Ladies and gentlemen, thank you for standing by. Welcome to the 3M fourth quarter earnings conference call. During the presentation, all participants will in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded, Thursday, January 28, 2010. I would now like to turn the call over to Matt Ginter, Vice President of Investor Relations at 3M.

Thank you. Good morning, everyone and welcome to our fourth quarter business review. It was great to see many of you in New York last month for our 2010 outlook meeting. I know it's early here in 2010, but we have set a date for next year's event. So please mark your calendars for the morning of Tuesday, December 7. Complete details regarding timing and location will be available later this year. Joining me on today's call is George Buckley, 3M Chairman, President and Chief Executive Officer; and Pat Campbell, Senior Vice President and Chief Financial Officer. Today's call will summarize our financial results for the fourth quarter and full year 2009 along with our outlook for 2010. A power point presentation accompanies today's conference call. It's available on our Investor Relations website at 3M.com. Today's presentation and the audio replay will be archived on our website for be an extended period of time. If I could ask when we get to Q&A today you ask you that you limit yourself to one question and one follow-up. We have plenty of material to cover today and I'm sure we will have plenty of questions so we do want to be fair to everybody. So, thank you for honoring that. And before we begin please take a moment to read the forward-looking statements on slide two. During today's conference call, we'll make certain predictive statements that reflect our current views about out future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Item 1A of our most recent Form 10-K and 10-Q lists some of the most important risk factors that could cause actual results to differ from our predictions. So, let's begin today's review. Turn to slide number three. And I will hand it over to George.

Thank you very much, Matt. Happy New Year everybody and thank you for joining us on our fourth quarter call. As the results indicate by staying on plan we are able to deliver another excellent quarter. One that came in a nice little bit stronger than we forecast. You all know the fundamentals of our plan, tight control of spending at factories while retaining a focus on generating cash and using innovation to ethically drive sales as (pure) market share and customer excitement everywhere. We worked very hard these past few years doing a lot of heavy (spade) work but it's paying off. Much of what we did back then prepared us very well for this economic downturn. That's notwithstanding a superb execution by 3M's people in 2009. Like were always offering surprises but we are increasing the confident in both the design and implementation of our plan, especially because our business gains strength and momentum in 2009 went on culminating in the quarter that we reported today. So, in the context of the economic environment in which we operate, Q4 was a successful quarter in a very difficult but ultimately rewarding year for 3M. To me a hugely important distinguishing factor of 2009 was our resolve to maintain investments in our future. And that is going to be paying off. We maintained a significant investment of more than a billion dollars in R&D at a time when many companies were forced to drastically cut back in this area. And we still pulled off great free cash flow conversion even with $900 million investments in CapEx last year. Those investments are clear and present signal of our confidence in the future of 3M. In fact I have personally never been more confident during my tenure here. We have demonstrated our…

Thanks George and good morning. Please turn to slide number four. For the fourth quarter, earnings were $1.30 per share on both the GAAP reported and on adjusted basis an increase of 69% and 34% respectively, on an adjusted bases this would be a record result for the fourth quarter. Our business is getting stronger quarter by quarter and of course we all recall how tough things were in last year's fourth quarter. Therefore the year on year growth rates will be very good. The $1.30 was ahead of expectations driven by strong sales growth and by relentless commitment to managing our costs. I will cover these details in a few charts. Full year earnings per share were $4.52 on a reported basis and $4.69 adjusted for special items which are largely related to restructuring actions undertake it in the first nine months of this year. To pick up on something that George alluded to, our original expected range of earnings for 2009 was $4.50 to $4.95. But we had a few ups and downs then and now in the end we posted a $4.69 per share right near the midpoint of our original range. Very few industrial companies can make that claim. So, my hat is off to our leadership team for once again getting the job done. Please be aware that in 2010 borrowing any very large or unusual items we will be presenting our numbers to you each quarter primarily on a GAAP reported basis. Likewise our estimates of future earnings are on a GAAP reported basis as well. Please turn to slide five for a deeper look at sales. Sales increased over 11% year on year and the growth was very broad based. Every geographic region expand the sales with notable performances in Asia Pacific at…

