Ladies and gentlemen, thank you for standing by, and welcome to the 3M third quarter 2009 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in the question-and-answer session. (Operator instructions) As a reminder, this conference is being recorded, Thursday, October 22, 2009. We would now like to turn the call over to Matt Ginter, Vice President of Investor Relations for 3M.

Thank you. Good morning everyone and welcome to our third quarter 2009 business review. Joining me on today’s call are 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 third quarter. A power point presentation will accompany today’s conference call, which you can access on 3M’s Investor Relations website at 3M.com. Today’s slide presentation and the audio replay will be archived on our website for an extended period of time for your convenience. As I mentioned last quarter, our next investor meeting is scheduled for December 8 from 8 AM to approximately noun at the Grand Hyatt Hotel in New York City. We sent out an invitation earlier this month and many of you have already RSVP. If you have not responded to date, please do so, and if you did not receive the invitation, please contact my office and we will give it out to you right away. Before we begin today, please take a moment to read the forward-looking statement on slide two. During today’s conference call, we will make certain predictive statements that reflect our current views about our future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risk 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. Please turn to slide number three. And I will turn the program over to George.

Thank you, Matt, and good morning everybody, and thank you very much for listening to our third quarter call. For 3M, the third quarter was marked by continued execution of our plan, tight control of our spending, while retaining the sharp focus we’ve had on cash generation as we simultaneously drove sales and market share everywhere that we could. I almost give you my second quarter remarks here again, because Q3 was really all about continued execution of the plan, rather than any radical new pathway or strategy. So while we significantly overachieved relative to external expectations and were certainly hugely encouraged by our progress there, do please keep in mind that organic sales volumes are down 7.1% year-over-year. Sequentially, however, third-quarter sales increased by an impressive 8.3% over Q2 and as I’ve mentioned last quarter, the second derivative of sales with respect to time also continues to improve. We remain encouraged by our ability to operate well and to maintain good margins and generate huge amounts of cash in these times. And I confess that the rate of sequential grow is surprisingly pleasant. We achieved a free cash flow conversion of 163% this quarter, and 145% year-to-date. So there is no question that it was a strong quarter delivered by hard slog by the good people of 3M. Pat will detail the quarter for you in a moment, including several factors which helped us again. And for example, demand for optical films continued strong as it did in Q2, especially films for LCD TVs. We also achieved good growth in renewable energy, health care, automotive after-market and aerospace to name but a few. As you would have expected, demand for respiratory products used to prevent the spread of H1N1 virus remained strong. So, investing an additional $20 million or…

Thanks George and good morning everyone. Please turn to slide number four. Third quarter GAAP reported earnings were $1.35 per share versus last year’s $1.41 per share. Excluding special items, this quarter's earnings were $1.37 per share, which was slightly below last year's $1.42, and above our internal expectations entering the quarter. As most of you know, we have been aggressively restructuring the company since early last year, and we continue this effort in the most recent quarter. We announced the reduction of approximately 200 positions in Q3, with the majority of those occurring in Western Europe and to a lesser extent here in the United States. The related pre-tax net restructuring charge totaled $26 million in the quarter or about $0.02 per share. Next, I will recap the third-quarter sales growth, please turn to slide five. There were some encouraging data points in our third-quarter sales figure, but to be clear we are still operating in a weak and uncertain economy, even as the recession has been determined to be technically over. First, sales to the consumer electronics industry remain good coming off an improved second quarter with particularly good results in our optical film business. Secondly, demand remained strong for respiratory protection products due to the outbreak of the H1N1 virus. We are the global leader in disposable respirators with market share capacity that far outpaces our nearest competitor. The respiratory factories have been running 24 hours a day, seven days a week since May of this year to keep up with demand, but we have been unable to significantly reduce our backorder volume levels. The good news on sales was not limited to these two markets. In fact, we posted sequential sales improvements in each of our six business segments in the third quarter, with Electro and…

