What changed in this filing

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Item 1. Financial Statements

2022-04-26 compared with 2021-10-26 · 438 added, 707 removed, 1123 unchanged (50% of the section changed)

3 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(Millions, except per share amounts) 2022 2021

4 unchanged sentences

Research, development and related expenses 480 524

Gain on sale of businesses — — — ( 389 )

Total operating expenses 7,188 6,857

16 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(Millions) 2022 2021

11 unchanged sentences

Consolidated Balance Sheet

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

(Dollars in millions, except per share amount) March 31,

2022 December 31,

35 unchanged sentences

944,033,056 shares issued

Shares outstanding - September 30, 2021:

Shares outstanding - March 31, 2022:

Shares outstanding - December 31, 2021:

3 unchanged sentences

( 30,860 ) ( 30,463 )

Shares at September 30, 2021:

Shares at March 31, 2022:

Shares at December 31, 2021:

7 unchanged sentences

Consolidated Statement of Cash Flows

Nine months ended

September 30,

Three months ended

(Millions) 2022 2021

46 unchanged sentences

The interim consolidated financial statements and notes are presented as permitted by the requirements for Quarterly Reports on Form 10-Q.

This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its Annual Report on Form 10-K.

Effective in the first quarter of 2021, 3M made the following changes.

Information provided herein reflects the impact of these changes for all periods presented.

• Change in accounting principle for net periodic pension and postretirement plan cost.

See below for additional information.

• Change in measure of segment operating performance used by 3M’s chief operating decision maker—impacting 3M’s disclosed measure of segment profit/loss (business segment operating income).

This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its most recent Annual Report on Form 10-K.

Effective in the first quarter of 2022, 3M made changes in the measure of segment operating performance used by 3M’s chief operating decision maker—impacting 3M’s disclosed measure of segment profit/loss (business segment operating income).

See additional information in Note 16.

• Change in alignment of certain products within 3M’s Consumer business segment—creating the Consumer Health and Safety Division.

3M's disclosed disaggregated revenue was also updated as a result of the changes in segment reporting.

See additional information in Note 2.

Change in Accounting Principle for Determining Net Periodic Pension and Postretirement Plan Cost

In the first quarter of 2021, 3M changed the method it uses to calculate the market-related value of fixed income securities included in its pension and other postretirement plan assets.

The market-related value is used to determine the expected return on plan assets and the amortization of net unamortized actuarial gains or losses expense components of net periodic benefit cost.

The Company previously used the calculated value approach for all plan assets, deferring over three years the impact on these amounts of asset gains or losses that differed from expected returns.

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 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.

This change was applied retrospectively to all periods presented within 3M’s financial statements.

The change did not impact consolidated operating income or net cash provided by operating activities but did impact the previously reported portion of pension and postretirement net periodic benefit cost (benefit) that was included within non-operating other expense (income) along with related consolidated income items such as net income and earnings per share.

Other impacts included related changes to previously reported consolidated other comprehensive income, retained earnings, accumulated other comprehensive income (loss), and associated line items within the determination of net cash provided by operating activities.

For classes of plan assets other than fixed income investments, the Company continues to use the calculated value approach to determine their market-related value.

The adoption of this change impacted previously reported amounts included herein as indicated in the tables below.

Consolidated Statement of Income

Three months ended

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

Income before income taxes 1,805 1,826 5,001 5,064

Provision for income taxes 387 391 1,002 1,016

Income of consolidated group 1,418 1,435 3,999 4,048

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

Net income attributable to 3M 1,413 1,430 3,995 4,044

Earnings per share attributable to 3M common shareholders — basic $ 2.45 $ 2.47 $ 6.92 $ 7.01

Earnings per share attributable to 3M common shareholders — diluted $ 2.43 $ 2.45 $ 6.87 $ 6.95

Consolidated Statement of Comprehensive Income

Three months ended

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

Other comprehensive income (loss), net of tax:

Defined benefit pension and postretirement plans adjustment 127 116 304 271

Total other comprehensive income (loss), net of tax 327 316 177 144

Comprehensive income (loss) including noncontrolling interest 1,744 1,750 4,175 4,191

Comprehensive income (loss) attributable to 3M 1,739 1,745 4,174 4,190

Consolidated Balance Sheet

As of December 31, 2020

(Millions) Under Prior

Method As Adjusted

Retained earnings $ 43,761 $ 43,821

Accumulated other comprehensive income (loss) ( 7,661 ) ( 7,721 )

Consolidated Statement of Cash Flows

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.

Information provided herein reflects the impact of these changes for all periods presented.

Consolidation and foreign currency translation

Local currencies generally are considered the functional currencies outside the United States with the exception of 3M’s subsidiaries in Argentina, the economy of which is considered highly inflationary and, accordingly, the financial statements of these subsidiaries are remeasured as if their functional currency is that of their parent.

Assets and liabilities for operations in local-currency environments are translated at month-end exchange rates of the period reported.

Income and expense items are translated at average monthly currency exchange rates in effect during the period.

Cumulative translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in shareholders’ equity.

3M has subsidiaries in Turkey.

Based on underlying indices, Turkey’s cumulative three-year inflation rate exceeded 100 percent in the first quarter of 2022, thus being considered highly inflationary.

As a result, the financial statements of the Turkish subsidiaries will be remeasured as if their functional currency were that of their parent, starting in the second quarter of 2022.

The operating income and balances of underlying net monetary assets denominated in Turkish lira are not material to 3M.

Earnings Per Share

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 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).

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 23.1 million average options for the three months ended March 31, 2022 and 8.7 million average options for the three months ended March 31, 2021.

The computations for basic and diluted earnings per share follow:

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Three months ended

September 30, Nine months ended

September 30,

(Amounts in millions, except per share amounts) 2022 2021

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 2.7 5.8

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

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New Accounting Pronouncements

Refer to Note 1 in 3M’s 2020 Annual Report on Form 10-K for a more detailed discussion of the standards in the tables that follow, except for those pronouncements issued subsequent to the most recent Form 10-K filing date for which separate, more detailed discussion is provided below as applicable.

Standards Adopted During the Current Fiscal Year

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.

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

Clarifies when accounting for certain equity securities, a Company should consider observable transactions before applying or upon discontinuing the equity method of accounting for the purposes of applying the measurement alternative.

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.

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

Facilitation of the Effects of Reference Rate Reform on

Financial Reporting and ASU No.

2021-01, Reference Rate Reform (Topic 848):

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 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.

Refer to Note 1 to the Consolidated Financial Statements in 3M’s 2021 Annual Report on Form 10-K for a discussion of applicable standards issued and not yet adopted by 3M.

Contract Balances:

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

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.

Deferred revenue (current portion) as of March 31, 2022 and December 31, 2021 was $ 549 million and $ 529 million, respectively.

Approximately $ 200 million of the December 31, 2021 balance was recognized as revenue during the three months ended March 31, 2022, while approximately $ 180 million of the December 31, 2020 balance was recognized as revenue during the three months ended March 31, 2021.

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 $ 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.

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 136 million during the three months ended March 31, 2022 and $ 140 million during the three months ended March 31, 2021.

Disaggregated revenue information:

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Three months ended

September 30, Nine months ended

September 30,

Net Sales (Millions) 2022 2021

13 unchanged sentences

Transportation Safety 198 215

Other Transportation and Electronics ( 1 ) ( 2 ) ( 2 ) ( 3 )

Total Transportation and Electronics Business Segment 2,340 2,396

Drug Delivery — — — 146

Food Safety 92 87

3 unchanged sentences

Separation and Purification Sciences 250 240

Other Health Care — 5 ( 3 ) 5

Total Health Care Business Group 2,124 2,069

6 unchanged sentences

Corporate and Unallocated 1 ( 2 )

Elimination of Dual Credit ( 520 ) ( 553 ) ( 1,693 ) ( 1,471 )

Total Company $ 8,829 $ 8,851

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

Elimination of Dual Credit ( 239 ) ( 219 ) ( 62 ) — ( 520 )

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

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

Elimination of Dual Credit ( 738 ) ( 666 ) ( 290 ) 1 ( 1,693 )

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

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 )

Elimination of Dual Credit ( 279 ) ( 194 ) ( 80 ) — ( 553 )

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

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 )

Elimination of Dual Credit ( 716 ) ( 533 ) ( 222 ) — ( 1,471 )

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

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.

Three months ended

Net Sales (Millions) 2022 2021

Americas $ 4,438 $ 4,328

Asia Pacific 2,770 2,769

Europe, Middle East and Africa 1,621 1,755

Other Unallocated — ( 1 )

Worldwide $ 8,829 $ 8,851

Americas included United States net sales to customers of $ 3.6 billion for the three months ended March 31, 2022 and $ 3.6 billion for the three months ended March 31, 2021.

Acquisitions and Divestitures

Refer to Note 3 in 3M’s 2020 Annual Report on Form 10-K for more information on relevant pre-2021 acquisitions and divestitures.

Refer to Note 3 to the Consolidated Financial Statements in 3M’s 2021 Annual Report on Form 10-K for more information on relevant pre-2022 acquisitions and divestitures.

Acquisitions:

2 unchanged sentences

2022 acquisitions:

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

2020 acquisitions:

There were no acquisitions that closed during the year ended December 31, 2020.

There were no acquisitions that closed during the three months ended March 31, 2022.

Divestitures:

3M may divest certain businesses from time to time based upon review of the Company’s portfolio considering, among other items, factors relative to the extent of strategic and technological alignment and optimization of capital deployment, in addition to considering if selling the businesses results in the greatest value creation for the Company and for shareholders.

2021 divestitures:

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

2020 divestitures:

During 2020, as described in Note 3 in 3M’s 2020 Annual Report on Form 10-K, the Company divested its advanced ballistic-protection business, substantially all of its drug delivery business, and a small dermatology products business.

