oe e. harlan executive vice president, electro and communications business

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

“Maintaining the Growth

Momentum”

Joe Harlan,Executive Vice President

Electro & Communications Business


ECB Key Financial Data

$2.1 $2.2 $2.3

$0.6

$0.0

$1.0

$2.0

$3.0

2003 2004 2005 Q1 2006

$266$316

$127

$447

$0

$100

$200

$300

$400

$500

2003 2004 2005 Q1 2006

2005 Sales By Geographic AreaU.S. 27%

Europe 22%

APAC 41%

LAC 10%

Sales Operating Income

LC Growth -.7% 12.7%2.7% 4.2% 10.6% 14.2% 19.2% 21.0%OI Margin

$Billions & YOY % Chg $Millions & YOY % Chg

+3% +6% +5%

+8%

+19%

+42%

+33%

+12%*

*2002 estimated stock options, not restated.


ECB Has Had A Wild Ride…

…And Future Growth is SustainableSolid core portfolio…margins sustainableCustomer intimacy stronger than everEffective “Go-to-Market” structure

$2,536

$2,223

$2,034$2,101

$2,224

$2,333

$1,500

$1,800

$2,100

$2,400

$2,700

2000 2001 2002 2003 2004 2005

$US

in M

illio

ns

ECB Revenues(10%) CAGR 5% CAGR

OI% 16% 9% 13% 13% 14% 19%

International opportunities aboundExpanding footprint in adjacent marketsService as a differentiator

ECB Positioned For Continued Growth

Projecting Sustainable

Growth of 5-8%


ECB Portfolio Footprint

CharacteristicsIntegrated materials science & processing technologies

Participating in “hot” markets– Infrastructure build / upgrades– Electronics boom

Go-to-Market via OEM, channel pull / push & “Bench-to-Bench” selling (ODM, CM’s)

LAC10%

US27% APAC

41%

…And Balanced Proportionately to Global Opportunities

23%

19%

28%

30%

Balanced Platform Portfolio…

Electronics

Growth Across Multiple Platforms & Geographies

Strong positions in expanding / upgrading infrastructure (Europe, LAC, APAC)

Asia driven by Electronics…EE Emerging

Servicing transnational customers globally

EUR 22%


Electrical Markets

Power Generation Transmission DistributionApplications

Med- / High-Voltage splices & terminationsVinyl electrical tapesElectrical connectors

EMI / RFI shielding & insulating materialStrong brand & reputation in electrical utility industry

Key Capabilities

Terminating & Splicing Electrical Tapes Terminals

Cold Shrink

Solutions


Electrical interconnectFiber optics cabling & connector expertise –Fiber management

Specialty optical fibers – GGPEnvironmentally stable cabinetsStrong brand & reputation in telecom industry

Key Capabilities

Solutions

Central Office Connectivity Copper Aerial Closure

Fiber Optic Closures Fiber Optic Splices

Copper Splicing Modules & Connectors

DSL Test Equipment

Copper Structured

Cabling

Fiber Optic Structured

Cabling

Communications MarketsApplications

C a m p u s C e n t r a l O f f i c e

C e n t r a l O f f i c e C u s t o m e r

P r e m i s e s


Electronics SolutionsApplications

Embedded capacitanceComponent transport & testingStatic control & protection

Flexible fine-pitch interconnectHigh-performance electronic substrate materials

Key Capabilities

Solutions

Flex Circuits Backplane Solutions

Fiber Optic Solutions

Carrier & Cover TapeInkjet Cartridge

High Speed Backplane

Assemblies


Electronics MaterialsApplications

Plastic bonding & hot melt solutionsForm-in-Place gasketsThermal management

Specialty fluids & gasesSintered & fixed abrasivesBattery materials

Key Capabilities

Solutions

Chemicals & Gasses

Tapes & Bonding Films Thermally

Conductive MaterialsSemiconductor Materials

Gaskets & Adhesives


Platform Capabilities

Med- / High-Voltage splices & terminationsVinyl electrical tapesElectrical connectorsEMI / RFI shielding & insulating materialStrong brand and reputation in electrical utility industryStrong channel presence

Electrical

World-class telecom test equipmentElectrical interconnectFiber optics cabling & connector expertise –fiber managementSpecialty optical fibers – GGPEnvironmentally stable cabinetsStrong brand & reputation in telecom industryStrong channel presence

