What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-10-26 compared with 2021-07-27 · 575 added, 528 removed, 1255 unchanged (47% of the section changed)

3 unchanged sentences

Three months ended

Six months ended

September 30, Nine months ended

September 30,

(Millions, except per share amounts) 2021 2020 2021 2020

Net sales $ 8,942 $ 8,350 $ 26,743 $ 23,601

Operating expenses

21 unchanged sentences

Three months ended

Six months ended

September 30, Nine months ended

September 30,

(Millions) 2021 2020 2021 2020

Net income including noncontrolling interest $ 1,437 $ 1,434 $ 4,589 $ 4,047

10 unchanged sentences

Consolidated Balance Sheet

(Dollars in millions, except per share amount)

(Dollars in millions, except per share amount) September 30,

2021 December 31,

Current assets

6 unchanged sentences

Total inventories 4,950 4,239

Prepaids 501 675

Other current assets 326 325

4 unchanged sentences

Operating lease right of use assets 840 864

Goodwill 13,597 13,802

Intangible assets — net 5,426 5,835

Other assets 2,666 2,440

Total assets $ 48,278 $ 47,344

Current liabilities

15 unchanged sentences

944,033,056 shares issued

Shares outstanding - June 30, 2021:

Shares outstanding - September 30, 2021:

Shares outstanding - December 31, 2020:

2 unchanged sentences

Treasury stock, at cost:

Shares at June 30, 2021:

( 29,673 ) ( 29,404 )

Shares at September 30, 2021:

Shares at December 31, 2020:

2 unchanged sentences

Noncontrolling interest 70 64

Total equity 14,530 12,931

Total liabilities and equity $ 48,278 $ 47,344

2 unchanged sentences

Consolidated Statement of Cash Flows

Six months ended

Nine months ended

September 30,

(Millions) 2021 2020

Cash Flows from Operating Activities

9 unchanged sentences

Accounts receivable ( 324 ) 113

Inventories ( 823 ) 43

Accounts payable 340 ( 48 )

Accrued income taxes (current and long-term) ( 41 ) 146

Other — net 212 4

Net cash provided by (used in) operating activities 5,449 5,598

6 unchanged sentences

Proceeds from sale of businesses, net of cash sold — 576

Other — net 18 8

Net cash provided by (used in) investing activities ( 1,432 ) ( 321 )

6 unchanged sentences

Dividends paid to shareholders ( 2,572 ) ( 2,540 )

Other — net ( 21 ) ( 47 )

Net cash provided by (used in) financing activities ( 3,733 ) ( 3,498 )

26 unchanged sentences

3M changed to the fair value approach for calculating market-related value for the fixed income class of plan assets, which does not involve deferring the impact of excess plan asset gains or losses in the determination of these two components of net periodic benefit cost.

3M considers the use of the fair value approach preferrable to the calculated value approach as it results in a more current reflection of impacts of changes in value of these plan assets in the determination of net periodic benefit cost.

3M considers the use of the fair value approach preferable to the calculated value approach as it results in a more current reflection of impacts of changes in value of these plan assets in the determination of net periodic benefit cost.

Additionally, given the plans’ liability-driven investment strategy whereby the changes in value of the fixed income plan assets should offset changes in the value of the plans’ liabilities, this approach more closely aligns the expected return on plan assets expense component with the value reflected in the plans’ funded status.

6 unchanged sentences

Three months ended

Six months ended

June 30, 2020

(Millions, except per share amounts)

September 30, 2020 Nine months ended

September 30, 2020

(Millions, except per share amounts) Under Prior

Method As Adjusted Under Prior

Method As Adjusted

Other expense (income), net $ 104 $ 83 $ 311 $ 248

8 unchanged sentences

Three months ended

Six months ended

June 30, 2020

September 30, 2020 Nine months ended

September 30, 2020

(Millions) Under Prior

Method As Adjusted Under Prior

Method As Adjusted

Net income including noncontrolling interest $ 1,417 $ 1,434 $ 3,998 $ 4,047

6 unchanged sentences

As of December 31, 2020

(Millions) Under Prior

Method As Adjusted

Retained earnings $ 43,761 $ 43,821

1 unchanged sentence

Consolidated Statement of Cash Flows

Six months ended

June 30, 2020

Nine months ended

September 30, 2020

(Millions) Under Prior

Method As Adjusted

Net income including noncontrolling interest $ 3,998 $ 4,047

Company pension and postretirement expense 295 232

Other — net ( 10 ) 4

The cumulative adjustment as of January 1, 2020, the beginning of the earliest period presented in the consolidated financial statements included herein, was a $ 5 million reduction to each of retained earnings and accumulated other comprehensive loss.

1 unchanged sentence

The difference in the weighted average 3M shares outstanding for calculating basic and diluted earnings per share attributable to 3M common shareholders is a result of the dilution associated with the Company’s stock-based compensation plans.

Certain options outstanding under these stock-based compensation plans were not included in the computation of diluted earnings per share attributable to 3M common shareholders because they would have had an anti-dilutive effect ( 6.3 million average options for the three months ended June 30, 2021;

7.5 million average options for the six months ended June 30, 2021;

20.9 million average options for the

three months ended June 30, 2020;

20.0 million average options for the six months ended June 30, 2020).

Certain options outstanding under these stock-based compensation plans were not included in the computation of diluted earnings per share attributable to 3M common shareholders because they would have had an anti-dilutive effect of 7.9 million average options for the three months ended September 30, 2021;

7.7 million average options for the nine months ended September 30, 2021;

18.8 million average options for the three months ended September 30, 2020;

19.6 million average options for the nine months ended September 30, 2020).

The computations for basic and diluted earnings per share follow:

1 unchanged sentence

Three months ended

Six months ended

September 30, Nine months ended

September 30,

(Amounts in millions, except per share amounts) 2021 2020 2021 2020

1 unchanged sentence

Denominator for weighted average 3M common shares outstanding – basic

579.6 577.8 580.3 577.2

Dilution associated with the Company’s stock-based compensation plans 6.7 4.6 6.8 4.4

Denominator for weighted average 3M common shares outstanding – diluted

586.3 582.4 587.1 581.6

Earnings per share attributable to 3M common shareholders – basic

$ 2.47 $ 2.47 $ 7.90 $ 7.01

Earnings per share attributable to 3M common shareholders – diluted

$ 2.45 $ 2.45 $ 7.81 $ 6.95

New Accounting Pronouncements

1 unchanged sentence

Standards Adopted During the Current Fiscal Year

Relevant Description

Effective Date for 3M

Impact and Other Matters

Standard Relevant Description Effective Date for 3M Impact and Other Matters

2019-12, Simplifying the Accounting for Income Taxes (Topic 740)

Eliminates certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for transactions outside of business combination that result in a step-up in the tax basis of goodwill.

January 1, 2021

Adoption of this ASU did not have a material impact on 3M’s consolidated results of operations and financial condition.

January 1, 2021 Adoption of this ASU did not have a material impact on 3M’s consolidated results of operations and financial condition.

2020-01, Clarifying the Interactions between Topic 321, Investments—Equity Securities, Topic 323, Investments—Equity Method and Joint Ventures, and Topic 815, Derivatives and Hedging

1 unchanged sentence

Indicates when determining the accounting for certain derivatives, a Company should not consider if the underlying securities would be accounted for under the equity method or fair value option.

January 1, 2021

Adoption of this ASU did not have a material impact on 3M’s consolidated results of operations and financial condition.

January 1, 2021 Adoption of this ASU did not have a material impact on 3M’s consolidated results of operations and financial condition.

2020-04, Reference Rate Reform (Topic 848):

3 unchanged sentences

Provides temporary optional expedients and exceptions to existing guidance on contract modifications and hedge accounting to facilitate the market transition from existing reference rates, such as LIBOR which is being phased out beginning at the end of 2021, to alternate reference rates, such as SOFR.

Effective upon ASUs’ issuances in 2020 & 2021

Effective upon ASU issuances in 2020 & 2021

With the beginning of the phase out of LIBOR at the end of 2021, 3M continues to evaluate commercial contracts that may utilize LIBOR and will continue to monitor developments during the LIBOR transition period.

1 unchanged sentence

Deferred revenue primarily relates to revenue that is recognized over time for one-year software license contracts.

Deferred revenue (current portion) as of June 30, 2021 and December 31, 2020 was $ 475 million and $ 498 million, respectively.

Approximately $ 140 million and $ 320 million of the December 31, 2020 balance was recognized as revenue during the three and six months ended June 30,

2021, respectively, while approximately $ 110 million and $ 270 million of the December 31, 2019 balance was recognized as revenue during the three and six months ended June 30, 2020, respectively.

Deferred revenue (current portion) as of September 30, 2021 and December 31, 2020 was $ 467 million and $ 498 million, respectively.

Approximately $ 90 million and $ 410 million of the December 31, 2020 balance was recognized as revenue during the three and nine months ended September 30, 2021, respectively, while approximately $ 100 million and $ 370 million of the December 31, 2019 balance was recognized as revenue during the three and nine months ended September 30, 2020, respectively.

Operating Lease Revenue:

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 145 million and $ 133 million during the three months ended June 30, 2021 and 2020, respectively, and $ 285 million and $ 275 million during the six months ended June 30, 2021 and 2020.

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 148 million and $ 153 million during the three months ended September 30, 2021 and 2020, respectively, and $ 433 million and $ 428 million during the nine months ended September 30, 2021 and 2020.

Disaggregated revenue information:

1 unchanged sentence

Three months ended

Six months ended

September 30, Nine months ended

September 30,

Net Sales (Millions) 2021 2020 2021 2020

Abrasives $ 362 $ 289 $ 1,067 $ 861

Automotive Aftermarket 314 308 939 794

9 unchanged sentences

Commercial Solutions 457 391 1,349 1,148

Electronics 1,000 1,025 3,040 2,772

Transportation Safety 250 245 727 678

2 unchanged sentences

Drug Delivery — — — 146

Food Safety 96 83 279 252

Health Information Systems 309 280 897 833

Medical Solutions 1,241 1,251 3,783 3,471

Oral Care 359 320 1,086 741

Separation and Purification Sciences 244 221 733 639

2 unchanged sentences

Consumer Health and Safety 152 139 465 431

Home Care 278 268 829 796

Home Improvement 699 644 1,988 1,711

5 unchanged sentences

Total Company $ 8,942 $ 8,350 $ 26,743 $ 23,601

Three months ended June 30, 2021

Net Sales (Millions)

Europe, Middle East and Africa

Other Unallocated

Three months ended September 30, 2021

Net Sales (Millions) Americas Asia Pacific Europe, Middle

East and Africa Other

Unallocated Worldwide

Safety and Industrial $ 1,710 $ 828 $ 698 $ ( 1 ) $ 3,235

Transportation and Electronics 728 1,367 355 — 2,450

Health Care 1,357 425 467 — 2,249

Consumer 1,135 241 149 — 1,525

Corporate and Unallocated 1 — 1 1 3

1 unchanged sentence

Total Company $ 4,692 $ 2,642 $ 1,608 $ — $ 8,942

Six months ended June 30, 2021

Net Sales (Millions)

Europe, Middle East and Africa

Other Unallocated

Nine months ended September 30, 2021

Net Sales (Millions) Americas Asia Pacific Europe, Middle

East and Africa Other

Unallocated Worldwide

Safety and Industrial $ 5,077 $ 2,465 $ 2,275 $ ( 1 ) $ 9,816

Transportation and Electronics 2,096 4,239 1,129 ( 1 ) 7,463

Health Care 4,001 1,263 1,512 ( 1 ) 6,775

Consumer 3,165 765 450 — 4,380

Corporate and Unallocated 1 — 1 — 2

1 unchanged sentence

Total Company $ 13,602 $ 8,066 $ 5,077 $ ( 2 ) $ 26,743

Three months ended June 30, 2020

Net Sales (Millions)

Europe, Middle East and Africa

Other Unallocated

Three months ended September 30, 2020

Net Sales (Millions) Americas Asia Pacific Europe, Middle

East and Africa Other

Unallocated Worldwide

Safety and Industrial $ 1,618 $ 702 $ 696 $ 1 $ 3,017

Transportation and Electronics 641 1,358 317 — 2,316

Health Care 1,335 377 447 1 2,160

Consumer 1,032 231 148 1 1,412

Corporate and Unallocated — — — ( 2 ) ( 2 )

1 unchanged sentence

Total Company $ 4,347 $ 2,474 $ 1,528 $ 1 $ 8,350

Six months ended June 30, 2020

Net Sales (Millions)

Europe, Middle East and Africa

Other Unallocated

Nine months ended September 30, 2020

Net Sales (Millions) Americas Asia Pacific Europe, Middle

East and Africa Other

Unallocated Worldwide

Safety and Industrial $ 4,500 $ 2,063 $ 2,038 $ — $ 8,601

Transportation and Electronics 1,848 3,711 933 — 6,492

Health Care 3,690 1,091 1,306 — 6,087

Consumer 2,801 697 395 — 3,893

Corporate and Unallocated ( 1 ) — — — ( 1 )

1 unchanged sentence

Total Company $ 12,122 $ 7,029 $ 4,450 $ — $ 23,601

Americas included United States net sales to customers of $ 3.8 billion and $ 3.1 billion for the three months ended June 30, 2021 and 2020, respectively, and $ 7.4 billion and $ 6.6 billion for the six months ended June 30, 2021 and 2020, respectively.

Americas included United States net sales to customers of $ 3.9 billion and $ 3.7 billion for the three months ended September 30, 2021 and 2020, respectively, and $ 11.3 billion and $ 10.2 billion for the nine months ended September 30, 2021 and 2020, respectively.

Acquisitions and Divestitures

4 unchanged sentences

2021 acquisitions:

There were no acquisitions that closed during the six months ended June 30, 2021.

There were no acquisitions that closed during the nine months ended September 30, 2021.

2020 acquisitions:

3 unchanged sentences

2021 divestitures:

There were no divestitures that closed during the six months ended June 30, 2021.

There were no divestitures that closed during the nine months ended September 30, 2021.

2020 divestitures:

1 unchanged sentence

Operating income and held for sale amounts:

The aggregate operating income of applicable businesses held for sale with respect to the first six months of 2020 was $ 38 million.

The aggregate operating income of applicable businesses held for sale with respect to the first nine months of 2020 was $ 40 million.

Goodwill and Intangible Assets

There was no goodwill recorded from acquisitions during the first six months of 2021.

There was no goodwill recorded from acquisitions during the first nine months of 2021.

The amounts in the “Translation and other” row in the following table primarily relate to changes in foreign currency exchange rates.

The goodwill balance by business segment as of December 31, 2020 and June 30, 2021, follow:

Safety and Industrial

Transportation and Electronics

Total Company

The goodwill balance by business segment as of December 31, 2020 and September 30, 2021, follow:

(Millions) Safety and Industrial Transportation and

Electronics Health Care Consumer Total Company

Balance as of December 31, 2020

$ 4,687 $ 1,858 $ 6,992 $ 265 $ 13,802

Translation and other ( 43 ) ( 21 ) ( 133 ) ( 8 ) ( 205 )

Balance as of June 30, 2021

Balance as of September 30, 2021

$ 4,644 $ 1,837 $ 6,859 $ 257 $ 13,597

Accounting standards require that goodwill be tested for impairment annually and between annual tests in certain circumstances such as a change in reporting units or the testing of recoverability of a significant asset group within a reporting unit.

