This summary is based on the fourth quarter fiscal 2007 earnings call conducted by 3M Co. (MMM: chart) on January 29, 2008.

Management:

- Chairman, President and CEO: George W. Buckley
- Sr. VP and CFO: Patrick D. Campbell
- VP, IR and Financial Planning & Analysis: Matt Ginter

Key Investors Issues

- Sales were $6.2 billion, an increase of 11% from $5.78 billion in the prior year.
- Earnings were $851 million or $1.19 per share, down 27.6% from $1.2 billion or $1.57 a share in 2006.
- The firm reaffirmed a minimum 10% increase in earnings in 2008.

Full Year Highlights:

- Sales were up 10.5% to $24.5 billion, with 63% of sales coming from international operations.
- Earnings rose 6% to $4.1 billion or $5.60 a share driven primarily by 12% operating profit improvement.
- The firm returned over $4.6 billion to shareholders via a combination of dividends and share repurchases.

Fourth Quarter Highlights

Sales were $6.2 billion, an increase of 11% from $5.78 billion in the prior year adjusted for the divested businesses and helped by favorable currency of 4.7%.

- In dollar terms all six of the businesses grew sales year-on-year led by healthcare at 22.4%.
- There was also double digit growth in both industrial and transportation and in safety, security and protection services.
- Geographically broad-based growth was realised with double digit dollar sales growth in Europe, Latin America and Canada, excluding divestitures.
- Even after excluding positive currency impacts, local currency growth was positive in every major region of the world.

Earnings were $851 million or $1.19 per share, down 27.6% from $1.2 billion or $1.57 a share in 2006, including 2 cents a share of costs related to restructuring actions due to the creation of a new projection systems organization and selective restructurings.

- Gross margins were 46.9% and operating margins were 20.8%, in line with last year after adjusting for the impact of divestitures.
- SG&A expense was up 5.7% year-on-year to $1.3 billion or up 11.7% adjusted for divestitures as the weak dollar inflates costs.
- Selling expenses were up 9% as the firm invested in healthcare and areas such as oral care, medical and through recent acquisitions such as Biotrace, EcoLITE and SoftMed.
- Selling expenses were also driven by Consumer and Office were the firm stepped up investment in brands to support the longer impel for this business and to drive sales.

Research and development and related expenditures were up nearly 13% driven by healthcare and industrial and transportation to support the underlying strategy to reinvigorate the core businesses.

- Operating income was $1.3 billion, an increase of 5.2%, or 11.2% excluding divestitures.
- Non-operating expense was $33 million, up $11 million from the prior year, with $8 million of this increase due to an impaired auction option rate of security wrote off during the quarter.
- Free cash flow was about $1.3 billion versus $900 million in 2006 adjusting pro forma, gains and taxes.
- Capital expenditures totaled $391 million not too dissimilar from both year-on-year and sequentially.
- Dividend payments were $341 million and the firm continues to buy back stock with gross share repurchase of $483 million.

Sales Highlights:

- In U.S. dollar terms, global sales increased 7.3% or 11% adjusting for divestitures, primarily the pharma business.
- International sales growth ex-divestitures was 13.5%, while the US operations expanded sales by 6.7% as currency impacts added 4.7% to worldwide sales growth.
- In the United States, total growth was 6.7%, led by strong performance in health care, industrial and transportation and Electro and Communications businesses.
- Sales were down slightly in the other three businesses due to a slowdown in a handful of divisions tied to residential construction, consumer spending, highway construction and consumer electronic devices that have come to end of life.

Acquisitions and industrial and transportation and healthcare, accounted for most of the 3.8% acquisition growth in the U.S,while organic volume added 1.9% and selling price changes added a full percent to growth.

- International total local currency growth was 6.1%, with Latin America leading the way with 16.2% growth.
- Europe grew to 6.4% lead by healthcare at 18.4%, while Asia-Pacific and Canada, all drove local currency growth rates of approximately 4%.
- Excluding optical films, the Asia-Pacific region had the strongest quarterly local currency growth of the year.
- Organic volumes increased 5% in international with double digit volume growth from emerging markets and acquisitions added 1.3%.

Business Segment Highlights:

- Industrial and transportation sales were up 13.7% to $1.9 billion as local currency sales increased 7.8%, including 4% from acquisitions.
- Operating income increased 13.5% to 360 million with margins in line with last year at 19.1%.
- The contribution to sales growth were similar to previous quarters as the largest divisions within industrial and transportation continue to lead the way, most notably industrial adhesives and tapes abrasives, automotive after-market and the automotive OEM division.