What changed in this filing

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Item 1. Financial Statements

2022-07-27 compared with 2022-04-26 · 416 added, 237 removed, 1324 unchanged (33% of the section changed)

3 unchanged sentences

Three months ended

June 30, Six months ended

(Millions, except per share amounts) 2022 2021 2022 2021

20 unchanged sentences

3M Company and Subsidiaries

Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income (Loss)

Three months ended

June 30, Six months ended

(Millions) 2022 2021 2022 2021

11 unchanged sentences

Consolidated Balance Sheet

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

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

2022 December 31,

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944,033,056 shares issued

Shares outstanding - March 31, 2022:

Shares outstanding - June 30, 2022:

Shares outstanding - December 31, 2021:

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( 30,781 ) ( 30,463 )

Shares at March 31, 2022:

Shares at June 30, 2022:

Shares at December 31, 2021:

7 unchanged sentences

Consolidated Statement of Cash Flows

Three months ended

Six months ended

(Millions) 2022 2021

6 unchanged sentences

Stock-based compensation expense 182 184

Gain on sale of businesses — —

Deferred income taxes ( 451 ) 91

9 unchanged sentences

Proceeds from sale of PP&E and other assets 56 43

Acquisitions, net of cash acquired — —

Purchases of marketable securities and investments ( 518 ) ( 1,188 )

25 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 most recent Annual Report on Form 10-K.

This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its Current Report on Form 8-K dated April 26, 2022 (which updated 3M's 2021 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).

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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.

Local currencies generally are considered the functional currencies outside the United States.

Exceptions include 3M’s subsidiaries in Argentina and, beginning in the second quarter of 2022, in Turkey, the economy of which also became highly inflationary.

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

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.

1 unchanged sentence

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 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.

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 31.9 million and 27.5 million average options for the three and six months ended June 30, 2022, respectively, and 6.3 million and 7.5 million average options for the three and six months ended June 30, 2021, respectively.

The computations for basic and diluted earnings per share follow:

1 unchanged sentence

Three months ended

June 30, Six months ended

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

1 unchanged sentence

Denominator for weighted average 3M common shares outstanding – basic

571.0 581.0 571.6 580.7

Dilution associated with the Company’s stock-based compensation plans 1.7 7.6 2.2 6.7

Denominator for weighted average 3M common shares outstanding – diluted

572.7 588.6 573.8 587.4

Earnings per share attributable to 3M common shareholders – basic

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New Accounting Pronouncements

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.

Refer to Note 1 to the Consolidated Financial Statements in 3M’s Current Report on Form 8-K dated April 26, 2022 (which updated 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 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.

Deferred revenue (current portion) as of June 30, 2022 and December 31, 2021 was $ 503 million and $ 529 million, respectively.

Approximately $ 140 million and $ 340 million of the December 31, 2021 balance was recognized as revenue during the three and six months ended June 30, 2022, respectively, while approximately $ 140 million and $ 320 million of the December 31, 2020 balance was recognized as revenue during the three and six months ended June 30, 2021, respectively.

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 $ 136 million during the three months ended March 31, 2022 and $ 140 million during the three months ended March 31, 2021.

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 $ 284 million during the three and six months ended June 30, 2022, respectively, and $ 145 million and $ 285 million during the three and six months ended June 30, 2021, respectively.

Disaggregated revenue information:

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June 30, Six months ended

Net Sales (Millions) 2022 2021 2022 2021

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Transportation Safety 222 257 420 472

Other Transportation and Electronics — ( 1 ) — ( 1 )

Total Transportation and Electronics Business Segment 2,268 2,355 4,608 4,751

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Separation and Purification Sciences 255 247 505 487

Other Health Care — ( 4 ) — ( 4 )

Total Health Care Business Group 2,179 2,165 4,303 4,234

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Three months ended

June 30, Six months ended

Net Sales (Millions) 2022 2021 2022 2021

4 unchanged sentences

Worldwide $ 8,702 $ 8,950 $ 17,531 $ 17,801

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.

Americas included United States net sales to customers of $ 3.9 billion and $ 7.5 billion for the three and six months ended June 30, 2022, respectively, and $ 3.8 billion and $ 7.4 billion for the three and six months ended June 30, 2021, respectively.

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.

Refer to Note 3 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M’s 2021 Annual Report on Form 10-K) for more information on relevant pre-2022 acquisitions and divestitures.

Acquisitions:

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2022 acquisitions:

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

There were no acquisitions that closed during the six months ended June 30, 2022.

Divestitures:

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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.

Under the terms of the agreements, which involve a tax-free Reverse Morris Trust, the Food Safety business would be either 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 $ 1.0 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.

In late July 2022, 3M announced it intends to complete the transaction through a split-off with a closing date of September 1, 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.

Due to factors such as the nature of the transaction and underlying approvals, the Food Safety business is not considered held for sale as of June 30, 2022.

In July 2022, 3M announced its intention to spin off the Health Care business as a separate public company.

3M expects to initially retain an ownership position of 19.9 % in the business, which 3M intends to monetize over time.

The Company expects to complete the transaction, which is intended to be tax-free for U.S.

federal income tax purposes, by year-end 2023.

Because the intended transaction is a spin-off, the Health Care business will not be classified as held for sale.

Operating income and held for sale amounts:

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.

Operating income information of the Health Care business, inclusive of the Food Safety Division, is included in Note 16.

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 three months of 2022.

There was no goodwill recorded from acquisitions during the first six 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, 2021 and March 31, 2022, follow:

The goodwill balance by business segment as of December 31, 2021 and June 30, 2022, follow:

(Millions) Safety and Industrial Transportation and

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Translation and other ( 86 ) ( 50 ) ( 269 ) ( 17 ) ( 422 )

Balance as of March 31, 2022

Balance as of June 30, 2022

$ 4,536 $ 1,775 $ 6,517 $ 236 $ 13,064

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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 March 31, 2022, and December 31, 2021, follow:

(Millions) March 31,

The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets, as of June 30, 2022, and December 31, 2021, follow:

(Millions) June 30,

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.