Flexible fine-pitch interconnectEmbedded capacitanceHigh-performance electronic substrate materialsComponent transport / testingSpecialty fluids / gasesSintered & fixed abrasivesBattery materialsPlastic bonding and hot melt solutionsForm-in-Place gasketsThermal mgmt

Communications ElectronicsCamp us Cen tral

OfficeCen tral O ffice C usto mer

Prem is es

Powe r Generation Transmission DistributionTransformers Transformers

An Integrated Platform With Differentiated Materials & Solutions


Positioned to Serve What, When & Where the Customer Wants

ECB Market DynamicsCharacteristics 3M Response

Customers Move Fast Clear “Line of Sight” From Customer –Intimate Dedicated Technology Interface

Customers are Geographically Indifferent– Spec – Design – Source – Mfg – End-User

Can be Different Geographies

Leverage 3M Global Subsidiaries and Networks…Invest Where Customers Reside

New Technology Drives the Market– Business is Bi-Modal– Short Life Cycle– Fast Commoditization

“Bench-to-Bench” Relationships Enable Leading Edge Position on Multi-Generational Applications and Process Technologies

Continuous Cost-Down Mindset Intense Productivity Without Service Compromise

Major Growth Areas Shift Rapidly– Between and w/in in Geographies

Ability to React Fast Globally, Without Barriers


ECB Positioned For Continued Growth…

Go-to-Market Structure– Market-Focused / Customer-Centric

Differentiated Technologies Yield Differentiated New Products

Aggressive International Expansion

Adjacent Markets & Complementary Acquisitions

Service as a Differentiator

Competitiveness / Culture


ECB Market-Focused / Customer Centric3M Electronics Go-to-Market Structure…

One Face to the Customer…Supported by Multiple Technology Platforms

Marketing Sales Key Accounts

Customer

Segment Markets

Operations

Tech Applications

e-Productivity

Semi-Conductor / Components

Assembly

Distribution / Channel

Regional

Transnational

Global

Platform Technologies

EMD D&G IB SS&PSESDEMMDCMD


ECB Market-Focused / Customer Centric3M Electronics Example…

Running with the WinnersMany Are TransnationalReplicating Success Globally

Customers SamsungNECToshibaHitachiIntelPhilipsFreescaleIBM

SeagateMaxtorW. DigitalHitachiFujitsuToshibaHGST

MotorolaNokiaSamsungNECPanasonicSharpSony / EricssonSiemensPhilips

PhilipsLGSamsungSharpToshibaMatsushitaSanyoEpsonHitachi

HPLexmarkSamsungCanonBrotherEpsonOlivettiKodakDell

MarketSegments

Semi-conductor

Hard DiscDrive

MobileHandheld Display Printers


ECB – Covering The Transnationals

DesignCentersDesignCenters

ChicagoHelsinkiCopenhagenSeoulBeijingTokyo

ODMs / ConvertersFlextronicsFoxconnBradyStokvisM&C

Manufacturing

BrazilIndiaHungaryChinaKorea

Customers

Everywhere!

3M Product1183 CopperFoil Tape

ApplicationLCD Shielding

Exemplary Project

U.S KoreaChina /Brazil

Sales

3M Subsidiary Network

Each Specification Requires Global Coordination

Design Center

Tier 1 Supplier

ContractMfg.

China

Converter

Mobile Phone OEM


Coordination Driven By Subsidiary Reach

United States l s n

Canada l s nPuerto Rico l

Trinidad & Tobagol s

France l s n

Irelandl

United Kingdoml s n

Belgiuml s n

Netherlands l s n

Germanyl s n

Denmark l s

Norway l Sweden lFinland l

Poland lCzech Republic l

Switzerland l sAustria l s

Hungary l

Russia l

Greece l s

Turkey l

China l s

Korea l s n

Japan l s n

Mexicol s n

Dominican Republicl s

Guatemalal s

El Salvadorl

Costa Rical s

Jamaical s

Panamal

Ecuadorl s

Colombial s Peru

l s Chilel s

Venezuelal s n

Argentinal s n

Uruguayl

Brazill s

Portugall s

Moroccol

Spainl s n

South Africal s n

Zimbabwel s

Kenyal

Italyl s n

Egyptl

Israelil

Saudi ArabialUnited ArabEmirates l

Sri Lanka l

Singaporel s n

Australia l s n

New Zealand l s n

Indonesia l s

Malaysia l s

India l s

Philippines l s n

Hong Kong l s n

Taiwan l s n

Vietnam l

Pakistan l

Keyl Sales and Mar ketings Manufacturing/Converting (42 R egions)n Research and D evelopment

Thailand l s n

3M Subsidiary Network Effective Globally & at Home


Consistent Process for “Go-to-Market”

Just Do It!