Thank you very much Pat. Before we answer your questions, I'd like to address our outlook for the rest of year. We are certainly glad for the positive sales outcome this quarter. We all know that the hardest time to forecast sales accurately is a turning point in demand. That is where the inflection points, or inflection points saw significant changes, or even in some cases reversals in gradient. As we might say, changes in the first derivative. You recall that we said last quarter that the US economy or at least those collective segments where 3M plays seems to have reached bottom at the end of the second quarter. So that's where you see the changes of gradient. So to be fair to everyone, I don't think forecasting is going to be much easier anytime soon, and I hope you will bear with us as we try to identify the underlying trends and patterns that will help us get better insight into where the world economy is going. I think 3M’s capability of execution in difficult times is now beyond anybody's reasonable doubt. So the continued $64,000 question on everybody's mind is where is the economy going? Whenever I get excited about our progress, we have seen huge progress in new products in market penetration. I do remind myself of King’s View [ph], which I quoted to you last quarter in that there can be no sustainable recovery without natural improvements in aggregate end-market demand. The question remains where will it come from. First, some people who will be wondering have similar packages led to this improved performance. The short answer to that question is no. On stimulus packages some countries seem to have done it well like China for example. Conversely some like the United States and the…

(Operator instructions). Our first question will come from the line of Deane Dray with FBR Capital Markets. Deane Dray – FBR Capital Markets: Thank you. Good morning everyone.

Good morning, Deane.

Good morning, Deane. Deane Dray – FBR Capital Markets: Hi, George, my first question was going to be to update us on the expected recovery path but I think your closing remarks really honed right in on expectations there and you've had a pretty hard hand, so I think that's – I won't pursue that further, I think that's pretty clear on your expectations. So instead I would like to focus a bit here on what you call the x factor in the respiratory mask and just give us a sense, the last update was 40% of capacity being added, looks like you've done a little bit more than that, but can you size for us the back order, and is there risk in over expansion here and chasing this demand and might you consider licensing out the product and just give us a sense of how you are managing this high quality problem.

Sure. Thanks Deane. The capacity we added was probably closer to 30% rather than 40 so that gives you kind of a sizing of where we've gone. As for the high quality problem of outsourcing, the practical matter is, Deane, nobody has any capacity. So there is nobody to buy from. So the challenge at one level is not to disappoint big customers and very large and very powerful customers like governments, so we chose to make these relatively small incremental investments. And I do think that H1N1 may – we could be proven wrong, but I think it may have changed people and government's attitude to these quite virulent viruses, so we don't think – because of what we spend, where we spend it, and how we structured it, sort of flexible, shutdownable ,overcapacity that this will be a big challenge. And it is of course a chance Deane for us to gain market share, continued influence with our customers. So we think on balance it is the right thing to do. Deane Dray – FBR Capital Markets: And just to clarify I know you don't break out margins by particular products but just when you look at this incremental revenue coming through, how does this compare to the margins for the segment?

I would say, Dean, Pat here, it is similar. Every one of these tenders are different, okay, but on average it's not all that different from you know the business as a whole. Deane Dray – FBR Capital Markets: Great, thank you.

Thanks, Deane.

Our next question will come from Shannon O'Callaghan with Barclays Capital. Please proceed. Shannon O'Callaghan – Barclays Capital: Good morning guys.

Good morning Shannon. Shannon O'Callaghan – Barclays Capital: You know George just a question on how you are thinking about the trade-off between the margins and investments at this point, I mean your focus has always been really more on ramping the investment, trying to accelerate the growth of the company, I mean with the margins coming in a strong as they are, I mean you are ticking up R&D a little which is nice to see, why not put the pedal down a little more and how are you thinking about that trade-off as you look out the next couple of years?