As discussed in Note 16 (Business Segments), gains/losses on sale of businesses are reflected in Corporate and Unallocated.

2022 divestitures and previously announced divestitures:

In March 2022, 3M completed the sale of its floor products business in Western Europe, formerly part of the Consumer business, for immaterial proceeds that approximated the business's book value.

In December 2021, 3M entered into agreements with Neogen Corporation pursuant to which 3M will separate its Food Safety Division business (part of the Health Care business) and combine it with Neogen in a transaction that is intended to be tax-efficient to 3M and its shareholders for U.S.

federal income tax purposes.

Under the terms of the agreements, which involve a tax-free Reverse Morris Trust, the Food Safety business will be spun-off or split-off to 3M shareholders and simultaneously merged with Neogen.

Existing Neogen shareholders will continue to own approximately 49.9 % of the combined company and 3M shareholders will receive approximately 50.1 % of the combined company.

In connection with the transaction, the Food Safety business will incur new debt and fund to 3M consideration valued at approximately $ 1 billion, subject to closing and other adjustments.

The transaction is expected to close by the end of the third quarter of 2022, subject to approval by Neogen shareholders, receipt of required regulatory approvals and the satisfaction of other customary closing conditions.

Net sales information relative to the Food Safety Division is included in Note 2.

Due to factors such as the potential nature of the transaction and underlying approvals, the Food Safety business is not considered held for sale as of March 31, 2022.

Operating income and held for sale amounts:

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

The aggregate operating income of these businesses included in 3M's consolidated results, including the announced divestitures, for the first three months of 2021 and 2022 was approximately $ 30 million and $ 30 million respectively.

The amounts of major assets and liabilities associated with disposal groups classified as held-for-sale as December 31, 2021 were not material.

Goodwill and Intangible Assets

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

There was no goodwill recorded from acquisitions during the first three months of 2022.

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 September 30, 2021, follow:

The goodwill balance by business segment as of December 31, 2021 and March 31, 2022, follow:

(Millions) Safety and Industrial Transportation and

3 unchanged sentences

Translation and other ( 17 ) ( 12 ) ( 85 ) ( 4 ) ( 118 )

Balance as of September 30, 2021

Balance as of March 31, 2022

$ 4,605 $ 1,813 $ 6,701 $ 249 $ 13,368

1 unchanged sentence

At 3M, reporting units correspond to a division.

As described in Note 16, effective in the first quarter of 2021, the Company changed its business segment reporting.

For any product changes that resulted in reporting unit changes, the Company applied the relative fair value method to determine the impact on goodwill of the associated reporting units, the results of which were immaterial.

3M will continue to monitor its reporting units and asset groups in 2022 for any triggering events or other indicators of impairment.

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 September 30, 2021, and December 31, 2020, follow:

(Millions) September 30,

The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets, as of March 31, 2022, and December 31, 2021, follow:

(Millions) March 31,

2022 December 31,

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Certain tradenames acquired by 3M are not amortized because they have been in existence for over 60 years, have a history of leading-market share positions, have been and are intended to be continuously renewed, and the associated products of which are expected to generate cash flows for 3M for an indefinite period of time.

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 nine months ended September 30, 2021 and 2020 follows:

Amortization expense for the three months ended March 31, 2022 and 2021 follows:

Three months ended

September 30, Nine months ended

September 30,

(Millions) 2022 2021

Amortization expense $ 131 $ 133

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

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

Expected amortization expense for acquired amortizable intangible assets recorded as of March 31, 2022:

(Millions) Remainder of 2022

2023 2024 2025 2026 2027 After

Amortization expense $ 378 $ 483 $ 455 $ 425 $ 418 $ 391 $ 1,940

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Operational/Marketing Capability Restructuring:

As described in Note 5 in 3M’s 2020 Annual Report on Form 10-K, in late 2020, 3M announced it would undertake certain actions to further enhance its operations and marketing capabilities to take advantage of certain global market trends while de-prioritizing investments in slower-growth end markets.

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 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 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

As described in Note 5 to the Consolidated Financial Statements in 3M’s 2021 Annual Report on Form 10-K, in late 2020, 3M announced it would undertake certain actions beginning in the fourth quarter of 2020 to further enhance its operations and marketing capabilities to take advantage of certain global market trends while de-prioritizing investments in slower-growth end markets.

In 2021, management approved and committed to undertake additional actions under this initiative resulting in a 2021 pre-tax charge of $ 124 million.

In the first quarter of 2022, management approved and committed to undertake the remaining actions under this initiative resulting in a pre-tax charge of $ 18 million.

This initiative, begun in 2020 and ending with committed first quarter 2022 actions, impacted approximately 3,100 positions worldwide with a pre-tax charge of approximately $ 280 million over that period.

The related restructuring charges for periods presented were recorded in the income statement as follows:

Three months ended

(Millions) 2022 2021

Cost of sales $ — $ 1

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

First Nine Months of 2021

(Millions) Employee-Related

Three months ended

Employee-Related

(Millions) 2022 2021

Safety and Industrial $ 2 $ 2

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Incremental expense incurred in the first quarter of 2022 18

Incremental expense incurred in the second quarter of 2021 43

Incremental expense incurred in the third quarter of 2021 50

Cash payments ( 53 )

Adjustments ( 8 )

Accrued restructuring action balances as of September 30, 2021

Divestiture-Related Restructuring

As described in Note 5 in 3M’s 2020 Annual Report on Form 10-K, during the second quarter of 2020, following the divestiture of substantially all of the drug delivery business, management approved and committed to undertake certain restructuring actions addressing corporate functional costs and manufacturing footprint across 3M in relation to the magnitude of amounts previously allocated/burdened to the divested business.

These actions affected approximately 1,300 positions worldwide and resulted in a second quarter 2020 pre-tax charge of $ 55 million, within Corporate and Unallocated.

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

(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 were largely completed in the third quarter of 2021.

Other Restructuring

As described in Note 5 in 3M’s 2020 Annual Report on Form 10-K, in the second quarter of 2020, management approved and committed to undertake certain restructuring actions addressing structural enterprise costs and operations in certain end markets as a result of the COVID-19 pandemic and related economic impacts.

These actions affected approximately 400 positions worldwide and resulted in a second quarter 2020 pre-tax charge of $ 58 million.

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

(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, 2022

Remaining activities related to this restructuring were largely completed in the second quarter of 2021.

Supplemental Income Statement Information

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Three months ended

September 30, Nine months ended

September 30,

(Millions) 2022 2021

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Supplemental Equity and Comprehensive Income Information

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.

Cash dividends declared and paid totaled $ 1.49 and $ 1.48 per share for the first quarter of 2022 and 2021, respectively.

Consolidated Changes in Equity

Three months ended September 30, 2021

3M Company Shareholders

(Millions) Total Common

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

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:

Cumulative translation adjustment ( 302 ) ( 301 ) ( 1 )

Defined benefit pension and post-retirement plans adjustment 119 119 —

Cash flow hedging instruments 48 48 —

Total other comprehensive income (loss), net of tax ( 135 )

Dividends declared ( 856 ) ( 856 )

Stock-based compensation 46 46

Reacquired stock ( 563 ) ( 563 )

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

Balance at September 30, 2021

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

Nine months ended September 30, 2021

Three months ended March 31, 2022

3M Company Shareholders

(Millions) Total Common

Capital Retained

Paid-in Capital Retained

Earnings Treasury

1 unchanged sentence

Comprehensive

Income (Loss) Non-

Balance at December 31, 2021

10 unchanged sentences

Issuances pursuant to stock option and benefit plans 164 ( 212 ) 376

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 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:

Cumulative translation adjustment 271 270 1

Defined benefit pension and post-retirement plans adjustment 116 116 —

Cash flow hedging instruments ( 71 ) ( 71 ) —

Total other comprehensive income (loss), net of tax 316

Dividends declared ( 847 ) ( 847 )

Stock-based compensation 42 42

Reacquired stock ( 1 ) ( 1 )

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

Balance at September 30, 2020

Balance at March 31, 2022

$ 15,004 $ 6,568 $ 46,056 $ ( 30,860 ) $ ( 6,834 ) $ 74

Nine months ended September 30, 2020

Three months ended March 31, 2021

3M Company Shareholders

4 unchanged sentences

Comprehensive

Income (Loss) Non-

Balance at December 31, 2020

7 unchanged sentences

Dividends declared ( 858 ) ( 858 )

Purchase of subsidiary shares ( 1 ) ( 1 )

Stock-based compensation 121 121

1 unchanged sentence

Issuances pursuant to stock option and benefit plans 295 ( 332 ) 627

Balance at September 30, 2020

Balance at March 31, 2021

$ 13,828 $ 6,292 $ 44,255 $ ( 29,020 ) $ ( 7,767 ) $ 68

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

Three months ended September 30, 2021

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

Income (Loss)

Balance at June 30, 2021, net of tax:

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

Other comprehensive income (loss), before tax:

Amounts before reclassifications ( 286 ) — 44 ( 242 )

Amounts reclassified out — 158 18 176

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 September 30, 2021, net of tax:

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

Nine months ended September 30, 2021

Three months ended March 31, 2022

(Millions) Cumulative

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Total other comprehensive income (loss), net of tax ( 170 ) 87 ( 1 ) ( 84 )

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 June 30, 2020, net of tax:

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

Other comprehensive income (loss), before tax:

Amounts before reclassifications 237 — ( 72 ) 165

Amounts reclassified out — 149 ( 21 ) 128

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 September 30, 2020, net of tax:

Balance at March 31, 2022, net of tax:

$ ( 2,113 ) $ ( 4,666 ) $ ( 55 ) $ ( 6,834 )

Nine months ended September 30, 2020

Three months ended March 31, 2021

(Millions) Cumulative

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Total other comprehensive income (loss), net of tax ( 223 ) 119 58 ( 46 )

Balance at September 30, 2020, net of tax

Balance at March 31, 2021, net of tax:

$ ( 1,673 ) $ ( 5,979 ) $ ( 115 ) $ ( 7,767 )

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Accumulated Other Comprehensive Income Location on Income

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

Three months ended

(Millions) 2022 2021

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

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

Transition asset $ — $ — Other (expense) income, net

Prior service benefit 13 15 Other (expense) income, net

Net actuarial loss ( 127 ) ( 173 ) Other (expense) income, net

Curtailments/Settlements ( 1 ) ( 1 ) Other (expense) income, net

Total before tax ( 115 ) ( 159 )

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Total reclassifications for the period, net of tax $ ( 82 ) $ ( 126 )

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.