Before we get to your questions, I would like to address our outlook for the rest of year. Frankly, not a great deal has materially changed since our December outlook meeting. But I'm pleased to say that here and there things have hedged to little more positive than we saw in early December. Of course, as you expect from us, we will maintain our typical conservative stands on these things. You think over the years our increasing experience would teach us how to forecast the next year ever better. But it seems that each of these past few ones have been as deeply mysterious and clouded as its predecessor. Therefore, context recognizing that I'm an engineer and anything I can't forecast exactly is considered by me to be mysterious anyway. In all seriousness, there are lots of moving parts again in the world economy with a complex mix of factors driving different parts of the world economy up, down or sideways. We try to sort them out in a balanced way in arriving at our consensus view. As I said to you in New York in December, the challenge of forecasting is always hardest around turning points or if you like whether it changes ingredients such as peaks, valleys or points of inflection. That's what we have here in 2010. Let's not be fooled by the arithmetic magic of year-over-year comparisons. For most companies if we index to 2007 major economies and companies still have a lot of digging out to do. I mentioned in New York, there are five things which affect our sales in any one year. First, performance of the end markets. Second, supply chain filling and emptying. Three, X-factors. Four, creation of new markets, via product releases and five, share gains. Some of these are going…

(Operator Instructions). And our first question comes from the line of Scott Davis of Morgan Stanley. Please proceed with your question.

Hi, good morning guys.

Good morning Scott.

Can we talk a little bit about guidance and the timing of some of the cost that may come back, it looks like you are expecting a pretty good leverage off of that sales volume. But you did cut advertising expense a little bit in 2010 and had some benefit from vacation policy changes. Are there costs or timing or sequential timing issues that we should think about?

Yes, Scott, I can't think of anything major, on the vacation front, we will have a little less benefit in 10 than we had in 9 but nothing too significant. I wasn't exactly clear on your comment of book cutting at advertising merchandise. If anything we are going the other way. We are actually increasing our adverse spending. We ramped it up in the back half of this year. I think you saw it in the fourth quarter a big piece of that is in the consumer business both domestically and internationally. So those increases will continue into our 10 plan.

Okay. That's good clarification. Can we talk a little bit about China? You are throwing up some pretty big growth rates there and maybe it will be helpful for background to understand your business mix. I know this is your folks out there but it's my understanding that big chunk of that is auto and auto has been strong in China so it helps explain. Maybe start with the business mix then talk to us about whether you are gaining share in China or have more product selling into the region you have establish yourself more or weather there is a restock, just a little bit of color please on China?

Yes, I will and I kind of anticipated that a number of people are concerned about kind of recent news coming out of China relative trying to slow things down. George and we just happen to be there last week so we kind of have a fresh view on things, I must say the business there is performing very, very well and even into the first part of this year. Our China business, so paying by how you define it if you took kind of the mainland China probably through Hong Kong and it’s about 5% to 6% of our revenue base. As you would expect in China, our business is heavily focused around industrial and infrastructure related businesses at this point in time. So, our consumer business and our health care business would be smaller pieces of the portfolio (inaudible) be the companywide average which is only natural for a country like China as it continues to grow economically. So most of our businesses there, our larger businesses are around industrial related, automotive is a big market for us as well. But think of it heavily around the infrastructure as well as there is a lot of electronics businesses that are migrating to China as well. A lot of the optical systems business is migrating to China as well, not necessarily for local consumption but for export purposes. And generally speaking our strategy in China, Scott, to remind you is very much a China for China strategy. We, other than the optical systems business where we are effectively following our customers, most of our business there is really been developed for local needs. And as George pointed out in his presentation, the lab that we have in China is just absolutely phenomenal and on fire relative to new product development relative to really developing local products for the local market. My sense is that still in China we are under penetrated where we need to be. So we can we still have very significant growth opportunities and for those of you who attended New York's meeting in December, (inaudible) you talk about our strategy for China which was kind of a very much an accelerated ramp up there.