Well as always you know the thing in life Shannon you know this, it is what we call here internally the baby bath strategy, not too hot, not too cold, not too soft, not too hard, and we could certainly do what you suggest, but I think we always have to keep in mind the stability that we offer to our investors. So we will certainly tick up our investments machine, absolutely no question about it, and we have already gone through our planning process and we have lots of great ideas, and that is one of the really nice things that really happened to us. If you go back not that many years, we had a lot of money and not maybe as many ideas as we have today, now we have lots of ideas and plenty of capability. So I think that you'll be pleasantly surprised next year as we step on the gas to invest in a number of different places in healthcare we talked about right in the past, but in industrial, in renewable energy, a lot of really really good ideas are coming through, Shannon. And I think you'll be pleasantly surprised. But in the end Pat and I will always try to find that sort of balance point so we don't bang the pendulum from one side to the other because in the end when you do that you end up with inefficiencies and we tend to take a view in our company of, it is always better to have funding and R&D a little bit tight than a little bit loose and that is probably the way that we will follow our pathway next year. But I think you can look forward with encouragement and anticipation to what we plan to do. Shannon O'Callaghan – Barclays Capital: Okay, thanks. As you see the sequential volumes picking up here nicely, how are you thinking about overall employment at 3M? I mean in terms of increasing people's hours as a first step and actually bring in people back, I mean are you hitting that soon, how do you think that plays out?

Well I don't think we are past that, because you know we've got – at least this year, we do have some added capacity, because we had people on, a lot of people on layoff, a lot of people have been on forced vacations, so we still have some already good internal capacity to respond to those things. It is an excellent question, but it is why we manage the business in a way that we did. Rather than laying people off and then struggling with a recovery, we said no, we need to do furloughs, we need to mandatory vacations, those sort of things. Because if a bigger vacation accrues, that's really I think helped us in preparing for the future. But there is another side to the question and that is the quality of people that are available out there. And we certainly will step on the gas little bit here in investing people that will help us with e-commerce, with some of the electronic products and software opportunities that are emerging. We will almost certainly – I mean the plan is in construction right now, accelerate investments in – I won't be too specific but you'll be able to figure them out very quickly, some overseas markets that provide big opportunities. But I think we're going to try to do it as best as we can without a lot of wholesale hiring apart from the kind of cherry pickers data that I think we have got from some great manufacturing industries in this country in particular, we will do that. But we're going to try to do it steadily and without again banging the pendulum to the other side.

Our next question will come from Scott Davis with Morgan Stanley. Please proceed. Scott Davis – Morgan Stanley: Hi, good morning guys.

Good morning Scott.

Hi Scott. Scott Davis – Morgan Stanley: It looks like you have several billion dollars of cash now on the balance sheet which is kind of a high-class problem I suppose. You know any particular reason, I mean I guess, one, can give us some context of the size of the pension contribution that you're looking at for 4Q? And then two, when does it make sense, you know what is holding you back I guess from taking a look at share buybacks again, is it just uncertain market environment or potential acquisitions that you think you have out there that could potentially be a cash cow in the next year?

Scott, we really do have short memories, don't we, as to a year ago we're kind of facing you know kind of concerned about bank failures and everything else, so we've got to let a little bit of time here past that. To answer your question on pensions, we are probably looking in the order of magnitude of $300 million to $500 million in the fourth quarter is what we're looking at contributing at this stage. Of course, we look at how the fourth quarter develops and where rates move and so forth. That would probably be the order of magnitude that we're looking at. Scott Davis – Morgan Stanley: Okay. The second question and I don't want to take away from other people who may have heard this correctly, but safety security and protection, it wasn't clear to me, it looks like if you're doing apples to apples on H1N1 that sales would have been down about 15% where were the weakest points there?

Well, the weakest, even within the I will call it the personal protection that is related to industrial activity, that business is down. As we mentioned, corrosion protection which is heavily driven really kind of by oil price, and of course now with oil prices kind of going up, you know that business may see a little bit of a rebound here. Industrial minerals was down a little bit and also our commercial care business was also down. So those are very industrial kind of related economic related businesses so they were all you know down. And so as the overall economy improves, process SPS [ph], we should see a gradual improvement in the growth rate outside of the H1N1 piece.

Our next question will come from Laurence Alexander with Jefferies. Laurence Alexander – Jefferies: Good morning.

