3M Display & Graphics Business Drives Sustainable Profitable Growth

Sustainable Profitable Growth
Jim Stake
Executive Vice President,
Display & Graphics Business

3M Investor Meeting 2006 © 3M 2006 All Rights Reserved

Display & Graphics Business
Commercial Graphics

Optical

Technology
Traffic
Pipeline
Safety

Growing core businesses…
Growing core businesses…
common strengths…healthyReserved
common strengths…healthy pipeline
© 3M 2006 All Rights pipeline
3M Investor Meeting 2006

3M Display & Graphics: Key Financial Data
Sales Operating Income
$1,500
$Billions & YOY % Chg $Millions & YOY % Chg
$1,162
$4.0 $3.5 $1,115
$1,200
$3.3
+4%
+5% +29%
$2.9 $865
+17%
$3.0
$900
+35% +67%*
$2.0 $600
$296
$0.9
$1.0 $300
+8% +4%
$0
$0.0
2003 2004 2005 Q1 2006
2003 2004 2005 Q1 2006

LC Growth 28.4% 12.4% 4.7% 9.5% OI Margin 30.3% 33.3% 33.1% 32.4%

2005 Sales By Geographic Area
Europe 14%
U.S. 21%
LAC 5%

*2002 estimated stock options, not restated.
APAC 60%


Commercial Graphics Division
Building brands through graphics and digital signage
Building brands through graphics and digital signage

World’s largest graphic
Boeing complex – Everett, WA

Transportation


Food & Beverage


Banking

Night Signage

Interior & Digital Signage Day Signage


Patented microreplicated
Patented microreplicated
adhesive technology
adhesive technology


Printing
Knowledge

“Big 3M” End-user
Coverage

Broad Scotchprint™
Range of Warranted
Offerings Graphics

Manufacturing Global Graphic
Excellence & Network
Scale
Intellectual
Sustainable global
Sustainable global
Property
growth model
growth model

Traffic Safety Systems Division

The Leader in Transportation Safety
The Leader in Transportation Safety
& Mobility Solutions
& Mobility Solutions


3X Brighter 10X Brighter

Prismatic Migration
DG³
1939 2006
Diamond
Grade

High Intensity

Engineer Grade

Materials Digital Systems

Solutions & Services Latest Innovation

High value solutions for vehicle registration
High value solutions for vehicle registration


Day - Dry Night - Dry Night - Wet

Technology breakthrough and service migration in pavement markings

History of
Leadership
Expanding into
Services Global
Coverage

Broad Consistent
Range of Quality &
Offerings Service

Government
Manufacturing
Relationships –
Excellence &
“Trust”
Scale
Intellectual
Sustainable global
Sustainable global
Property
© 3M 2006 growth model
growth model
3M Investor Meeting 2006 All Rights Reserved

Optical Systems Division

Making LCDs better, brighter
Making LCDs better, brighter
and more energy efficient
and more energy efficient

LCD Panel Structure
Polarizer

Compensator
Glass
Color Filter
Liquid Crystal Display Glass
Liquid Cr ystal
Glass
Compensator

Polarizer

Cover Sheet

3M DBEF

3M BEF
Backlight
3M BEF

Diffuser

Light Guide
3M Reflectors


BEF - Brightness Enhancement Film

BEF Recycles off axis light
Wasted Light

Without BEF
Dim
Light refracted
toward viewer
Wasted Light

Lamp
Wasted
off-axis light
reflected back
for recycling
BEF redirects
Bright light towards
the viewer
BEF Backlight
LCD


DBEF - Dual Brightness Enhancement Film
Without DBEF, 50% of backlight output is absorbed by the LCD

Transmit P1
Dim
Absorb P2

LCD Backlight
DBEF increases brightness by Reflecting & Recycling polarized light

P1
P2
Bright
Reflect

Recycle

P1

LCD DBEF Backlight

LCD Area Growth
05-10 CAGR: 25%
80
TV
70 Monitor
Notebook
Display Area (Millions m2)

60 Handheld

50

40

30

20

10

-
2002 2003 2004 2005 2006 2007 2008 2009 2010

3M Investor Meeting 2006 Source: DisplaySearch © 3M 2006 All Rights Reserved

3M LCD Film Sales ($) by Application

LCD TVs

Monitors

Notebooks

Handhelds

2001 2002 2003 2004 2005

Strong growth led by LCD-TV
Strong growth led by LCD-TV
and handheld devices
and handheld devices

Consumer Television Units
250
LCD
PDP
PJ TV
200
CRT
Units (Millions)

150

100

50

0
2003 2004 2005 2006 2007 2008 2009 2010


New TV Technology Area Growth
05-10 CAGR: 32%
60000

LCD TV
50000 PDP
RPTV
40000
Area (000's m2)

30000

20000

10000

0
2003 2004 2005 2006 2007 2008 2009 2010

3M Investor Meeting 2006 Source: 3M Estimate © 3M 2006 All Rights Reserved

32” LCD TV Panel Price
LCD Panel ASP LCD Panel Demand

$2,250
$2,250 45,000
45,000

$2,000
$2,000 40,000
40,000

$1,750
$1,750 35,000
35,000

$1,500
$1,500 30,000
30,000
($/unit)
ASP ($/unit)