You can imagine we pursued at this point when Pat and I were in China last week. And the opinion of people on the ground there is the Chinese government is dealing with this very thoughtfully. Yes, they are trying to call demand and for some people to get concerned about asset bubbles and then of course you Cascade that into worrying whether same sort of thing could happen there that happened here. But the profile of the consumer is very different than it is here. People put very large deposits down on houses. They are much more conservative with their spending and their savings ratios and much, much higher than what you see in the United States. So I think the consumer end of the equation, we are unlikely to see much in the way of any real trouble. On commercial construction, there is some concern that maybe some of those assets have gotten inflated. Chinese government is successful in the actions that they are taking, and nearly these guys so far have proven time and time again whether it's in growth, whether it’s in restocking their economy, that they are very, very smart. We meet a lot of the community leaders, and industrial leaders and government leaders there and what is beginning to happen progressively is they are staffing those positions with superbly well educated people, extremely able folks. And certainly heretofore I think they have proven that they know how to manage this particular situation and I think at this juncture our assessment is that the risk is not that great.

Okay. Thanks guys. I will jump in or I will call afterwards and let other people jump in.

Okay, thanks Scott.

Our next question comes from the line of Deane Dray of FBR Capital Markets. Please proceed.

Thank you, good morning everyone.

Good morning Deane.

And George, it was nice to hear that you're still somewhat in the economic forecasting business here, I do appreciate your thoughts about the recovery path. Now you mentioned this twice, so, I wanted to follow up on it is you grouped 3M markets, residential, auto and commercial construction, I see you weren't expecting much in the way of a lift. Now I wouldn't think you would say that I would agree that you would say that about commercial construction, that's a small piece by maybe 2% our estimates. But both residential and auto had that element of early cycle and you do have some sizable exposure to auto OE and aftermarket, maybe its split 12% total, 6 each. So, why would you not be seeing a bit of a lift maybe some restocking, higher auto production. Why would those not be seeing that benefit as well?

Well, my logic Deane was really tied off the unemployment. Obviously I'm speaking specifically about the United States when I make those references. China and India are seeing sort of rocket shift growth in some of those segments. So, I'm really speaking about the United States. I think, I don't know if I should say pessimism but caution at the very least is tied there to the unemployment rates. And I'm just of the mind that until I see some here and there minor improvements in the unemployment picture, I'm going to be cautious on those two segments. I think you are right Deane that given where inventories are and I track those and Pat does, we all do, it does appear that some of the inventory drawdown in the United States in a number of different segments is kind of reaching bottom. We were seeing a little bit of pickup here and there. So, maybe in the coming quarter or two quarters we might see some restocking. But in terms of end market demand, I am kind of taking a cautious view on those market segments in particular. I don't expect them to get worse by the way Deane. So, I'm not in any way forecasting that they are going to go down. I'm expecting them to go side ways or they may get lifted through restocking. But generally speaking kind of a sideways motion maybe some benefit from restocking but not any sort of appreciable change in the overall pattern in those marketplaces in the United States.

And then just as a follow-up, where would you expect to see the restocking occur for those? And before we were thinking electronics in Asia perhaps but has your thinking changed there?

No. I think electronics some people were forecasting Armageddon a year ago. But what's happened when you look at fab utilization rates they just shot back up from numbers in the 30s to numbers in the 80s. So that looks all very good and I think the overall just a general industrial spaces in the United States will probably begin to restock a little bit here, Deane. I kind of made some comments on that in my remarks. Obviously, I'm bound to think that Asia is going to be in front. The United States a little bit behind, Western Europe a little bit behind that, and Eastern Europe a little bit behind them. Latin America though probably and certainly we saw really good growth in the fourth quarter, we will probably pop back more quickly simply because their economy is more internal. Pat mentioned the kind of China for China. Well, in a sense we are following the Latin America for Latin America, China for China, India for India kind of strategy. We are not really dependent in those markets being of a lot of exports. And as they naturally improve through their own sort of efforts. We remain quite positive about those markets. And of course, we had just wonderful improvements in the renewable energy area. You always wonder how long those social things can last, how many years will that go on for? But nevertheless it's really bringing us some very, very nice growth right now. As are the other sort of energy sensitive energy related kind of markets in films both the Windows as well as LCD. So, the health care is not going to do really anything that different than this year. It may actually begin to pickup a little bit with some restocking there, because…

Yeah, Dean. Just one thing I would add on the automotive side is I would expect that probably the first quarter this year-on-year comps are so easy. Okay, that they more will be bad. I think the wild card here is number of governments spend a fair amount of money on stimulus around cash for clunkers last year. Its unclear okay, if that will continue. So that actually could be a okay, a significant headwind on a global basis. But I think from a timing standpoint earlier in the year because the comps are easy we will be probably okay. I think it should be the question is later in the year where will the demand kind of rise? And obviously the cost we have on both autos and housing is to make sure people don't think that this going to return to where it was. That we believe there is going to be a permanent reset in both of those markets.