Good morning. Laurence Alexander – Jefferies: Wanted to follow-up on the – you commented a few times on market share gain and specifically for auto aftermarket but also more broadly how much of a tailwind do you think you can get from market share gains in the early part of the cycle and then how sustainable do you think that will be?

You know Lawrence I think we thought about it across the company, there clearly are going to be some better gains in some areas than others. China offers vast opportunities for share gains in automotive aftermarket and that will be one of the investments that we make next year, I'm pretty sure about that. But overall, you know, you try to assess what can you really get market share, I think it is possible to get in the half to one point of market share a year for the entire company, that would be the kind of target range that we would be thinking about. And you know we've continued to spend on R&D, Lawrence, and we have maintained our investment, we've tried to make sure that we didn't run out of capacity where those opportunities lay, and you have to imagine if you are in our shoes now, it is time to make that pay, and that is basically the attitude that we are taking, and I think we are doing it. As I mentioned in my remarks, it is quite difficult to make measurements of these things, because in many industries, the data isn't there. So you end up making – end up making some kind of educated guesses. But it is going to be a push for us next year, Lawrence. Laurence Alexander – Jefferies: And lastly just briefly on pensions, what is the endgame, I mean are you aiming to finally get the pension plans to the point where you can immunize them? Or is it is just going to be sort of moving to sort of year by year just to maintain within the statutory limits?

Well of course we have significant international plans (inaudible) you have to kind of look at them on a plan by plan basis. Generally speaking, we would like to keep it about fully funded situation. If the opportunity ever arose, if they give us the opportunity, okay, to immunize ourselves, okay, that is something that we would strongly, strongly look at. Laurence Alexander – Jefferies: Thank you.

Thanks Lawrence.

Our next question will come from Jeff Sprague with Citi Investment Research. Please go ahead. Jeff Sprague – Citi Investment Research: Thank you. Good morning everyone.

Good morning, Jeff. Jeff Sprague – Citi Investment Research: Good morning. I just wonder if you could help us kind of piece together kind of the restructuring variances and towards some degree this idea of the way you've managed cost out on the way down with vacation and furlough and things like that. I mean the gist of my question is, you know what kind of carry over benefit do we have know into 2010, good old fashioned restructuring versus maybe the stuff that creeps back in on kind of undoing some of the more kind of near term things kind of in the heat of the moment?

Jeff, I'll take a stab at this. This is Pat. On the vacation side, we have got about another year to go there, 2009 and 2010 and that of course the issue that will be what happens in 2011 and that runs order of magnitude $100 million in both 2009 and 2010, a little bit heavier maybe in 2009. On a restructuring basis, based on what we have watched and announced, we probably have something north of $100 million benefit going into 2010. Jeff Sprague – Citi Investment Research: Great. And so just to be clear on the pension, I mean I am sorry on the vacation, it is not an incremental 100 more in 2010, it's just stays at kind of where we were…

Let me just to be clear for everybody, when we went into the situation, we had a call it a accrual balance of about $200 million for earned vacation okay that had outside the current year. So effectively we will be drawing that balances down over a two-year period, so it comes out about $100 million down in 2009 and another hundred million down in 2010 is the way it works. Jeff Sprague – Citi Investment Research: Okay. And Pat or George, can you give us a little more color on just the price environment overall, you know it looks like you've got that big Latin benefit you attributed to FX but now we are going the other way on the real and other things, I don't know if this is other currencies we should be worrying about there. But I would assume that your near kind of positive cost variances on a year-over-year basis, so it would – just kind of tie together the price versus cost dynamic as we look forward the next couple of quarters?

Yes, sure. First of all, to a large degree, most of our pricing will start to anniversary as we get into the fourth quarter, so our reported price will start to diminish. There is still some pricing going on in Latin American markets, you know you bring up Brazil, but Venezuela is also very a large sizable business for us as well. So there still will be some positive price related to some currency moves. If you look at, as George said in his comments, on a longer-term basis, we have really tried to kind of manage price cost spread. I think it would be fair to say that in today's world, we have – our teams have done a marvelous job going after price, and input costs as we mentioned are probably down about 3% here in this quarter. So we have got a favorable gap there. But on a long-term basis, we will look at trying to manage those together. And if I really think on a more going forward basis, I think from a planning assumption standpoint, generally you think of it being kind of a loss is the way that you think of the model going forward. Jeff Sprague – Citi Investment Research: I'm sorry. Just if I could sneak one more in, having put or planning to put this pension contribution in Q4, if you tie that up with where your returns are now and what you're looking at on discount rate, can you give us some back of envelope on pension headwind for next year?

