3M Co MMM
Q1 2011 Earnings Call Transcript

Operator: Laurence Alexander, Jefferies & Company.

Laurence Alexander - Jefferies & Company: I guess two quick questions. One, (indiscernible) expected raw material (indiscernible) think about your end market, were you seeing any end markets where you are starting to see distinct destruction because of higher cost pass throughs?

George W. Buckley - Chairman, President and CEO: Laurence, I don't know if you can hear me, this is George. But we got something wrong with the sort of voice activated audio right now. So, we can hear about every third word that you say, and while English offers some chances for interpolation it does not offer that many for interpolation, so we're going to try and fix it and hopefully we will be back with you quickly. So we may ask you to repeat your question please.

Laurence Alexander - Jefferies & Company: I guess two part question, first on raw materials, inflation assumption. I will try it back.

George W. Buckley - Chairman, President and CEO: We fixed it Laurence.

Laurence Alexander - Jefferies & Company: I guess the two part question was one on raw materials, what's your inflation assumption is for the year and are we seeing end markets or regions where you are starting to be a concerned about demand disruption because of the inflationary cost pressures?

David W. Meline - SVP, Finance and CFO: On RM inflation for the year we are expecting around 4% which is what we experienced in the first quarter and we expect that will continue. In terms of end market impacts, we have not seen the impact even though we have varying levels of inflation going on, we haven't seen that curtailing the strength of demand for us at this time.

Operator: Scott Davis, Morgan Stanley.

Scott Davis - Morgan Stanley: George one of your last comments of the presentation just related to need to add capacity and I want to dig into that a little bit, if we think about the last up cycle, you did spend a fair amount and added a fair amount of capacity in areas that were tied to the time. How do you balance adding additional capacity with some of the other options out there and maybe those options include just A, raising prices or capturing a little bit margin or B, just putting more emphasis on fixing some of the supply chain issues that you've had on a legacy basis and premiums and capacity that ways, is there some granularity you can provide for us there please?

David W. Meline - SVP, Finance and CFO: Well I think investments in our own growth Scott has always proven to be the best return. Here we are getting say 23% returns or they are balance on and maybe even higher than that incrementally. So to walk away from the growth and let somebody take the share strategically is probably not a great idea. So usually when that kind of demand comes along we obviously are going to ask ourselves the question, is it sustainable, is it real and if it proves to offset both of those, those questions are answered yes, we'll make the investment. Some of this stuff that we are speaking about Scott are as in optical care adhesives and the stuff is getting put into tablets and displays touch enabled technologies which are just taking off like rockets. You have seen the demand reports on some of the electronic guys who are servicing those people and you even saw I think at our meeting here Scott, some of the quite wonderful new technologies that we enabled completely clear (touch) both side touch we showed you those kind of gizmos on watches and games that are going to be enabled by this. So we think this is right think to do versus some of the choices we have and we think ultimately it provides us a stronger company and better return for our shareholders.