On automotive aftermarket, Deane that business has really done quite well this year. I don't suggest it's in anyway impervious to the economy but it certainly less sensitive to the economy than the automotive OEM business. So, we are kind of encouraged by that one and expect quite a bit of growth here in the U.S. but particularly in Asia we expect that. And so I think in that area in particular the news is mostly good.

Our next question comes from the line of Jeff Sprague of Citi Investment Research. Please proceed.

We have done a lot of macro. Let me kind of drill down into a couple of businesses if you don't mind. First on optical, George or Pat, could you just give a sense of kind of the state of play on the evolution of competition if we think about trying to guard against ultimate (communization) of DBEF given what will happen with DBEF? Do you see the forces marshaling against there may be some comment on your lead? And this 3D technology that you are talking about sounds very interesting. Is there a reason why it only applies to handheld devices? Or is that something that can apply to flat screen televisions and things like that with some more work?

Let me have a poke at that if I can, please. On the sustainability of that model, our patents are pretty solid for the next couple of years. So, we get some insulation from that. But in any market we both know, we all know who were on this call that the competition is always going to try to follow markets which appear to be growing faster or have a decent earnings capability. But I think when you think about what's going on in the LCD TV market in particular, prices have gone down of units, I think the high grey (inaudible) days are gone. Doesn't mean you can't make design money. So I think this sort of incentive to be drawn to this market is a little lower today than it was say four or even five years ago. On the BEF versus DBEF comparisons, the manufacturing challenges that DBEF is far greater, orders of magnitude more difficult than it would be for DBEF. On the other hand, there are some great manufacturers around. I'm sure would try to have a bite at that business. But I don't see the sort of everybody coming out of the woodworks kind of competitive response in DBEF that we saw in BEF. So I think it’s a little more insulated Jeff than that was. On the other hand, let's also be realistic. You never seem to be more than a year or a year and a half from de-contenting in this business. So the kind of reports that we have taken strategically is to work genuinely, really hard to get ever more close to the customers to work on specific innovation for them. And even during the toughest of times these folks always remarked if ever we want innovation the only people we really can turn to is 3M. We have a value proposition for there people that are very sustainable long term. Nevertheless, all-in-all I think you can't keep on taking content out to televisions until they cost nothing. And the approach that we have taken is basically to take a look at building material of monitors, of laptops or LCD TVs and basically say, okay, what do we got in our portfolio of ideas and products that we can apply to these products to take out content? So, we are part and parcel of the charge to take out cost and make these businesses successful. All-in-all in summary I'm less concerned about DBEF than I was about BEF. I just hope that my forecast here turns out to be right.

Great. And on the 3D technology?

Sorry, Jeff I forgot about that. On the 3D technology we started off in cameras. That was our sort of first launch with one of the Japanese camera manufacturers. There is now interest in this for gaming and even for televisions. It's early to predict exactly where this market will go, but it's a unique technology and I think it's got some legs for sometime. Although probably not I mean, I think it will, to be honest with Jeff probably will be and I’m guessing that this is a guesstimate, little bit more that sort of a 10% piece of that TV puzzle that will be my educated guess.

Okay.

Jeff, the other thing I was going to add on the kind of the LCD story is of course there has been quite a movement here on LED at the same time. And we have a very, very good value proposition on the LED side. So, as George points out that you kind of take this design by design. You never take anything for granted but we think we were in reasonably good position here for the near term.

And then just one on health care and I will pass for the time. Pat, I think it was your phrase in Q1 I was running hot at 31.2% margins and every quarter in '09 has actually been higher. I assume some of that is mixed, but can you just kind of address the dynamics in health care margins and kind of what we should expect going forward?

Jeff, good question. Brad and his team have a kind of an amazing portfolio there that it kind of reviewed in the December meeting. The way of course you bring margins down in that business is obviously our level of investment in the business and so what we are staging here is looking at what kind of product pipeline they have and then looking at the degree that we want to fund new investment options that we have accelerated that over this past year. Interesting model though because Brad and his team have done just such a marvelous job on ongoing productivity work as well that it would be more profitable business over time. But there is a little bit of a mix advantage kind of going on in the business right now some of the businesses that have held up our stronger than the others from a profit margin standpoint.