Yes I can. Again, I will probably give you some more in December, Jeff, when we meet. Of course, we won't know the final answer until the year closes, but right now, if I had to kind of draw a kind of a snap a line, we are probably about $300 million of headwind next year or $0.03 a share, and that is about $100 million more than they we gave you, last time we gave you a number, which I think was in the April timeframe. And that is exclusively related to the change in the discount rate. Interest rates have – at least corporate rates have come down pretty significantly, so it is really on the discount rate side is where that movement has occurred, it's not really been on the return side. Jeff Sprague – Citi Investment Research: Yes. Thank you very much.

Thanks Jeff.

Our next question will come from John Inch with Merrill Lynch. Please go ahead. John Inch – Merrill Lynch: Thank you, good morning.

Good morning John. John Inch – Merrill Lynch: Good morning guys. So other than optical, were there any of your businesses sort of as the quarter progressed or segments or whatever facing price pressures that incrementally got worse, and any incrementally facing price benefit, I'm just sort of kind of thinking of the mix between all your various moving parts here?

John, I would say that nothing significant to call out. John Inch – Merrill Lynch: George, when you talk about market share gains, are there obvious areas. I mean obviously you have got all new products in the pipeline that you are launching, but are there segments or areas, as we look back over the course of the recession where you feel you have made meaningfully significant inroads with respect to share gains?

Well I think there are two that immediately come to mind, John, almost as respirators, we have done extraordinarily well, but we did add capacity early. We were able to capitalize on those investments in particular given that the plant that we are building in Korea, we were headed again there. The extensions in the UK and now these new ones that I just talked about, so I think in that area, John, we would have done well. In the optical area, I don't think there is any doubt either there because we see the reported attachment rates that we have in those businesses, and also picking back up again quite substantially. So we're clearly gaining share in that area. In the renewable energy, John, while that business is still small (inaudible) footprint is getting put down the. We're building a new plant in Singapore for film for that business, and as soon as that capacity comes on stream, we will able to gain share there as well. We obviously gain share partly through acquisitions in the automotive aftermarket, so I think those things will continue, John. We have some marvelous products in abrasives. If we see you in December, we thought of bringing along some either good graphics or maybe even movies, you would think that it was not possible to add or make any more inventions in abrasives, but it is just – look, we should take people's time on the call to give you the detail, but absolutely marvelous. So I think in a fairly broad front, John, we're going to be able to gain share. You're always going to be careful not to be too optimistic about how you can gain it because other people have to give it up and they don't always do that willingly, but I think we're going to do well or share gain because of the investments in innovation and is certainly – and in some cases investments in capacity. So I think we can continue down the path way very strongly, John. John Inch – Merrill Lynch: Thanks, George. Just…

John, the other thing, and I'm not going to – I won't give you exactly specifics, I will give you more of a dull comment. The other thing that happened of course is with the economic conditions, there are a number of suppliers that are not the healthiest today. And a lot of large multinationals reviewed their supply base during these kind of times, so we spent a lot of time with big customers during these kind of times, it doesn't show on our results today. But I think as business returns, I think you'll see that we will be treated I think with additional volume, just because they know what is we are going to be around, and two, obviously, our innovation, so I think we will pick up some as the economy returns here. John Inch – Merrill Lynch: Okay. Just one more. On healthcare with US going through this big debate, can you guys remind us how much of your healthcare business runs through US hospitals? And if that business is not going to be subject to some form of managed pricing pressure over the course of the coming years?