3 unchanged sentences

Acquired Intangible Assets

The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets, as of June 30, 2021, and December 31, 2020, follow:

The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets, as of September 30, 2021, and December 31, 2020, follow:

(Millions) September 30,

2021 December 31,

Customer related intangible assets $ 4,229 $ 4,280

Patents 516 537

Other technology-based intangible assets 2,112 2,114

13 unchanged sentences

As discussed in Note 13, 3M reflected an immaterial charge related to impairment of certain indefinite-lived assets in the first quarter of 2020.

Amortization expense for the three and six months ended June 30, 2021 and 2020 follows:

Amortization expense for the three and nine months ended September 30, 2021 and 2020 follows:

Three months ended

Six months ended

September 30, Nine months ended

September 30,

(Millions) 2021 2020 2021 2020

Amortization expense $ 131 $ 137 $ 398 $ 405

Expected amortization expense for acquired amortizable intangible assets recorded as of June 30, 2021:

Expected amortization expense for acquired amortizable intangible assets recorded as of September 30, 2021:

(Millions) Remainder of 2021 2022 2023 2024 2025 2026 After

Amortization expense $ 131 $ 514 $ 486 $ 458 $ 428 $ 420 $ 2,334

The preceding expected amortization expense is an estimate.

Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets,

accelerated amortization of intangible assets and other events.

Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets, accelerated amortization of intangible assets and other events.

3M expenses the costs incurred to renew or extend the term of intangible assets.

4 unchanged sentences

During the fourth quarter of 2020, management approved and committed to undertake associated restructuring actions impacting approximately 2,100 positions resulting in a pre-tax charge of $ 137 million.

In the first six months of 2021, management approved and committed to undertake additional actions under this initiative resulting in a pre-tax charge of $ 14 million and $ 43 million in the first and second quarter of 2021, respectively.

In the first nine months of 2021, management approved and committed to undertake additional actions under this initiative resulting in pre-tax charges of $ 14 million, $ 43 million, and $ 50 million in the first, second, and third quarters of 2021, respectively.

Remaining activities related to the restructuring actions approved and committed under this initiative are expected to be largely completed through the first quarter of 2022.

3M expects further actions under this initiative through 2021.

This aggregate initiative, begun in 2020 and continuing through 2021, is expected to impact approximately 2,900 positions worldwide with an expected pre-tax charge of $ 250 to $ 300 million over that period.

The related first six months of 2021 restructuring charges were recorded in the income statement as follows:

First Six Months of 2021

3M expects further actions under this initiative through early 2022.

This aggregate initiative, begun in 2020 and continuing through early 2022, is expected to impact approximately 3,100 positions worldwide with an expected pre-tax charge of $ 300 million to $ 325 million over that period.

The related first nine months of 2021 restructuring charges were recorded in the income statement as follows:

(Millions) First Nine Months of 2021

Cost of sales $ 18

3 unchanged sentences

The business segment operating income impact of these restructuring charges is summarized as follows:

First Six Months of 2021

Employee-Related

First Nine Months of 2021

(Millions) Employee-Related

Safety and Industrial $ 28

Transportation and Electronics 23

Health Care 18

Corporate and Unallocated 32

1 unchanged sentence

Restructuring actions, including cash and non-cash impacts, follow:

Employee-Related

Accrued restructuring action balances as of December 31, 2020

(Millions) Employee-Related

Accrued restructuring action balance as of December 31, 2020 $ 101

Incremental expense incurred in the first quarter of 2021 14

Incremental expense incurred in the second quarter of 2021 43

Incremental expense incurred in the third quarter of 2021 50

Cash payments ( 94 )

Accrued restructuring action balances as of June 30, 2021

Adjustments ( 8 )

Accrued restructuring action balances as of September 30, 2021

Divestiture-Related Restructuring

2 unchanged sentences

Divestiture-related restructuring actions, including cash and non-cash impacts, follow:

Employee-Related

Asset-Related and Other

(Millions) Employee-Related Asset-Related and Other Total

Accrued divestiture-related restructuring action balances as of December 31, 2020

$ 15 $ 9 $ 24

Cash payments ( 5 ) — ( 5 )

Adjustments ( 1 ) — ( 1 )

Accrued divestiture-related restructuring action balances as of June 30, 2021 $ 9 $ 9 $ 18

Remaining activities related to this divestiture-related restructuring are expected to be largely completed through the third quarter of 2021.

Remaining activities related to this divestiture-related restructuring were largely completed in the third quarter of 2021.

Other Restructuring

2 unchanged sentences

Restructuring actions, including cash and non-cash impacts, follow:

Employee-Related

(Millions) Employee-Related

Accrued restructuring action balances as of December 31, 2020

Cash payments ( 4 )

Adjustments ( 9 )

Accrued restructuring action balances as of March 31, 2021 $ 11

3 unchanged sentences

Three months ended

Six months ended

September 30, Nine months ended

September 30,

(Millions) 2021 2020 2021 2020

Interest expense $ 117 $ 128 $ 370 $ 388

1 unchanged sentence

Pension and postretirement net periodic benefit cost (benefit) ( 80 ) ( 40 ) ( 239 ) ( 116 )

Total $ 31 $ 83 $ 113 $ 248

Interest expense includes an early debt extinguishment pre-tax charge of approximately $ 11 million in the first quarter of 2021.

2 unchanged sentences

Supplemental Equity and Comprehensive Income Information

Cash dividends declared and paid totaled $ 1.48 and $ 1.47 per share for the first and second quarters 2021 and 2020, respectively, or $ 2.96 and $ 2.94 per share for the first six months of 2021 and 2020, respectively.

Cash dividends declared and paid totaled $ 1.48 and $ 1.47 per share for the first, second, and third quarters of 2021 and 2020, respectively, or $ 4.44 and $ 4.41 per share for the first nine months of 2021 and 2020, respectively.

Consolidated Changes in Equity

Three months ended June 30, 2021

Three months ended September 30, 2021

3M Company Shareholders

(Millions) Total Common

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Balance at March 31, 2021

Balance at June 30, 2021 $ 14,516 $ 6,346 $ 44,824 $ ( 29,236 ) $ ( 7,486 ) $ 68

Net income 1,437 1,434 3

Other comprehensive income (loss), net of tax:

7 unchanged sentences

Issuances pursuant to stock option and benefit plans 85 ( 41 ) 126

Balance at June 30, 2021

Six months ended June 30, 2021

Balance at September 30, 2021

$ 14,530 $ 6,392 $ 45,361 $ ( 29,673 ) $ ( 7,620 ) $ 70

Nine months ended September 30, 2021

3M Company Shareholders

(Millions) Total Common

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Balance at December 31, 2020

$ 12,931 $ 6,171 $ 43,821 $ ( 29,404 ) $ ( 7,721 ) $ 64

Net income 4,589 4,582 7

Other comprehensive income (loss), net of tax:

7 unchanged sentences

Issuances pursuant to stock option and benefit plans 566 ( 470 ) 1,036

Balance at June 30, 2021

Three months ended June 30, 2020

Balance at September 30, 2021

$ 14,530 $ 6,392 $ 45,361 $ ( 29,673 ) $ ( 7,620 ) $ 70

Three months ended September 30, 2020

3M Company Shareholders

(Millions) Total Common

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Balance at March 31, 2020

Balance at June 30, 2020 $ 10,925 $ 6,083 $ 42,786 $ ( 29,699 ) $ ( 8,303 ) $ 58

Net income 1,434 1,430 4

Other comprehensive income (loss), net of tax:

4 unchanged sentences

Dividends declared ( 847 ) ( 847 )

Purchase of subsidiary shares

Stock-based compensation 42 42

1 unchanged sentence

Issuances pursuant to stock option and benefit plans 90 ( 40 ) 130

Balance at June 30, 2020

Six months ended June 30, 2020

Balance at September 30, 2020

$ 11,959 $ 6,125 $ 43,329 $ ( 29,570 ) $ ( 7,988 ) $ 63

Nine months ended September 30, 2020

3M Company Shareholders

(Millions) Total Common

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Balance at December 31, 2019

$ 10,126 $ 5,916 $ 42,130 $ ( 29,849 ) $ ( 8,134 ) $ 63

Net income 4,047 4,044 3

Other comprehensive income (loss), net of tax:

8 unchanged sentences

Issuances pursuant to stock option and benefit plans 331 ( 305 ) 636

Balance at June 30, 2020

Balance at September 30, 2020

$ 11,959 $ 6,125 $ 43,329 $ ( 29,570 ) $ ( 7,988 ) $ 63

Changes in Accumulated Other Comprehensive Income (Loss) Attributable to 3M by Component

Three months ended June 30, 2021

Defined Benefit

Three months ended September 30, 2021

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

Income (Loss)

Balance at March 31, 2021, net of tax:

Balance at June 30, 2021, net of tax:

$ ( 1,502 ) $ ( 5,858 ) $ ( 126 ) $ ( 7,486 )

Other comprehensive income (loss), before tax:

2 unchanged sentences

Total other comprehensive income (loss), before tax ( 286 ) 158 62 ( 66 )

Tax effect ( 15 ) ( 39 ) ( 14 ) ( 68 )

Total other comprehensive income (loss), net of tax ( 301 ) 119 48 ( 134 )

Balance at June 30, 2021, net of tax:

Six months ended June 30, 2021

Defined Benefit

Balance at September 30, 2021, net of tax:

$ ( 1,803 ) $ ( 5,739 ) $ ( 78 ) $ ( 7,620 )

Nine months ended September 30, 2021

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

1 unchanged sentence

Balance at December 31, 2020, net of tax:

$ ( 1,450 ) $ ( 6,098 ) $ ( 173 ) $ ( 7,721 )

Other comprehensive income (loss), before tax:

2 unchanged sentences

Total other comprehensive income (loss), before tax ( 303 ) 477 123 297

Tax effect ( 50 ) ( 118 ) ( 28 ) ( 196 )

Total other comprehensive income (loss), net of tax ( 353 ) 359 95 101

Balance at June 30, 2021, net of tax:

Three months ended June 30, 2020

Defined Benefit

Balance at September 30, 2021, net of tax:

$ ( 1,803 ) $ ( 5,739 ) $ ( 78 ) $ ( 7,620 )

Three months ended September 30, 2020

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

Income (Loss)

Balance at March 31, 2020, net of tax:

Balance at June 30, 2020, net of tax:

$ ( 2,234 ) $ ( 6,049 ) $ ( 20 ) $ ( 8,303 )

Other comprehensive income (loss), before tax:

2 unchanged sentences

Total other comprehensive income (loss), before tax 237 149 ( 93 ) 293

Tax effect 33 ( 33 ) 22 22

Total other comprehensive income (loss), net of tax 270 116 ( 71 ) 315

Balance at June 30, 2020, net of tax:

Six months ended June 30, 2020

Defined Benefit

Balance at September 30, 2020, net of tax:

$ ( 1,964 ) $ ( 5,933 ) $ ( 91 ) $ ( 7,988 )

Nine months ended September 30, 2020

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

1 unchanged sentence

Balance at December 31, 2019, net of tax:

$ ( 1,899 ) $ ( 6,204 ) $ ( 31 ) $ ( 8,134 )

Other comprehensive income (loss), before tax:

2 unchanged sentences

Total other comprehensive income (loss), before tax ( 98 ) 366 ( 78 ) 190

Tax effect 33 ( 95 ) 18 ( 44 )

Total other comprehensive income (loss), net of tax ( 65 ) 271 ( 60 ) 146

Balance at June 30, 2020, net of tax

Income taxes are not provided for foreign translation relating to permanent investments in international subsidiaries, but tax effects within cumulative translation does include impacts from items such as net investment hedge transactions.

Balance at September 30, 2020, net of tax

$ ( 1,964 ) $ ( 5,933 ) $ ( 91 ) $ ( 7,988 )

Income taxes are not provided for foreign translation relating to permanent investments in international subsidiaries, but tax effects within cumulative translation do include impacts from items such as net investment hedge transactions.

Reclassification adjustments are made to avoid double counting in comprehensive income items that are subsequently recorded as part of net income.

Reclassifications out of Accumulated Other Comprehensive Income Attributable to 3M

Amount Reclassified from

Details about Accumulated Other

Accumulated Other Comprehensive Income

Comprehensive Income Components

Three months ended June 30,

Six months ended June 30,

Location on Income

Comprehensive Income Components Amount Reclassified from

Accumulated Other Comprehensive Income Location on Income

Three months ended September 30, Nine months ended September 30,

(Millions) 2021 2020 2021 2020

Defined benefit pension and postretirement plans adjustments

Gains (losses) associated with defined benefit pension and postretirement plans amortization

Transition asset

Prior service benefit

Net actuarial loss

Curtailments/Settlements

Transition asset $ ( 1 ) $ ( 1 ) $ ( 2 ) $ ( 2 ) See Note 11

Prior service benefit 15 15 45 46 See Note 11

Net actuarial loss ( 172 ) ( 162 ) ( 518 ) ( 487 ) See Note 11

Curtailments/Settlements — ( 1 ) ( 2 ) ( 3 ) See Note 11

Total before tax ( 158 ) ( 149 ) ( 477 ) ( 446 )

Provision for income taxes

Tax effect 39 33 118 108 Provision for income taxes

Net of tax ( 119 ) ( 116 ) ( 359 ) ( 338 )

Cash flow hedging instruments gains (losses)

Foreign currency forward/option contracts

Cost of sales

Interest rate contracts

Interest expense

Foreign currency forward/option contracts ( 15 ) 23 ( 32 ) 74 Cost of sales

Interest rate contracts ( 3 ) ( 2 ) ( 7 ) ( 6 ) Interest expense

Total before tax ( 18 ) 21 ( 39 ) 68

Provision for income taxes

Tax effect 4 ( 5 ) 9 ( 16 ) Provision for income taxes

Net of tax ( 14 ) 16 ( 30 ) 52

Total reclassifications for the period, net of tax $ ( 133 ) $ ( 100 ) $ ( 389 ) $ ( 286 )

The IRS has completed its field examination of the Company’s U.S.

federal income tax returns through 2018, but the years 2005 through 2017 have not closed as the Company is in the process of resolving issues identified during those examinations.

In addition to the U.S.

federal examination, there is also audit activity in several U.S.

state and foreign jurisdictions where the Company is subject to ongoing tax examinations and governmental assessments, which could be impacted by evolving political environments in those jurisdictions.

As of June 30, 2021, no taxing authority proposed significant adjustments to the Company’s tax positions for which the Company is not adequately reserved.

It is reasonably possible that the amount of unrecognized tax benefits could significantly change within the next 12 months.

The effective tax rate for the third quarter of 2021 was 18.4 percent, compared to 21.5 percent in the third quarter of 2020, a decrease of 3.1 percentage points.

The effective tax rate for the first nine months of 2021 was 18.8 percent compared to 20.1 percent in the first nine months of 2020, a decrease of 1.3 percentage points.

The primary factor that decreased the Company’s effective tax rate was favorable adjustments in 2021 related to impacts of U.S.

international tax provisions.

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of September 30, 2021 and December 31, 2020 are $ 1,105 million and $ 1,145 million, respectively.

It is reasonably possible that the amount of

unrecognized tax benefits could significantly change within the next 12 months.

At this time, the Company is not able to estimate the range by which these potential events could impact 3M’s unrecognized tax benefits in the next 12 months.

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June 30, 2021 and December 31, 2020 are $ 1,090 million and $ 1,145 million, respectively.