Okay, thank you.

Our next question comes from the line of Terry Darling of Goldman Sachs. Please proceed.

Thanks. Good morning.

Good morning Terry.

Pat, I’m wondering recognizing you don't give first quarter guidance but I just thought that it might be helpful for all parties here to pickup qualitatively about any big sequential movers. Obviously the corporate line is going up for all of the reasons that you have talked about tax goes up a little bit. But any other kind of seasonal items in the businesses or things like your advertising spending rate? Things like that you want to call out for us?

I guess Terry, the only thing I want to remind everybody is that the way our stock optioning expense flows through the year because our grant is in February, we get a much heavier hit in the first quarter and I think we scale that probably $40 million, $50 million higher in the first quarter. So, as people are thinking of their first quarter estimates they are I make sure that they dial that in. That’s not a change from last year, it's a change from a couple years ago. But that's only thing that I see, we will be seeing commodity prices are starting to rise. So, I think maybe I will get through the first quarter a little bit or maybe part way through the first quarter but we will start to see some pressure on material costs. Now of course our purchasing guys are trying to find new offsets to that but we could see a little pressure in the first quarter.

Okay and then coming back to the earlier question on optical. I think your comps are very easy in the first quarter. Does that drive display and graphic organic up a lot sequentially?

Yes. Well, yes. Probably it maybe a little bit sequentially but definitely on a year-over-year basis Terry optical will be a lot higher because the first quarter was a terrible period for us last year in that business. So, we saw on a year-over-year basis it will be up and actually that industry has maintained a fair amount of discipline in this past year. So, probably see more of a normal trend there.

You know, I think you called out optical up 50% year-over-year in the fourth quarter. I missed weather that was local currency. Can you calibrate us as to where that ended up on the full year and maybe within the context of 2010 what you are assuming there?

I’ll be honest, I think for the full year, I think our business is just up slightly for the full year because we had the first half of the year was a difficult period and then of course that business came on strong starting in Q2. But on an all in basis the sales of that business are just up slightly for the whole year.

And for ten, should we be thinking kind of moderate to low double digits or something better than that?

It actually, we are expecting that business will perform very well. Now if I look at the D&G business in total, which optical is imbedded in, that was one of our higher growth rate businesses that we reviewed in December primarily as we expect that there should be some recovery in the traffic signs and commercial graphics has kind of in a difficult period that maybe they have got a little bit of a momentum as well.

Okay and then just coming back to the second half organic indications on the outlook slide for the whole company, I'm just trying to think 2% to 4% second half organic recognizing your commentary about being conservative, but trying to map that back to the December meeting with you are talking about taking organic for the whole company up 7 to 8. Is that comps are getting tougher timing of new products, can you just flush out why we decelerate below that kind of longer term organic growth target that you are talking about in the second half?

Terry it's like three quarters away, okay. So, that's probably as much as anything reflection we think in the first part of this year the one for comp purposes and two the momentum we got we feel pretty good about it. Let's face it, I only gave us as a crystal ball okay, so how the back half of this year is going to play out. Some of the pundits basically are concerned about the back half may not be as strong. So as we put our plan together, what we are basically indicating is we need to get off to a very, very rapid start here in Q1 and Q2. And position us for whatever happens in the back half of the year. I think it will be probably fair to say Terry, that we probably have a more conservative view in the back half of the year.

I also think Terry, just let me chip in. This year is the year of transition where you got kind of easy comps at the beginning year and other comps at the end of the year. Your net-net, I don't think the numbers probably going to be a lot different than what you suggested. And honestly that normal run rate that number that we quoted you is what we expect. You are bound to see quarter over quarter bumpiness when you got to hear of transition lot this one is from a terrible year last year.

I understood. And then I guess lastly just wondering talking about things are a little bit better since December you have raised guidance. It doesn't seem like the guidance is really assuming a step up in sort of balance sheet deployment 6% net debt to cap in the fourth quarter. I guess the question is just what are you waiting for to maybe get a little more aggressive with the balance sheet and maybe talk about the M&A pipeline in that context, too?