John, let we try to answer it maybe a little bit differently. I'm not maybe you guys can see if they can figure out the hospital numbers, but here is how I think of that business. About half of it is in the US and there are certain elements of that business that to some degree may actually benefit a little bit okay from some of the efforts. You know take our health information systems business, they may actually benefit. So as we looked at the various rounds of debate that is going on around healthcare, of course we don't necessarily like any kind of taxation that is put on the healthcare industry, but what we're looking at under the various scenarios right now is something that we think is kind of a manageable expense for us. There is a piece that is on, will be on the medical side, there could be piece that you know leaks over into the oral care side, okay, as well, but as we thought about it and looked at it, of course none of us like to have any kind of call it penalty, but the reality is we think within the size of our business, it is a pretty manageable thing at this point in time. John Inch – Merrill Lynch: Great, thank you.

Thanks John.

Our next question will come from David Begleiter with Deutsche Bank.

David, are you there?

David, your line is open.

Why don't we go on, we will come back to David right after.

Our next question will come from Steven Winoker with Sanford Bernstein. Steven Winoker – Sanford Bernstein: Good morning.

Good morning Steve. Steven Winoker – Sanford Bernstein: Just a quick question on CapEx first, it is down 37% roughly year on year and cash from ops is up 15%, and historical rate is I have got around a billion and a half spending last year on a full-year basis, so how are you thinking about accepting, pushing the accelerator down on that part of the question?

I will start, okay, and then – Georgia and I were kind of debating, okay, where this is kind of going to end up. He's got a big smile on his face, Steve. And in part, Steve, obviously what we're trying to judge is as George talked about , we just kind of completed our planning process, and we – there are some really good ideas inside the company. So we're trying to settle down on that number. As I would have probably told you a quarter ago, I would have probably said that number was going to be kind of flat, okay, which I still think is going to be flat to maybe up a little is kind of how I would, is how I would put it, Steve.

Steve, we have got a lot of these – the big projects are kind of coming to completion, so that carry over from 2008 into 2009 would have been much bigger than the carryover from 2009 into 2010. So even though it sounds impressive, they are flat to a little bit up. In point of fact, there is significant new elbowroom has been created by the completion of earlier products in that roughly 900 million or so that was spent this year. So it is going to create some capacity chances for us. And then obviously what Pat and I will do is, and are doing as we speak with David's help, are going over each of these projects, the most important ones, the ones that seems to have the best returns, are the ones that have the greatest strategic capability, and probably will end up allocating a little bit more to those, temp it to some degree by some strong demand in one or two areas like respirators, like optical films, that will again color that mix. But again I think overall, it will give us a little bit of elbowroom, more than we had last year to start now allocating some of that money to grow, and we may top it up with just a little bit to make sure that we are not leaving any really good opportunities on the table. Steven Winoker – Sanford Bernstein: But you're basically looking there for a CapEx, these run rates are closer to normalized, a little bit better than what you used to run historically as you're going through all the major capacity changes in the supply chain effort.

Yes. We still got some of those things to complete, Steve, but I think that – I mean if you think you know the normal run rate within $100 million plus or minus where we are today, I think you'd probably find that's how we're run for sometime. Steven Winoker – Sanford Bernstein: And just a business unit question, consumer and office, the organic local currency sales were down from what I can tell 7.5% versus 4.3% in the second and 3% in the first, is the only business where I saw organic local currency sales before acquisition and currency, can you once again jus clarify a little bit what that…

Steve, maybe this will answer part of your question. On the second quarter call, I tried to remind everybody (inaudible) there is a little bit of movement in back-to-school shipments that win in the second quarter, okay, that normally was in the third quarter. There is about two points of growth. So the second quarter actually benefited by about two points of growth that normally was a third quarter activity. So if you kind of move two points of growth between Q2 and Q3, I think you get back to something I think that is more of a normal trend. Steven Winoker – Sanford Bernstein: Okay. And then the last question, sort of another spin on the I think the pricing and margin question that have been asked three times, which is when I look over 40 years of gross margins and operating margins, the peak margins that I can find are sort of 51 and 25% respectively, and you are pretty much just about there now. So as you think about all of these investments and changes in drivers in organic growth, is there a new level that you're driving towards as you think about it in terms of sustaining, you talked about pricing, you talk about the cost cuts that you doing, how are you guys kind of debating and thinking about that looking over a little longer term?