The effective tax rate for the first quarter of 2022 was 18.8 percent, compared to 16.4 percent in the first quarter of 2021, an increase of 2.4 percentage points.

The primary factor that increased the Company’s effective tax rate included adjustments to reserves for uncertain tax positions.

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of March 31, 2022 and December 31, 2021 are $ 1,150 million and $ 1,112 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.

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.

As of March 31, 2022 and December 31, 2021, the Company had valuation allowances of $ 141 million and $ 142 million on its deferred tax assets, respectively.

Marketable Securities

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

(Millions) September 30, 2021 December 31, 2020

Corporate debt securities $ — $ 7

(Millions) March 31,

2022 December 31,

Commercial paper $ 35 $ 109

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Total marketable securities $ 139 $ 228

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.

At March 31, 2022 and December 31, 2021, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material.

The balances at March 31, 2022 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.

(Millions) September 30, 2021

(Millions) March 31,

Due in one year or less $ 112

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Long-Term Debt and Short-Term Borrowings

In March 2021, 3M, via a make-whole call offer, redeemed $ 450 million principal amount of 2.75 % notes due 2022.

The Company recorded an early debt extinguishment pre-tax charge of approximately $ 11 million within interest expense.

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

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 September 30, 2021 and December 31, 2020.

In February 2022, 3M repaid 500 million euros aggregate principal amount of fixed-rate medium-term notes that matured.

2021 issuances, maturities, and extinguishments of short- and long-term debt are described in Note 5 to the Consolidated Financial Statements in 3M’s 2021 Annual Report on Form 10-K.

The Company had no commercial paper outstanding at March 31, 2022 and December 31, 2021.

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 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):

The maturities of long-term debt for the periods subsequent to March 31, 2022 are as follows (in millions):

2023 2024 2025 2026 2027 After

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Pension and Postretirement Benefit Plans

As discussed in Note 1, effective in the first quarter of 2021, 3M made a change in accounting principle for net periodic pension and postretirement plan cost.

This impacted the expected return on plan assets and the amortization of net unamortized actuarial gains or losses expense components of net periodic benefit cost.

This change was applied retrospectively to all periods presented within 3M’s financial statements.

The service cost component of defined benefit net periodic benefit cost is recorded in cost of sales;

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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:

Components of net periodic benefit cost and other supplemental information for the three months ended March 31, 2022 and 2021 follow:

Benefit Plan Information

Three months ended September 30,

Qualified and Non-qualified

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

Interest cost 90 124 25 31 11 16

Expected return on plan assets ( 264 ) ( 263 ) ( 81 ) ( 77 ) ( 19 ) ( 20 )

Amortization of transition asset — — 1 1 — —

Amortization of prior service benefit ( 6 ) ( 6 ) — ( 1 ) ( 9 ) ( 8 )

Amortization of net actuarial loss 132 123 26 28 14 11

Settlements, curtailments, special termination benefits and other — — — — — 1

Total non-operating expense (benefit) ( 48 ) ( 22 ) ( 29 ) ( 18 ) ( 3 ) —

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

Nine months ended September 30,

Three months ended March 31,

Qualified and Non-qualified

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Total net periodic benefit cost (benefit) $ 27 $ 24 $ 6 $ 12 $ 10 $ 11

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

For the three months ended March 31, 2022 contributions totaling $ 41 million were made to the Company’s U.S.

and international pension plans and $ 1 million to its postretirement plans.

For total year 2021, the Company expects to contribute approximately $ 200 million of cash to its global defined benefit pension and postretirement plans.

For total year 2022, the Company expects to contribute in the range of $ 100 million to $ 200 million of cash to its global defined benefit pension and postretirement plans.

The Company does not have a required minimum cash pension contribution obligation for its U.S.

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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.

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.

Note 14 to the Consolidated Financial Statements in 3M's 2021 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:

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• Fair value of derivative instruments is included in Note 13.

• 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.

• Derivatives and/or hedging instruments associated with the Company’s long-term debt are described in Note 12 to the Consolidated Financial Statements in 3M’s 2021 Annual Report on Form 10-K.

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.

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Cash Flow Hedges:

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.

As of March 31, 2022, the Company had a balance of $ 55 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 $ 98 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 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).

Based on exchange rates as of March 31, 2022, of the total after-tax net unrealized balance as of March 31, 2022, 3M expects to reclassify approximately $ 19 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,

Three months ended

(Millions) 2022 2021

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Fair Value Hedges:

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

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

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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

Location on the Consolidated Balance Sheet March 31,

2022 December 31,

2021 March 31,

2022 December 31,

Short-term borrowings and current portion of long-term debt $ — $ — $ — $ —

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Net Investment Hedges:

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.

At March 31, 2022, 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 2.4 billion euros.

The maturity dates of these derivative and nonderivative instruments designated in net investment hedges range from 2022 to 2031.

2 unchanged sentences

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

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

Three months ended

(Millions) 2022 2021

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Location and Amount of Gain (Loss) Recognized in Income

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

Cost of sales Other expense

(income), net

Cost of sales Other expense

(income), net

Three months ended March 31,

Cost of sales Other expense (income), net

(Millions) 2022 2021 2022 2021

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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

Gross Notional Amount Assets Liabilities

(Millions) Location Fair Value Amount Location Fair Value Amount

2022 December 31,

2021 March 31,

2022 December 31,

2021 March 31,

2022 December 31,

Derivatives designated as hedging instruments

1 unchanged sentence

Foreign currency forward/option contracts 807 800 Other assets 41 41 Other liabilities 3 1

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

Interest rate contracts 800 800 Other assets — — Other liabilities 57 9

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Total derivative instruments $ 112 $ 119 $ 112 $ 33

Amount Assets Liabilities

December 31, 2020 (Millions)

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 3,166 Other current assets 13 Other current liabilities 14

Total derivatives not designated as hedging instruments 13 14

Total derivative instruments $ 44 $ 106

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.

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).

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.

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

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Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties

Gross Amount of Derivative Assets Presented in the

Balance Sheet Gross Amounts not Offset in the

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

Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet Gross Amount of Eligible Offsetting Recognized Derivative Liabilities Cash

Collateral Received Net Amount of

Derivative Assets

Derivatives subject to master netting agreements $ 84 $ 20 $ — $ 64

Derivatives not subject to master netting agreements — —

Total $ 84 $ 64

December 31, 2020 (Millions)

(Millions) March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31,

2022 December 31, 2021

Derivatives subject to master netting agreements $ 112 $ 119 $ 40 $ 25 $ — $ — $ 72 $ 94

2 unchanged sentences

Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties

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

Eligible Offsetting

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)

Gross Amounts not Offset in the

Consolidated Balance Sheet that are Subject to Master Netting Agreements

Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet Gross Amount of Eligible Offsetting Recognized Derivative Assets Cash

Collateral Received Net Amount of

Derivative Liabilities

(Millions) March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

Derivatives subject to master netting agreements $ 110 $ 33 $ 40 $ 25 $ — $ — $ 70 $ 8

2 unchanged sentences

Currency Effects

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.

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, increased pre-tax income by approximately $ 17 million and decreased pre-tax income by approximately $ 10 million for the three months ended March 31, 2022 and 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.

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.

In addition to the information above, refer to Note 15 to the Consolidated Financial Statements in 3M’s 2021 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

Using Inputs Considered as

(Millions) Level 1 Level 2 Level 3

Fair Value at Fair Value Measurements Using Inputs Considered as

Level 1 Level 2 Level 3

Description (Millions) March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

Available-for-sale:

Marketable securities:

Corporate debt securities $ — $ — $ — $ —

Commercial paper 35 109 — — 35 109 — —

4 unchanged sentences

Foreign currency forward/option contracts 112 119 — — 112 119 — —

Interest rate contracts 4 — 4 —

Derivative instruments — liabilities:

Foreign currency forward/option contracts 55 24 — — 55 24 — —

Description Fair Value at

December 31, 2020

Fair Value Measurements

Using Inputs Considered as

(Millions) Level 1 Level 2 Level 3

Available-for-sale:

Marketable securities:

Corporate debt securities $ 7 $ — $ 7 $ —

Commercial paper 237 — 237 —

Certificates of deposit/time deposits 31 — 31 —

treasury securities 125 125 — —

municipal securities 34 — — 34

Derivative instruments — assets:

Foreign currency forward/option contracts 37 — 37 —

Interest rate contracts 57 9 — — 57 9 — —

Derivative instruments — liabilities:

Foreign currency forward/option contracts 106 — 106 —

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).

1 unchanged sentence

municipal securities only Three months ended

September 30, Nine months ended

September 30,

(Millions) 2022 2021

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In addition, the plan assets of 3M’s pension and postretirement benefit plans are measured at fair value on a recurring basis (at least annually).

Refer to Note 13 in 3M’s 2020 Annual Report on Form 10-K.

Refer to Note 13 to the Consolidated Financial Statements in 3M’s 2021 Annual Report on Form 10-K.

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis:

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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 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 September 30, 2020.