And you kind of raised one of them okay, one of them is we have started to I’ll call it stimulate the M&A process. So, we will have a better read here as we go through the first half of the year as to what properties we are interested in, what’s available. We did run a little bit stronger than we thought from a cash flow perspective. Realistically I think it’s going to probably be more by mid-year or so before we feel comfortable trying to address a different solution.

There is a nice pipeline developing in the consumer and office basis. Nice pipeline developing in the safety and securities spaces with dominance in the way these things are coming up overseas where we have a lot of cash. So, I think it won't be too long before you see that sort of rolls back in the bloom so to speak.

Great. Thank you very much. Appreciate it.

Thanks, Terry.

Our next question comes from the line of Steven Winoker of Sanford Bernstein. Please proceed.

I'm trying to just get a better sense. I know it's hard to do but look at core growth attributable to new product sales versus the footprint, the geographic footprint in the end market overall. So, just product vitality index in terms of where that's running now and in any sense for this?

It's running Steve, it's just a teeny weenie bit under 29% for last year, and moving at about for the company as a whole moving about two points a year. Now we also have the other thing we have been trying to do which is as we sort of managed the breadth of the pyramid a little bit better we are trying as best we can reduce some of the sort of leaky bucket (cannibalization). So, hopefully as a consequence of that we might get a little bit more lift in the growth as we try to plug the bucket as-well-as fill it with new products if you forgive my sort of analogy there. So, I think this by the way we said this in New York, this is a number that's dominated by the core of 3M. Whereas if you gone back to 2005 and a number in the low teens it's more than doubled since that time. So, we are very enthusiastic. You are in a company like 3M it's like some technological candy store. But let me tell you the candy store is going to a super store from what we can tell right now. And the ideas are coming out all over the place. Now, if we can just make sure that our colleagues in the R&D and the marketing areas get this stuff launched in a timely fashion, it's extremely encouraging what we see with the deliver of these R&D numbers. So, I just am becoming increasingly positive about the model we got and the way that the technology folks at 3M have just lifted their game and absolutely done everything that we asked of them. So, I'm really pleased and very optimistic for the future.

Even if you look at just 2010 and you have been running at this two points per year, you actually see the slope of this steepening significantly the trajectory increasing?

Well, it's all about the definition of the word significantly. I don't want to get so it sound (inaudible) or anything like that. But it is going to move a little faster. And I think we made our targets clear. We want to be before 2014 we want to be at that 40% number. We know if we could drive it passed that's great. But given the kind of erosion (cannibalization) that you see in the company that 40% is really going to help us drive toward those higher growth numbers that we spoken about several times now. So it's so nice to see in the company many of these longer standing issues that we dealt with fixed supply chain running very nicely, the R&D start picking up. The pyramid management thing seems to be an absolute godsend in the way we handled it for this time. So, there is so much positive news and Pat and I are sort of keepers of the gate on capital. And it almost doesn't seem that as day goes by where people seem to be one getting a new order for this and a new big launch for that. We might be tight on capacity. So, it just feels a lot, lot better than heretofore, Steve.

And since you mentioned capacity, I remember that I think the December 2008 guidance for CapEx was down something like 10% down. You ended up the year down closer to 40% and you're guiding to this year up mid-11% to 22% so that sort of billion dollar level. How should I think about that, what happened versus what was expected and as you look forward ramping up capacity?

Well, again Steve. We kind of executed what we said we would do for '09. We had invested in some capacity and so forth over the last couple of years so we consciously pull that back. We aren't going to let CapEx hamstring our growth here. Our guidance is a billion dollars here for 2010. We thank a billion to a billion two as it is kind of a good run rate for the company. I will tell you I would love to comeback to you mid-year and say that we have so many other good growth ideas that we want to take our CapEx number up even higher. But that's our current thinking as (inaudible) says just in the last probably couple of weeks, months there has been a number of good breakthroughs where some customers in spots that we have some capacity issues. George and I will be facing okay, what we thought we had is a little bit of a (kitty) for the year has been used up by the business people very rapidly for good growth program. So if that number creeps up a little bit, I guess I wouldn't be surprised these will be for absolutely the right reason.

Wouldn't be bad news.