Steve, our margins really – we don't have a strategy, okay, that says that our margins ought to be x, and then kind of drive everything off of it. It is kind of an outcome talking of all the individual pieces that we put in place and the great work of the business. And I do think that 3M has a very, very unique business model and capability which is the reason why these margins are so high and so sustainable and we would talk to you some more about that in the December meeting when we think about it. But I mean the reality is we have improved our business and kind of your observations, we have improved our business to the point where of course our peak margins are now better than they have historically been. And of course if you look at history and we have been in different businesses at different times, so it is never really the same company. But the reality is we have done that, which actually provides a great platform for George and I to think about, you know where do you grow, okay. There is a lot of good opportunities we have to grow the business and with the incremental margins that we have in many cases, any growth we get just actually makes the results better, better when you drive growth. So even with the acquisitions we have made and some of the strategies we have made on going further down the (inaudible) and so forth, we have been able to kind of hold our margin structure together, which I think shows the power of the underlying capability of the company. So we will continue to drive growth. We are really lucky at obviously how do we drive shareholder value in this company, it is really getting more top line growth. It is not by squeezing more margin out of it.

So we'd be happy if these numbers stay, these margins stayed reasonably in this band and the leverage, if we do the operating leverage we get, Steve, we can just use that as fuel to stroke the growth fire, that is kind of the way that were thinking about this. And we have done quite about in this particular recession, we have done quite a bit of in-sourcing, stuff that actually historically we outsourced, maybe we outsourced it 10 years ago, it seemed to have a good value proposition at that time, now doesn't make sense, and we are bringing that stuff back inside, I think maybe a 150 million in sales this year or so. We're bringing that inside and getting it better process. So all of that is helping to leverage our gross margin and actually shorten our supply chain as well. So there seems to be an awful lot more juice in this lemon yet that we can use but our intention is to use that juice to fund more growth not necessarily fund more margin.

Yes, one other thing I guess I would like to maybe point out is also I know your question was really kind of on a operating margin basis, but I don't want to lose the reality that we have also been able to significantly get our tax rate down as well. So if you look at it on a net margin basis, we have been able to make some very good strides on our tax rate over time as well. So when you look at it on a net basis. And then the other thing we don't talk about but the other thing that is safer to us was really looking at our overall ROIC as well. So we have got some objectives that make sure that our returns remain in the 20% plus category, so it's both margins and returns is what we focus on. Steven Winoker – Sanford Bernstein: Thank you.

Our next question will come from John Roberts with Buckingham Research. John Roberts – Buckingham Research: Good morning guys.

Good morning John. John Roberts – Buckingham Research: When you look below the aggregate sales at the individual customer order patterns, have they firmed up in terms of frequency and in terms of average order size, things like that to give you a little bit more confidence and predictability than you had earlier?

I would say on the margin okay maybe it's slightly better but I can't send – we are not back okay to where we were a couple of years ago from a kind of demand planning standpoint. John Roberts – Buckingham Research: I'm not talking about the aggregate percent, I think before that I had less confidence because they were coming in infrequent basis and smaller amounts.

I wouldn't say it is. Any time you start back up, okay, I think it starts to improve, but I still think it'll be fair to say that we're seeing smaller orders than we used to see, okay, and they are kind of in the more sporadic nature. I do think customers will continue to be very cash flow conscious as they recover here. So I think that is going to have a impact in supply chain really across all industries as this thing recovers, I think there is going to be a little bit more of a hand to mouth view for a while here.

I mean they are going to be more cautious John, you expect people to be more cautious, and they may or may not be restricted by credit, but both of those factors if they really will come together and probably you just asked which is probably for a time here, we will have more small orders, more frequent smaller orders. We have done well in responding to that and hopefully that settles down and accelerates to return to more should I say more normal ordering patterns as volume builds. Let's hope that is the case. John Roberts – Buckingham Research: Thank you.