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

Amortization expense for the three and six months ended June 30, 2022 and 2021 follows:

Three months ended

June 30, Six months ended

(Millions) 2022 2021 2022 2021

Amortization expense $ 129 $ 134 $ 260 $ 267

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

Expected amortization expense for acquired amortizable intangible assets recorded as of June 30, 2022:

(Millions) Remainder of 2022

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Operational/Marketing Capability Restructuring:

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.

As described in Note 5 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 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.

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

Three months ended

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(Millions) 2022 2021

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

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Employee-Related

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Adjustments ( 9 )

Accrued restructuring action balances as of March 31, 2022

Accrued restructuring action balances as of June 30, 2022

Remaining activities related to this restructuring are expected to be largely completed through the third quarter of 2022.

Supplemental Income Statement Information

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June 30, Six months ended

(Millions) 2022 2021 2022 2021

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Supplemental Equity and Comprehensive Income Information

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

Cash dividends declared and paid totaled $ 1.49 and $ 1.48 per share for the first and second quarters of 2022 and 2021, respectively, or $ 2.98 and $ 2.96 per share for the first six months of 2022 and 2021, respectively.

Consolidated Changes in Equity

Three months ended March 31, 2022

Three months ended June 30, 2022

3M Company Shareholders

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Income (Loss) Non-

Balance at March 31, 2022

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

Net income 82 78 4

Other comprehensive income (loss), net of tax:

Cumulative translation adjustment ( 705 ) ( 701 ) ( 4 )

Defined benefit pension and post-retirement plans adjustment 85 85

Cash flow hedging instruments 88 88

Total other comprehensive income (loss), net of tax ( 532 )

Dividends declared ( 848 ) ( 848 )

Stock-based compensation 48 48

Reacquired stock — —

Issuances pursuant to stock option and benefit plans 62 ( 17 ) 79

Balance at June 30, 2022

$ 13,816 $ 6,616 $ 45,269 $ ( 30,781 ) $ ( 7,362 ) $ 74

Six months ended June 30, 2022

3M Company Shareholders

(Millions) Total Common

Paid-in Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Income (Loss) Non-

Balance at December 31, 2021

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Issuances pursuant to stock option and benefit plans 226 ( 229 ) 455

Balance at June 30, 2022

$ 13,816 $ 6,616 $ 45,269 $ ( 30,781 ) $ ( 7,362 ) $ 74

Three months ended June 30, 2021

3M Company Shareholders

(Millions) Total Common

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Income (Loss) Non-

Balance at March 31, 2021

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

Three months ended March 31, 2021

Net income 1,525 1,524 1

Other comprehensive income (loss), net of tax:

Cumulative translation adjustment 170 171 ( 1 )

Defined benefit pension and post-retirement plans adjustment 121 121

Cash flow hedging instruments ( 11 ) ( 11 )

Total other comprehensive income (loss), net of tax 280

Dividends declared ( 858 ) ( 858 )

Stock-based compensation 54 54

Reacquired stock ( 499 ) ( 499 )

Issuances pursuant to stock option and benefit plans 186 ( 97 ) 283

Balance at June 30, 2021

$ 14,516 $ 6,346 $ 44,824 $ ( 29,236 ) $ ( 7,486 ) $ 68

Six months ended June 30, 2021

3M Company Shareholders

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Issuances pursuant to stock option and benefit plans 481 ( 429 ) 910

Balance at March 31, 2021

Balance at June 30, 2021

$ 14,516 $ 6,346 $ 44,824 $ ( 29,236 ) $ ( 7,486 ) $ 68

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

Three months ended March 31, 2022

Three months ended June 30, 2022

(Millions) Cumulative

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Income (Loss)

Balance at March 31, 2022, net of tax:

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

Other comprehensive income (loss), before tax:

Amounts before reclassifications ( 664 ) — 128 ( 536 )

Amounts reclassified out — 112 ( 15 ) 97

Total other comprehensive income (loss), before tax ( 664 ) 112 113 ( 439 )

Tax effect ( 37 ) ( 27 ) ( 25 ) ( 89 )

Total other comprehensive income (loss), net of tax ( 701 ) 85 88 ( 528 )

Balance at June 30, 2022, net of tax:

$ ( 2,814 ) $ ( 4,581 ) $ 33 $ ( 7,362 )

Six months ended June 30, 2022

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

Income (Loss)

Balance at December 31, 2021, net of tax:

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Total other comprehensive income (loss), net of tax ( 871 ) 172 87 ( 612 )

Balance at June 30, 2022, net of tax:

$ ( 2,814 ) $ ( 4,581 ) $ 33 $ ( 7,362 )

Three months ended June 30, 2021

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

Income (Loss)

Balance at March 31, 2021, net of tax:

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

Three months ended March 31, 2021

Other comprehensive income (loss), before tax:

Amounts before reclassifications 159 — ( 26 ) 133

Amounts reclassified out — 160 12 172

Total other comprehensive income (loss), before tax 159 160 ( 14 ) 305

Tax effect 12 ( 39 ) 3 ( 24 )

Total other comprehensive income (loss), net of tax 171 121 ( 11 ) 281

Balance at June 30, 2021, net of tax:

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

Six months ended June 30, 2021

(Millions) Cumulative

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Total other comprehensive income (loss), net of tax ( 52 ) 240 47 235

Balance at March 31, 2021, net of tax:

Balance at June 30, 2021, net of tax:

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

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June 30, Six months ended

(Millions) 2022 2021 2022 2021

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Total reclassifications for the period, net of tax $ ( 73 ) $ ( 130 ) ( 155 ) $ ( 256 )

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.

The effective tax rate for the second quarter of 2022 was ( 38.3 ) percent, a decrease from 21.5 percent in the prior year.

The effective tax rate for the first six months of 2022 was 16.8 percent, as compared to 18.9 percent in the prior year.

The primary factor that decreased the Company's effective tax rate for both periods was the tax impact associated with the second quarter 2022 charge related to steps toward resolving Combat Arms Earplugs litigation (discussed in Note 14).