As of June 30, 2021 and December 31, 2020, the Company had valuation allowances of $ 150 million and $ 135 million on its deferred tax assets, respectively.

The effective tax rate for the second quarter and first six months of 2021 was 21.5 percent and 18.9 percent, respectively, largely consistent with 21.0 percent and 19.3 percent for the same periods, respectively, in prior year.

As of September 30, 2021 and December 31, 2020, the Company had valuation allowances of $ 158 million and $ 135 million on its deferred tax assets, respectively.

Marketable Securities

1 unchanged sentence

The following is a summary of amounts recorded on the Consolidated Balance Sheet for marketable securities (current and non-current).

June 30, 2021

December 31, 2020

(Millions) September 30, 2021 December 31, 2020

Corporate debt securities $ — $ 7

7 unchanged sentences

Total marketable securities $ 885 $ 434

At June 30, 2021 and December 31, 2020, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material.

The balances at June 30, 2021 for marketable securities by contractual maturity are shown below.

At September 30, 2021 and December 31, 2020, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material.

The balances at September 30, 2021 for marketable securities by contractual maturity are shown below.

Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

June 30, 2021

(Millions) September 30, 2021

Due in one year or less $ 855

6 unchanged sentences

This charge reflected the differential between the carrying value and the amount paid to reacquire the notes and related expenses.

In the second quarter of 2021, 3M entered into interest rate swaps with a notional amount of $ 650 million.

During the second and third quarters of 2021, 3M entered into interest rate swaps with an aggregate notional amount of $ 800 million.

These swaps converted $ 500 million and $ 300 million of 3M’s $ 1.0 billion and $ 650 million principal amount of fixed rate notes due 2049 and 2050, respectively, into floating rate debt for the portion of their terms through mid-2028 with an interest rate based on a three-month LIBOR index.

2020 issuances, maturities, and extinguishments of short- and long-term debt are described in Note 5 in 3M’s 2020 Annual Report on Form 10-K.

The Company had no commercial paper outstanding at June 30, 2021 and December 31, 2020.

The Company had no commercial paper outstanding at September 30, 2021 and December 31, 2020.

Future Maturities of Long-term Debt

Maturities of long-term debt in the table below reflect the impact of put provisions associated with certain debt instruments and are net of the unaccreted debt issue costs such that total maturities equal the carrying value of long-term debt as of June 30, 2021.

The maturities of long-term debt for the periods subsequent to June 30, 2021 are as follows (in millions):

Maturities of long-term debt in the table below reflect the impact of put provisions associated with certain debt instruments and are net of the unamortized debt issue costs such that total maturities equal the carrying value of long-term debt as of September 30, 2021.

The maturities of long-term debt for the periods subsequent to September 30, 2021 are as follows (in millions):

2022 2023 2024 2025 2026 After

$ 754 $ 1,253 $ 1,942 $ 1,100 $ 1,792 $ 1,511 $ 9,797 $ 18,149

Pension and Postretirement Benefit Plans

5 unchanged sentences

and research, development and related expenses.

The other components of net periodic benefit cost are reflected in other

expense (income), net.

Components of net periodic benefit cost and other supplemental information for the three and six months ended June 30, 2021 and 2020 follow:

The other components of net periodic benefit cost are reflected in other expense (income), net.

Components of net periodic benefit cost and other supplemental information for the three and nine months ended September 30, 2021 and 2020 follow:

Benefit Plan Information

Three months ended June 30,

Three months ended September 30,

Qualified and Non-qualified

Pension Benefits

Postretirement

United States

International

Pension Benefits Postretirement

United States International

(Millions) 2021 2020 2021 2020 2021 2020

Net periodic benefit cost (benefit)

Operating expense

Service cost $ 72 $ 66 $ 41 $ 39 $ 12 $ 11

Non-operating expense

7 unchanged sentences

Total net periodic benefit cost (benefit) $ 24 $ 44 $ 12 $ 21 $ 9 $ 11

Six months ended June 30,

Nine months ended September 30,

Qualified and Non-qualified

Pension Benefits

Postretirement

United States

International

Pension Benefits Postretirement

United States International

(Millions) 2021 2020 2021 2020 2021 2020

Net periodic benefit cost (benefit)

Operating expense

Service cost $ 216 $ 197 $ 125 $ 115 $ 35 $ 33

Non-operating expense

7 unchanged sentences

Total net periodic benefit cost (benefit) $ 72 $ 134 $ 36 $ 61 $ 29 $ 34

For the six months ended June 30, 2021 contributions totaling $ 83 million were made to the Company’s U.S.

For the nine months ended September 30, 2021 contributions totaling $ 118 million were made to the Company’s U.S.

and international pension plans and $ 3 million to its postretirement plans.

5 unchanged sentences

The Company uses interest rate swaps, currency swaps, and forward and option contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity price fluctuations.

The information that follows explains the various types of derivatives and financial instruments used by 3M, how and why 3M uses such instruments, how such instruments are accounted for, and how such instruments impact 3M’s financial position and performance.

Note 14 in 3M's 2020 Annual Report on Form 10-K explains the types of derivatives and financial instruments used by 3M, how and why 3M uses such instruments, and how such instruments are accounted for.It also contains information regarding previously initiated contracts or instruments.

Additional information with respect to derivatives is included elsewhere as follows:

2 unchanged sentences

• Derivatives and/or hedging instruments associated with the Company’s long-term debt are described in Note 12 in 3M’s 2020 Annual Report on Form 10-K.

Types of Derivatives/Hedging Instruments and Inclusion in Income/Other Comprehensive Income

Refer to the section below titled Statement of Income Location and Impact of Cash Flow and Fair Value Derivative Instruments and Derivatives Not Designated as Hedging Instruments for details on the location within the consolidated statements of income for amounts of gains and losses related to derivative instruments designated as cash flow or fair value hedges (along with similar information relative to the hedged items) and derivatives not designated as hedging instruments.

Additional information relative to cash flow hedges, fair value hedges, net investment hedges and derivatives not designated as hedging instruments is included below as applicable.

Cash Flow Hedges:

For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings.

Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized in current earnings.

Cash Flow Hedging - Foreign Currency Forward and Option Contracts:

The Company enters into foreign exchange forward and option contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies.

These transactions are designated as cash flow hedges.

The settlement or extension of these derivatives will result in reclassifications (from accumulated other comprehensive income) to earnings in the period during which the hedged transactions affect earnings.

3M may dedesignate these cash flow hedge relationships in advance of the occurrence of the forecasted transaction.

The portion of gains or losses on the derivative instrument previously included in accumulated other comprehensive income for dedesignated hedges remains in accumulated other comprehensive income until the forecasted transaction occurs or becomes probable of not occurring.

Changes in the value of derivative instruments after dedesignation are recorded in earnings and are included in the Derivatives Not Designated as Hedging Instruments section below.

The maximum length of time over which 3M hedges its exposure to the variability in future cash flows of the forecasted transactions is 36 months .

Cash Flow Hedging - Interest Rate Contracts:

The Company may use forward starting interest rate contracts and treasury rate lock contracts to hedge exposure to variability in cash flows from interest payments on forecasted debt issuances.

The amortization of gains and losses on forward starting interest rate swaps is included in the tables below as part of the gain/(loss) reclassified from accumulated other comprehensive income into income.

Additional information regarding previously issued but terminated interest rate contracts, which have related balances within accumulated other comprehensive income being amortized over the underlying life of related debt, can be found in Note 14 in 3M’s 2020 Annual Report on Form 10-K.

As of June 30, 2021, the Company had a balance of $ 126 million associated with the after-tax net unrealized loss associated with cash flow hedging instruments recorded in accumulated other comprehensive income.

As of September 30, 2021, the Company had a balance of $ 78 million associated with the after-tax net unrealized loss associated with cash flow hedging instruments recorded in accumulated other comprehensive income.

This includes a remaining balance of $ 102 million (after-tax loss) related to the forward starting interest rate swap and treasury rate lock contracts, which will be amortized over the respective lives of the notes.

Based on exchange rates as of June 30, 2021, 3M expects to reclassify approximately $ 30 million over the next 12 months, $ 24 million over the remainder of 2021, $ 10 million in 2022 and $ 92 after 2022 of the after-tax net unrealized cash flow hedging losses to earnings (with the impact offset by earnings/losses from underlying hedged items).

The location in the consolidated statements of income and comprehensive income and amounts of gains and losses related to derivative instruments designated as cash flow hedges are provided in the following table.

Reclassifications of amounts from accumulated other comprehensive income into income include accumulated gains (losses) on dedesignated hedges at the time earnings are impacted by the forecasted transactions.

Pretax Gain (Loss) Recognized in Other

Pretax Gain (Loss) Reclassified from Accumulated

Comprehensive Income on Derivative

Other Comprehensive Income into Income

Three months ended June 30,

Foreign currency forward/option contracts

Cost of sales

Interest rate contracts

Interest expense

Six months ended June 30,

Based on exchange rates as of September 30, 2021, of the total after-tax net unrealized balance as of September 30, 2021, 3M expects to reclassify approximately $ 4 million after-tax net unrealized gain over the next 12 months (with the impact offset by earnings/losses from underlying hedged items).

The amount of pretax gain (loss) recognized in other comprehensive income related to derivative instruments designated as cash flow hedges is provided in the following table.

Pretax Gain (Loss) Recognized in Other Comprehensive Income on Derivative

Three months ended September 30, Nine months ended September 30,

(Millions) 2021 2020 2021 2020

Foreign currency forward/option contracts $ 44 $ ( 72 ) $ 84 $ ( 8 )

Cost of sales

Interest rate contracts — — — ( 2 )

Interest expense

Total $ 44 $ ( 72 ) $ 84 $ ( 10 )

Fair Value Hedges:

For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivatives as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings.

Fair Value Hedging - Interest Rate Swaps:

The Company manages interest expense using a mix of fixed and floating rate debt.

To help manage borrowing costs, the Company may enter into interest rate swaps.

Under these arrangements, the Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount.

The mark-to-market of these fair value hedges is recorded as gains or losses in interest expense and is offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense.

Additional information regarding designated interest rate swaps can be found in Note 14 in 3M’s 2020 Annual Report on Form 10-K.

In the second quarter of 2021, 3M entered into interest rate swaps with a notional amount of $ 650 million.

During the second and third quarters of 2021, 3M entered into interest rate swaps with an aggregate notional amount of $ 800 million.

Refer to the section below titled Statement of Income Location and Impact of Cash Flow and Fair Value Derivative Instruments for details on the location within the consolidated statements of income for amounts of gains and losses related to derivative instruments designated as fair value hedges and similar information relative to the hedged items for the three and six months ended June 30, 2021 and 2020.

The following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges:

Cumulative Amount of Fair Value Hedging

Carrying Value of the

Adjustment Included in the Carrying Value

Hedged Liabilities

of the Hedged Liabilities

Location on the Consolidated Balance Sheet

June 30, 2021

December 31, 2020

June 30, 2021

December 31, 2020

(Millions) Carrying Value of the

Hedged Liabilities Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Value of the Hedged Liabilities

Location on the Consolidated Balance Sheet September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020

Short-term borrowings and current portion of long-term debt $ 353 $ 373 $ 1 $ 5

Long-term debt 1,008 225 8 6

Total $ 1,361 $ 598 $ 9 $ 11

Net Investment Hedges:

The Company may use non-derivative (foreign currency denominated debt) and derivative (foreign exchange forward contracts) instruments to hedge portions of the Company’s investment in foreign subsidiaries and manage foreign exchange risk.

For instruments that are designated and qualify as hedges of net investments in foreign operations and that meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in cumulative translation within other comprehensive income.

The remainder of the change in value of such instruments is recorded in earnings.

Recognition in earnings of amounts previously recorded in cumulative translation is limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation.

To the extent foreign currency denominated debt is not designated in or is dedesignated from a net investment hedge relationship, changes in value of that portion of foreign currency denominated debt due to exchange rate changes are recorded in earnings through their maturity date.

3M’s use of foreign exchange forward contracts designated in hedges of the Company’s net investment in foreign subsidiaries can vary by time period depending on when foreign currency denominated debt balances designated in such relationships are dedesignated, matured, or are newly issued and designated.

Additionally, variation can occur in connection with the extent of the Company’s desired foreign exchange risk coverage.

At June 30, 2021, the total notional amount of foreign exchange forward contracts designated in net investment hedges was approximately 50 million euros, along with a principal amount of long-term debt instruments designated in net investment hedges totaling 3.5 billion euros.

At September 30, 2021, the total notional amount of foreign exchange forward contracts designated in net investment hedges was approximately 150 million euros, along with a principal amount of long-term debt instruments designated in net investment hedges totaling 3.5 billion euros.

The maturity dates of these derivative and nonderivative instruments designated in net investment hedges range from 2021 to 2031.

The location in the consolidated statements of income and comprehensive income and amounts of gains and losses related to derivative and nonderivative instruments designated as net investment hedges are as follows.

There were no reclassifications of the effective portion of net investment hedges out of accumulated other comprehensive income into income for the periods presented in the table below.

Pretax Gain (Loss) Recognized

Amount of Gain (Loss) Excluded

as Cumulative Translation within

from Effectiveness Testing

Other Comprehensive Income

Recognized in Income

Three months ended June 30,

Foreign currency denominated debt

Cost of sales

Foreign currency forward contracts

Cost of sales

Six months ended June 30,

Six months ended June 30, 2021 (Millions)

The amount of gain (loss) excluded from effectiveness testing recognized in income relative to instruments designated in net investment hedge relationships is not material.

The amount of pretax gain (loss) recognized in other comprehensive income related to derivative and nonderivative instruments designated as net investment hedges are as follows.

Pretax Gain (Loss) Recognized as Cumulative Translation within Other Comprehensive Income

Three months ended September 30, Nine months ended September 30,

(Millions) 2021 2020 2021 2020

Foreign currency denominated debt $ 83 $ ( 154 ) $ 195 $ ( 150 )

Cost of sales

Foreign currency forward contracts 3 ( 3 ) 4 2

Cost of sales

Derivatives Not Designated as Hedging Instruments:

Derivatives not designated as hedging instruments include dedesignated foreign currency forward and option contracts that formerly were designated in cash flow hedging relationships (as referenced in the Cash Flow Hedges section above).

In addition, 3M enters into foreign currency contracts that are not designated in hedging relationships to offset, in part, the impacts of changes in value of various non-functional currency denominated items including certain intercompany financing balances.

These derivative instruments are not designated in hedging relationships;

therefore, fair value gains and losses on these contracts are recorded in earnings.

The Company does not hold or issue derivative financial instruments for trading purposes.