Ideas

Concept

Feasibility

Development

Scale-up

Launch

New Products Flow Through NPI System

VOC dictates NPI• Replicate to key accounts• Multi-Generational Presence

Prospects Forwarded to Cross-Functional Teams

Sales Market

Tech.Mfg.

CTC

+

+Laboratory

Apply Intellectual Capital to

Opportunities

Communications

Electrical

Electronics Materials

Electronics Solutions

+

Served Markets

• Key account focus• Find the “pain points”• Develop prospects

Success Depends Upon Global Boundaryless Teamwork


Mobile Handheld

…With Huge Opportunities!

Custom Bumpons

NovecFluids

Flexible Circuits

Micro Coaxial Interconnect

Labels

Double-Coated Tapes

Double-Coated Tapes

Plastic Bonding Adhesive

Bonding Films

Memory Card Connector

EMI/RFI Shielding

Bonding Films

Thermal Interface Materials

G-Sheet

Electronic Switch

Adhesives

Display Enhancement Materials

Protective Tape

Optically Clear Adhesive

Anisotropic Conductive Films

EMI/RFI Absorbing

Water Contact Indicator Tape

Mobile Hand-held Served by Multiple Divisions/Geographies…

800MM cell phones produced each year

3M sales for these applications currently~ $400MM

Entitlement is >$7 / Unit

Earning Content & Avoiding Commoditizationwith Value-Add, Customized, Differentiated Technology Solutions


4

> $100MM 3Business in 2006

3M Hard Disk Drive Applications1

2

Noise and Vibration Damping SolutionsContamination Removal ProductsAbrasivesInterconnects (Flex & Fixed)Tapes and SealsLabelsAdhesives

3

4

5

6

7

Customer Intimacy at “Bench-to-Bench” Keeps us in the Game…Substantial Content in HDDs Across the World


ECB Positioned for Continued Growth…








ECB Key TechnologiesESDFlex CircuitsComponent TransportInterconnect IDCs

EMMDFC FluidsInterconnect IDCsMicroabrasives Anisotropic Conductive Adhesives

EMDColdshrinkAdhesives and PVC tapesLiquid Resins

CMDFiber Optics ConnectorsHigh Density IDCsTest & MsmtDiagnostics ---

3M Investor Meeting 2006 © 3M 2006 All Rights ReservedMore than 20 of 3M’s Key Technologies Leveraged in ECB

3M Technology Platforms

MeMetalMatrix

Composites

SuSurface

Modification

FsFiltration,

Separation,Purification

DoDental &

OrthodonticMaterials

AdAdhesives

RfReclosableFasteners

AbAbrasives

DdDrug

Delivery

MrMicro-

replication

PePredictive

Engineering& Modeling

RpRadiationProcessing

AcAcoustics

DmDisplay

Materials

NmNonwovenMaterials

PmPolymer MeltProcessing

SmSpecialtyMaterials

AsApplicationSoftware

FiFilms

MdMedical

Data Mgmt

MiMicrobialDetection& Control

PoPorous

Materials &Membranes

PcPrecisionCoating

CeCeramics

EpElectronicPackaging

FlFluoro-

materials

ImImaging

IsIntegratedSystemsDesign

MoMolding

PdParticle &DispersionProcessing

PrProcess

Design &Control

WoWoundMgmt

CpChemical

PowerSources

FcFlexible

Converting/Packaging

FoFiberOptics

IpInks &

Pigments

LmLightMgmt

AmAdvancedMaterials

BiBiotech

VpVacuum

Processing

PpPrecision

Processing

NtNano

Technology

Existing Technology Base

New Technologyfor New Products


Differentiated Products Drive Growth

0

100

200

300

400

500

2004 2005 2006

($ M

illion

s)