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the three months ended March 31, 2022 and 2021.

Fair Value of Financial Instruments:

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

September 30, 2021 December 31, 2020

(Millions) Carrying

Value Carrying

March 31, 2022 December 31, 2021

(Millions) Carrying Value Fair Value Carrying Value Fair Value

Long-term debt, excluding current portion $ 14,801 $ 15,076 $ 16,056 $ 17,601

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 September 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 March 31, 2022 and December 31, 2021 due to the lower interest rates and tighter credit spreads compared to issuance levels.

Commitments and Contingencies

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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 environmental laws in the United States and other jurisdictions.

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 healthcare program related laws and regulations, such as the False Claims Act and anti-kickback laws, securities, and environmental laws in the United States and other jurisdictions.

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

From time to time, the Company also receives subpoenas or requests for information from various government agencies.

The Company generally responds to such subpoenas and requests in a cooperative, thorough and timely manner.

From time to time, the Company also receives subpoenas, investigative demands or requests for information from various government agencies.

The Company generally responds in a cooperative, thorough and timely manner.

These responses sometimes require time and effort and can result in considerable costs being incurred by the Company.

Such subpoenas and requests can also lead to the assertion of claims or the commencement of administrative, civil or criminal legal proceedings against the Company and others, as well as to settlements.

Such requests can also lead to the assertion of claims or the commencement of administrative, civil or criminal legal proceedings against the Company and others, as well as to settlements.

The outcomes of legal proceedings and regulatory matters are often difficult to predict.

Any determination that the Company’s operations or activities are not, or were not, in compliance with applicable laws or regulations could result in the imposition of fines, civil or criminal penalties, and equitable remedies, including disgorgement, suspension or debarment or injunctive relief.

Additional information about the Company’s process for disclosure and recording of liabilities and insurance receivables related to legal proceedings can be found in Note 16 “Commitments and Contingencies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Additional information about the Company’s process for disclosure and recording of liabilities and insurance receivables related to legal proceedings can be found in Note 16 “Commitments and Contingencies” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The following sections first describe the significant legal proceedings in which the Company is involved, and then describe the liabilities and associated insurance receivables the Company has accrued relating to its significant legal proceedings.

Respirator Mask/Asbestos Litigation

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.

As of March 31, 2022, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 4,012 individual claimants, compared to approximately 3,876 individual claimants with actions pending December 31, 2021.

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.

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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

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.

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 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.

Since the second half of 2020, the Company has experienced an increase in the number of cases filed that allege injuries from exposures to coal mine dust;

that increase represents the substantial majority of the growth in case numbers referred to above.

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.

3 unchanged sentences

that petition was denied in November 2020.

Trial for the unfair trade practices claims has been set for August 2022.

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

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

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 three months of 2022 for respirator mask/asbestos liabilities by $ 14 million.

In the first three months of 2022, the Company made payments for legal defense costs and settlements of $ 28 million related to the respirator mask/asbestos litigation.

As of March 31, 2022, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 626 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 September 30, 2021, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $ 4 million.

As of March 31, 2022, 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.

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

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.

As of March 31, 2022, 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 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.

As of March 31, 2022, the Company, through its Aearo subsidiary, had accruals of $ 41 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.

The accrual was reduced by $ 37 million during the second quarter of 2020 after paying Aearo’s share of certain settlements under the informal arrangement described below.

The accrual reflects the Company’s assessment of pending and expected lawsuits, its review of its respirator mask/asbestos liabilities, and the cost of resolving claims of persons who claim more serious injuries.

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The engagement is ongoing.

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 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.

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

Safety measures – wastewater discharge.

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.

Separately, the permitting authority has initiated a process to tighten the wastewater discharge limits immediately.

In October 2021, the Province of Antwerp adopted lower discharge limits for the nine PFAS compounds specifically identified in the water discharge permit and added a special condition that essentially prohibits discharge of any PFAS chemistry without a specific limit in the permit.

The action by the Province was timely appealed and a hearing on the appeal was held in January 2022.

The Flemish Regional Environmental Permit Commission subsequently issued a recommendation that the appeal be denied and that lower limits on PFAS compounds be imposed immediately.

In March 2022, the Flemish Minister of the Environment issued an order denying 3M Belgium’s appeal of the discharge permit modification, and a subsequent request for emergency suspension of the permit modification was also denied.

3M Belgium is complying with the modified discharge permit and is engaging in discussions with enforcement authorities to reconcile the new permit modification with certain pre-existing Flemish government environmental orders that require PFAS treatment.

Certain non-PFAS manufacturing operations continue under enforcement discretion.

The current wastewater discharge permit is scheduled to expire at the end of June 2022;

3M Belgium has applied for renewal and is in discussions with the authority regarding the applicability of the modified discharge limits and other terms in a new permit.

The adverse ruling on the appeal restricts the discharge of wastewater under the special condition noted above, which has resulted in continued idling of certain processes that materially and adversely impacts the facility’s operations, and further enforcement could cause further disruption to operations at the facility, including the possibility of causing the facility to cease operations.

While the Company is exploring multiple options to mitigate the impact of the adverse ruling, a prolonged suspension or interruption of the facility's operations, or unfavorable terms upon renewal of the current discharge permit, could have a significant adverse impact on the Company's businesses that receive products and other materials from the facility, some of which may not be available in similar quantities from other 3M facilities, which could in turn impact these businesses’ ability to fulfill supply obligations to their customers.

Safety measure – air emissions.

As previously disclosed, in October 2021, the Flemish environmental agency issued a new safety measure that prohibits all emissions of all forms of PFAS from the facility unless and until specifically approved on a process-by-process basis.

3M Belgium thereupon commenced an immediate appeal process to the Council of States, seeking, among other things, urgent suspension of the safety measure during the pendency of the appeal process.

At the same time, 3M Belgium initiated efforts to comply with the safety measure by temporarily idling the affected production at the facility.

The Council of States declined to grant urgent suspension of the safety measure.

An unsuccessful appeal of the safety measure would extend the period the affected production is idled and could have a material negative impact on the Zwijndrecht facility’s operations.

3M Belgium has established a regular cadence of meetings with the relevant authorities in connection with the requests to restart specific production processes that may result in emissions to air.

The authorities have accepted the third-party experts proposed by 3M Belgium who are required by the safety measure to review and opine on proposals necessary for restarting processes in accordance with the safety measure's limitations on emissions to air.

Although some requests have been approved for testing purposes, and the facility is taking actions to remedy emission issues, a prolonged suspension and idling of the facility's operations could have a significant adverse impact on the Company's businesses that receive products and other materials from the facility, some of which may not be available in similar quantities from other 3M facilities, which could in turn impact these businesses’ ability to fulfill supply obligations to their customers.

Administrative measure – soil piles.

Although 3M Belgium has been in discussions with the relevant authorities, removal and remediation of the soil piles has not been possible in the timeframe specified in the administrative measure, which may lead to the imposition of administrative fines.

Notice of default – environmental law compliance.

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 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 local commercial farmers impacted by restrictions on sale of agricultural products, and enhancements to site discharge control technologies.

3M is also committed to payment for ongoing off-site descriptive soil investigation and appropriate soil remediation.

In March 2022, the Company announced an investment of 150 million euros to advance remedial actions to address legacy PFAS previously produced at the Zwijndrecht facility.

An accredited third-party soil remediation expert has recently progressed towards a remedial action plan based on a descriptive soil investigation that would help inform 3M Belgium’s remedial actions onsite and in certain surrounding areas.

3M Belgium representatives continue to have discussions with the relevant authorities regarding further remedial actions.

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

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EPA reporting does not identify the sources of the PFOA and PFOS in the public water supplies.

In March 2021, EPA proposed including 29 PFAS in the fifth version of the unregulated contaminant monitoring rule.

If finalized, monitoring for these additional substances will occur between 2023 and 2025.

In February 2019, the EPA issued a PFAS Action Plan that outlines short- and long-term actions the EPA plans to take to address PFAS – actions that include developing a national drinking water determination for PFOA and PFOS, strengthening enforcement authorities and evaluating cleanup approaches, nationwide drinking water monitoring for PFAS, expanding scientific knowledge for understanding and managing risk from PFAS, and developing consistent risk communication tools for communicating with other agencies and the public.

In December 2021, EPA published the fifth version of the unregulated contaminant monitoring rule, which requires monitoring for 29 PFAS compounds between 2023 and 2025.

With respect to PFOA and PFOS in groundwater, EPA issued interim recommendations in December 2019, providing guidance for screening levels and preliminary remediation goals for groundwater that is a current or potential drinking water source, to inform final clean-up levels of contaminated sites.

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.

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

In December 2020, EPA released for public comment interim guidance on destroying and disposing of certain PFAS and PFAS-containing materials.

The Company submitted comments on that draft guidance document.

In March 2021, EPA published its intention to initiate a process to develop a national primary drinking water regulation for PFOA and PFOS;

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

EPA's Commitments to Action 2021-2024,” which presents EPA’s 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 compounds, requiring water systems to test for 29 PFAS compounds under the SDWA, and publishing improved analytical methods in eight different environmental matrices to monitor 40 PFAS compounds present in wastewater and stormwater discharges.

EPA previously published its intention to initiate a process to develop a national primary drinking water regulation for PFOA and PFOS;

the process is expected to take several years and will include further analyses, scientific review and opportunities for public comment.

EPA also issued an Advance Notice of Proposed Rulemaking (ANPR) in March 2021 to collect information regarding manufacturers of PFAS and the presence and treatment of PFAS in discharges from these manufacturing facilities.

The Company responded to that ANPR in May 2021.

EPA initiated the first step in the process in November 2021 by referring its proposed approach to developing a Maximum Contaminant Level Goal to the Science Advisory Board and soliciting public comment.