The location in the consolidated statement of income and amounts of gains and losses related to derivative instruments not designated as hedging instruments are as follows:

Gain (Loss) on Derivative Recognized in Income

Three months ended June 30,

Six months ended June 30,

Foreign currency forward/option contracts

Cost of sales

Foreign currency forward contracts

Interest expense

Statement of Income Location and Impact of Cash Flow and Fair Value Derivative Instruments

The location in the consolidated statement of income and pre-tax amounts recognized in income related to derivative instruments designated in a cash flow or fair value hedging relationship are as follows:

Location and Amount of Gain (Loss) Recognized in Income

Total $ 86 $ ( 157 ) $ 199 $ ( 148 )

Statement of Income Location and Impact of Cash Flow and Fair Value Derivative Instruments and Derivatives Not Designated as Hedging Instruments

The location in the consolidated statement of income and pre-tax amounts recognized in income related to derivative instruments designated in cash flow or fair value hedging relationships and for derivatives not designated as hedging instruments are as follows:

Location and Amount of Gain (Loss) Recognized in Income

Three months ended June 30, 2021

Six months ended June 30, 2021

Cost of sales

Other expense

Three months ended September 30, Nine months ended September 30,

Cost of sales Other expense

(income), net

Cost of sales

Other expense

Cost of sales Other expense

(income), net

Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded

The effects of cash flow and fair value hedging:

(Millions) 2021 2020 2021 2020 2021 2020 2021 2020

Information regarding cash flow and fair value hedging relationships:

Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of derivatives are recorded $ 4,853 $ 4,303 $ 31 $ 83 $ 14,097 $ 12,217 $ 113 $ 248

Gain or (loss) on cash flow hedging relationships:

5 unchanged sentences

Interest rate contracts:

Hedged items — — 1 3 — — 3 3

Derivatives designated as hedging instruments — — ( 1 ) ( 3 ) — — ( 3 ) ( 3 )

Location and Amount of Gain (Loss) Recognized in Income

Three months ended June 30, 2020

Six months ended June 30, 2020

Cost of sales

Other expense

(income), net

Cost of sales

Other expense

(income), net

Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded

The effects of cash flow and fair value hedging:

Gain or (loss) on cash flow hedging relationships:

Information regarding derivatives not designated as hedging instruments:

Gain or (loss) on derivatives not designated as instruments:

Foreign currency forward/option contracts — 1 ( 35 ) 29 — 3 ( 7 ) 2

Amount of gain or (loss) reclassified from accumulated other comprehensive income into income

Interest rate contracts:

Amount of gain or (loss) reclassified from accumulated other comprehensive income into income

Gain or (loss) on fair value hedging relationships:

Interest rate contracts:

Derivatives designated as hedging instruments

Location and Fair Value Amount of Derivative Instruments

Location, Fair Value, and Gross Notional Amounts of Derivative Instruments

The following tables summarize the fair value of 3M’s derivative instruments, excluding nonderivative instruments used as hedging instruments, and their location in the consolidated balance sheet.

Notional amounts below are presented at period end foreign

exchange rates, except for certain interest rate swaps, which are presented using the inception date’s foreign exchange rate.

Additional information with respect to the fair value of derivative instruments is included in Note 13.

June 30, 2021 (Millions)

Derivatives designated as

hedging instruments

Foreign currency forward/option contracts

Other current assets

Other current liabilities

Foreign currency forward/option contracts

Other liabilities

Interest rate contracts

Other current assets

Other current liabilities

Interest rate contracts

Other liabilities

Notional amounts below are presented at period end foreign exchange rates, except for certain interest rate swaps, which are presented using the inception date’s foreign exchange rate.

Amount Assets Liabilities

September 30, 2021 (Millions)

Location Fair

Value Amount Location Fair

Derivatives designated as hedging instruments

Foreign currency forward/option contracts 1,796 Other current assets $ 41 Other current liabilities $ 17

Foreign currency forward/option contracts 792 Other assets 31 Other liabilities 3

Interest rate contracts 403 Other current assets 1 Other current liabilities —

Interest rate contracts 800 Other assets 3 Other liabilities —

Total derivatives designated as hedging instruments 76 20

Derivatives not designated as

hedging instruments

Foreign currency forward/option contracts

Other current assets

Other current liabilities

Derivatives not designated as hedging instruments

Foreign currency forward/option contracts 5,269 Other current assets 8 Other current liabilities 20

Total derivatives not designated as hedging instruments 8 20

Total derivative instruments $ 84 $ 40

Amount Assets Liabilities

December 31, 2020 (Millions)

Derivatives designated as

hedging instruments

Foreign currency forward/option contracts

Other current assets

Other current liabilities

Foreign currency forward/option contracts

Other liabilities

Interest rate contracts

Other current assets

Other current liabilities

Location Fair

Value Amount Location Fair

Derivatives designated as hedging instruments

Foreign currency forward/option contracts 1,630 Other current assets $ 14 Other current liabilities $ 67

Foreign currency forward/option contracts 669 Other assets 10 Other liabilities 25

Interest rate contracts 403 Other current assets 7 Other current liabilities —

Total derivatives designated as hedging instruments 31 92

Derivatives not designated as

hedging instruments

Foreign currency forward/option contracts

Other current assets

Other current liabilities

Derivatives not designated as hedging instruments

Foreign currency forward/option contracts 3,166 Other current assets 13 Other current liabilities 14

Total derivatives not designated as hedging instruments 13 14

1 unchanged sentence

Credit Risk and Offsetting of Assets and Liabilities of Derivative Instruments

The Company is exposed to credit loss in the event of nonperformance by counterparties in interest rate swaps, currency swaps, and forward and option contracts.

However, the Company’s risk is limited to the fair value of the instruments.

The Company actively monitors its exposure to credit risk through the use of credit approvals and credit limits, and by selecting major international banks and financial institutions as counterparties.

3M enters into master netting arrangements with counterparties when possible to mitigate credit risk in derivative transactions.

A master netting arrangement may allow each counterparty to net settle amounts owed between a 3M entity and the counterparty as a result of multiple, separate derivative transactions.

As of June 30, 2021, 3M has International Swaps and Derivatives Association (ISDA) agreements with 17 applicable banks and financial institutions which contain netting provisions.

In addition to a master agreement with 3M supported by a primary counterparty’s parent guarantee, 3M also has associated credit support agreements in place with 16 of its primary derivative counterparties which, among other things, provide the circumstances under which either party is required to post eligible collateral (when the market value of transactions covered by these agreements exceeds specified thresholds or if a counterparty’s credit rating has been downgraded to a predetermined rating).

These arrangements may allow each counterparty to net settle amounts owed between a 3M entity and the counterparty as a result of multiple, separate derivative transactions.

3M also has associated credit support agreements in place with its primary derivative counterparties which, among other things, provide the circumstances under which either party is required to post eligible collateral (when the market value of transactions covered by these agreements exceeds specified thresholds or if a counterparty’s credit rating has been downgraded to a predetermined rating).

The Company does not anticipate nonperformance by any of these counterparties.

3 unchanged sentences

Derivatives not subject to master netting agreements are not eligible for net presentation.

As of the applicable dates presented below, no cash collateral had been received or pledged related to these derivative instruments.

Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties

Gross Amounts not Offset in the

Consolidated Balance Sheet that are

Subject to Master Netting Agreements

Gross Amount of

Derivative Assets

Eligible Offsetting

Presented in the

Net Amount of

June 30, 2021 (Millions)

Balance Sheet

Gross Amount of Derivative Assets Presented in the

Balance Sheet Gross Amounts not Offset in the

Consolidated Balance Sheet that are Subject to Master Netting Agreements

September 30, 2021 (Millions)

Gross Amount of Eligible Offsetting

Liabilities Cash

Received Net Amount of

Derivative Assets

1 unchanged sentence

Derivatives not subject to master netting agreements — —

Total $ 84 $ 64

December 31, 2020 (Millions)

1 unchanged sentence

Derivatives not subject to master netting agreements — —

Total $ 44 $ 33

Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties

Gross Amounts not Offset in the

Gross Amount of

Presented in the

Balance Sheet Gross Amounts not Offset in the

Consolidated Balance Sheet that are

Subject to Master Netting Agreements

September 30, 2021 (Millions)

Gross Amount of

Presented in the

Eligible Offsetting

Net Amount of

June 30, 2021 (Millions)

Balance Sheet

Derivative Assets

Derivative Assets Cash

Pledged Net Amount of

Derivatives subject to master netting agreements $ 40 $ 20 $ — $ 20

Derivatives not subject to master netting agreements — —

Total $ 40 $ 20

December 31, 2020 (Millions)

1 unchanged sentence

Derivatives not subject to master netting agreements — —

Total $ 106 $ 95

Currency Effects

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by approximately $ 48 million and $ 58 million for the three and six months ended June 30, 2021, respectively.

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by approximately $ 36 million and $ 94 million for the three and nine months ended September 30, 2021, respectively.

These estimates include transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate risks.

1 unchanged sentence

3M follows ASC 820, Fair Value Measurements and Disclosures, with respect to assets and liabilities that are measured at fair value on a recurring basis and nonrecurring basis.

The Company adopted ASU No.

2018-13, Changes to the Disclosure Requirements for Fair Value Measurements, as of January 1, 2020.

This ASU primarily amended the disclosures around Level 3 investments, of which the Company had an immaterial amount for all periods presented.

In addition to the information above, refer to Note 15 in 3M’s 2020 Annual Report on Form 10-K for a qualitative discussion of the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis, a description of the valuation methodologies used by 3M, and categorization within the valuation framework of ASC 820.

The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis.

Description Fair Value at

September 30, 2021

Fair Value Measurements

Fair Value at

Using Inputs Considered as

June 30, 2021

(Millions) Level 1 Level 2 Level 3

Available-for-sale:

10 unchanged sentences

Foreign currency forward/option contracts 40 — 40 —

Description Fair Value at

December 31, 2020

Fair Value Measurements

Fair Value at

Using Inputs Considered as

December 31, 2020

(Millions) Level 1 Level 2 Level 3

Available-for-sale:

11 unchanged sentences

The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis in the table above that used significant unobservable inputs (level 3).

Three months ended

Six months ended

Marketable securities — certain U.S.

municipal securities only

municipal securities only Three months ended

September 30, Nine months ended

September 30,

(Millions) 2021 2020 2021 2020

Beginning balance $ 34 $ 37 $ 34 $ 46

12 unchanged sentences

For 3M, such measurements of fair value relate primarily to indefinite-lived and long-lived asset impairments, goodwill impairments, and adjustment in carrying value of equity securities for which the measurement alternative of cost less impairment plus or minus observable price changes is used.

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the three and six months ended June 30, 2021.

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the three and nine months ended September 30, 2021.

3M reflected an immaterial charge related to impairment of certain indefinite-lived assets and a net charge of $ 22 million related to adjustment to the carrying value of equity securities using the measurement alternative during the first quarter of 2020.

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the three months ended June 30, 2020.

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the three months ended September 30, 2020.

Fair Value of Financial Instruments:

4 unchanged sentences

Information with respect to the carrying amounts and estimated fair values of these financial instruments follow:

June 30, 2021

December 31, 2020

September 30, 2021 December 31, 2020

(Millions) Carrying

Value Carrying

Long-term debt, excluding current portion $ 16,193 $ 17,836 $ 17,989 $ 20,496

1 unchanged sentence

The carrying amount of long-term debt referenced above is impacted by certain fixed-to-floating interest rate swaps that are designated as fair value hedges and by the designation of certain fixed rate Eurobond securities issued by the Company as hedging instruments of the Company’s net investment in its European subsidiaries.

A number of 3M’s fixed-rate bonds were trading at a premium at June 30, 2021 and December 31, 2020 due to the lower interest rates and tighter credit spreads compared to issuance levels.

A number of 3M’s fixed-rate bonds were trading at a premium at September 30, 2021 and December 31, 2020 due to the lower interest rates and tighter credit spreads compared to issuance levels.

Commitments and Contingencies

1 unchanged sentence

The Company and some of its subsidiaries are involved in numerous claims and lawsuits, principally in the United States, and regulatory proceedings worldwide.

These claims, lawsuits and proceedings include, but are not limited to, products liability (involving products that the Company now or formerly manufactured and sold), intellectual property, commercial, antitrust, federal False Claims Act, securities, and state and federal environmental laws.

Unless otherwise stated, the Company is vigorously defending all such litigation and proceedings.

8 unchanged sentences

Respirator Mask/Asbestos Litigation

As of June 30, 2021, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 2,929 individual claimants, compared to approximately 2,075 individual claimants with actions pending December 31, 2020.

As of September 30, 2021, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 3,096 individual claimants, compared to approximately 2,075 individual claimants with actions pending December 31, 2020.

The vast majority of the lawsuits and claims resolved by and currently pending against the Company allege use of some of the Company’s mask and respirator products and seek damages from the Company and other defendants for alleged personal injury from workplace exposures to asbestos, silica, coal mine dust or other occupational dusts found in products manufactured by other defendants or generally in the workplace.

13 unchanged sentences

The Company has demonstrated in these past trial proceedings that its respiratory protection products are effective as claimed when used in the intended manner and in the intended circumstances.

Consequently, the Company believes that claimants are unable to

establish that their medical conditions, even if significant, are attributable to the Company’s respiratory protection products.

Consequently, the Company believes that claimants are unable to establish that their medical conditions, even if significant, are attributable to the Company’s respiratory protection

Nonetheless, the Company’s litigation experience indicates that claims of persons alleging more serious injuries, including mesothelioma, other malignancies, and black lung disease, are costlier to resolve than the claims of unimpaired persons, and it therefore believes the average cost of resolving pending and future claims on a per-claim basis will continue to be higher than it experienced in prior periods when the vast majority of claims were asserted by medically unimpaired claimants.

In addition, during the second half of 2020 and as of June 30, 2021, the Company has experienced an increase in the number of cases filed that allege injuries from exposures to coal mine dust.

In addition, during the second half of 2020 and through September 30, 2021, the Company has experienced an increase in the number of cases filed that allege injuries from exposures to coal mine dust.

As previously reported, the State of West Virginia, through its Attorney General, filed a complaint in 2003 against the Company and two other manufacturers of respiratory protection products in the Circuit Court of Lincoln County, West Virginia, and amended its complaint in 2005.

13 unchanged sentences

These developments include, but are not limited to, significant changes in (i) the key assumptions underlying the Company’s accrual, including, the number of future claims, the nature and mix of those claims, the average cost of defending and resolving claims, and in maintaining trial readiness (ii) trial and appellate outcomes, (iii) the law and procedure applicable to these claims, and (iv) the financial viability of other co-defendants and insurers.

As a result of its review of its respirator mask/asbestos liabilities, of pending and expected lawsuits and of the cost of resolving claims of persons who claim more serious injuries, including mesothelioma, other malignancies, and black lung disease, the Company increased its accruals in the first six months of 2021 for respirator mask/asbestos liabilities by $ 53 million.

In the first six months of 2021, the Company made payments for legal defense costs and settlements of $ 44 million related to the respirator mask/asbestos litigation.

As a result of its review of its respirator mask/asbestos liabilities, of pending and expected lawsuits and of the cost of resolving claims of persons who claim more serious injuries, including mesothelioma, other malignancies, and black lung disease, the Company increased its accruals in the first nine months of 2021 for respirator mask/asbestos liabilities by $ 80 million.

In the first nine months of 2021, the Company made payments for legal defense costs and settlements of $ 87 million related to the respirator mask/asbestos litigation.

As previously disclosed, during the first quarter of 2019, the Company recorded a pre-tax charge of $ 313 million in conjunction with an increase in the accrual as a result of the March and April 2019 settlements-in-principle of the coal mine dust lawsuits mentioned above and the Company’s assessment of other then current and expected coal mine dust lawsuits (including the costs to resolve all then current and expected coal mine dust lawsuits in Kentucky and West Virginia at the time of the charge).

As of June 30, 2021, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 671 million.

As of September 30, 2021, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 655 million.

This accrual represents the Company’s best estimate of probable loss and reflects an estimation period for future claims that may be filed against the Company approaching the year 2050.