+14%+36%

$303$76

$344$91

$468

$125

1-Year New Products 4-Year New Products

4-Yr NPI % to Sales 14% 15% 19%

ECB New Product Sales

New Product Momentum Increasing…Customer Intimacy Stronger than Ever“Go-to-Market” StructureLab Capabilities Drive Unique Solutions


New Products a Key Component of Electrical Platform Rebirth

New Products Driving GrowthElectrical Markets Example

$109

$78$67

$27

$4

10%10%

12%

6%

2%

0

20

40

60

80

100

120

2002 2003 2004 2005 2006

NPI

Sal

es ($

MM

)

0%

2%

4%

6%

8%

10%

12%

14%

Revenue G

rowth

New Product Sales Revenue Growth

# of New Product Families 2 6 15 25 37


…And Momentum is BuildingMoving Assets Closer to the CustomerAccelerating Lab Presence & Scale…Yielding IP FootholdEstablishing “Centers of Excellence” Close to Customers

ECB Revenue is 74% OUS…and Growing

ECB’s Largest Platform for Growth…ECB OUS Growth

Japan China Korea SEA EE LAC

2001 2002 2003 2004 2005

CAGR = 14

%

CAGR = 11%

CAGR = 39%

CAGR = 7%

CAGR = 7%

CAGR = 5%


Driving Asset Shift…CapEx & People

Assets Close To The Customer

$28 $22

$46 $50

$73

01020304050607080

$ M

illio

ns

2002 2003 2004 2005 2006

International CapEx

Electrical: Vinyl Coaters in Taiwan & China, Lab capabilities in APAC / Europe

Communication: NPI capabilities in APAC, Europe & Latin America

Electronics: Expanding capacity &capability in Japan, Singapore, China, Taiwan, Hong Kong

Bolstering lab resources / expertise in APAC, Europe & LAC

Transferred 2 Electronics units to Asia

Aligning 3M Electronics “Go-to-Market” across the world (U.S. sales force 7 1)

Geographical adds to support transnationals

Human Capital

143190105

165

405322

0

200

400

600

800

2005 2006Lab Mktg Mfg

570

760+33%


ECB Global Technology CentersElectronicsSolutions

Columbia,MO

Eau Claire,WI

ElectronicsMaterials

Antwerp,Belgium

Seoul,South Korea

ECB

St. Paul,MN

Austin,TX

Neuss,Germany

Singapore

Shanghai,China

Sagamihara,Japan

Communications

Pontchateau,France

Cluses,France

Brazil

Electrical

China

Brazil

Italy

Achieving Global Technical Presence


Locally Developing & Securing Unique Technologies

Protecting Our Investment

Records of Invention

2004 2005 2006

Patent Filings

2004 2005 2006

240

112

257

133

278

156122

52

149

66

184

807%

8%

22%23%

19% 17%27%

21%

…In Quantity AND QualityPatent & ROI Activity Gaining Traction OUSQuality of ROIs Increasing…51% 66% PatentsPeople Adds Building Capabilities for Growth in ’06 and Beyond

Lab Investments are Paying Off…

USOUS

ROI Yield 51% 68% 66%


Enables Sustained Growth…Close to the Customer

ECB Centers of Excellence

Static

eCabinetSemicon

OEM Tape

Regional

Global

EMI/EMC Battery Anode

PSA

Transmission Cable Acc.Transport

CMD-OSP

PSA Interconnect

Abrasives

CleaningChemicals

FTTx

BatteryMatls

FIPG

Semicon & Packaging

Flex


Replicable to Other Regions…$15MM at Deutsche Telekom Alone

Communications Network Security System

Technology Provides Unique Capability to Remotely Supervise Access Monitoring of Cabinets, Manholes & Remote Stations

Critical for Telco Infrastructure SecurityDriven by Strong Intimacy at Deutsche Telekom

Signaling & Comm. Module Manhole Sensor

RFIDTransponder

Software

Manholes

Cabinets

Control Unit

Management System

Network Application Product


Voice of Customer Dictates New Product Offerings

Existing Solution• 72 Parts• High labor

3M Proposed • Three Parts• Minimal Labor

69/72 kV Termination

Electrical High-Voltage Cable Accessories

Market segment is cable accessory products for 69+kV and 110+kV

Opportunity to expand upon existing position in medium-voltage accessories

Six Sigma identified customer pain points and new application for cold-shrink technology


Flex Technology Know-How, Combined with Strategic Acquisition

Medical Flex Application

Medical Devices are Moving Towards Microelectronics

Interconnects for Cardiac Implants, Glucose Sensors, Ultrasound, X-ray, etc.