The Company submitted initial comments in December 2021 and supplemental comments in January and February 2022.

In April 2022, the Science Advisory Board published a draft report on its analysis of EPA’s proposed approach to developing a Maximum Contaminant Level Goal.

The Science Advisory Board will hold public hearings before finalizing its report to EPA.

EPA has stated that it intends to publish a proposed national primary drinking water regulation for PFOA and PFOS in the fall of 2022.

In October 2021, in response to a petition by New Mexico, EPA announced it will initiate a rulemaking to designate four PFAS compounds as hazardous constituents under the Resource Conservation and Recovery Act (RCRA).

Further, in January 2022, EPA formally submitted to the Office of Management and Budget (OMB) its plan to designate PFOA and PFOS as hazardous substances under CERCLA.

EPA has also taken several actions to increase reporting and restrictions regarding PFAS under the Toxic Substances Control Act (TSCA) and the Toxics Release Inventory (TRI), which is a part of the Emergency Planning and Community Right-to-Know Act.

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

EPA has added more than 170 PFAS compounds 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 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.

Those states include the following:

• Minnesota Department of Health in May 2017 stated that HBVs “are designed to reduce long-term health risks across the population and are based on multiple safety factors to protect the most vulnerable citizens, which makes them overprotective for most of the residents in our state.” As of 2021, the current HBVs are 35 ppt for PFOA, 15 ppt for PFOS, 47 ppt for PFHxS and 2 ppb for PFBS.

States with finalized standards include the following:

• Minnesota Department of Health in May 2017 stated that Health Based Values (HBVs) “are designed to reduce long-term health risks across the population and are based on multiple safety factors to protect the most vulnerable citizens, which makes them overprotective for most of the residents in our state.” As of 2021, the current HBVs are 35 ppt for PFOA, 15 ppt for PFOS, 47 ppt for PFHxS and 2 ppb for PFBS.

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.

• Minnesota Pollution Control Agency (MPCA) and three other state agencies published “Minnesota’s PFAS Blueprint” in February 2021.

The Blueprint outlines the State’s plans to manage, investigate, monitor, research and regulate PFAS discharges or releases in Minnesota.

MPCA also published the final version of its PFAS Monitoring Plan in March 2022.

Four 3M facilities - Cottage Grove, Maplewood, Hutchinson, and Woodbury - are among the 137 Minnesota facilities that are preliminarily scoped to be within the Monitoring Plan..

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

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

• New Jersey finalized drinking water standards and designated PFOA and PFOS as hazardous substances in June 2020.

• New York established drinking water standards for PFOA and PFOS in July 2020.

• New Hampshire established drinking water standards by legislation for certain PFAS, including PFOS and PFOA, in July 2020.

• Michigan implemented final drinking water standards for certain PFAS, including PFOS and PFOA, in August 2020.

• Massachusetts published final regulations establishing a drinking water standard relating to six combined PFAS in October 2020.

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.

• New Hampshire established drinking water standards by legislation for certain PFAS compounds, including PFOS and PFOA, in July 2020.

• Michigan implemented final drinking water standards for certain PFAS compounds, including PFOS and PFOA, in August 2020.

• Massachusetts published final regulations establishing a drinking water standard relating to six combined PFAS compounds in October 2020.

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

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.

Additionally, in December 2021, California finalized its listing of PFOS as a carcinogen, and PFNA as a reproductive toxicant under its Proposition 65 law.

California has also proposed listing PFOA as a carcinogen and PFDA, PFHxS, and PFUNDA as reproductive toxicants under Proposition 65.

In August 2021, Maine became the first state to ban all PFAS compounds in all products, except where use is unavoidable.

The ban becomes effective in 2030.

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.

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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.

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.

An oral argument on the merits was held in December 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.

In September 2021, the court denied EGLE’s motion in part, and briefing on the merits of the remaining claims is expected to be completed in April 2022.

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.

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John” case), seeking property damage from exposure to certain perfluorochemicals at or near the Company’s Decatur, Alabama, manufacturing facility.

The parties have agreed to continue to stay the St.

John case, pending ongoing mediation between the parties involved in this case and another case discussed below.

The parties have agreed to repeated stays of the St.

John case, to permit ongoing mediation between the parties involved in this case and another case discussed below.

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 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.

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and the Municipal Utilities Board of Decatur, Morgan County, Alabama.

The complaint alleges that the defendants violated the Resource Conservation and Recovery Act in connection with the disposal of certain PFAS through their ownership and operation of their respective sites.

The complaint further alleges such practices may present an imminent and substantial endangerment to health and/or the environment and that Riverkeeper has suffered and will continue to suffer irreparable harm caused by defendants’ failure to abate the endangerment unless the court grants the requested relief, including declaratory and injunctive relief.

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

This case was also 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.

The agreements, if finalized and approved by the court, will complement the Interim Consent Order that 3M entered with the Alabama Department of Environmental Management (ADEM) in 2020, as described below.

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.

In December 2021, the court in the St.

John action granted preliminary approval of the class settlement, and in April 2022, the court granted the final approval of the class settlement.

Also in December 2021, the court handling the Tennessee Riverkeeper action administratively closed that case in light of the settlement between the parties.

In October 2015, West Morgan-East Lawrence Water & Sewer Authority (Water Authority) filed a 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.

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.

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 March 2022, the court issued a final order approving the class settlement.

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).

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Plaintiffs in the Billings case have amended their complaint numerous times to add additional plaintiffs.

There are now approximately 4,000 named plaintiffs.

There were approximately 4,500 named plaintiffs.

The parties have entered into a settlement agreement and resolved the litigation in March 2022.

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

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The court denied a motion by co-defendant Daikin to stay this case pending resolution of the St.

John case, and the case is progressing through discovery.

The parties have engaged in negotiations to resolve the litigation.

The parties entered into a settlement agreement 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.

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In November 2019, the King plaintiffs amended their complaint to withdraw all class allegations.

Since then, the plaintiffs have added 37 new individual plaintiffs and voluntarily dismissed five plaintiffs (for a total of 55 plaintiffs).

Since then, the complaint has been amended several times to add or dismiss plaintiffs, and the case currently involves 42 plaintiffs.

The case is scheduled for trial in July 2023.

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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.

In November 2021, 3M and the City of Decatur, Decatur Utilities and Morgan County executed a collaborative agreement under which the Company agreed to contribute approximately $ 99 million and also to 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.

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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.

3M continues to negotiate with property owners and has resolved for an immaterial amount some of the claims brought by them.

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

Litigation Related to Historical PFAS Manufacturing Operations in Minnesota

In July 2016, the City of Lake Elmo filed a lawsuit in the U.S.

District Court for the District of Minnesota against 3M alleging that the City suffered damages from drinking water supplies contaminated with PFAS, including costs to construct alternative sources of drinking water.

In April 2019, 3M and the City of Lake Elmo agreed to settle the lawsuit for less than $ 5 million.

In December 2021, the parties reached a settlement under which 3M agreed to contribute $ 30 million that will be used on a new treatment system for Guin’s drinking water and a new wastewater treatment facility.

In March 2022, a new putative class action was filed in the Northern District of Alabama on behalf of Guin ratepayers.

Defendants include 3M, the Guin landfill, the Guin WWSB, and some waste transporters.

The plaintiffs allege that their water supply has been contaminated with PFAS, which has caused them property damage and unspecified damage to health interests.

State Attorneys General Litigation related to PFAS

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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.

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In June 2020, the court consolidated the two actions, along with two others brought by the NJDEP relating to the DuPont facilities, for case management and pretrial purposes.

In August 2020, the NJDEP filed second amended complaints.

3M has moved to dismiss those complaints.

Discovery is proceeding in these cases.

In December 2021, the court denied various motions to dismiss that the defendants had filed, including 3M's motions.

In March 2022, 3M answered the complaints.

The parties are conducting discovery.

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.

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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.

In September 2021 the state filed its second amended complaint, which 3M answered in October 2021.

A hearing on case scheduling was conducted in March 2022, but an order has not yet been issued.

T he case remains in early stages of litigation.

In June 2019, the Vermont Attorney General filed two lawsuits alleging contamination of the state’s drinking water supplies and other natural resources by PFAS chemicals.

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

The parties are now engaged in discovery 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.

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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.

In addition, in July 2021, the State of Alaska named 3M as a third-party defendant in two cases originally brought against the state by plaintiffs alleging property damage from AFFF use.

Both of these cases were also removed to federal court and transferred to the AFFF MDL.

North Carolina .

In November 2021, the State of North Carolina filed four lawsuits against 3M and other defendants, alleging damages from the release of PFAS into the environment from AFFF use at certain air force bases and a fire training academy.

These cases have been removed to federal court and have been transferred to the AFFF MDL.

In March 2022, the Illinois Attorney General filed a lawsuit in Illinois state court against 3M alleging contamination of the state's natural resources by PFAS compounds disposed of by, or discharged, or emitted from 3M's Cordova plant.

The complaint requests monetary damages, injunctive relief, civil penalties, a testing program, and a public outreach and information sharing program.

3M is seeking to remove the case to federal court.

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 PFAS-related lawsuits against certain manufacturers including the Company.

In addition, the Company is in discussions with several state attorneys general and agencies, responding to information and other requests relating to PFAS matters and exploring potential resolution of some of the matters raised.

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

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 of March 31, 2022, 2,195 lawsuits (including 32 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.

Additional AFFF cases continue to be filed in or transferred to the MDL.

The Company also continues to defend certain AFFF cases that remain in state court and be in discussions with pre-suit claimants for possible resolutions where appropriate.

The Company also continues to defend certain AFFF cases that remain in state court and is in discussions with pre-suit claimants for possible resolutions where appropriate.

In December 2018, the U.S.

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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.

The MDL court has encouraged the parties to negotiate to resolve cases in the MDL.