The Company cannot estimate the amount or upper end of the range of amounts by which the liability may exceed the accrual the Company has established because of the (i) inherent difficulty in projecting the number of claims that have not yet been asserted or the time period in which future claims may be asserted, (ii) the complaints nearly always assert claims against multiple defendants where the damages alleged are typically not attributed to individual defendants so that a defendant’s share of liability may turn on the law of joint and several liability, which can vary by state, (iii) the multiple factors described above that the Company considers in estimating its liabilities, and (iv) the several possible developments described above that may occur that could affect the Company’s estimate of liabilities.

As of June 30, 2021, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $ 4 million.

As of September 30, 2021, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $ 4 million.

The Company continues to seek coverage under the policies of certain insolvent and other insurers.

3 unchanged sentences

Aearo manufactured and sold various products, including personal protection equipment, such as eye, ear, head, face, fall and certain respiratory protection products.

As of June 30, 2021, Aearo and/or other companies that previously owned and operated Aearo’s respirator business (American Optical Corporation, Warner-Lambert LLC, AO Corp.

As of September 30, 2021, Aearo and/or other companies that previously owned and operated Aearo’s respirator business (American Optical Corporation, Warner-Lambert LLC, AO Corp.

and Cabot Corporation (“Cabot”)) are named defendants, with multiple co-defendants, including the Company, in numerous lawsuits in various courts in which plaintiffs allege use of mask and respirator products and seek damages from Aearo and other defendants for alleged personal injury from workplace exposures to asbestos, silica-related, coal mine dust, or other occupational dusts found in products manufactured by other defendants or generally in the workplace.

As of June 30, 2021, the Company, through its Aearo subsidiary, had accruals of $ 30 million for product liabilities and defense costs related to current and future Aearo-related asbestos, silica-related and coal mine dust claims.

As of September 30, 2021, the Company, through its Aearo subsidiary, had accruals of $ 29 million for product liabilities and defense costs related to current and future Aearo-related asbestos, silica-related and coal mine dust claims.

This accrual represents the Company’s best estimate of Aearo’s probable loss and reflects an estimation period for future claims that may be filed against Aearo approaching the year 2050.

14 unchanged sentences

If any of the developments described above were to occur, the actual amount of these liabilities for existing and future claims could be significantly larger than the amount accrued.

estimate of Aearo’s liabilities, the Company cannot estimate the amount or range of amounts by which Aearo’s liability may exceed the accrual the Company has established.

Because of the inherent difficulty in projecting the number of claims that have not yet been asserted, the complexity of allocating responsibility for future claims among the Payor Group, and the several possible developments that may occur that could affect the estimate of Aearo’s liabilities, the Company cannot estimate the amount or range of amounts by which Aearo’s liability may exceed the accrual the Company has established.

Environmental Matters and Litigation

18 unchanged sentences

In the European Union, where 3M has manufacturing facilities in countries such as Germany and Belgium, recent regulatory activities have included both preliminary and on-going work on various restrictions under the Regulation concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), including the restriction of PFAS in certain usages and a broader restriction of PFAS as a class.

As of late 2020, PFOA is subject to broad restrictions under the EU’s Persistent Organic Pollutants (POPs) Regulation.

As of the second half of 2020, PFOA is subject to broad restrictions under the EU’s Persistent Organic Pollutants (POPs) Regulation.

Dyneon, a 3M subsidiary that operates a facility at Gendorf, Germany, has a recycling process for a critical emulsifier from which small amounts of PFOA are present after recycling, as an unintended and unavoidable byproduct of certain earlier process steps.

1 unchanged sentence

With respect to the applicability of the recently enacted POPs, Dyneon proactively consulted with the relevant German regulatory authority regarding process improvements underway that are designed to ensure compliance with the PFOA limits in the recycled material.

In October 2021, Dyneon also discussed with the authority technical complexities it had recently discovered in achieving PFOA reductions.

The engagement is ongoing.

In addition, 3M has been working with the Public Flemish Waste Agency (OVAM) for several years to investigate and remediate historical PFOA contaminations at and near its Zwijndrecht facility in Antwerp, Belgium.

In connection with a ring road construction project (the Oosterweel Project) in Antwerp that has involved extensive soil work, an investigative

committee with judicial powers was formed in June 2021 by the Flemish Government to investigate PFOA found in the soil and groundwater near 3M’s Zwijndrecht facility.

The Company testified at a Flemish parliamentary committee hearing in June 2021 on PFOA-related matters and is cooperating with the authorities in this investigation.

Separately, the Company is aware that certain residents of Zwijndrecht have filed a criminal complaint with an Antwerp investigatory judge against 3M, alleging it had unlawfully abandoned waste in violation of its environmental care obligations.

3M has not been served with any such complaint.

In addition, as previously disclosed, 3M Belgium, a subsidiary of the Company, has been working with the Public Flemish Waste Agency (OVAM) for several years to investigate and remediate historical PFOA contaminations at and near its facility in Zwijndrecht, Antwerp, Belgium.

In connection with a ring road construction project (the Oosterweel Project) in Antwerp that has involved extensive soil work, an investigative committee with judicial investigatory powers was formed in June 2021 by the Flemish Parliament to investigate PFAS found in the soil and groundwater near 3M’s Zwijndrecht facility.

The Company testified at Flemish parliamentary committee hearings in June and September 2021 on PFAS-related matters.

The Flemish Parliament, the Minister of the Environment, and regulatory authorities have initiated investigations and demands for

information related to the release of PFAS from the Zwijndrecht facility.

The Company is cooperating with the authorities in the investigations and information requests.

Separately, as previously disclosed, the Company is aware that certain residents of Zwijndrecht have filed a criminal complaint with an Antwerp investigatory judge against 3M Belgium, alleging it had unlawfully abandoned waste in violation of its environmental care obligations.

3M Belgium has not been served with any such complaint.

In August 2021, the Flemish Government served 3M Belgium with a notice of intent to impose a safety measure (wastewater discharge stoppage) and issued an infraction report alleging permit and/or legal violations in connection with the discharge of certain specific PFAS compounds for alleged lack of specific authorization.

Following discussions with the government officials, 3M Belgium implemented a focused safety measure that would allow continued production activities and plans to contest through appeal the underlying legal and factual basis for the safety measure.

Separately, the permitting authority has initiated a process to tighten the wastewater discharge limits immediately, and a hearing was held on the limits and discharge permit.

An adverse permit action, and an unsuccessful appeal thereof, could adversely impact the facility’s normal operations.

In September 2021, the Flemish Government served 3M Belgium with a notice of intent to impose an administrative measure related to the removal and potential remediation of soil piles on 3M’s Zwijndrecht site.

Also in September 2021, the Flemish Region issued a notice of default alleging violations of environmental laws and seeking PFAS-related information, indemnity and a remediation plan for soil and water impacts due to PFAS originating from the Zwijndrecht facility.

In September 2021, 3M responded to the notice of default and announced a plan to invest up to 125 million euros in the next three years in actions related to the Zwijndrecht community, including support for an ongoing off-site descriptive soil investigation and appropriate soil remediation, support for local commercial farmers impacted by restrictions on sale of agricultural products, and enhancements to site discharge control technologies.

In the United States, the EPA has developed human health effects documents summarizing the available data studies of both PFOA and PFOS.

18 unchanged sentences

EPA has taken a number of actions to advance its PFAS Action Plan and regulatory agenda and to comply with mandatory actions required by Congress in the National Defense Authorization Act for Fiscal Year 2020.

EPA announced in its Spring 2020 Regulatory Agenda, released in June 2020, that it intended to publish a notice of proposed rulemaking to designate PFOA and PFOS as hazardous substances under CERCLA in August 2020.

EPA announced in its Spring 2020 Regulatory Agenda, released in June 2020, that it intended to publish a notice of proposed rulemaking to designate PFOA

and PFOS as hazardous substances under CERCLA in August 2020.

In November 2020, EPA announced it was developing a new analytical method to test for PFAS in wastewater and other environmental media.

7 unchanged sentences

EPA has added more than 170 PFAS to the list of substances that must be included in TRI reports as of July 2021.

In June 2021, EPA published a proposed rule under TSCA that, if adopted, would require certain persons that

manufacture (including import) or have manufactured PFAS in any year since 2011 to report information regarding PFAS uses, production volumes, disposal, exposures, and hazards.

The Company plans to submit comments on the proposed rule during the public comment period, which ends in August 2021.

In June 2021, EPA published a proposed rule under TSCA that, if adopted, would require certain persons that manufacture (including import) or have manufactured PFAS in any year since 2011 to report information regarding PFAS uses, production volumes, disposal, exposures, and hazards.

The Company submitted comments on the proposed rule during the public comment period, which ended in September 2021.

In October 2021, EPA released its "PFAS Strategic Roadmap:

EPA's Commitments to Action 2021-2024," which presents EPA's integrated approach to PFAS, including investing in research to increase an understanding of PFAS, pursuing a comprehensive approach to proactively control PFAS exposures to humans and the environment, and broadening and accelerating the scope of clean-up of PFAS in the environment.The 2021-2024 Roadmap sets timelines by which EPA plans to take specific actions, including, among other items, publishing a national PFAS testing strategy, proposing to designate PFOA and PFOS as CERCLA hazardous substances, restricting PFAS discharges from industrial sources through Effluent Limitations Guidelines, publishing the final toxicity assessment for five additional PFAS, requiring water systems to test for 29 PFAS under the Safe Drinking Water Act, and publishing improved analytical methods in eight different environmental matrices to monitor 40 PFAS present in wastewater and stormwater discharges.

Several state legislatures and state agencies have been evaluating or have taken actions related to cleanup standards, groundwater values or drinking water values for PFOS, PFOA, and other PFAS, and 3M has submitted various responsive comments.

2 unchanged sentences

In February 2018, the MDH published reports finding no unusual rates of certain cancers or adverse birth outcomes (low birth rates or premature births) among residents of Washington and Dakota Counties in Minnesota.

• California finalized drinking water standards for PFOA and PFOS in February 2020.

• Vermont finalized drinking water standards for a combination of PFOA, PFOS and three other PFAS in March 2020.

5 unchanged sentences

Some other states have also been evaluating or have taken actions relating to PFOA, PFOS and other PFAS in products such as food packaging, carpets and other products.

For example, in March 2021, California proposed listing PFOA and PFOS as carcinogens under its Proposition 65 law.

For example, in October 2021, two bills were signed into law in California that prohibit the use of PFAS in children’s products and in food packaging.

Additionally, in March 2021, California proposed listing PFOA and PFOS as carcinogens, and PFDA, PFHXS, PFNA, and PFUNDA as reproductive toxicants under its Proposition 65 law.

In October 2020, 3M and several other parties filed notices of appeal in the appellate division of the Superior Court of New Jersey to challenge the validity of the New Jersey PFOS and PFOA regulations.

In January 2021, the appellate division of the court denied the group’s motion to stay the regulations, and the parties are proceeding to litigation on the merits.

In January 2021, the appellate division of the court denied the group’s motion to stay the regulations.

The parties completed briefing on the merits in October 2021.

In March 2021, 3M filed a lawsuit against the New York State Department of Health, on the grounds that drinking water levels set by the agency for PFOS and PFOA should be vacated because they are arbitrary and did not comply with statutorily required processes.

In April 2021, 3M also filed a lawsuit against the Michigan Department of Environment, Great Lakes, and Energy (EGLE) to invalidate the drinking water standards EGLE promulgated under an accelerated timeline.

EGLE has moved to dismiss that lawsuit.

The court has scheduled oral argument on the merits for November 2021.

In April 2021, 3M also filed a lawsuit

against the Michigan Department of Environment, Great Lakes, and Energy (EGLE) to invalidate the drinking water standards EGLE promulgated under an accelerated timeline.

EGLE moved to dismiss that lawsuit.

In September 2021, the court denied EGLE’s motion in part, and the parties are proceeding to litigation on the merits of the remaining claims.

The Company cannot predict what additional regulatory actions in the United States, Europe and elsewhere arising from the foregoing or other proceedings and activities, if any, may be taken regarding such compounds or the consequences of any such actions to the Company.

5 unchanged sentences

Two additional putative class actions filed in the same court by certain residents in the vicinity of the Decatur plant seeking relief on similar grounds (the Chandler case and the Stover case, respectively) are stayed pending the resolution of class certification issues in the St.

The Company is in active discussions for negotiated resolutions with multiple parties regarding filed claims and pre-litigation disputes related to historical PFAS manufacturing operations in Alabama.

In October 2015, West Morgan-East Lawrence Water & Sewer Authority (Water Authority) filed an individual complaint against 3M Company, Dyneon, L.L.C, and Daikin America, Inc., in the U.S.

District Court for the Northern District of Alabama.

The complaint also includes representative plaintiffs who brought the complaint on behalf of themselves, and a class of all owners and possessors of property who use water provided by the Water Authority and five local water works to which the Water Authority supplies water (collectively, the “Water Utilities”).

The complaint seeks compensatory and punitive damages and injunctive relief based on allegations that the defendants’ chemicals, including PFOA and PFOS from their manufacturing processes in Decatur, have contaminated the water in the Tennessee River at the water intake, and that the chemicals cannot be removed by the water treatment processes utilized by the Water Authority.

In April 2019, 3M and the Water Authority settled the lawsuit for $ 35 million, which will

fund a new water filtration system, with 3M indemnifying the Water Authority from liability resulting from the resolution of the currently pending and future lawsuits against the Water Authority alleging liability or damages related to 3M PFAS.

The putative class claims brought by the representative plaintiffs who were supplied drinking water by the Water Authority (the “Lindsey” case) remain.

The parties are in active discussions regarding a negotiated resolution, and the case is currently stayed.

The Company is in discussions for negotiated resolutions with multiple parties regarding filed claims and pre-litigation disputes related to historical PFAS manufacturing operations in Alabama.

In June 2016, the Tennessee Riverkeeper, Inc.

7 unchanged sentences

This case has been stayed, pending ongoing mediation and discussions between the parties in conjunction with the St.

In October 2021, 3M reached agreements in principle to resolve litigation with the Tennessee Riverkeeper organization, as well as the plaintiffs in the St.

John (including Stover, Owens , and Chandler ) matters.

The agreements, if finalized and approved by the court, will complement the Interim Consent Order that 3M entered with ADEM in 2020.

Key provisions of these agreements include 3M’s continued environmental characterization, including sampling of environmental media, such as soil, ground water, and sediment, regarding the potential presence of PFAS at the 3M Decatur facility and legacy disposal sites, as well as supporting the execution of appropriate remedial actions.

The estimate of committed actions and other costs are reflected in the Company's balance of accruals for PFAS-related "other environmental liabilities."

In October 2015, West Morgan-East Lawrence Water & Sewer Authority (Water Authority) filed an individual complaint against 3M Company, Dyneon, L.L.C, and Daikin America, Inc., in the U.S.

District Court for the Northern District of Alabama.

In April 2019, 3M and the Water Authority settled the lawsuit for $ 35 million, which will fund a new water filtration system, with 3M indemnifying the Water Authority from liability resulting from the resolution of the currently pending and future lawsuits against the Water Authority alleging liability or damages related to 3M PFAS.

In October 2021, with respect to the putative class claims brought by the representative plaintiffs who were supplied drinking water by the Water Authority (the “Lindsey” case), the parties reached an agreement in principle, subject to court approval, to resolve the claims for an immaterial amount.

In August 2016, a group of over 200 plaintiffs filed a putative class action against West Morgan-East Lawrence Water and Sewer Authority (Water Authority), 3M, Dyneon, Daikin, BFI, and the City of Decatur in state court in Lawrence County, Alabama (the “Billings” case).

5 unchanged sentences

There are now approximately 4,000 named plaintiffs.