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June 30, 2022 and December 31, 2021 are $ 1,149 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 March 31, 2022 and December 31, 2021, the Company had valuation allowances of $ 141 million and $ 142 million on its deferred tax assets, respectively.

As of June 30, 2022 and December 31, 2021, the Company had valuation allowances of $ 140 million and $ 142 million on its deferred tax assets, respectively.

Marketable Securities

1 unchanged sentence

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

(Millions) March 31,

(Millions) June 30,

2022 December 31,

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Total marketable securities $ 289 $ 228

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.

At June 30, 2022 and December 31, 2021, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material.

The balances at June 30, 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) March 31,

(Millions) June 30,

Due in one year or less $ 262

4 unchanged sentences

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.

In June 2022, 3M repaid $ 600 million 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 Current Report on Form 8-K dated April 26, 2022 (which updated 3M’s 2021 Annual Report on Form 10-K).

The Company had $ 350 million and no commercial paper outstanding at June 30, 2022 and December 31, 2021, respectively.

In June 2022, 3M entered into a debt financing facility providing a commitment for term loans of $ 650 million related to the intended Food Safety Division split-off transaction (discussed in Note 3).

The term loan commitment reduces the previous December 2021 $ 1 billion debt financing commitment down to $ 350 million of remaining potential bridge financing for the Food Safety business's payment of approximately $ 1 billion of consideration, subject to closing and other adjustments, to 3M under the terms of the transaction.

Amounts outstanding under the term loan commitment are payable over five years following the closing date while those under the remaining $ 350 million bridge financing facility have a term of 364 days following the borrowing date and are required to be repaid when certain conditions are met, including upon completion of permanent financing.

The June 2022 debt commitment also included a $ 150 million revolving credit facility intended for the Food Safety business.

These commitments were undrawn at June 30, 2022.

Upon the close of the split-off transaction, outstanding obligations under the commitments (including the $ 150 million revolving credit facility) transfer with the Food Safety business and become those of the separate newly combined company.

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 March 31, 2022.

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

The maturities of long-term debt for the periods subsequent to June 30, 2022 are as follows (in millions):

2023 2024 2025 2026 2027 After

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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 months ended March 31, 2022 and 2021 follow:

Components of net periodic benefit cost and other supplemental information for the three and six months ended June 30, 2022 and 2021 follow:

Benefit Plan Information

Three months ended March 31,

Three months ended June 30,

Qualified and Non-qualified

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Total net periodic benefit cost (benefit) $ 27 $ 24 $ 5 $ 12 $ 8 $ 9

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

Six months ended June 30,

Qualified and Non-qualified

Pension Benefits Postretirement

United States International

(Millions) 2022 2021 2022 2021 2022 2021

Net periodic benefit cost (benefit)

Operating expense

Service cost $ 128 $ 144 $ 68 $ 84 $ 21 $ 23

Non-operating expense

Interest cost 208 180 64 50 26 22

Expected return on plan assets ( 482 ) ( 528 ) ( 142 ) ( 163 ) ( 35 ) ( 39 )

Amortization of transition asset — — 1 1 — —

Amortization of prior service benefit ( 12 ) ( 12 ) — ( 2 ) ( 16 ) ( 16 )

Amortization of net actuarial loss 212 264 20 54 20 28

Settlements, curtailments, special termination benefits and other — — — — 2 2

Total non-operating expense (benefit) ( 74 ) ( 96 ) ( 57 ) ( 60 ) ( 3 ) ( 3 )

Total net periodic benefit cost (benefit) $ 54 $ 48 $ 11 $ 24 $ 18 $ 20

For the six months ended June 30, 2022 contributions totaling $ 78 million were made to the Company’s U.S.

and international pension plans and $ 2 million to its postretirement plans.

5 unchanged sentences

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

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.

Note 14 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 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.

2 unchanged sentences

• 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 to the Consolidated Financial Statements in 3M’s 2021 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 Current Report on Form 8-K dated April 26, 2022 (which updated 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.

1 unchanged sentence

Cash Flow Hedges:

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.

As of June 30, 2022, the Company had a balance of $ 33 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 $ 97 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 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).

Based on exchange rates as of June 30, 2022, of the total after-tax net unrealized balance as of June 30, 2022, 3M expects to reclassify approximately $ 83 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.

1 unchanged sentence

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June 30, Six months ended

(Millions) 2022 2021 2022 2021

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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 March 31,

Location on the Consolidated Balance Sheet June 30,

2022 December 31,

2021 March 31,

2021 June 30,

2022 December 31,

3 unchanged sentences

Net Investment Hedges:

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.

At June 30, 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 2023 to 2031.

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June 30, Six months ended

(Millions) 2022 2021 2022 2021

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Location and Amount of Gain (Loss) Recognized in Income

Three months ended March 31,

Cost of sales Other expense (income), net

Three months ended June 30, Six months ended June 30,

Cost of sales Other expense (income), net Cost of sales Other expense (income), net

(Millions) 2022 2021 2022 2021 2022 2021 2022 2021

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2022 December 31,

2021 March 31,

2021 June 30,

2022 December 31,

2021 March 31,

2021 June 30,

2022 December 31,

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Derivative Assets

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

(Millions) June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30,

2022 December 31, 2021

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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

(Millions) June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

Derivatives subject to master netting agreements $ 124 $ 33 $ 39 $ 25 $ — $ — $ 85 $ 8

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Currency Effects

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.

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, increased pre-tax income by approximately $ 10 million and $ 27 million for the three and six months ended June 30, 2022, respectively, and decreased pre-tax income by approximately $ 48 million and $ 58 million for the three and six months ended June 30, 2021, respectively.

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

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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 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.

In addition to the information above, refer to Note 15 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 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.

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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

Description (Millions) June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

Available-for-sale:

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municipal securities only Three months ended

June 30, Six months ended

(Millions) 2022 2021 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 to the Consolidated Financial Statements in 3M’s 2021 Annual Report on Form 10-K.

Refer to Note 13 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 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 months ended March 31, 2022 and 2021.

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(Millions) Carrying Value Fair Value Carrying Value Fair Value

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

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

From time to time, the Company also receives subpoenas, investigative demands or requests for information from various government agencies in the United States and foreign countries.

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

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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” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

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 Current Report on Form 8-K dated April 26, 2022 (which updates 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 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.

As of June 30, 2022, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 4,131 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 jury delivered a complete defense verdict in favor of 3M, concluding that the 8710 respirator was not defective in design or warnings and any conduct by 3M was not a cause of plaintiff’s mesothelioma.

The plaintiff’s appeal is pending.

The plaintiff appealed the verdict.

In May 2022, the First Division intermediate appellate court in Washington affirmed in part and reversed in part 3M’s trial victory, concluding that the trial court misapplied Washington law in instructing the jury about factual causation.

3M will seek review by the Washington Supreme Court.

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.

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that petition was denied in November 2020.

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

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

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

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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 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.

As a result of its review of its respirator mask/asbestos liabilities, of pending and expected lawsuits and of the cost of resolving claims of persons who claim more serious injuries, including mesothelioma, other malignancies, and black lung disease, the Company increased its accruals in the first six months of 2022 for respirator mask/asbestos liabilities by $ 38 million.

In the first six months of 2022, the Company made payments for legal defense costs and settlements of $ 45 million related to the respirator mask/asbestos litigation.

As of June 30, 2022, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 633 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 March 31, 2022, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $ 4 million.

As of June 30, 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 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.

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 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 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.

Responsibility for legal costs, as well as for settlements and judgments, is currently shared in an informal arrangement among Aearo, Cabot, American Optical Corporation and a subsidiary of Warner Lambert and their respective insurers (the “Payor Group”).

In July 2022, Aearo Technologies and certain of its related entities (collectively, the "Aearo Entities") voluntarily initiated chapter 11 proceedings under the U.S.

Bankruptcy Code seeking court supervision to establish a trust, funded by the Company, to efficiently and equitably satisfy all claims determined to be entitled to compensation (including the Aearo respirator mask./asbestos matters).

This represents a change in strategy for managing the Combat Arms Version 2 earplugs and Aearo respirator mask/asbestos alleged litigation liabilities.

As a result, 3M's accrual relative to the commitments associated with that trust includes Aearo respirator mask/asbestos matters.

For additional information, see the discussion within the section "Product Liability Litigation" with respect to Aearo Technologies Dual-Ended Combat Arms Earplugs.

Preceding respirator mask/asbestos — Aearo Technologies matters/information:

Prior to the voluntary chapter 11 proceedings and as previously disclosed, as of December 31, 2021, the Company, through its Aearo subsidiary, had accruals of $ 46 million for product liabilities and defense costs related to current and future Aearo-related asbestos, silica-related and coal mine dust claims.

Responsibility for legal costs, as well as for settlements and judgments, is shared in an informal arrangement among Aearo, Cabot, American Optical Corporation and a subsidiary of Warner Lambert and their respective insurers (the “Payor Group”).

Liability is allocated among the parties based on the number of years each company sold respiratory products under the “AO Safety” brand and/or owned the AO Safety Division of American Optical Corporation and the alleged years of exposure of the individual plaintiff.

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The Company cannot determine the impact of these potential developments on its current estimate of Aearo’s share of liability for these existing and future claims.

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

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

If any of the developments described above were to occur, the actual amount of these liabilities for existing and future claims could be significantly larger than the amount accrued.Because of the inherent difficulty in projecting the number of claims that have not yet been asserted, the complexity of allocating responsibility for future claims among the Payor Group, and the several possible developments that may occur that could affect the estimate of Aearo’s liabilities, the Company cannot estimate the amount or range of amounts by which Aearo’s liability may exceed the accrual the Company has established.

Environmental Matters and Litigation

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

In March 2022, the European Chemicals Agency (ECHA) introduced a proposal for an EU-wide restriction on all PFAS substances in firefighting foams.

A six-month consultation period is ongoing.

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

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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 the 3M Belgium 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 the Zwijndrecht facility.

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 PFAS contaminations at and near the 3M Belgium facility in Zwijndrecht, Antwerp, Belgium.

In connection with a ring road construction project (the Oosterweel Project) in Antwerp that 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 the Zwijndrecht facility.

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

The Flemish Parliament, the Minister of the Environment, and regulatory authorities have initiated investigations and demands for information related to the release of PFAS from the Zwijndrecht facility.

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

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

The Flemish Parliament, the Minister of the Environment, and regulatory authorities initiated investigations and demands for information related to the release of PFAS from the Zwijndrecht facility.

The Company has cooperated with the authorities in the investigations and information requests and is working with the authorities on an ongoing basis, as they continue to maintain oversight of 3M Belgium’s operations at the Zwijndrecht facility, as further discussed below.

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

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

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.

In August 2021, the Flemish Government served 3M Belgium with a safety measure requiring the capture of certain process wastewaters to prevent their entry into the site wastewater treatment plant.

While 3M Belgium appealed the Safety Measure due to the belief it lacked adequate legal and factual foundation, 3M Belgium promptly implemented the required actions.

Separately, the permitting authority initiated a unilateral 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.

3M Belgium appealed certain aspects of that permit revision as inconsistent with applicable law.

The unilaterally modified permit was effective through June 30, 2022.

3M Belgium has received a new two-year permit effective July 1, 2022 and has reached an understanding with the competent authorities on implementation that allows resumption of PFAS-related production, with strict new limits for 24 different PFAS.

3M Belgium believes that the recently installed additional control systems will enable it to meet the new permit requirements.

Although the authorities have approved the restart of key production processes, a negative development in their ongoing oversight review, or inability to fully restart all production processes, could have a significant adverse impact on 3M Belgium’s normal operations and 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.

3M Belgium thereupon commenced an 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 complied with the safety measure by 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.

3M Belgium established a regular cadence of meetings with the relevant authorities to review restart of specific PFAS-related production processes.

3M Belgium first identified third-party experts to review restart proposals and provide opinions to the authorities on the acceptability of restart under the terms of the safety measure.

The proposed experts were accepted by the authorities and the process of review was begun.

As of July 2022, the authorities have approved the restart of key production processes and 3M Belgium continues to conduct required monitoring and reporting activities.

Belgian government authorities continue to maintain oversight of 3M Belgium’s operations and compliance with applicable requirements at the Zwijndrecht facility.

Administrative measure – soil piles.

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 the Zwijndrecht site.

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.

3M Belgium appealed the measure, contesting both the legal basis and the feasibility of meeting the deadline imposed.

In response to information provided by 3M Belgium regarding the limitations on regional capacity to accept the soil and other logistical matters, the Government extended the deadline for removal of the piles.

3M Belgium currently believes that it can meet the new deadline.

Notice of default – environmental law compliance.

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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.

An accredited third-party soil remediation expert has 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 July 2022, 3M Belgium and the Flemish Government announced an agreement in connection with the Zwijndrecht facility.

Pursuant to the agreement, 3M Belgium, among other things, committed an aggregate of 571 million euros, which includes the previous commitments described above.

In aggregate, the commitment includes enhancements to site discharge control technologies, support for qualifying local farmers, amounts to address certain identified priority remedial actions (which may include supporting additional actions as required under the Flemish Soil Decree which requires both public authorities and private parties to remediate contaminated soil and groundwater in Flanders), funds to be used by the Flemish Government in its sole discretion in connection with PFAS emissions from the Zwijndrecht facility, and support for the Oosterweel Project in cash and support services.

The agreement contains certain provisions ending current litigation and providing certain releases of liability for 3M, while recognizing that the Flemish Government retains its authority to act in the future to protect its citizenry.

In connection with these actions, the Company recorded a pre-tax charge of approximately $ 500 million in the first half of 2022, with approximately $ 355 million in the second quarter of 2022.

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

In May 2016, the EPA announced lifetime health advisory levels for PFOA and PFOS at 70 parts per trillion (ppt) (superseding the provisional levels established by the EPA in 2009 of 400 ppt for PFOA and 200 ppt for PFOS).

Where PFOA and PFOS are found together, EPA’s lifetime health advisory for PFOA and PFOS combined is also 70 ppt.

Lifetime health advisories, which are non-enforceable and non-regulatory, provide information about concentrations of drinking water contaminants at which adverse health effects are not expected to occur over the specified exposure duration.

In May 2016, the EPA announced lifetime health advisory levels for PFOA and PFOS, separate or together, at 70 parts per trillion (ppt) (superseding the provisional levels established by the EPA in 2009 of 400 ppt for PFOA and 200 ppt for PFOS).

In June 2022, EPA released new final lifetime health advisory levels for PFBS (2,000 ppt) and HFPO-DA and its salts (“GenX”) (4 ppt), and new interim lifetime health advisory levels for PFOA (.004 ppt) and PFOS (.02 ppt).

Lifetime health advisories, which are non-enforceable and non-regulatory, are intended to provide information about concentrations of drinking water contaminants at which adverse health effects are not expected to occur over the specified exposure duration.

Agency for Toxic Substances and Disease Registry (ATSDR) within the Department of Health and Human Services released a draft Toxicological Profile for PFAS for public review and comment in June 2018.

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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.

In May 2022, EPA added five PFAS substances – GenX, PFOS, PFOA perfluorononanoic acid (PFNA), and perfluorohexanesulfonic acid (PFHxS) -- to its list of Regional Screening and Removal Management Levels based on the May 2021 MRLs.

EPA had previously added PFBS to both lists in 2014.

Regional Screening Levels are used to identify contaminated media that may require further investigation, while Regional Removal Management Levels are used by EPA to support certain actions under CERCLA.

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

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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.

The Science Advisory Board will hold public hearings in July 2022 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.

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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.

That proposal continues to undergo OMB review.

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.

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

In April 2022, EPA released draft Aquatic Life Criteria for PFOA and PFOS.

These criteria, once finalized, may be used by states in developing water quality standards for protection of aquatic life under the Clean Water Act.

3M submitted comments on the draft criteria in July 2022.

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.

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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 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.

Additionally, in 2021 and 2022, California finalized its listing of PFOS (and its salts and transformation and degradation precursors) and PFOA as carcinogens, and PFNA as a reproductive toxicant under its Proposition 65 law.

California has also proposed listing 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.

Maine also has passed legislation requiring a reporting obligation for all products sold into Maine containing intentionally added PFAS starting in January 2023.

That same legislation bans the sale of most products containing intentionally added PFAS in Maine by 2030.

In addition, in June 2022, Colorado enacted a law which restricts the sale of certain consumer products, including carpets and furniture, fabric treatments, food packaging, and children’s products, that contain intentionally added PFAS.

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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An oral argument on the merits was held in December 2021.

In June 2022, the court issued a decision denying and dismissing the Company’s lawsuit on standing grounds.

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 briefing on the merits of the remaining claims is expected to be completed in April 2022.

In September 2021, the court denied EGLE’s motion in part, the parties have briefed the merits of the remaining claims and the court heard oral argument in June 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, 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.

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) were stayed pending the resolution of class certification issues in the St.

In June 2016, the Tennessee Riverkeeper, Inc.

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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 the Alabama Department of Environmental Management (ADEM) in 2020, as described below.

The agreements, as finalized and approved by the court, complements 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.

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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 June 2022, the court dismissed the Tennessee Riverkeeper case with prejudice.

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.

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

The complaint also included 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.

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 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 to resolve the claims for an immaterial amount.

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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).

Plaintiffs are residents of Lawrence, Morgan and other counties who are or have been customers of the Water Authority.

They contend defendants have released PFAS that contaminate the Tennessee River and, in turn, their drinking water, causing damage to their health and properties.

Plaintiffs were residents of Lawrence, Morgan and other counties who are or have been customers of the Water Authority.

They contended defendants had released PFAS that contaminate the Tennessee River and, in turn, their drinking water, causing damage to their health and properties.

In January 2017, the court in the St.

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There were approximately 4,900 named plaintiffs.

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

The parties 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).

The plaintiffs are owners of property, residents, and holders of property interests who receive their water from the West Morgan-East Lawrence Water and Sewer Authority (Water Authority).

They assert common law claims for negligence, nuisance, trespass, wantonness and battery, and they seek injunctive relief and punitive damages.

The plaintiffs are owners of property, residents, and holders of property interests who receive their water from the Water Authority.

They asserted common law claims for negligence, nuisance, trespass, wantonness, and battery, and they sought injunctive relief and punitive damages.

The plaintiffs contend that the defendants own and operate manufacturing and disposal facilities in Decatur that have released and continue to release PFOA, PFOS and related chemicals into the groundwater and surface water of their sites, resulting in discharges into the Tennessee River.

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

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.

The parties entered into a settlement agreement to resolve the litigation and the case has been dismissed.

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

District Court for the Northern District of Alabama.

The plaintiffs are residents of Lawrence and Morgan County, Alabama who receive their water from the Water Authority and seek injunctive relief, attorneys’ fees, compensatory and punitive damages for their alleged personal injuries.

The plaintiffs contend that the defendants own and operate manufacturing and disposal facilities in Decatur, Alabama that have released and continue to release PFOA, PFOS and related chemicals into the groundwater and surface water of their sites, resulting in discharges into the Tennessee River.

The plaintiffs contended that the defendants own and operate manufacturing and disposal facilities in Decatur, Alabama that have released and continue to release PFOA, PFOS and related chemicals into the groundwater and surface water of their sites, resulting in discharges into the Tennessee River.

The plaintiffs contend that, as a result of the alleged discharges, the water supplied by the Water Authority to the plaintiffs was, and is, contaminated with PFOA, PFOS and related chemicals at a level dangerous to humans.

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Since then, the complaint has been amended several times to add or dismiss plaintiffs, and the case currently involves 37 plaintiffs.

The case is scheduled for trial in July 2023.

Discovery in this case is proceeding.

The case is scheduled for trial in July 2023, and the parties recently filed a joint motion to extend scheduling deadlines that, if granted, will result in a December 2023 trial date.

Discovery in this case is proceeding, and a mediation is scheduled for August 2022.

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

3M 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.

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

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.

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

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

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 Decatur-area properties.

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In September 2020, the City of Guin Water Works and Sewer Board (Guin WWSB) brought a lawsuit against 3M in Alabama state court alleging that PFAS contamination in the Guin water system stems from manufacturing operations at 3M’s Guin facility and disposal activity at a nearby landfill.

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.

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

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.

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

The Company has filed a motion to dismiss this case.

State Attorneys General Litigation related to PFAS

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

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

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

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.

The Company has removed the case to federal court, and the U.S.

Judicial Panel on Multidistrict Litigation (JPML) issued a conditional transfer order which, if finalized, would send the case to the AFFF MDL.

The state has moved to remand the case back to state court and vacate the conditional transfer order.

The state’s motions remain pending.

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

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

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

In addition, 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.

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

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

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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.

The case was removed to federal court and 3M moved to transfer it to the AFFF MDL.

The state has moved to remand the case back to state court and has opposed transfer to the MDL.

Massachusetts .

In May 2022, the Massachusetts Attorney General filed an AFFF-related lawsuit against 13 defendants, including 3M, directly with the AFFF MDL federal court in South Carolina.

The lawsuit alleges damages to natural resources and harms to public health in Massachusetts purportedly caused by PFAS contamination.

In July 2022, the Wisconsin Attorney General filed a lawsuit in state court against 18 defendants, including the Company, alleging environmental contamination and public health impacts due to the PFAS chemicals and seeking punitive damages and reimbursement for the costs of investigations, cleanup and remediation.

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.

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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 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 of June 30, 2022, 2,632 lawsuits (including 33 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.

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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.

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

In December 2018, the JPML granted motions to transfer and consolidate all AFFF cases pending in federal courts to the U.S.

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

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

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

The MDL court in August 2021 issued a scheduling order and subsequently set the first bellwether cases to begin trial on or after March 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.

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

Oral argument on the motion is set for August 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.

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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.

As of June 30, 2022, the Company is aware of 13 other AFFF suits originally filed in various state courts in which the Company has been named a defendant.

3M was added as a defendant in at least two of these state court actions alleging personal injury, one brought by a coal miner in Illinois in May 2022 and another brought by a firefighter in Arizona in June 2022.

Nine 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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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 federal court individual cases, the parties selected 24 claimants in May 2021 for a discovery pool, which was further narrowed to eight claimants in July 2022 for expert discovery.

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

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.

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

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

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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.

The court has set a trial date in August 2022.

In addition to the consolidated federal court putative class action, as of June 30, 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.

3M and Wolverine have finalized settlement agreements to resolve two more of the remaining cases (on behalf of seven plaintiff families).

3M and Wolverine’s motion to dismiss the lone remaining individual Michigan state court case was granted without prejudice in June 2022.

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, in the Gadsden case, mediation has been ordered and trial has been set for October 2022.

The three water utility cases are proceeding through discovery.

In the Gadsden case, mediation has been ordered and is ongoing, 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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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.

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 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.

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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 June 2022, the JPML ordered that the case be transferred 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.

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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 June 2022, the Sacramento Suburban Water District filed a lawsuit in California federal court against 3M and certain other defendants, alleging PFAS contamination from 3M products generally.

3M has not yet responded to the complaint in that action.

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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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.

3M has answered the complaint, and discovery closed in September 2021.

The parties engaged in mediation.

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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.

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

Plaintiffs in ten 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 eight of these cases.

Plaintiffs in the seven 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.

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

Since then, Plaintiffs have filed five additional complaints in state court, two of which have been removed to federal 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.

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This case remains in early stages of litigation.

In May 2022, Middlesex Water Company filed a third-party complaint against the Company in New Jersey state court in a putative class action of the state residents who are customers of the water company, seeking indemnity from the Company.

In June 2022, 3M moved to dismiss and/or stay the third-party complaint in that action.

Middlesex Water Company subsequently removed the case to federal court in July 2022.

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.

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

The case has been removed to federal court.

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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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 May 2022, the Company responded to Illinois EPA’s request expressing the Company’s intent to continue voluntary remedial actions pursuant to the voluntary May 2000 Site Remediation Agreement, including anticipated completion schedules, ongoing operation and expansion of groundwater management activities, and new regional sampling and on-site activities at the Cordova facility.

In June 2022, the Illinois EPA provided notice of the termination of the Cordova May 2000 Site Remediation Agreement.

The Company continues to perform pumping of impacted site groundwater, groundwater monitoring and routine reporting of results to Illinois EPA.

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.

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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.

In April 2022, the Company received an information request from EPA seeking information related to the operation of specific PFAS-related processes, and the Company is cooperating with this inquiry and is producing documents and information.

In May 2022, the Company received a notice of potential violation and opportunity to confer and a notice of intent to file a complaint from EPA alleging violations of the Resource Conservation and Recovery Act (RCRA) related to the use of emergency spill containment units associated with certain chemical processes at the Cordova facility.

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

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

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

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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 and is in discussions with MPCA regarding an assessed penalty.

The Company has cooperated with MPCA to address the issues that are the subject of the NOV and signed a stipulation agreement in May 2022 with MPCA to pay a penalty and settle the waste violations cited in the NOV.

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 June 2022, MPCA directed that the Company address the presence of PFAS in its stormwater discharge from the Cottage Grove facility.

The Company is working with MPCA regarding its proposed schedule of compliance.

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 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.

During the first six 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 $ 529 million since December 31, 2021 and made related payments of $ 187 million.

As of June 30, 2022, the Company had recorded liabilities of $ 754 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 matters and 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 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.

As of June 30, 2022, the Company had recorded liabilities of $ 26 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.

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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 March 31, 2022, the Company’s receivable for insurance recoveries related to the environmental matters and litigation was $ 8 million.

As of June 30, 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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3M acquired Aearo Technologies in 2008 and sold these earplugs from 2008 through 2015, when the product was discontinued.

3M and Aearo Technologies believe the Combat Arms Earplugs were effective and safe when used properly, but nevertheless, as discussed below, face litigation from approximately 235,000 claimants.

As noted in the "Respirator Mask/Asbestos Litigation — Aearo Technologies" section above, in July 2022, the Aearo Entities voluntarily initiated chapter 11 proceedings under the U.S.

Bankruptcy Code seeking court supervision to establish a trust, funded by the Company, to efficiently and equitably satisfy all claims determined to be entitled to compensation associated with these matters and those described in the earlier section "Respirator Mask/Asbestos Litigation — Aearo Technologies".

3M entered into an agreement with the Aearo Entities to fund this trust and to support the Aearo Entities as they continue to operate during the chapter 11 proceedings.

3M has committed $ 1.0 billion to fund this trust and has committed an additional $ 0.2 billion to fund projected related case expenses.

Under the terms of the agreement, the Company will provide additional funding if required by the Aearo Entities.

Related to these actions, which represent a change in strategy for managing the Combat Arms Version 2 earplugs and Aearo respirator mask/asbestos alleged litigation liabilities, 3M reflected a pre-tax charge of $ 1.2 billion (within selling, general and administrative expenses), inclusive of fees and net of related existing accruals, in the second quarter of 2022.

The accrued liability balance is largely reflected within other liabilities on 3M's consolidated balance sheet.

The Company will deconsolidate Aearo Entities and certain other related entities in the third quarter of 2022, the impact of which is not expected to be material to 3M.

Upon the filings in late July 2022 in the U.S Bankruptcy Court for the Southern District of Indiana, all litigation against Aearo Entities that filed chapter 11 cases is automatically stayed.

The Aearo Entities have also requested that the Bankruptcy Court confirm that Combat Arms Earplugs litigation against the Company is also stayed or order it enjoined.

Further hearings on these matters are expected in the third quarter of 2022.

Preceding Combat Arms Earplugs matters:

In December 2018, a military veteran filed an individual lawsuit against 3M in the San Bernardino Superior Court in California alleging that he sustained personal injuries while serving in the military caused by 3M’s Dual-Ended Combat Arms earplugs – Version 2.

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

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.

As of June 30, 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 115,300 individual claimants making similar allegations.

In April 2019, the U.S.

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

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

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

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

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

3M has appealed the verdict.

3M appealed the verdict.

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

3M plans to appeal the verdict.

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 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.

Plaintiff in the fourteenth bellwether trial has filed a notice of appeal.

In April 2022, a jury returned a plaintiff’s verdict in the fifteenth bellwether trial, awarding $ 2.2 million in compensatory damages and declining to award punitive damages.

In May 2022, a jury returned a plaintiff’s verdict in the last scheduled federal bellwether trial.

The jury awarded $ 5 million in compensatory damages and $ 72 million in punitive damages.

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

While the Company intends to appeal these adverse verdicts, pending the Bankruptcy Court's decision on the hearings referenced above, the Court may stay any action on appeal.

An administrative docket of approximately 119,900 unfiled and unverified claims 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.

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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.

In May 2022, the judge issued the third wave order of an additional 500 cases.

The judge ordered a three-day mediation in July 2022.

Also in July 2022, the judge set the date for a single plaintiff trial for October 2022.

Following conclusion of the bellwether trial process and unsuccessful settlement discussions, and with another 1,500 cases being prepared for trial while the Company's appeals are still pending, the Aearo Entities and the Company adopted a change in strategy for managing these alleged litigation liabilities that led to the Aearo Entities initiating the chapter 11 proceedings as discussed above.

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

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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 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.

The Company has filed a motion to compel plaintiffs to produce medical records.

The first trial in Hennepin County is scheduled for no earlier than August 2022.

As of June 30, 2022, the Company was a named defendant in approximately 5,258 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.

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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.

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Supreme Court.

In May 2022, the U.S.

Supreme Court declined 3M’s request to review the Eighth Circuit court’s decision.

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.

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

Additional sessions will take place in August 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.

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

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

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

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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.

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

In August 2019, the MDL court enjoined the individual plaintiff from pursuing his claims in Texas state court because he had previously filed and dismissed a claim in the MDL.

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In January 2018, the Minnesota state court excluded plaintiffs’ experts and granted 3M’s motion for summary judgment on general causation.

The Minnesota Court of Appeals affirmed the state court orders in their entirety and the Minnesota Supreme Court denied plaintiffs’ petition for review and entered the finial dismissal in 2019, effectively ending the Minnesota state court cases.

In June 2016, the Company was served with a putative class action filed in the Ontario Superior Court of Justice for all Canadian residents who underwent various joint arthroplasty, cardiovascular, and other surgeries and later developed surgical site infections that the representative plaintiff claims was due to the use of the Bair Hugger™ patient warming system.

The Minnesota Court of Appeals affirmed the state court orders in their entirety and the Minnesota Supreme Court denied plaintiffs’ petition for review and entered the final dismissal in 2019, effectively ending the Minnesota state court cases.

In June 2016, the Company was served with a putative class action filed in the Ontario Superior Court of Justice for all Canadian residents who underwent various joint arthroplasty, cardiovascular, and other surgeries and later developed surgical site infections that the representative plaintiff claims were due to the use of the Bair Hugger™ patient warming system.

The representative plaintiff seeks relief (including punitive damages) under Canadian law based on theories similar to those asserted in the MDL.

No liability has been recorded for the Bair Hugger™ litigation because the Company believes that any such liability is not probable and reasonably estimable at this time.

For product liability litigation matters described in this section for which a liability has been recorded, the amount recorded is not material to the Company’s consolidated results of operations or financial condition.

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.

For product liability litigation matters described in this section for which a liability has been recorded,, the Company is not able to estimate a possible loss or range of possible loss in excess of the established accruals at this time.

Securities and Shareholder Litigation

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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.

The Minnesota federal plaintiffs then filed an amended complaint in February 2022.

The defendants moved to dismiss the consolidated federal derivative action in May 2022.

Federal False Claims Act / Qui Tam Litigation

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® Therapy in a manner that was not consistent with the Local Coverage Determinations issued by the Durable Medical Equipment Medicare Administrative Contractors and seek monetary damages.

One complaint (the “Godecke case”) also contains allegations that the KCI Defendants retaliated against the relator-plaintiff for alleged whistle-blowing behavior.

In October 2016, the KCI Defendants filed counterclaims in the Godecke case, asserting breach of contract and conversion.

In August 2017, the relator-plaintiff’s fraud claim in the Godecke case was dismissed in favor of the KCI defendants.

In January 2018, the district court stayed the retaliation claim and the KCI Defendants' counterclaims pending the relator-plaintiff’s appeal.

In September 2019, the U.S.

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

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.

One complaint (the “Godecke case”) also contained allegations that the KCI Defendants retaliated against the relator-plaintiff for alleged whistle-blowing behavior.

Following preliminary motions practice, two appeals, and discovery in the Godecke case, relator-plaintiff Godecke and the KCI Defendants reached a settlement in early 2022, which included 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.

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

As of June 30, 2022, the remaining shares available for grant under the LTIP Program are 32 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 months ended March 31, 2022 and 2021.

Capitalized stock-based compensation amounts were not material for the three and six months ended June 30, 2022 and 2021.

Stock-Based Compensation Expense

Three months ended

June 30, Six months ended

(Millions) 2022 2021 2022 2021

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Stock Option Program

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

The following table summarizes stock option activity during the six months ended June 30, 2022:

(Options in thousands) Number of

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Forfeited ( 372 ) 179.40

March 31 37,069 165.42 65 $ 191,760

June 30 36,667 165.61 63 $ 72,356

Options exercisable

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

June 30 29,170 $ 165.71 51 $ 72,356

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 March 31, 2022, there was $ 88 million of compensation expense that has yet to be recognized related to non-vested stock option based awards.

As of June 30, 2022, there was $ 72 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 24 months.

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.

The total intrinsic values of stock options exercised were $ 90 million and $ 277 million during the six months ended June 30, 2022 and 2021, respectively.

Cash received from options exercised was $ 123 million and $ 382 million for the six months ended June 30, 2022 and 2021, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the exercise of employee stock options were $ 18 million and $ 59 million for the six months ended June 30, 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 three months ended March 31, 2022:

The following table summarizes restricted stock and restricted stock unit activity during the six months ended June 30, 2022:

(Shares in thousands) Number of Shares Weighted Average

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Forfeited ( 62 ) 167.79

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.

As of June 30

As of June 30, 2022, there was $ 158 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 26 months.

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.

The total fair value of restricted stock and restricted stock units that vested during the six months ended June 30, 2022 and 2021 was $ 82 million and $ 79 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 $ 16 million and $ 15 million for the six months ended June 30, 2022 and 2021, respectively.

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

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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 three months ended March 31, 2022:

The following table summarizes performance share activity during the six months ended June 30, 2022:

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

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Forfeited ( 20 ) 160.83

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.

As of June 30

As of June 30, 2022, there was $ 23 million of compensation expense that has yet to be recognized related to performance shares.

This expense is expected to be recognized over the remaining weighted-average earnings period of 17 months.

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.

The total fair value of performance shares that were distributed were $ 21 million and $ 22 million for the six months ended June 30, 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 six months ended June 30, 2022 and 2021, respectively.

Business Segments

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

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.

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(Millions) Three months ended

June 30, Six months ended

Net Sales 2022 2021 2022 2021

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Total Company 8,702 8,950 17,531 17,801

Three months ended

June 30, Six months ended

Operating Performance 2022 2021 2022 2021

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Net costs for significant litigation ( 379 ) ( 75 ) ( 566 ) ( 145 )

Gain/(loss) on sale of businesses — —

Other corporate expense - net ( 21 ) 33 3 56

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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