In November 2021, the defendants filed an omnibus motion regarding their government contractor defense.

Following an initial round of briefing on defendants’ motion completed in February 2022, the Court requested supplemental briefing on the issue, which is scheduled to be completed in July 2022.

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.

Plaintiffs seek damages that allegedly have been or will be incurred in investigating and remediating PFAS contamination at their properties and replacing or disposing of AFFF products containing long-chain PFAS.

Two of these cases have been removed to federal court and transferred to the AFFF MDL.

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 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.

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

As of March 31, 2022, the Company is aware of 19 other AFFF suits originally filed in various state courts in which the Company has been named a defendant.

Ten of these cases have been removed to federal court, where defendants have sought transfer to the AFFF MDL.

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.

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In New York, 3M is defending 39 individual cases and one putative class action filed in the U.S.

District Court for the Northern District of New York and four additional individual cases filed in New York state court against 3M, Saint-Gobain Performance Plastics Corp.

District Court for the Northern District of New York and five additional individual cases filed in New York state court against 3M, Saint-Gobain Performance Plastics Corp.

(Saint-Gobain), Honeywell International Inc.

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Plaintiffs allege that PFOA discharged from fabric coating facilities operated by non-3M entities (that allegedly had used PFOA-containing materials from 3M, among others) contaminated the drinking water in the Village of Hoosick Falls, the Town of Hoosick and Petersburg, New York.

They assert various tort claims for personal injury and property damage and in some cases request medical monitoring.

3M has answered the complaints in these individual cases, which are now proceeding through discovery.

In the federal court individual cases, the parties selected 24 claimants in May 2021 for a pool from which eight plaintiffs will be chosen for expert discovery and dispositive motions.

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

Plaintiffs in both the federal and state individual cases assert various tort claims for personal injury and property damage and in some cases request medical monitoring.

3M has answered the operative complaints in these individual cases, which are now proceeding through discovery.

In the federal court individual cases, the parties selected 24 claimants in May 2021 for a pool, which will be further narrowed for expert discovery, dispositive motions, and eventually trial.

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.

In February 2022, the district court issued an order granting final approval of the settlement.

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.

3M’s contribution is not considered material 3M is also defending 13 cases in the U.S.

District Court for the Eastern District of New York filed by various 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.

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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 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.

Five of these cases were selected over time for bellwether trials.

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 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.

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

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 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.

3M filed an answer and counterclaims to Wolverine’s third-party complaint in June 2019.

In September and October 2019, the parties (including 3M as third-party defendant) engaged in mediation.

In December 2019, the State of Michigan, the intervening townships, and Wolverine announced that they had tentatively resolved the State and townships’ claims against Wolverine in exchange for a $ 70 million payment and certain future remediation measures by Wolverine.

In February 2020, the court approved a Consent Decree that memorializes Wolverine’s ongoing remediation obligations and the State’s and intervening townships’ covenants not to bring further lawsuits as to the remediated area.

3M has been formally designated as a “Contributing Party,” and as such, the State’s and townships’ covenants will also apply to 3M.

In February 2020, 3M and Wolverine executed an agreement to resolve the legal claims between the two companies.

Pursuant to the agreement, 3M made a one-time financial contribution of $ 55 million in March 2020 to support Wolverine’s past and ongoing efforts to address PFAS remediation under Wolverine’s Consent Decree with the State and the townships.

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 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.

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 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.

These municipalities released 3M from claims relating to or arising out of the extension of municipal water or the alleged PFAS contamination in the area of that extension.

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

The parties also filed several dispositive and expert witness-related Daubert motions in November 2021, and the parties have engaged in productive mediation sessions.

The court has set a trial date in June 2022.

In addition to the consolidated federal court putative class action, as of March 31, 2022, 3M had been a defendant in approximately 275 private individual actions in Michigan state court based on similar allegations.

Five of these cases were selected over time for bellwether trials, all of which were dismissed or settled.

Regarding the remaining cases, in October 2021, 3M and Wolverine reached a settlement in principle with counsel representing all but three of the remaining private individual actions.

At a further mediation in December 2021, 3M and Wolverine reached a settlement in principle to resolve two more of the remaining cases (on behalf of seven plaintiff families).

Upon completion of these settlements, only one private individual action will remain pending in Michigan state court.

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 manu facturers 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 are proceeding through discovery.

The three water utility cases are proceeding through discovery, in the Gadsden case, mediation has been ordered and trial has been set for October 2022.

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.

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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 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.

3M filed a motion to dismiss in November 2020 and in January 2021, the court granted defendants’ motion to dismiss the case for lack of personal jurisdiction.

In February 2021, the plaintiffs voluntarily dismissed their action without prejudice and filed a new case in the AFFF MDL court.

Separately, in December 2020, the Orange County Water District and ten additional local water providers sued 3M, Decra Roofing and certain DuPont-related entities in California state court, alleging PFAS contamination of the plaintiffs’ water sources and also referring to 3M's industrial minerals facility in Corona, California as a potential source of contamination.

3M, together with co-defendants, is also defending another putative class action in federal court in Georgia, in which 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 was granted in March 2022.

3M's motion to dismiss the case was denied in March 2022 This case remains in early stages of litigation.

In California, 3M, Decra Roofing and certain DuPont-related entities were named as defendants in an action brought in state court by the Orange County Water District and ten additional local water providers in California state court in December 2020, alleging PFAS contamination of the plaintiffs’ water sources and also referring to 3M's industrial minerals facility in Corona, California as a potential source of contamination.

The plaintiffs filed an amended complaint, and 3M filed a demurrer to the amended complaint in March 2021.

In April 2021, the court denied 3M’s demurrer, and the case remains in early stages of litigation.

In April 2021, the court denied 3M’s demurrer.

In May 2021, the Orange County plaintiffs filed a second amended complaint.

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

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

District Court for the Central District of California 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.

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

Court of Appeals for the Ninth Circuit, which in March 2022 reversed the district court's remand order and ordered the case be returned to federal court.

The action currently is stayed pending the resolution of 3M and other defendants’ motion to transfer the action to the AFFF MDL court.

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.

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.

The demurrer was denied in January 2022 and 3M answered the complaint in February 2022.

In October 2021, a lawsuit was filed against 3M in California state court in San Luis Obispo County by the Atascadero Mutual Water Company, a local water supplier.

The complaint alleges PFAS contamination from 3M products generally.

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

District Court for the Central District of California.

The plaintiffs amended their complaint in February 2022 to add allegations and new defendants relating to AFFF, and the case was transferred to the AFFF MDL.

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.

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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 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.

An oral argument was held in September 2021.

In December 2021, the court issued an order retaining jurisdiction over the case and 3M renewed its previous motion to dismiss, which remains pending.

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 discovery closed in September 2021.

The parties expect to engage in mediation .

The parties engaged in mediation .

3M filed its motion for summary judgement in March 2022.

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

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In March 2021, 3M filed a motion to dismiss the Pequannock matter.

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 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 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.

Discovery is ongoing in both the Hopatcong and Pequannock matters.

3M, together with several co-defendants, is also defending sixteen 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.

These cases have all been coordinated for discovery, which is ongoing.

Plaintiffs in eight of these cases seek medical monitoring and property damages.

3M’s motion to dismiss the earliest filed of these cases was largely denied in February 2021, and 3M has since filed answers in all eight cases.

Plaintiffs in the eight remaining individual cases in federal court allege personal injuries to themselves or their disabled adult children.

3M has moved to dismiss five of these cases, and stipulated to apply the motions in the other cases.

In February 2022, 3M's motion to dismiss was largely denied.

In December 2021, plaintiffs filed four additional cases in New Jersey state court similar to the personal injury actions filed in federal court.

These cases have been removed to federal court, and plaintiffs recently moved to remand the cases to state court.

Finally, 3M is also defending a putative class action filed in New Jersey federal court in November 2021 by individuals who received drinking water from Middlesex Water Company that was allegedly contaminated with PFAS in excess of state regulatory levels.

Middlesex Water Company is also named as a defendant in this action.

With respect to 3M, the suit asserts claims for negligence, nuisance, and trespass.

Plaintiffs seek an injunction to include bottled water and home treatment systems and alleged damages for diminution-in-property value, among other relief.

3M filed a motion to dismiss in March 2022.

This case remains in early stages of litigation.

In South Carolina, a putative class action lawsuit was filed in South Carolina state court against 3M, DuPont and DuPont related entities in March 2022.

The lawsuit alleges property damage and personal injuries from contamination from PFAS compounds used and disposed of at the textile plant known as the Galey & Lord plant from 1966 until 2016.

The complaint seeks remedies including damages, punitive damages, and medical monitoring.

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

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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, and the court’s ruling on class certification is pending.

In March 2022, the court certified a class of "[i]ndividuals subject to the laws of Ohio, who have 0.05 [ppt] of PFOA (C-8) and at least 0.05 ppt of any other PFAS in their blood serum." The judge ordered additional briefing to permit defendants to narrow the proposed nationwide class by “show[ing] what states do not recognize the type of claim for relief filed by” the plaintiff.

The defendants have filed a petition for permission to file an interlocutory appeal of the certification order with the Sixth Circuit Court of Appeals.

Other PFAS-related Matters

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As previously reported, the Illinois EPA in August 2014 approved a request by the Company to establish a groundwater management zone at its manufacturing facility in Cordova, Illinois, which includes ongoing pumping of impacted site groundwater, groundwater monitoring and routine reporting of results.

In Minnesota, the Company continues to work with the Minnesota Pollution Control Agency (MPCA) pursuant to the terms of the previously disclosed May 2007 Settlement Agreement and Consent Order to address the presence of certain PFAS in the soil and groundwater at former disposal sites in Washington County, Minnesota (Oakdale and Woodbury) and at the Company’s manufacturing facility at Cottage Grove, Minnesota.