Our next question will come from Steve Tusa with J.P. Morgan. Steve Tusa – J.P. Morgan: Good morning.

Good morning Steve.

Good morning Steve. Steve Tusa – J.P. Morgan: So just a commodity cost benefit I'm not sure you guys give that number, sorry if I missed it?

Well in the third quarter we said that our input costs was down about 3%. Steve Tusa – J.P. Morgan: Okay. When I look at the guidance, just trying to kind of get my hands around the seasonality here, so when you look at the fourth quarter EPS at the high-end, it looks like it's going to be about 26% of the annual number. And when you look at the implied margin at the high-end of around 20.5, you know that is down more than your kind of normal 150 bps decline from 3Q to 4Q and is jumping back quickly to the EPS comment with 26% of the year in the fourth quarter. That is kind of normal seasonality, but that would seem relatively conservative to me in the context of how this year has played out given that 1Q was so horrible and it looks like you still have a lot of tailwinds going for you in 3Q and 4Q. So I guess the bottom line is you know can you guys maybe discuss the seasonality dynamics here in the third and fourth quarter? It doesn't seem to make like it should be normal or maybe there are reasons why it should, could you just talk about that?

Steve, I'm surprised this waited till the last, that this is the last question to come up. It is an interesting question. Steve Tusa – J.P. Morgan: I can't help that.

No that is fine. You couldn't. I guess your observation's true. If you look at the top line guidance, I guess if you kind of do the math, I think you'll probably see that we have probably taken our top line expectation probably down a little bit from our normal seasonality. And to be honest with you, that is a little bit of a just a plan around – we don't know what is going to exactly transpire; I feel pretty good about October, but the wild card for me is December. I really don't exactly know how December is going to play out. December could either you know continue on kind of a steady trend basis here or could be a complete collapse, so we've kind of obviously you know probably hedged our bets a little bit when we looked at our fourth-quarter expectations, and so don't read anything you know more to it than just maybe a hesitation we've got into kind of operate in the kind of an uncertain world here. I just don't know where really December is going to fall out. But if I look at our margins probably for the fourth quarter, they will come down off the third quarter. They won't be at least to my expectations in the 20s, okay; they will probably be in maybe 22 or so, Steve, is the way I would think of it. Steve Tusa – J.P. Morgan: Okay, so you're basically – there is normal seasonality, there is upside to the range is what you're saying.

I would say there probably is, Steve.

What we will also do, Steve, the other thing we're trying to keep some flexibility open here is depending on how the fourth quarter goes and how the Christmas season goes, doing it the way that Pat has suggested it, will allow us to have a little bit of money in the back pocket to drive, to increase that (inaudible) some other R&D program. It looks like we might be able to pull ahead. So it'll give us that flexibility if we so wish based within the numbers that we told you. Steve Tusa – J.P. Morgan: And then just a question for the H1N1 stuff, is there any way to give us what the bottom line impact is, I mean how far and if you're not comfortable doing that, I mean either above or below average margins?

Steve, I would think from a modeling standpoint, just put a minute in average incremental margins, okay, because and I think it really, you almost look at the thing more from a gross margin perspective, Steve. You know there is not, there is not much infrastructure costs (inaudible) SG&A cost or R&D costs required, okay, to solve these additional mass, so it is more of a incremental gross margin business. But to some degree, some of the tenders are very, very competitive, okay, so to some degree, you have to discount a little bit off of that. So if you were to kind of bracket some points between a normal operating margin, our gross margin would be kind of a decent way to think of it. Steve Tusa – J.P. Morgan: That's a good range. Thank you.

Thanks, as well, Steve.

That concludes the question-and-answer portion of our conference. At this time, we will turn the call back over to 3M for some closing remarks.

Well, thank you very much, everyone. We appreciate very much the time that you spent with us, especially in these busy times. So thank you very much and we look forward to seeing you and talking to you in the beginning of December. Thanks a lot, everyone.