Leveraging Acquisition of Siemens Flex to Accelerate Penetration of Medical Imaging Market

Flexible Circuits


Strong Technology & IP…Potential to be a Big Player

Lithium Ion BatterySeparators

NegativeElectrodePositive

Electrode

AluminumCase

Market for Lithium Ion Batteries is Moving to higher voltage…Need Safer,High-Performance Batteries

Lithium Ion Materials is a $1.2 Billion Market

3M Has Materials for Advanced Cathodes & Anodes, as well as Electrolyte Salts & Solutions


Migrating to Markets Where We Add Value

Selective M&AMoving Towards Complementary Acquisitions…

Adj.Markets

Medical Flex Applications

Battery Components

Transmission Cable Accessories

Siemens Flex(“Specialized Technology”)

Jese Chem(“Specialized Technology”)

High-Voltage(“Specialized Technology”)

M&A

Core

Printer / Display Flex“Strong IP”

Battery Materials“Strong IP”

Low-Voltage Accessories & Tapes

“Strong Brand / Channel”

ElectricalElectronics MaterialElectronics Solutions

End Game Full Line Medical Penetration

Battery Production (Lithium Ion)

Full Line TransmissionCable Accessories


Service Now a Positive Differentiator

ECB Service & Sales

1/3 of 2005 Growth due to Improved Service20-Point Improvement (75% in Dec ’03 95% in Aug ’05)Consistently Topping 90%...More to doCustomer Testimonials Validate Favorable Impact

73%

78%

83%

88%

93%

98%

(15%)

(10%)

(5%)

0%

5%

10%

15%

20%

25%

ECB Service ECB Sales Growth

% O

n-Ti

me

& In

-Ful

l YOY Sales G

rowth

Dec ’03

Dec’05

Step-Change Improvement in Service and

Sales


Partnering with Vendors to Respond to Continuous Cost-Down Market Dynamics

Competitiveness

6-Sigma Margin Impact

$177$173

$150

120

140

160

180

200

2004 2005 2006

$ M

illio

ns

Continued Focus on Productivity…Sourcing Savings

$34$41$38

0

10

20

30

40

50

2004 2005 2006

$ M

illio

ns

% of Sales 6.7% 7.4% 7.2% % of Buy 8% 8% 6%

Six Sigma Continues to Drive Both Savings and Growth

Productivity Ingrained in ECB Culture

Sourcing Benefits Continue Despite Headwinds


Changing Cultural Paradigms…Pay for Global Impacts with Differentiated Contributions

Incentivizing GrowthCompensation Changes toDrive Borderless Growth…

ICP Revenue

ICP Design

Revenue Geography ≠ Spec Geography

Dynamics Require “Feet on the Street”– Spec in U.S., Japan & Europe– Value capture in Asia

Implication: Pay Sales Reps for Global Revenue Generation

US10%

Other90%

US50%

Other50%

Not Perfect…but Positive Trend

…And Recognizing the Winners

IATD25%

ECB75%

Electronics Example:2006 Revenue

Reps Paid on ECB Sales Only, 10% Variable, Capped

BEFORE:

Reps Paid on Total Electronics25% Variable2X Kicker @ 101% of Plan3X Kicker @ 120% of PlanNO CAP!

NOW:


ECB Well Positioned for Sustainable Growth

Summary

Maintained Brand/Reputation, Channel Relationships & Customer Intimacy

All Businesses Contributing…Strong Core Portfolio

Effective “Go-to-Market” Structure

Differentiated Technologies / Solutions

Accelerating International Presence…Opportunities Abound

Productivity Expertise without Service Compromise

A Culture Devoted to the “Growth Mission”

ECB Portfolio Stronger than Ever…Now Positioned for Offense

oe e. harlan executive vice president, electro and communications business

Economy & Finance