Under this agreement, the Company’s principal obligations include (i) evaluating releases of certain PFAS from these sites and proposing response actions;

(ii) providing treatment or alternative drinking water upon identifying any level exceeding a Health Based Value (HBV) or Health Risk Limit (HRL) (i.e., the amount of a chemical in drinking water determined by the Minnesota Department of Health (MDH) to be safe for human consumption over a lifetime) for certain PFAS for which a HBV and/or HRL exists as a result of contamination from these sites;

(iii) remediating identified sources of other PFAS at these sites that are not controlled by actions to remediate PFOA and PFOS;

In Minnesota, the Company continues to work with the Minnesota Pollution Control Agency (MPCA) pursuant to the terms of the previously disclosed May 2007 Settlement Agreement and Consent Order to address the presence of certain PFAS compounds in the soil and groundwater at former disposal sites in Washington County, Minnesota (Oakdale and Woodbury) and at the Company’s manufacturing facility at Cottage Grove, Minnesota.

Under this agreement, the Company’s principal obligations include (i) evaluating releases of certain PFAS compounds from these sites and proposing response actions;

(ii) providing treatment or alternative drinking water upon identifying any level exceeding a HBV or Health Risk Limit (HRL) (i.e., the amount of a chemical in drinking water determined by the Minnesota Department of Health (MDH) to be safe for human consumption over a lifetime) for certain PFAS compounds for which a HBV and/or HRL exists as a result of contamination from these sites;

(iii) remediating identified sources of other PFAS compounds at these sites that are not controlled by actions to remediate PFOA and PFOS;

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.

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

In Alabama, as previously reported, the Company entered into a voluntary remedial action agreement with the Alabama Department of Environmental Management (ADEM) to remediate the presence of PFAS in the soil and groundwater at the Company’s manufacturing facility in Decatur, Alabama associated with the historic (1978-1998) incorporation of wastewater treatment plant sludge.

In Alabama, as previously reported, the Company entered into a voluntary remedial action agreement with ADEM to remediate the presence of PFAS in the soil and groundwater at the Company’s manufacturing facility in Decatur, Alabama associated with the historic (1978-1998) incorporation of wastewater treatment plant sludge.

With ADEM’s agreement, 3M substantially completed installation of a multilayer cap on the former sludge incorporation areas.

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In April 2019, the Company voluntarily disclosed the releases to the U.S.

Environmental Protection Agency (EPA) and the Alabama Department of Environmental Management (ADEM).

EPA and ADEM.

During June and July 2019, the Company took steps to fully control the aforementioned processes by capturing all wastewater produced by the processes and by treating all air emissions.

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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, 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.

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 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;

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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.

The Company is cooperating with this and other inquiries and requests regarding its manufacturing facilities and is producing documents in response to the inquiries.

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).

The Company continues to work with the EPA and IEPA to address these issues from the Cordova facility.

The Company continues to work with the EPA and IEPA to address these issues from the Cordova facility, including the nature and scope of a draft EPA SDWA Administrative Consent Order received in December 2021 proposing that the Company survey and sample proposed private and public drinking water wells within the vicinity of the Cordova facility and provide alternate drinking water as appropriate.

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.

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In January 2021, the Company received a notice of violation (NOV) from MPCA related to, among other matters, the above-described Clean Water Act and RCRA issues.

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

The Company is cooperating with MPCA to address the issues that are the subject of the NOV and is in discussions with MPCA regarding an assessed penalty.

In October 2021, the Company received information requests from MPCA seeking additional toxicological and other information related to certain PFAS compounds.

The Company is cooperating with these inquires and is producing documents and information in response to the requests.

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.

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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 ongoing developments in those matters, including discussions regarding negotiated resolutions.

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.

During the first three months of 2022, as a result of recent developments in ongoing environmental matters and litigation, the Company increased its accrual for PFAS-related other environmental liabilities by $ 162 million since December 31, 2021 and made related payments of $ 100 million.

As of March 31, 2022, the Company had recorded liabilities of $ 474 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.

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.

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 March 31, 2022, the Company had recorded liabilities of $ 32 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.

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.

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

As of March 31, 2022, 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;

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

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.

As of March 31, 2022, the Company is a named defendant in lawsuits (including 14 putative class actions) in various state and federal courts that purport to represent approximately 69,740 individual claimants making similar allegations.

The significant increase from year-end 2021 in the number of claimants is largely due to the number of claims moved from the administrative docket to the active docket as the result of the transition orders the multi-district litigation (MDL) judge began issuing at the end of 2021 (as more fully described below), in addition to claims filed directly on the active docket during the first quarter of 2022.

In April 2019, the U.S.

Judicial Panel on Multidistrict Litigation granted motions to transfer and consolidate all cases pending in federal courts to the U.S.

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

District Court for the Northern District of Florida to be managed in an MDL proceeding to centralize pre-trial proceedings.

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

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3M plans to appeal the verdict.

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.

3M received verdicts in its favor in the fifth and sixth bellwether trials.

3M received an adverse verdict in the seventh and eighth bellwether trials, in which the juries awarded the plaintiffs $ 13 million and $ 23 million, respectively.

3M plans to appeal these verdicts.

3M prevailed in the ninth and tenth bellwether cases but received adverse verdicts in the eleventh bellwether case in which the jury awarded each of the two plaintiffs $ 15 million in compensatory and $ 40 million in punitive damages.

3M received adverse verdicts in the twelfth and thirteenth bellwether cases in which the jury awarded one plaintiff with $ 50 million and another with $ 8 million in compensatory damages.

3M plans to appeal these verdicts.

3M prevailed in the fourteenth bellwether trial.

The next two bellwether cases are scheduled for trial in 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.

An administrative docket of approximately 199,000 unfiled and unverified claims (after factoring in approximately 75,000 claims in a transitional process as described below) has also been maintained at the MDL court.

The MDL court in August 2021 provided notice of an intent to issue forthcoming transition orders requiring all claims be moved off the administrative docket to the active docket on a rolling basis over 12 months.

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

To date approximately 75,000 claims are in the process of being transitioned to the active docket or dismissed.

The MDL court also ordered the parties to prepare for trial 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.

In November 2021, the judge issued the first wave order of the first 500 cases over the next eight months , and in February 2022, the judge issued the second wave order of an additional 500 cases.

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

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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.

In November 2021, the Eighth Circuit granted 3M's unopposed motion to vacate the remand orders in the remaining appeals of military service member cases.

The military service member cases are expected to be remanded to federal court and transferred to the MDL.

There are approximately 40 lawsuits involving approximately 900 plaintiffs pending in the state court.

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.

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

The first trial in Hennepin County is scheduled for no earlier than June 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 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.

The plaintiffs claim they underwent various joint arthroplasty, cardiovascular, and other surgeries and later developed surgical site infections due to the use of the Bair Hugger™ patient warming system.

As of March 31, 2022, the Company was a named defendant in approximately 5,267 lawsuits in the United States 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 is a named defendant in lawsuits in federal courts involving over 5,000 plaintiffs alleging that they underwent various joint arthroplasty, cardiovascular, and other surgeries and later developed surgical site infections due to the use of the Bair Hugger™ patient warming system.

The plaintiffs seek damages and other relief based on theories of strict liability, negligence, breach of express and implied warranties, failure to warn, design and manufacturing defect, fraudulent and/or negligent misrepresentation/concealment, unjust enrichment, and violations of various state consumer fraud, deceptive or unlawful trade practices and/or false advertising acts.

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In July 2019, the court excluded several of the plaintiffs’ causation experts, and granted summary judgment for 3M in all cases pending at that time in the MDL.

Plaintiffs have appealed that decision to the U.S.

Plaintiffs appealed that decision to the U.S.

Court of Appeals for the Eighth Circuit.

Plaintiffs have also appealed a 2018 jury verdict in favor of 3M in the first bellwether trial in the MDL and appealed the dismissal of another bellwether case.

Plaintiffs also appealed a 2018 jury verdict in favor of 3M in the first bellwether trial in the MDL and appealed the dismissal of another bellwether case.

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.

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

In November 2021, the Eighth Circuit court denied 3M’s petition for rehearing en banc.

In February 2022, the Company filed a petition for a writ of certiorari in the U.S.

Supreme Court.

The MDL court has not yet issued a new case management order.

In February 2022, the MDL court ordered the parties to engage in any mediation sessions that a court-appointed mediator deems appropriate, initial sessions will take place in May 2022.

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.

The MDL has stayed all 26 remaining lawsuits pending the appeal of the summary judgment decision.

In February 2020, the MDL court remanded two cases to state court in Jackson County, Missouri that combined Bair Hugger product liability claims with medical malpractice claims.

The Missouri court set trial dates of September 2022 and April 2023 for these two cases.

In addition to the federal cases, there are four state court cases.

Three are pending in Missouri state court and combine Bair Hugger product liability claims with medical malpractice claims.

Two of the Missouri cases are set for trial;

one in September 2022 and one in April 2023.

There is also one case in Hidalgo County, Texas that combines Bair Hugger product liability claims with medical malpractice claims.

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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.

The court has set a trial date in December 2022.

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

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

Stockholder Litigation

Securities and Shareholder Litigation

In July 2019, Heavy & General Laborers’ Locals 472 & 172 Welfare Fund filed a putative securities class action against 3M Company, its former Chairman and CEO, current Chairman and CEO, and former CFO in the U.S.

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

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, which judgment is now final.

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

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The derivative lawsuits rely on similar factual allegations as the putative securities class action discussed above.

The state court plaintiffs have agreed to stay these cases pending a ruling on a motion to dismiss the securities class action.

The Minnesota state court cases were consolidated and stayed pending a decision on the motion to dismiss in the securities class action, and the Minnesota state plaintiffs have agreed to further stay their action pending a decision on the motion to dismiss the federal derivative lawsuit discussed below.

