the pharmaceutical business. Sales of certain products within 3M’s pharmaceuticals business, primarily comprised of prescription drugs for inhalation, women’s health, and cardiovascular conditions, declined due to price pressure in Europe and decreased demand for some of these older products. Health Care continued to focus on operational efficiency, which helped drive a 14.6% increase in operating income in 2005.

Looking ahead, as discussed in the preceding “Overview” section, the sale of our branded pharmaceuticals business will impact both sales growth and operating income margins in Health Care and the total company in 2007. Sales growth in 2007 will be negatively impacted as significant pharmaceuticals sales will be in the base 2006 period. In addition, Health Care operating income is expected to decline in 2007 by approximately 2 percentage points year-on-year, negatively impacted by this sale.  As a result, 3M believes the following disaggregated information for 3M Health Care’s remaining businesses (after the sale of pharmaceuticals) and for pharmaceuticals on a stand-alone basis provides useful information.

The following discussion provides information on 3M Health Care’s remaining businesses (after the sale of pharmaceuticals).

In total, the combination of the following items negatively impacted 2006 fourth quarter and total year operating income by $110 million. Health Care without pharmaceuticals included $95 million of expensed in-process research and development costs related to the Brontes acquisition. Business-specific restructuring actions totaled $15 million, primarily comprised of severance and related benefits plus asset impairments.

In 2006, sales were $3.237 billion. Organic local-currency growth was 7.4%, with acquisitions adding an additional 1.1% of growth. Local-currency growth was led by the medical supplies and dental businesses. Geographically, local-currency sales growth in dollars was strongest in the United States, Europe and Asia Pacific areas. Operating income for 2006 decreased 9.1%, impacted by restructuring impacts and other items as discussed in the preceding paragraph, which negatively impacted operating income growth by 12.4%.

In 2005, local-currency sales growth was 5.3%, led by 3M’s medical, dental and health information systems businesses. Operational efficiency helped drive a 14.0% increase in operating income in 2005.

Pharmaceuticals Business:

In total, the combination of the following items positively impacted total year 2006 pharmaceuticals operating income by $783 million, primarily in the fourth quarter of 2006. As discussed in Note 2, in early December 2006, the Company sold its branded pharmaceuticals business in the Asia Pacific region, including Australia and South Africa. The Company also sold its branded pharmaceuticals business in the United States, Canada and Latin America in late December 2006. The operating income gain related to these transactions, which is included in pharmaceuticals, totaled $1.074 billion. As discussed in Note 4, $112 million of severance and benefit costs were recorded in the fourth quarter of 2006 related to worldwide staff overhead reduction actions