Mediation in the Billings case is ongoing.

In January 2017, several hundred plaintiffs sued 3M, Dyneon and Daikin America in Lawrence and Morgan Counties, Alabama (the “Owens” case).

5 unchanged sentences

John case, and the case is progressing through discovery.

Discussions among the parties are ongoing.

The parties have engaged in negotiations to resolve the litigation.

In November 2017, a putative class action (the “King” case) was filed against 3M, Dyneon, Daikin America and the West Morgan-East Lawrence Water and Sewer Authority (Water Authority) in the U.S.

8 unchanged sentences

In July 2019, 3M announced that it had initiated an investigation into the possible presence of PFAS in three closed municipal landfills in Decatur that accepted waste from 3M’s Decatur plant and other companies in the 1960s through the 1980s.

3M is working with the City of Decatur and other local and state entities as it conducts its investigation and will report the results and recommended remedial action, if any, to those entities and the public.

3M has worked with the City of Decatur and other local and state entities such as Morgan County and Decatur Utilities as it conducted its investigation.

In October 2021, 3M reached a collaborative agreement with the City of Decatur, Decatur Utilities and Morgan County, subject to their final approval, under which the Company will contribute approximately $ 99 million and also continue to address certain PFAS-related matters in the area.

The contribution relates to initiatives to improve the quality of life and overall environment in Decatur, including community redevelopment and recreation projects by the City, County and Decatur Utilities.

It also includes addressing PFAS matters at the Morgan County landfill and reimbursement of costs previously incurred related to PFAS remediation.

In addition to the contribution, 3M will continue to address PFAS at certain other closed municipal sites at which the Company historically disposed waste and continue environmental characterization in the area.

This work will complement the Interim Consent Order that 3M entered with ADEM in 2020 and includes sampling of environmental media, such as ground water, regarding the potential presence of PFAS at the 3M Decatur facility and legacy disposal sites as well as supporting the execution of any appropriate remedial actions.

The contribution and estimate of committed actions are reflected in the Company’s balance of accruals for PFAS-related "other environmental liabilities."

3M is also defending or has received notice of potential lawsuits in state and federal court brought by individual property owners who claim damages related to historical PFAS disposal at former area landfills near their properties.

2 unchanged sentences

In this same month, Guin WWSB dismissed its lawsuit without prejudice and has been working with 3M to further investigate the presence of chemicals in the area.

The parties have made progress in ongoing discussions for a negotiated resolution.

The parties, including the City of Guin are in discussions for a negotiated resolution.

Litigation Related to Historical PFAS Manufacturing Operations in Minnesota

5 unchanged sentences

In February 2018, 3M and the State of Minnesota reached a resolution of the NRD Lawsuit.

Under the terms of the settlement, 3M agreed to provide an $ 850 million grant to the State for a special “3M Water Quality and Sustainability Fund.” This Fund, which is administered by the State, will enable projects that support water sustainability in the Twin Cities East Metro region, such as continued delivery of water to residents and enhancing groundwater recharge to support sustainable growth.

Under the terms of the settlement, 3M agreed to provide an $ 850

million grant to the State for a special “3M Water Quality and Sustainability Fund.” This Fund, which is administered by the State, will enable projects that support water sustainability in the Twin Cities East Metro region, such as continued delivery of water to residents and enhancing groundwater recharge to support sustainable growth.

Other purposes of the grant include habitat and recreation improvements, such as fishing piers, trails, and open space preservation.

15 unchanged sentences

3M has moved to dismiss those complaints.

The parties have exchanged written discovery requests.

The case is in early stages of litigation.

Discovery is proceeding in these cases.

In May 2019, the New Jersey Attorney General and NJDEP filed a lawsuit against 3M, DuPont, and six other companies, alleging natural resource damages from AFFF products and seeking damages, including punitive damages, and associated fees.

7 unchanged sentences

In October 2020, the state amended its complaint to add a state commission as plaintiff and make a claim related to the state’s drinking water and groundwater trust fund statute.

In July 2021, the court granted defendants’ motions to dismiss these amendments;

In July 2021, the court gra nted defendants’ motions to dismiss these amendments.

In September 2021 the state filed its second amended complaint;

the case remains in early stages of litigation.

5 unchanged sentences

In May 2020, the court denied the defendants’ motion to dismiss, but dismissed the state’s trespass claim as to property the state does not own.

The parties are now engaged in discovery, and the court has set a trial date in October 2022.

The parties are now engaged in discovery and have filed a joint motion to extend discovery schedule into 2023 and the court has set a trial-ready date in October 2023.

In January 2020, the Michigan Attorney General filed a lawsuit in state court against 3M, Dyneon, DuPont, Chemours and others seeking injunctive and equitable relief and damages for alleged injury to Michigan public natural resources and its residents related to PFAS, excluding AFFF.

11 unchanged sentences

The lawsuit alleges injuries to the State’s property and natural resources purportedly caused by PFAS contamination from AFFF use and seeks both compensatory and punitive damages.

In April 2021, the State of Alaska filed a lawsuit against 3M and other defendants, alleging damages from the release of PFAS into the environment from a variety of products, including AFFF.

In April 2021, the State of Alaska filed a lawsuit against 3M and other defendants, alleging damages from the release of PFAS into th e environment from a variety of products, including AFFF.

This lawsuit was removed to federal court and transferred to the AFFF MDL in August 2021.

In addition to the above state attorneys general actions, several other states and the District of Columbia, through their attorneys general, have announced selection processes to retain outside law firms to bring PFSA-related lawsuits against certain manufacturers including the Company.

2 unchanged sentences

3M manufactured and marketed AFFF for use in firefighting at airports and military bases from approximately 1963 to 2002.

As of June 30, 2021, 1,274 lawsuits (including 26 putative class actions) alleging injuries or damages by AFFF use have been filed against

3M (along with other defendants) in various state and federal courts.

As of September 30, 2021, 1,762 lawsuits (including 27 putative class actions) alleging injuries or damages by AFFF use have been filed against 3M (along with other defendants) in various state and federal courts.

As further described below, a vast majority of these pending cases are in a federal Multi-District Litigation (MDL) court in South Carolina.

6 unchanged sentences

An initial pool of ten water supplier cases was selected in February 2021 for case-specific fact discovery as potential bellwether cases.

After completion of such discovery, the parties and the MDL court will select a smaller set of these cases for expert discovery and to be tried as bellwethers.

In October 2021, the parties and the MDL court selected three of these cases for additional fact and expert discovery and for potential trial as bellwether cases.

The MDL court in August 2021 issued a scheduling order and set the first bellwether cases to begin trial on or after January 1, 2023.

In June 2019, several subsidiaries of Valero Energy Corporation, an independent petroleum refiner, filed eight AFFF cases against 3M and other defendants, including DuPont/Chemours, National Foam, Buckeye Fire Equipment, and Kidde-Fenwal, in various state courts.

2 unchanged sentences

Five cases remain pending in state courts where they are in early stages of litigation, after Valero dismissed its Ohio state court action without prejudice in October 2019.

The parties in the state court cases have agreed to stay all five cases until September 2021.

The parties in the state court cases have agreed to stay all five cases until March 2022.

As of September 30, 2021, the Company is aware of six other AFFF suits outside the MDL in which the Company has been named a defendant.

Three of these cases are pending in federal court.

Two subsidiaries of Husky Energy filed suit in April 2020 against 3M and other AFFF manufacturers in Wisconsin state court relating to alleged PFAS contamination from AFFF use at Husky facilities in Superior, Wisconsin and Lima, Ohio.

1 unchanged sentence

The plaintiffs filed a notice of dismissal without prejudice in September 2020.

As of June 30, 2021, the Company is aware of eight other AFFF suits originally filed in various state courts across the country in which the Company has been named a defendant.

The Company is assessing whether these cases may be removed to federal court and transferred to the AFFF MDL.

Separately, the Company is aware of pre-suit claims by other parties related to the use and disposal of AFFF.

The Company had discussions with certain potential claimants pre-suit and reached a negotiated resolution with the City of Bemidji in March 2021.

Separately, the Company is aware of pre-suit claims or demands by other parties related to the use and disposal of AFFF, one of which purports to represent a large group of firefighters.

The Company had discussions with certain potential pre-suit claimants and, as a result of such discussions, reached a negotiated resolution for an immaterial amount with the City of Bemidji in March 2021.

Other PFAS-related Product and Environmental Litigation

3M manufactured and sold products containing various PFOA and PFOS, including Scotchgard, for several decades.

3M manufactured and sold various products containing PFOA and PFOS, including Scotchgard, for several decades.

Starting in 2017, 3M has been served with individual and putative class action complaints in various state and federal courts alleging, among other things, that 3M’s customers’ improper disposal of PFOA and PFOS resulted in the contamination of groundwater or surface water.

15 unchanged sentences

At the conclusion of these motions, the court will determine which case(s) will continue toward trial.

In the putative class action, class certification briefing is complete, and in July 2021, certain parties, including 3M, reached an agreement to resolve litigation among the settling parties, pending approval by the

district court.

Under the agreement, 3M, Saint-Gobain and Honeywell will collectively contribute to a fixed total amount of approximately $ 65 million to resolve the plaintiffs’ claims and those of the proposed classes.

3M’s contribution is not considered material.

3M is also defending 12 individual cases in New York filed by Nassau and Suffolk County drinking water providers in the U.S.

District Court for the Eastern District of New York.

In the putative class action, certain parties, including 3M, reached an agreement to resolve litigation among the settling parties.

The settlement agreement received preliminary approval from the district court in July 2021.

Under the agreement, 3M, Saint-G obain and Honeywell will collectively contribute to a fixed total amount of approximately $ 65 million to resolve the plaintiffs’ claims and those of the proposed classes.

3M’s contribution is not considered material 3M is also defending 12 individual cases in the U.S.

District Court for the Eastern District of New York filed by Nassau and Suffolk County drinking water providers.

The plaintiffs in these cases allege that products manufactured by 3M, DuPont, and additional unnamed defendants contaminated plaintiffs’ water supply sources with various PFAS compounds.

6 unchanged sentences

In June 2021, the court partially denied the defendants' motions to dismiss, by granting the motions to dismiss the negligence claim only insofar as the plaintiffs seek damages for personal injuries, as opposed to property damage.

The case remains in early stages of litigation.

In September 2021, the plaintiffs filed a motion to amend the complaint, including to add four new named plaintiffs and putative class representatives.

3M and Wolverine filed a motion to strike the plaintiffs’ motion for class certification and opposed plaintiffs’ motion to amend the complaint.

The court has set a trial date in April 2022.

In addition to the consolidated federal court putative class action, as of June 30, 2021, 3M is a defendant in approximately 280 private individual actions in Michigan state court based on similar allegations.

In addition to the consolidated federal court putative class action, as of September 30, 2021, 3M is a defendant in approximately 280 private individual actions in Michigan state court based on similar allegations.

These cases are coordinated for pre-trial purposes.

1 unchanged sentence

In January 2020, the court issued the first round of dispositive motion rulings related to the first two bellwether cases, including dismissing the second bellwether case entirely and dismissing certain plaintiffs’ medical monitoring and risk of future disease claims, and granting summary judgment to the defendants on one plaintiff’s cholesterol injury claims.

The parties settled the first bellwether case in early 2020.

The parties settled the first bellwether case in early 2020 for an immaterial amount.

In June 2020, the court denied the plaintiffs’ motion to reconsider the dismissal of the second bellwether case, and the plaintiffs have appealed the decision to the state appellate court.

In January 2021, the court granted summary judgment in favor of the defendants in one of three remaining bellwether cases.

In January 2021, the court granted

summary judgment in favor of the defendants in one of three remaining bellwether cases.

The plaintiffs in this dismissed bellwether case have also appealed the dismissal to the state appellate court.

The Company has settled one of the two remaining bellwether cases for an immaterial amount.

The other bellwether case has a trial date scheduled for October 2021.

The Company has settled both remaining bellwether cases for an immaterial amount.

An additional eight cases have been identified as a pool from which future bellwether cases will be selected.

The parties have engaged in mediation efforts in both the putative class action and the state court mass action cases.

The parties have engaged in mediation efforts in the putative class action and are in discussions in certain state court mass action cases for negotiated resolutions.

Wolverine also filed a third-party complaint against 3M in a suit by the State of Michigan and intervenor townships that sought to compel Wolverine to investigate and address contamination associated with its historic disposal activity.

7 unchanged sentences

This amount was part of 3M’s charge taken in the fourth quarter of 2019 as discussed below in the “Environmental Liabilities and Insurance Receivables” section.

3M is also a defendant, together with Georgia-Pacific as co-defendant, in a putative class action in federal court in Michigan brought by residents of Parchment, who allege that the municipal drinking water was contaminated from waste generated by a paper mill owned by Georgia-Pacific’s corporate predecessor.

3M was also a defendant, together with Georgia-Pacific as co-defendant, in a putative class action in federal court in Michigan brought by residents of Parchment, who allege that the municipal drinking water was contaminated from waste generated by a paper mill owned by Georgia-Pacific’s corporate predecessor.

The defendants’ motion to dismiss certain claims in the complaint was denied in January 2021.

A trial date is set for January 2022.

The parties have engaged in mediation and in April 2021 reached a preliminary settlement agreement, subject to court approval, under which 3M and Georgia-Pacific would jointly pay an amount and be released from plaintiffs’ putative class action claims.

The parties engaged in mediation and in April 2021 reached a preliminary settlement agreement, subject to court approval, under which 3M and Georgia-Pacific would jointly pay an amount and be released from plaintiffs’ putative class action claims.

3M’s portion is not considered material.

The final fairness hearing for the settlement is scheduled for September 2021.

The court approved the settlement in September 2021.

Separately, as a result of discussions among Georgia-Pacific, 3M and municipalities near Parchment, Georgia-Pacific and 3M contributed to a fund in November 2020 to provide expanded municipal water service in the area.

1 unchanged sentence

3M’s portion relative to the preliminary agreement and contribution above was not material.

In Alabama and Georgia, 3M, together with multiple co-defendants, is defending three state court cases brought by municipal water utilities, relating to 3M’s sale of PFAS-containing products to carpet manufacturers in Georgia.

The plaintiffs in these cases allege that the carpet manufacturers improperly discharged PFAS into the surface water and groundwater, contaminating drinking water supplies of cities located downstream along the Coosa River, including Rome, Georgia and Centre and Gadsden, Alabama.

The three water utility cases remain in the early stages of litigation.

The three water utility cases are proceeding through discovery.

Another case originally filed in Georgia state court was brought by individuals asserting PFAS contamination by the Georgia carpet manufacturers and seeking economic damages and injunctive relief on behalf of a putative class of Rome and Floyd County water subscribers.

This case has been removed to federal court, where 3M has filed a motion to dismiss a series of amended complaints.

This case has been removed to federal court, where 3M filed a motion to dismiss a series of amended complaints, resulting in the dismissal of plaintiffs’ negligence claim against 3M.

This case is proceeding through discovery.

3M, together with co-defendants, is also defending two putative class actions in federal court, where the plaintiffs seek relief on behalf of a class of individual ratepayers in Summerville, Georgia who allege their water supply was contaminated by PFAS discharged from a textile mill.

In May 2021, the City of Summerville filed a motion to intervene in the lawsuit, which remains pending.

3M has filed motions to dismiss these putative class actions and plaintiffs’ amended complaint.

3M has moved to dismiss this case.

This case remains in early stages of litigation.

