3M 2008 Annual Report Download - page 11

5
products, including surface-preparation and wood-finishing materials, Command™ Adhesive Products and Filtrete™
Filters for furnaces and air conditioners; home care products, including Scotch-Brite® Scour Pads, Scotch-Brite®
Scrub Sponges, Scotch-Brite™ Microfiber Cloth products, O-Cel-O™ Sponges and Scotchgard™ Fabric Protectors;
protective material products; certain maintenance-free respirators; and Nexcare™ Adhesive Bandages.
Display and Graphics Business: The Display and Graphics segment serves markets that include electronic display,
traffic safety and commercial graphics. This segment includes optical film solutions for electronic displays; computer
screen filters; reflective sheeting for transportation safety; commercial graphics systems; and projection systems,
including mobile display technology and visual systems products.
The optical film business provides films that serve numerous market segments of the electronic display industry. 3M
provides distinct products for five market segments, including products for: 1) LCD computer monitors, 2) LCD
televisions, 3) hand-held devices such as cellular phones, 4) notebook PCs and 5) automotive displays. Other optical
products include desktop and notebook computer screen filters that address needs for light control, privacy viewing
and glare reduction. In traffic safety systems, 3M provides reflective sheetings used on highway signs, vehicle
license plates, construction work-zone devices, trucks and other vehicles, and also provides pavement marking
systems. Major commercial graphics products include films, inks, digital signage systems and related products used
to produce graphics for vehicles and signs. The projection systems business focuses on bringing technology to the
projection market, including mobile display technology in addition to its visual communication products that serve the
world’s office and education markets with overhead projectors and transparency films, as well as equipment and
materials for electronic and multimedia presentations.
Electro and Communications Business: The Electro and Communications segment serves the electrical, electronics
and communications industries, including electrical utilities; electrical construction, maintenance and repair; original
equipment manufacturer (OEM) electrical and electronics; computers and peripherals; consumer electronics;
telecommunications central office, outside plant and enterprise; as well as aerospace, military, automotive and
medical markets; with products that enable the efficient transmission of electrical power and speed the delivery of
information and ideas. Products include electronic and interconnect solutions, microinterconnect systems, high-
performance fluids, high-temperature and display tapes, telecommunications products, electrical products, and touch
screens and touch monitors.
Major electronic and electrical products include packaging and interconnection devices; high-performance fluids used
in the manufacture of computer chips, and for cooling electronics and lubricating computer hard disk drives; high-
temperature and display tapes; insulating materials, including pressure-sensitive tapes and resins; and related items.
3M™ Flexible Circuits use electronic packaging and interconnection technology, providing more connections in less
space, and are used in ink-jet print cartridges, cell phones and electronic devices. This segment serves the world’s
telecommunications companies with a wide array of products for fiber-optic and copper-based telecommunications
systems for rapid deployment in fixed and wireless networks. The 3M™ Aluminum Conductor Composite Reinforced
(ACCR) electrical power cable, with an aluminum-based metal matrix at its core, increases transmission capacity for
existing power lines. The touch systems business includes touch screens and touch monitors.
Distribution
3M products are sold through numerous distribution channels, including directly to users and through numerous
wholesalers, retailers, jobbers, distributors and dealers in a wide variety of trades in many countries around the
world. Management believes the confidence of wholesalers, retailers, jobbers, distributors and dealers in 3M and its
products — a confidence developed through long association with skilled marketing and sales representatives — has
contributed significantly to 3M’s position in the marketplace and to its growth.
Research and Patents
Research and product development constitutes an important part of 3M’s activities and has been a major driver of
3M’s sales growth. Research, development and related expenses totaled $1.404 billion in 2008, $1.368 billion in 2007
and $1.522 billion in 2006. The global branded pharmaceuticals business, which was divested in December 2006 and
January 2007, incurred research, development and related expenses of approximately $120 million in 2006. The
2006 amount also included a $95 million in-process research and development charge (discussed in Note 2) and $75
million in restructuring actions (Note 4). Research and development, covering basic scientific research and the
application of scientific advances in the development of new and improved products and their uses, totaled $851
million in 2008, $788 million in 2007 and $943 million in 2006. Related expenses primarily include technical support
provided by 3M to customers who are using existing 3M products, and internally developed patent costs, which
include costs and fees incurred to prepare, file, secure and maintain patents.