(000's)
Units (000's)
$1,250
$1,250 25,000
25,000

$1,000
$1,000 20,000
20,000

$750
$750 15,000
15,000

$500
$500 10,000
10,000

$250
$250 5,000
5,000

$-
$- --

2002 2003 2004 2005 2006 2007 2008 2009 2010
2002 2003 2004 2005 2007 2008 2009 2010

LCD price decreases fueling strong demand
LCD price decreases fueling strong demand

Customer Investments
LCD Fabs
LG Philips 7G Q1’06 8G Q3’08
Samsung/Sony 7G Q1’06 8G Q4’07
Samsung 9G Q3’09
Sharp 8G Q4’06 9G Q1’10
AUO 7G Q4’06 8G TBD
CMO 7G Q3’07 8G Q2’08 8G TBD
Hannstar 7.5G TBD
SVA-NEC 6G Q3’08
BOE-Hydis 6G Q1’09
Poland TV Assembly
LG Electronics
Sharp
Total customer investment of over $30 Billion
Total customer investment of over $30 Billion

Customer Investments
Sharp Kameyama Samsung

Source: Sharp Website Source: Samsung Website

Source: L.G. Investors Presentation
L.G. Philips – 7G Substrate

Large Area LCD Supply / Demand
180000

Excess capacity
Excess capacity
160000

represents upside
represents upside
140000

120000
Units (1,000/QTR)

100000

80000

60000

40000

20000

0
Q1'05
Q2'05
Q3'05
Q4'05
Q1'06
Q2'06
Q3'06
Q4'06
Q1'07
Q2'07
Q3'07
Q4'07
Q1'08
Q2'08
Q3'08
Q4'08
Q1'09
Q2'09
Q3'09
Q4'09
Q1'10
Q2'10
Q3'10
Q4'10
Realistic Capacity Demand Total


Optical Systems Division
Product
Technology
Customer
Support Teams Process
Technology

Global Supply
Chain Intellectual
Property

Quality
Customer
Systems
Relations

Manufacturing
Application
Excellence &
Development
Scale

3M Investor Meeting 2006 Sustainable global© growthRights Reserved
Sustainable global 3M 2006 All model
growth model

Optical Systems Intellectual Property
750
Active US Patents

0
2000 2001 2002 2003 2004 2005 2006
YTD

Large and growing patent portfolio
Large and growing patent portfolio


Customer Satisfaction is Growing
Key Account Teams supporting customer success

Annual customer satisfaction surveys

’03 ’04 ‘05

0 1 2 3 4 5 6 7 8 9 10


Investing to Support Customer Growth

Suzhou, China Wroclaw, Poland

Kansai, Japan Hwaseong, Korea

Tainan, Taiwan
USA Naju, Korea


Continuous Flow of New Product Innovations
High Gain BEF
– 8% - 10% brightness improvement
Anti-Static BEF
– Lower LCD assembly cost

APF: Next generation DBEF
– Thinner, higher contrast, better color
BEF- RP Multifunction Film
– Superior gain, lower LCD assembly cost

Notebook Privacy Filters
– New manufacturing process
enables mass market pricing


Quality Advantage
3M delivers industry-leading quality
2006 quality objectives:
– Tighten particle size specs by 25% to 30%
– Cut total number of defects by 50%
Superior quality:
– Lowers customer assembly and rework costs
– Improves 3M manufacturing yields

Current Spec Future Spec
Defect Human Hair

24 um


LCD Film Price History
120

100

80
Relative Price

60

40 3M Enhancem ent ASP

20

0
1999 2000 2001 2002 2003 2004 2005 2006

Sharing productivity gains and optimizing
Sharing productivity gains and optimizing
price/value to maximize opportunity
price/value to maximize opportunity

VikuitiTM DBEF And Energy Efficiency

12 Lamps + DBEF 16 Lamps

Less Power
Lower Temp

DBEF = fewer bulbs, less energy, lower temperature
DBEF = fewer bulbs, less energy, lower temperature

D&G Technology Pipeline – Plasma


D&G Technology Pipeline – OLED


D&G Technology Pipeline – LEDs


D&G Technology Pipeline – Projection
Durable Polarizers for LCD projection
systems
– Dramatically reduces long term display
degradation
Solid State Lamps (LEDs)
– Improved lifetime, better color, instant on,
no Mercury
Optical core for reflective LCD systems (L-COS)
– Improved brightness, contrast and uniformity


D&G Technology Pipeline – Touch Systems


Stepped-Up Marketing

www.vikuiti.com


Display & Graphics
Outstanding teams in place
Excellent customer relationships
Strong core businesses
Unmatched manufacturing scale and quality
Growing markets
Clear leadership positions
Positive momentum – 8%+ LC Growth Target
Robust technology pipeline
Sustainable, profitable growth!
Sustainable, profitable growth!

3M Display & Graphics Business Drives Sustainable Profitable Growth

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