In California, 3M and other defendants were named as defendants in an action brought in federal court by Golden State Water Company, alleging PFAS contamination of certain wells located in its water systems.

6 unchanged sentences

In June 2021, the case was removed to the U.S.

District Court for the Central District of California where the plaintiffs have moved to remand the case back to state court.

In July 2021, 3M filed a motion to transfer the action to the AFFF MDL.

The case otherwise remains in early stages of litigation.

District Court for the Central District of Ca lifornia where the plaintiffs moved to remand the case back to state court.

The court granted plaintiffs’ motion to remand.

3M has appealed the remand decision to the U.S.

Court of Appeals for the Ninth Circuit, which is hearing the appeal on an expedited basis, with briefing scheduled to be completed in December 2021.

Pending that appeal, in September 2021, the state court ordered that discovery can proceed against 3M.

In February 2021, the City of Corona and a local utility authority filed a lawsuit in California state court against 3M and other defendants, alleging PFAS contamination from 3M products generally as well as from 3M’s Corona facility and roofing granules products.

Plaintiffs filed an amended complaint in June 2021.

In July 2021, the case was removed to the U.S.

2021, the case was removed to the U.S.

District Court for the Central District of California.

The federal court granted plaintiffs’ motion to remand the action to state court.

In October 2021, 3M filed a demurrer to the amended complaint in state court.

In Delaware, 3M, together with several co-defendants, is defending one putative class action brought by individuals alleging PFAS contamination of their water supply resulting from the operations of local metal plating facilities.

4 unchanged sentences

In February 2021, the court raised the question whether subject matter jurisdiction under the Class Action Fairness Act was proper, issued an order requiring the parties to brief the issue and denied defendants’ motions to dismiss with leave to renew pending the court’s ruling on jurisdiction.

Briefing on the jurisdictional question is complete, and an oral argument has been set for September 2021.

In New Jersey, 3M is a defendant in an action brought in federal court by Middlesex Water Company, alleging PFAS contamination of its water wells.

Briefing on the jurisdictional question is complete, and oral argument was held in September 2021.

In New Jersey, 3M is a defendant in an action brought in federal court by Middlesex Water Company, alleging PFAS

contamination of its water wells.

3M’s motion to transfer the case to the AFFF MDL was denied.

3M has moved to dismiss the complaint, and the case is currently in discovery.

3M has moved to dismiss the complaint, and discovery closed in September 2021.

The parties expect to engage in mediation .

In September 2020, 3M was named a defendant in a similar lawsuit brought by the Borough of Hopatcong.

3 unchanged sentences

3M, together with several co-defendants, is also defending twelve cases in New Jersey federal court brought by individuals with private drinking water wells near certain DuPont and Solvay facilities that were allegedly supplied with PFAS by 3M.

Plaintiffs in two of these cases seek medical monitoring and damages, while plaintiffs in the remaining cases seek damages for alleged personal injuries to themselves or their disabled adult children.

Plaintiffs in seven of these cases seek medical monitoring and damages, while plaintiffs in the remaining cases seek damages for alleged personal injuries to themselves or their disabled adult children.

3M’s motion to dismiss the earliest filed case, which seeks medical monitoring, was largely denied in February 2021.

3M has filed answers in seven of these cases.

The cases remain in early stages of litigation and have been coordinated for discovery purposes.

3M has filed answers in these cases, which remain in early stages of litigation and have been coordinated for discovery purposes.

A similar case was filed in federal court in August 2021, but that case has not yet been coordinated with the others for discovery, and 3M has not yet answered the complaint.

In October 2018, 3M and other defendants, including DuPont and Chemours, were named in a putative class action in the U.S.

3 unchanged sentences

3M and other entities jointly filed a motion to dismiss in February 2019.

September 2019, the court denied the defendants’ motion to dismiss.

In September 2019, the court denied the defendants’ motion to dismiss.

In February 2020, the court denied 3M’s motion to transfer the case to the AFFF MDL.

Briefing on plaintiff’s class certification motion is complete.

Briefing on plaintiff’s class certification motion is complete, and the court’s ruling on class certification is pending.

Other PFAS-related Matters

12 unchanged sentences

and (iv) sharing information with the MPCA about certain perfluorinated compounds.

During 2008, the MPCA issued formal decisions adopting remedial options for the former disposal sites in Washington County, Minnesota (Oakdale and Woodbury).

During 2008, the MPCA issued

formal decisions adopting remedial options for the former disposal sites in Washington County, Minnesota (Oakdale and Woodbury).

In August 2009, the MPCA issued a formal decision adopting remedial options for the Company’s Cottage Grove manufacturing facility.

2 unchanged sentences

At each location the remedial options were recommended by the Company and approved by the MPCA.

Remediation work has been completed at the Oakdale and Woodbury sites, and they are in an operational maintenance mode.

The Company has completed remediation work and continues with operational and maintenance activities at the Oakdale and Woodbury sites.

Remediation work has been substantially completed at the Cottage Grove site, with operational and maintenance activities ongoing.

10 unchanged sentences

The NPDES permit requires the Company to report on a monthly and quarterly basis the quality and quantity of pollutants discharged to the Tennessee River.

In June 2019, the Company voluntarily disclosed to the EPA and ADEM that it had included incorrect values in certain of its monthly and quarterly reports.

In June 2019, as previously reported, the Company voluntarily disclosed to the EPA and ADEM that it had included incorrect values in certain of its monthly and quarterly reports.

The Company has submitted the corrected values to both the EPA and ADEM.

As part of ongoing work with the EPA and ADEM to address compliance matters at the Decatur facility, the Company discovered it had not fully characterized its PFAS discharge in its NPDES permit.

As previously reported, as part of ongoing work with the EPA and ADEM to address compliance matters at the Decatur facility, the Company discovered it had not fully characterized its PFAS discharge in its NPDES permit.

In September 2019, the Company disclosed the matter to the EPA and ADEM and announced that it had elected to temporarily idle certain other manufacturing processes at 3M Decatur.

The Company is reviewing its operations at the plant, has installed wastewater treatment controls and has restarted idled processes.

As a result of the Company’s discussions with ADEM to address these and other related matters in the state of Alabama, 3M and ADEM have agreed to the terms of an interim Consent Order in July 2020 to cover all PFAS-related wastewater discharges and air emissions from the Company’s Decatur facility.

As a result of the Company’s discussions with ADEM to address these and other related matters in the state of Alabama, as previously reported, 3M and ADEM have agreed to the terms of an interim Consent Order in July 2020 to cover all PFAS-related wastewater discharges and air emissions from the Company’s Decatur facility.

Under the interim Consent Order, the Company’s principal obligations include commitments related to (i) future ongoing site operations such as (a) providing certain notices or reports and performing various analytical and characterization studies and (b) future capital improvements;

1 unchanged sentence

Obligations related to ongoing future site operations under the Consent Order will involve additional operating costs and capital expenditures over multiple years.

The Company does not expect them to have a material impact on its consolidated results of operations or financial position.

With respect to remediation activities, financial obligations related to certain activities under the Consent Order are probable and reasonably estimable, and are included in the Company’s accruals for “other environmental liabilities” as described in the “Environmental Liabilities and Insurance Receivables” section below.

As offsite investigation activities continue, additional remediation amounts may become probable and reasonably estimable in the future.

In December 2019, the Company received a grand jury subpoena from the U.S.

As previously reported, in December 2019, the Company received a grand jury subpoena from the U.S.

Attorney’s Office for the Northern District of Alabama for documents related to, among other matters, the Company’s compliance with the 2009 TSCA consent order and unpermitted discharges to the Tennessee River.

The Company is cooperating with this and other inquiries and is producing documents in response to requests.

In addition, as part of its ongoing evaluation of regulatory compliance at its Cordova, Illinois facility, the Company discovered it had not fully characterized its PFAS discharge in its NPDES permit for the Cordova facility.

In addition, as previously reported, as part of its ongoing evaluation of regulatory compliance at its Cordova, Illinois facility, the Company discovered it had not fully characterized its PFAS discharge in its NPDES permit for the Cordova facility.

In November 2019, the Company disclosed this matter to the EPA, and in January 2020 disclosed this matter to the Illinois Environmental Protection Agency (IEPA).

1 unchanged sentence

The Company is also reviewing operations at its other plants with similar manufacturing processes, such as the plant in Cottage Grove, Minnesota, to ensure those operations are in compliance with applicable environmental regulatory requirements and Company policies and procedures.

As a result of these reviews, the Company discovered it had not fully characterized its PFAS discharge in its NPDES permit for the Cottage Grove facility.

As a result of these reviews, as previously reported, the Company discovered it had not fully characterized its PFAS discharge in its NPDES permit for the Cottage Grove facility.

In March 2020, the Company disclosed this matter to the Minnesota Pollution Control Agency (MPCA) and the EPA.

2 unchanged sentences

The Company continues to work with the MPCA and EPA to address the discharges from the Cottage Grove facility.

Separately, in June 2020, the Company reported to EPA and MPCA that it had not fully complied with elements of the inspection, characterization and waste stream profile verification process of the Waste and Feedstream Analysis Plan (WAP/FAP) of its Resource Conservation and Recovery Act (RCRA) permit for its Cottage Grove incinerator.

Separately, as previously reported, in June 2020, the Company reported to EPA and MPCA that it had not fully complied with elements of the inspection, characterization and waste stream profile verification process of the Waste and Feedstream Analysis Plan (WAP/FAP) of its Resource Conservation and Recovery Act (RCRA) permit for its Cottage Grove incinerator.

In July 2020, the Company received an information request from MPCA related to the June 2020 disclosure, to which the Company responded in September 2020.

2 unchanged sentences

The Company is cooperating with MPCA to address the issues that are the subject of the NOV.

In February 2020, the Company received an information request from EPA for documents and information related to, among other matters, the Company’s compliance with the Clean Water Act at its facilities that manufacture, process and use PFAS, including the Decatur, Cordova and Cottage Grove facilities.

In February 2020, as previously reported, the Company received an information request from EPA for documents and information related to, among other matters, the Company’s compliance with the Clean Water Act at its facilities that manufacture, process and use PFAS, including the Decatur, Cordova and Cottage Grove facilities.

The Company is cooperating with this inquiry and is producing documents and information in response to the request for information.

The Company will continue to work with relevant federal and state agencies (including EPA, the U.S.

Department of Justice, state environmental agencies and state attorneys general) as it conducts these reviews.

The Company cannot predict at this time the outcomes of resolving these compliance matters or what potential actions may be taken by the regulatory agencies.

The Company continues to work with relevant federal and state agencies (including EPA, the U.S.

Department of Justice, state environmental agencies and state attorneys general) as it conducts these reviews and responds to information, inspection and other requests from the agencies.

The Company cannot predict at this time the outcomes of resolving these compliance matters, what actions may be taken by the regulatory agencies or the potential consequences to the Company.

Other Environmental Litigation

7 unchanged sentences

Environmental Liabilities and Insurance Receivables

The Company periodically examines whether the contingent liabilities related to the environmental matters and litigation described above are probable and reasonably estimable based on experience and developments in those matters.

During the first six months ended June 30, 2021, as a result of recent developments in ongoing environmental matters and litigation, the Company increased its accrual for PFAS-related other environmental liabilities by $ 112 million and made related payments of $ 35 million.

As of June 30, 2021, the Company had recorded liabilities of $ 493 million for “other environmental liabilities.” The accruals represent the Company’s best estimate of the probable loss in connection with the environmental matters and PFAS-related litigation described above.

During the first nine months of 2021, as a result of recent developments in ongoing environmental matters and litigation, the Company increased its accrual for PFAS-related other environmental liabilities by $ 132 million since December 31, 2020 and made related payments of $ 53 million.

As of September 30, 2021, the Company had recorded liabilities of $ 494 million for “other environmental liabilities.” The accruals represent the Company’s best estimate of the probable loss in connection with the environmental matters and PFAS-related litigation described above.

The Company is not able to estimate a possible loss or range of possible loss in excess of the established accruals at this time.

Recent related accrual history includes the following:

During the first quarter of 2019, EPA issued its PFAS Action Plan and the Company settled the litigation with the Water Authority (both matters are described in more detail above).

As previously disclosed, the Company increased its accrual for “other environmental liabilities” by $ 235 million pre-tax as a result of then-recent developments in ongoing environmental matters and litigation in the first quarter of 2019.

As also previously disclosed, during the fourth quarter of 2019, the Company recorded a pre-tax charge of $ 214 million as a result of other then-recent developments in ongoing environmental matters and litigation.

As of June 30, 2021, the Company had recorded liabilities of $ 24 million for estimated non-PFAS related “environmental remediation” costs to clean up, treat, or remove hazardous substances at current or former 3M manufacturing or third-party sites.

The Company evaluates available facts with respect to each individual site each quarter and records liabilities for remediation costs on an undiscounted basis when they are probable and reasonably estimable, generally no later than the completion of feasibility studies or the Company’s commitment to a plan of action.

As of September 30, 2021, the Company had recorded liabilities of $ 28 million for estimated non-PFAS related “environmental remediation” costs to clean up, treat, or remove hazardous substances at current or former 3M manufacturing or third-party sites.

completion of feasibility studies or the Company’s commitment to a plan of action.

Liabilities for estimated costs of environmental remediation, depending on the site, are based primarily upon internal or third-party environmental studies, and estimates as to the number, participation level and financial viability of any other potentially responsible parties, the extent of the contamination and the nature of required remedial actions.

7 unchanged sentences

(iv) success in allocating liability to other potentially responsible parties;

and (v) the financial viability of

other potentially responsible parties and third-party indemnitors.

and (v) the financial viability of other potentially responsible parties and third-party indemnitors.

For sites included in both “environmental remediation liabilities” and “other environmental liabilities,” at which remediation activity is largely complete and remaining activity relates primarily to operation and maintenance of the remedy, including required post-remediation monitoring, the Company believes the exposure to loss in excess of the amount accrued would not be material to the Company’s consolidated results of operations or financial condition.

1 unchanged sentence

The Company has both pre-1986 general and product liability occurrence coverage and post-1985 occurrence reported product liability and other environmental coverage for environmental matters and litigation.

As of June 30, 2021, the Company’s receivable for insurance recoveries related to the environmental matters and litigation was $ 8 million.

As of September 30, 2021, the Company’s receivable for insurance recoveries related to the environmental matters and litigation was $ 8 million.

Various factors could affect the timing and amount of recovery of this and future expected increases in the receivable, including (i) delays in or avoidance of payment by insurers;

6 unchanged sentences

The plaintiff seeks various damages, including medical and related expenses, loss of income, and punitive damages.

As of June 30, 2021, the Company is a named defendant in approximately 3,494 lawsuits (including 14 putative class actions) in various state and federal courts that purport to represent approximately 13,026 individual claimants making similar allegations.

As of September 30, 2021, the Company is a named defendant in approximately 3,522 lawsuits (including 14 putative class actions) in various state and federal courts that purport to represent approximately 13,437 individual claimants making similar allegations.

In April 2019, the U.S.

1 unchanged sentence

District Court for the Northern District of Florida to be managed in a multi-district litigation (MDL) proceeding to centralize pre-trial proceedings.

Discovery is underway.

There is an administrative docket of approximately 236,000 unfiled and unverified claims at the MDL court.

The plaintiffs and 3M filed preliminary summary judgment motions on the government contractor defense.

In July 2020, the court granted the plaintiffs’ summary judgment motion and denied the defendants’ summary judgment motion, ruling that plaintiffs’ claims are not barred by the government contractor defense.