In October 2020, the derivative action pending in the U.S.

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

The Minnesota federal plaintiffs filed an amended complaint in February 2022, relying on similar allegations as the putative securities class action discussed above.

Federal False Claims Act / Qui Tam Litigation

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

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.

In August 2021, the district court entered a discovery and pretrial schedule with an April 2022 trial date.

Relator-plaintiff Godecke and the KCI Defendants reached a settlement, which includes a settlement payment by the KCI Defendants to relator-plaintiff of an agreed amount and a complete dismissal of all claims with prejudice by both parties and without prejudice to the United States.

In January 2022, the district court entered an order dismissing the case with prejudice as to the relator-plaintiff and the KCI Defendants and without prejudice to the United States.

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.

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

As of March 31, 2022, the remaining shares available for grant under the LTIP Program are 31 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.

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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 nine months ended September 30, 2021 and 2020.

Capitalized stock-based compensation amounts were not material for the three months ended March 31, 2022 and 2021.

Stock-Based Compensation Expense

Three months ended

September 30, Nine months ended

September 30,

(Millions) 2022 2021

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Stock Option Program

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

The following table summarizes stock option activity during the three months ended March 31, 2022:

(Options in thousands) Number of

Options Weighted

Exercise Price Weighted

Life (months) Aggregate

Exercise Price Weighted Average

Remaining Contractual Life (months) Aggregate

Intrinsic Value

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Forfeited ( 156 ) 174.36

September 30 34,927 $ 163.16 64 $ 691

March 31 37,069 165.42 65 $ 191,760

Options exercisable

September 30 27,271 $ 160.79 52 $ 634

March 31 29,505 $ 165.47 54 $ 191,760

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

As of March 31, 2022, there was $ 88 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 26 months.

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.

The total intrinsic values of stock options exercised were $ 83 million and $ 180 million during the three months ended March 31, 2022 and 2021, respectively.

Cash received from options exercised was $ 103 million and $ 240 million for the three months ended March 31, 2022 and 2021, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the exercise of employee stock options were $ 17 million and $ 38 million for the three months ended March 31, 2022 and 2021, respectively.

For the primary 2022 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.

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Restricted Stock and Restricted Stock Units

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

The following table summarizes restricted stock and restricted stock unit activity during the three months ended March 31, 2022:

(Shares in thousands) Number of Shares Weighted Average

Grant Date Fair Value

Nonvested balance —

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Forfeited ( 35 ) 167.51

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.

As of March 31

As of March 31, 2022, there was $ 181 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 28 months.

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.

The total fair value of restricted stock and restricted stock units that vested during the three months ended March 31, 2022 and 2021 was $ 80 million and $ 78 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 $ 14 million for the three months ended March 31, 2022 and 2021, respectively.

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

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Instead of restricted stock units, the Company makes annual grants of performance shares to members of its executive management.

The 2021 performance criteria for these performance shares (organic volume growth, return on invested capital, free cash flow conversion, and earnings per share growth) were selected because the Company believes that they are important drivers of long-term stockholder value.

The 2022 performance criteria for these performance shares (organic sales growth, free cash flow growth, and earnings per share growth) were selected because the Company believes that they are important drivers of long-term stockholder value.

The number of shares of 3M common stock that could actually be delivered at the end of the three-year performance period may be anywhere from 0 % to 200 % of each performance share granted, depending on the performance of the Company during such performance period.

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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 nine months ended September 30, 2021:

(Shares in thousands) Number of

Shares Weighted

The following table summarizes performance share activity during the three months ended March 31, 2022:

(Shares in thousands) Number of Shares Weighted Average Grant Date Fair Value

Undistributed balance —

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Forfeited ( 13 ) 165.21

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.

As of March 31

As of March 31, 2022, there was $ 46 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 19 months.

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.

The total fair value of performance shares that were distributed were $ 21 million and $ 22 million for the three months ended March 31, 2022 and 2021, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the distribution of performance shares were $ 4 million and $ 4 million for the three months ended March 31, 2022 and 2021, respectively.

Business Segments

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3M discloses business segment operating income as its measure of segment profit/loss, reconciled to both total 3M operating income and income before taxes.

Business segment operating income includes dual credit for certain related operating income (as described below in “Elimination of Dual Credit”).

Business segment operating income excludes certain expenses and income that are not allocated to business segments (as described below in “Corporate and Unallocated”).

Additionally, the following special items are excluded from business segment operating income and, instead, are included within Corporate and Unallocated:

significant litigation-related charges/benefits, gain/loss on sale of businesses (see Note 3), and divestiture-related restructuring actions (see Note 5).

Effective in the first quarter of 2021, the measure of segment operating performance used by 3M’s CODM changed and, as a result, 3M’s disclosed measure of segment profit/loss (business segment operating income) was updated.

Effective in the first quarter of 2022, the measure of segment operating performance used by 3M’s chief operating decision maker (CODM) changed and, as a result, 3M’s disclosed measure of segment profit/loss (business segment operating income) was updated.

The change to business segment operating income aligns with the update to how the CODM assesses performance and allocates resources for the Company’s business segments.

The change included the following:

Changes in cost attribution

The extent of allocation and method of attribution of certain net costs were updated to result in fewer items remaining in Corporate and Unallocated and, instead, including them in 3M’s business segments’ operating performance.

See the updated description of Corporate and Unallocated below.

Previously, a larger portion of ongoing corporate staff costs and costs associated with centrally managed material resource centers was retained in Corporate and Unallocated.

In addition, portions of pension costs and costs associated with certain centrally managed but ongoing business-related legal matters, along with certain insurance-related costs, were retained in Corporate and Unallocated.

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.

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

Also effective in the first quarter of 2021, within 3M’s Consumer business segment, certain safety products formerly within the Construction and Home Improvement Division and the Stationery and Office Division were moved to the newly-named Consumer Health and Safety Division (formerly the Consumer Health Care Division).

The financial information presented herein reflects the impact of the preceding changes for all periods presented.

The changes included the items described below.

The financial information presented herein reflects the impact of these business segment reporting changes for all periods presented.

Eliminating inclusion of dual credit in measure of segment operating performance

3M business segment operating performance measures were updated to no longer include dual credit to business segments for certain sales and related operating income.

Management previously evaluated its business segments based on net sales and operating income performance, including dual credit reporting.

3M reflected additional (“dual”) credit to another business segment when the customer account activity (“sales district”) with respect to the particular product sold to the external customer was provided by a different business segment.

For example, privacy screen protection products are primarily sold by the Display Materials and Systems Division within the Transportation and Electronics business segment;

however, certain sales districts within the Consumer business segment provide the customer account activity for sales of the product to particular customers.

In this example, the non-primary selling segment (Consumer) previously would also have received credit for the associated net sales initiated through its sales district and the related approximate operating income.

The offset to the dual credit business segment reporting was reflected as a reconciling item entitled “Elimination of Dual Credit,” such that sales and operating income in total were unchanged.

Reflecting certain litigation-related costs in the Safety and Industrial segment's operating performance measure

3M's business segment operating performance measure with respect to its Safety and Industrial business segment was updated relative to litigation-related costs for respirator mask/asbestos litigation matters.

Previously, 3M included these costs, when significant, as a special item (as further described below) within Corporate and Unallocated.

3M now includes all litigation-related costs associated with respirator mask/asbestos litigation matters within the Safety and Industrial business segment (along with other Safety and Industrial matters already included therein, such as those related to Combat Arms Earplugs).

Business Segment Information

(Millions) Three months ended

September 30, Nine months ended

September 30,

Net Sales 2022 2021

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Corporate and Unallocated 1 ( 2 )

Elimination of Dual Credit ( 520 ) ( 553 ) ( 1,693 ) ( 1,471 )

Total Company 8,829 8,851

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Consumer 224 269

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

Total business segment operating income 1,804 2,041

Corporate and Unallocated

Special items:

Significant litigation-related (charges)/benefits — — — ( 17 )

Corporate special items:

Net costs for significant litigation ( 187 ) ( 70 )

Gain/(loss) on sale of businesses — —

Divestiture-related restructuring actions — — — ( 55 )

Other corporate expense - net 24 23

4 unchanged sentences

Corporate and Unallocated

Corporate and Unallocated operating income includes “special items” and “other corporate expense-net”.

Special items include significant litigation-related charges/benefits, gain/loss on sale of businesses, and divestiture-related restructuring costs.

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.

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

Corporate and Unallocated operating income includes “corporate special items” and “other corporate expense-net”.

Corporate special items include net costs for significant litigation associated with PFAS-related other environmental matters (see Note 14), gain/loss on sale of businesses (see Note 3), and divestiture-related restructuring costs.

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, 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 former Drug Delivery business following its 2020 divestiture.

Items 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.

Elimination of Dual Credit

3M business segment reporting measures include dual credit to business segments for certain sales and related operating income.

Management evaluates each of its four business segments based on net sales and operating income performance, including dual credit reporting to further incentivize sales growth.

As a result, 3M reflects additional (“dual”) credit to another business segment when the customer account activity (“sales district”) with respect to the particular product sold to the external customer is provided by a different business segment.

This additional dual credit is largely reflected at the division level.

For example, privacy screen protection products are primarily sold by the Display Materials and Systems Division within the Transportation and Electronics business segment;

however, certain sales districts within the Consumer business segment provide the customer account activity for sales of the product to particular customers.

In this example, the non-primary selling segment (Consumer) would also receive credit for the associated net sales initiated through its sales district and the related approximate operating income.

The assigned operating income related to dual credit activity may differ from operating income that would result from actual costs associated with such sales.

The offset to the dual credit business segment reporting is reflected as a reconciling item entitled “Elimination of Dual Credit,” such that sales and operating income in total are unchanged.

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