But I think that’s kind of order of magnitude for you, Steve.

Okay and can you give us some idea from where some of those businesses are, where you are getting these nicer surprises?

I will tell you, it is literally almost all over the portfolio. I can think of someone in health care. I can see some industrial and see some in safety and security in the electronics group okay. So is it literally across the board.

And I really do think, Steve, it's a response to the commitment that we had to reinvent the technological core of the company. I really do think that's happening and the customers are seeing it. The customers love it. The scientists are just totally committed to it. So, it just feels so much better now. And hopefully that 2010 unfolds we will see more of this accelerating and then you guys will be able to accuse Pat and myself of being overly conservative as you usually do. But let’s hope that's the case.

Steve, I think there is another element of this. And as we just said, as we just got back from the trip to China and in India and few other spots. I think the other thing that's happening is our local lab capability gets better and better we are getting more and more local pride development done and they are also realizing that they need more and more local manufacturing as well. So, I think that's also going to as our new product development for local markets continues to accelerate we are going to have to deal with some of the local manufacturing issues as well.

I mentioned it briefly earlier Steve that abrasives thing that I showed you in New York, I mean, it looks like it's an absolute game changer. Changes the basis of competition dramatically and I can point to many others like that. I'm so enthusiastic by what's happening. And so let's hope that this year tends to be kind of the start of something big. Sounds like a cue for a song.

Well, Steve, it's at least a 100 okay. And it's going to appear in a number of cases. As there are some cases its R&D investment. Other cases it's that had much investment okay, in some international markets and the life source. Its going to be a kind of as a broad base kind of category relative to investments. And by the way, there is a number of people that are still in the queue that would like to invest and we have to make a judgment. One where the organizational capability to pull off and then two, how well is the business running. I think you are spot on when you kind of look at the way I think of running the business in this margin range is what I want to do is make sure that we were investing in all of the great growth opportunities we have. So, as we do that obviously, you'll have the tendency to may be trend towards the lower end of that margin range. And I like nothing better than to actually have the business be running stronger here on a top line basis and our ability to reinvest back in additional growth ideas.

And our last question comes from the line of David Begleiter of Deutsche Bank.

Thanks, Jason (inaudible) sitting in for David this morning. For a moment I thought Pat said you had a new line of pocket protectors? I guess sort of excited.

I probably did. You want me to send you a new pocket protector.

Please do. But I will pay full price. The commodity inflations mentioned, Pat, are there any segments in particular you to highlight where you are raising prices to offset raw materials at this point?

Not specifically. We take very close look at that on a business by business. The business people have to lead that forward, not as close to that. But it is spotty okay, those that are kind of impacted by I will call it oil derived commodity increases and it is a little more spotty on a business by business basis. They know what they have to do from managing that. And in some cases they have raised prices. But I say its going to be on a much more select basis as we go into 2000, 2010. It’s the way I would see it right now.

Okay. That's helpful. And then just a double back on the respirators. George, you mentioned this sort of handoff of H1N1 were to slow and new products pick up, on balance for the year, do you guys at this point anticipate any sort of head wind from respirator sales?

Not materially. You know, you obviously don't know exactly when the H1N1 demand is going to fall off. Certainly its going to be some tied to the seasonality of all around the world for that matter. So demand at the moment still seems to be robust. I think you have to be realistic about it that it will come to an end eventually. But I kind of mentioned the connected point that we have been working on obviously on approved N95 respirators that can reach down into parts of the market that we could never touch previously. And obviously that’s going to demand some capacity, those things are very close to being released. We are not going to make as much money, its kind of the speaking on those products as we would have done on some of the others. So, we will probably see sales okay. So we see a little bit of margin compression depending on what kind of mix we get out of that. But all in all again it's another great business. And we prove ourselves to be I think the folks in that business masters of managing this kind of crisis and I think it's one of those business we remain positive about and I think with the products coming out all in all its going to be okay.

Excellent. Thanks very much.

There are no further questions. I will now turn the call back over to 3M for some closing comments.

Well, Thanks for joining us today, everybody. We had a lot of material to cover. We did have some very good questions. I know we did have a couple we could not get to in the interest of time. So we will be back in touch this morning with you. Thanks for coming. Looking forward to talking to you next quarter and in between as well, thanks.

Thanks everyone.