In July 2020, the MDL court granted the plaintiffs’ summary judgment motion and denied the defendants’ summary judgment motion, ruling that plaintiffs’ claims are not barred by the government contractor defense.

The court denied the Company’s request to immediately certify the summary judgment ruling for appeal to the U.S.

Court of Appeals for the Eleventh Circuit.

In December 2020, the MDL court granted the plaintiffs’ motion to consolidate three plaintiffs for the first bellwether trial, which began in March 2021.

In December 2020, the court granted the plaintiffs’ motion to consolidate three plaintiffs for the first bellwether trial, which began in March 2021.

In April 2021, 3M received an adverse jury verdict in the first bellwether trial.

The jury awarded the three plaintiffs less than $ 1 million in compensatory damages and $ 6 million in punitive damages for a total of $ 7 million.

3M plans to appeal the verdicts.

The appeal is expected to challenge, among other rulings, the district court's denial of 3M’s motion to assert the government contractor defense.

3M has appealed the verdicts, challenging, among other rulings, the MDL court's denial of 3M’s motion to assert the government contractor defense.

The next two bellwether trials occurred in May and June of 2021.

In May 2021, 3M received a verdict in its favor, in the second bellwether trial, where the jury rejected claims that 3M knowingly sold earplugs with design defects.

In May 2021, 3M received a verdict in its favor in the second bellwether trial, in which a jury rejected claims that 3M knowingly sold earplugs with design defects.

In June 2021, 3M received an adverse verdict in the third bellwether trial.

1 unchanged sentence

The jury apportioned fault 62 percent to 3M and 38 percent to the plaintiff for a total damage award of approximately $ 1 million.

3M has appealed the verdict.

In October 2021, 3M received an adverse verdict in the fourth bellwether trial, in which a jury awarded $ 8 million to the plaintiff.

3M plans to appeal the verdict.

The trials for the next five bellwether plaintiffs are scheduled for September and October 2021 and January 2022.

Discovery in the remaining 15 bellwether cases is scheduled to be complete by the first quarter of 2022.

3M is also defending lawsuits brought by non-military plaintiffs in state court in Hennepin County, Minnesota.

Separately, the

MDL court set an accelerated trial schedule for the next 12 bellwether cases for October, November and December 2021 and January, March, April and May 2022.

These trials will not include several bellwether cases that plaintiffs' counsel dismissed with prejudice either during discovery or after being set for trial.

An administrative docket of approximately 260,000 unfiled and unverified claims has also been maintained at the MDL court.

The MDL court in August 2021 issued transition orders requiring all claims be moved off the administrative docket to the active docket on a rolling basis over the next 12 months.

The orders provide that any case not moved to the active docket will be dismissed without prejudice, and the administrative docket will then be closed.

The MDL court also ordered the parties to prepare for the trial of 1,500 cases in three waves of 500 cases over the next 14 months.

After the preparation of these cases is completed, the cases will be remanded to the federal district courts where the cases were originally filed.

3M is also defending lawsuits brought primarily by non-military plaintiffs in state court in Hennepin County, Minnesota.

3M removed these actions to federal court, and the federal court remanded them to state court in March 2020.

The Company has appealed the remand orders to the U.S.

Court of Appeals for the Eighth Circuit.

Oral argument on the first remand order appeal occurred in June 2021.

On appeal, the U.S.

Court of Appeals for the Eighth Circuit ruled in October 2021 that the cases brought by non-military plaintiffs were properly remanded to state court, whereas the cases brought by military contractor plaintiffs who had received the Combat Arms Earplugs from the military should have remained in federal court.

The Eighth Circuit has not yet ruled on the appeal concerning the remand of cases brought by military plaintiffs.

There are approximately 65 lawsuits involving approximately 1,100 plaintiffs pending in the state court.

The state court actions will be subject to a bellwether case selection process.

The first trial in Hennepin County is scheduled for April 2022.

The state court actions are subject to a bellwether case selection process.

The first two trials in Hennepin County are scheduled for January and April of 2022.

No liability has been recorded for these matters because the Company believes that any such liability is not probable and reasonably estimable at this time.

As of June 30, 2021, the Company was a named defendant in 27 lawsuits in the United States involving 28 plaintiffs and one Canadian putative class action with a single named plaintiff, alleging that the Bair Hugger™ patient warming system caused a surgical site infection.

As of September 30, 2021, the Company was a named defendant in 27 lawsuits in the United States involving 34 plaintiffs and one Canadian putative class action with a single named plaintiff, alleging that the Bair Hugger™ patient warming system caused a surgical site infection.

As previously disclosed, 3M had been a named defendant in lawsuits in federal courts involving over 5,000 plaintiffs.

8 unchanged sentences

The Eighth Circuit court heard oral argument on all pending appeals in March 2021.

A panel of the appellate court in August 2021 reversed the district court’s exclusion of the plaintiffs’ causation experts and the grant of summary judgment for 3M.

The Company has sought further appellate en banc review by the full Eighth Circuit court.

Proceedings have not resumed in the MDL court.

Also, in August 2021, the Eighth Circuit court separately affirmed the 2018 jury verdict in 3M’s favor in the only bellwether trial in the MDL.

Among the 29 remaining lawsuits in the United States, 26 are in the MDL court and three are in state court.

7 unchanged sentences

In May 2021, the Court of Appeals lifted the MDL court’s injunction that barred plaintiff from litigating the Texas state court case.

No trial date has been set in the case.

As previously disclosed, 3M had been named a defendant in 61 cases in Minnesota state court.

12 unchanged sentences

In October 2019, the court consolidated the securities class actions and appointed a group of lead plaintiffs.

In January 2020, the defendants filed a motion to transfer venue to the

In January 2020, the defendants filed a motion to transfer venue to the U.S.

District Court for the District of Minnesota.

2 unchanged sentences

In November 2020, the federal Court of Appeals granted 3M’s petition for a writ of mandamus and directed the New Jersey federal court to transfer the action to the Minnesota federal court.

The defendants filed a motion to dismiss the action in January 2021;

that motion was argued in July 2021.

The suit is in the early stages of litigation.

The defendants filed a motion to dismiss the action in January 2021, and in September 2021, the Minnesota federal court granted 3M’s motion to dismiss the securities class action.

In October 2019, a stockholder derivative lawsuit was filed in the U.S.

9 unchanged sentences

In February 2021, an additional stockholder derivative lawsuit was filed in the District of Minnesota, making similar factual allegations as the putative securities class action discussed above.

The Minnesota federal court consolidated these federal derivative suits and stayed them pending and through any appeal of the securities class action dismissal.

Federal False Claims Act / Qui Tam Litigation

18 unchanged sentences

Court of Appeals for the Ninth Circuit reversed and remanded the case to the district court for further proceedings.

In April 2021, the court allowed the parties to issue subpoenas to the Centers for Medicare & Medicaid Services and its contractors, but the court has not ordered further discovery to commence.

Separately, in June 2019, following discovery, the district court in the second case (the “Hartpence case”) entered summary judgment in the KCI Defendants’ favor on all of the relator-plaintiff’s claims.

The Godecke case is in a pre-trial phase and, in August 2021, the district court entered a discovery and pretrial schedule with an April 2022 trial date.

Separately, in June 2019, the district court in the second case (the “Hartpence case”) entered summary judgment in the KCI Defendants’ favor on all of the relator-plaintiff’s claims.

The relator-plaintiff then filed an appeal in the U.S.

8 unchanged sentences

The Company has retained outside counsel and a forensic accounting firm to assist with the investigation.

2019, the Company voluntarily disclosed this investigation to both the Department of Justice and Securities and Exchange Commission and is cooperating with both agencies.

In July 2019, the Company voluntarily disclosed this investigation to both the Department of Justice and Securities and Exchange Commission and is cooperating with both agencies.

The Company cannot predict at this time the outcome of its investigation or what potential actions may be taken by the Department of Justice or Securities and Exchange Commission.

2 unchanged sentences

Awards may be issued in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock awards, and performance units and performance shares.

As of June 30, 2021, the remaining shares available for grant under the LTIP Program are 37 million.

As of September 30, 2021, the remaining shares available for grant under the LTIP Program are 37 million.

The Company’s annual stock option and restricted stock unit grant is made in February to provide a strong and immediate link between the performance of individuals during the preceding year and the size of their annual stock compensation grants.

8 unchanged sentences

Amounts recognized in the financial statements with respect to stock-based compensation programs, which include stock options, restricted stock, restricted stock units, performance shares and the General Employees’ Stock Purchase Plan (GESPP), are provided in the following table.

Capitalized stock-based compensation amounts were not material for the three and six months ended June 30, 2021 and 2020.

Capitalized stock-based compensation amounts were not material for the three and nine months ended September 30, 2021 and 2020.

Stock-Based Compensation Expense

Three months ended

Six months ended

September 30, Nine months ended

September 30,

(Millions) 2021 2020 2021 2020

Cost of sales $ 8 $ 9 $ 39 $ 41

5 unchanged sentences

Stock Option Program

The following table summarizes stock option activity during the six months ended June 30, 2021:

The following table summarizes stock option activity during the nine months ended September 30, 2021:

(Options in thousands) Number of

Options Weighted

Exercise Price Weighted

Life (months) Aggregate

Intrinsic Value

(Options in thousands)

Exercise Price

Life (months)

Under option —

January 1 35,401 $ 156.23

Granted 3,612 175.04

Exercised ( 3,880 ) 110.14

Forfeited ( 206 ) 179.50

September 30 34,927 $ 163.16 64 $ 691

Options exercisable

September 30 27,271 $ 160.79 52 $ 634

Stock options vest over a period from one year to three years with the expiration date at 10 years from date of grant.

As of June 30, 2021, there was $ 76 million of compensation expense that has yet to be recognized related to non-vested stock option based awards.

As of September 30, 2021, there was $ 62 million of compensation expense that has yet to be recognized related to non-vested stock option based awards.

This expense is expected to be recognized over the remaining weighted-average vesting period of 21 months.

The total intrinsic values of stock options exercised were $ 277 million and $ 127 million during the six months ended June 30, 2021 and 2020, respectively.

Cash received from options exercised was $ 382 million and $ 145 million for the six months ended June 30, 2021 and 2020, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the exercise of employee stock options were $ 59 million and $ 27 million for the six months ended June 30, 2021 and 2020, respectively.

The total intrinsic values of stock options exercised were $ 306 million and $ 160 million during the nine months ended September 30, 2021 and 2020, respectively.

Cash received from options exercised was $ 425 million and $ 193 million for the nine months ended September 30, 2021 and 2020, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the exercise of employee stock options were $ 65 million and $ 34 million for the nine months ended September 30, 2021 and 2020, respectively.

For the primary 2021 annual stock option grant, the weighted average fair value at the date of grant was calculated using the Black-Scholes option-pricing model and the assumptions that follow.

13 unchanged sentences

Restricted Stock and Restricted Stock Units

The following table summarizes restricted stock and restricted stock unit activity during the six months ended June 30, 2021:

(Shares in thousands)

The following table summarizes restricted stock and restricted stock unit activity during the nine months ended September 30, 2021:

(Shares in thousands) Number of

Shares Weighted

Nonvested balance —

As of January 1 1,722 $ 189.78

As of June 30

As of June 30, 2021, there was $ 124 million of compensation expense that has yet to be recognized related to non-vested restricted stock and restricted stock units.

Granted 785 176.87

Vested ( 450 ) 230.32

Forfeited ( 68 ) 173.49

As of September 30

1,989 $ 176.07

As of September 30, 2021, there was $ 109 million of compensation expense that has yet to be recognized related to non-vested restricted stock and restricted stock units.

This expense is expected to be recognized over the remaining weighted-average vesting period of 25 months.

The total fair value of restricted stock and restricted stock units that vested during the six months ended June 30, 2021 and 2020 was $ 79 million and $ 89 million, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the vesting of restricted stock and restricted stock units was $ 15 million and $ 17 million for the six months ended June 30, 2021 and 2020, respectively.

The total fair value of restricted stock and restricted stock units that vested during the nine months ended September 30, 2021 and 2020 was $ 81 million and $ 89 million, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the vesting of restricted stock and restricted stock units was $ 15 million and $ 17 million for the nine months ended September 30, 2021 and 2020, respectively.

Restricted stock units granted generally vest three years following the grant date assuming continued employment.

13 unchanged sentences

Weighted average performance shares whose performance period is complete are included in computation of diluted earnings per share.

The following table summarizes performance share activity during the six months ended June 30, 2021:

(Shares in thousands)

The following table summarizes performance share activity during the nine months ended September 30, 2021:

(Shares in thousands) Number of

Shares Weighted

Undistributed balance —

As of January 1 423 $ 188.61

Granted 166 176.79

Distributed ( 115 ) 228.80

Performance change 16 180.90

As of June 30

As of June 30, 2021, there was $ 32 million of compensation expense that has yet to be recognized related to performance shares.

Forfeited ( 25 ) 171.17

As of September 30

As of September 30, 2021, there was $ 23 million of compensation expense that has yet to be recognized related to performance shares.

This expense is expected to be recognized over the remaining weighted-average earnings period of 18 months.

The total fair value of performance shares that were distributed were $ 22 million and $ 35 million for the six months ended June 30, 2021 and 2020, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the distribution of performance shares were $ 4 million and $ 7 million for the six months ended June 30, 2021 and 2020, respectively.

The total fair value of performance shares that were distributed were $ 22 million and $ 35 million for the nine months ended September 30, 2021 and 2020, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the distribution of performance shares were $ 4 million and $ 7 million for the nine months ended September 30, 2021 and 2020, respectively.

Business Segments

22 unchanged sentences

Continued alignment of customer account activity

As part of 3M’s regular customer-focus initiatives, the Company realigned certain customer account activity (“sales district”) to correlate with the primary divisional product offerings in various countries and reduce complexity for customers when interacting with multiple 3M businesses.

customers when interacting with multiple 3M businesses.

This impacted the amount of dual credit certain business segments receive as a result of sales district attribution.

2 unchanged sentences

Business Segment Information

Three months ended

Six months ended

(Millions) Three months ended

September 30, Nine months ended

September 30,

Net Sales 2021 2020 2021 2020

Safety and Industrial $ 3,235 $ 3,017 $ 9,816 $ 8,601

Transportation and Electronics 2,450 2,316 7,463 6,492

Health Care 2,249 2,160 6,775 6,087

Consumer 1,525 1,412 4,380 3,893

Corporate and Unallocated 3 ( 2 ) 2 ( 1 )

4 unchanged sentences

Transportation and Electronics 465 514 1,602 1,338

Health Care 529 493 1,614 1,246

Consumer 332 343 932 886

Elimination of Dual Credit ( 131 ) ( 142 ) ( 428 ) ( 374 )

14 unchanged sentences

Other corporate expense-net includes items such as net costs related to limited unallocated corporate staff and centrally managed material resource centers of expertise costs, certain litigation and environmental expenses largely related to legacy products/businesses not allocated to business segments, corporate philanthropic activity, and other net costs that 3M may choose not to allocate directly to its business segments.

Other corporate expense-net also includes costs and income from contract manufacturing, transition services and other arrangements with the acquirer of the Communication Markets Division following its 2018 divestiture through 2019 and the

acquirer of the former Drug Delivery business following its 2020 divestiture.

Items classified as revenue from this activity are included in Corporate and Unallocated net sales.

classified as revenue from this activity are included in Corporate and Unallocated net sales.

Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements