What changed in this filing

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Item 1. Financial Statements

2022-10-25 compared with 2022-07-27 · 435 added, 327 removed, 1413 unchanged (35% of the section changed)

3 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

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

4 unchanged sentences

Research, development and related expenses 461 482 1,417 1,520

Gain on business divestitures ( 2,724 ) — ( 2,724 ) —

Total operating expenses 4,463 7,154 20,243 20,990

16 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(Millions) 2022 2021 2022 2021

11 unchanged sentences

Consolidated Balance Sheet

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

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

2022 December 31,

35 unchanged sentences

944,033,056 shares issued

Shares outstanding - June 30, 2022:

Shares outstanding - September 30, 2022:

Shares outstanding - December 31, 2021:

3 unchanged sentences

( 32,843 ) ( 30,463 )

Shares at June 30, 2022:

Shares at September 30, 2022:

Shares at December 31, 2021:

7 unchanged sentences

Consolidated Statement of Cash Flows

Six months ended

Nine months ended

September 30,

(Millions) 2022 2021

6 unchanged sentences

Stock-based compensation expense 226 227

Gain on business divestitures ( 2,724 ) —

Deferred income taxes ( 495 ) ( 155 )

12 unchanged sentences

Proceeds from sale of businesses, net of cash sold 13 —

Cash payment from Food Safety business split-off, net of divested cash 478 —

Other — net 1 18

29 unchanged sentences

Consolidation and foreign currency translation

3M deconsolidated the Aearo Entities in the third quarter of 2022.

See additional information in Note 14.

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

7 unchanged sentences

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 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.

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 31.7 million and 28.9 million average options for the three and nine months ended September 30, 2022, respectively, and 7.9 million and 7.7 million average options for the three and nine months ended September 30, 2021, respectively.

The computations for basic and diluted earnings per share follow:

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June 30, Six months ended

September 30, Nine months ended

September 30,

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

11 unchanged sentences

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.

Relevant New Standards Issued Subsequent to Most Recent Annual Report

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

The ASU requires a buyer in a supplier finance program to disclose information about the program’s nature, activity during the period, changes from period to period, and potential magnitude.

For 3M, this standard is effective beginning after January 1, 2023.

As this ASU relates to disclosures only, there will be no impact to 3M’s consolidated results of operations and financial condition.

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 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.

Deferred revenue (current portion) as of September 30, 2022 and December 31, 2021 was $ 506 million and $ 529 million, respectively.

Approximately $ 100 million and $ 440 million of the December 31, 2021 balance was recognized as revenue during the three and nine months ended September 30, 2022, respectively, while approximately $ 90 million and $ 410 million of the December 31, 2020 balance was recognized as revenue during the three and nine months ended September 30, 2021, respectively.

Operating Lease Revenue:

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 148 million and $ 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.

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 145 million and $ 429 million during the three and nine months ended September 30, 2022, respectively, and $ 148 million and $ 433 million during the three and nine months ended September 30, 2021, respectively.

Disaggregated revenue information:

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June 30, Six months ended

September 30, Nine months ended

September 30,

Net Sales (Millions) 2022 2021 2022 2021

31 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

Net Sales (Millions) 2022 2021 2022 2021

4 unchanged sentences

Worldwide $ 8,619 $ 8,942 $ 26,150 $ 26,743

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.

Americas included United States net sales to customers of $ 3.9 billion and $ 11.4 billion for the three and nine months ended September 30, 2022, respectively, and $ 3.9 billion and $ 11.3 billion for the three and nine months ended September 30, 2021, respectively.

Acquisitions and Divestitures

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2022 acquisitions:

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

There were no acquisitions that closed during the nine months ended September 30, 2022.

Divestitures:

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

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

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

2022 divestitures and previously announced divestitures:

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

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

federal income tax purposes.

Under the terms of the agreements, which involve a tax-free Reverse Morris Trust, the Food Safety business 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.

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 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.

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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.

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

In September 2022, 3M completed the split-off and combination of its Food Safety Division business (part of the Health Care business) with Neogen Corporation in a transaction that involved a Reverse Morris Trust structure intended to make the split-off tax-efficient to 3M and 3M's shareholders for U.S.

federal income tax purposes.

As a result of the transaction, 3M reflected a pre-tax gain of $ 2.7 billion based on aggregate consideration of $ 2.8 billion.

Under the terms of the underlying agreements, aggregate consideration included 3M shares exchanged and $ 1.0 billion ($ 828 million after closing and other adjustments) funded from debt that became obligations of Neogen.

The cash and non-cash consideration components are further described below.

• $ 2.0 billion representing the value of 16 million 3M common shares accepted by 3M that reduced shares outstanding through a fully-subscribed exchange offer.

The exchange ultimately resulted in subscribed 3M shareholders owning 50.1 % of the common shares of Neogen.

• $ 828 million in cash and non-cash components funded from debt that became obligations of Neogen.

◦ $ 478 million, net of divested cash, as a cash payment to 3M funded from Food Safety business borrowings coincident with the transaction that became obligations of Neogen.

This amount is reflected in the investing section on the consolidated statement of cash flows.

The amount was subject to closing and other adjustments and included cash paid to 3M for direct sales of certain net assets of the Food Safety business to Neogen.

◦ $ 350 million as part of a non-cash debt-for-debt exchange that reduced then-outstanding 3M commercial paper indebtedness and became new term-debt obligations of Neogen.

3M determined that the split-off involving the Reverse Morris Trust structure and certain internal business separation transactions qualified as tax-free for U.S.

federal income tax purposes.

In making these determinations, 3M applied U.S.

federal tax law to relevant facts and circumstances and obtained a favorable private letter ruling from the Internal Revenue Service, third party tax opinions, and other external tax advice related to the concluded tax treatment.

The applicable facts and circumstances that existed at the time of the Reverse Morris Trust split-off transactions may be reviewed as part of an audit by the Internal Revenue Service.

If the completed transactions were later determined to fail to qualify for tax-free treatment for U.S.

federal income tax purposes, the Company could be subject to significant liabilities, and there could be material adverse impacts on the Company’s business, financial condition, results of operations and cash flows in future reporting periods.

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

Neogen and 3M entered into certain limited-term agreements related to post-divestiture transition supply, manufacturing and services and into certain longer-term commercial supply and distributor arrangements.

Operating income and held for sale amounts:

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.

With the respect to the businesses above, the amounts of major assets and liabilities associated with disposal groups related classified as held for sale as of December 31, 2021 and as of September 30, 2022 were not material.

Information related to other held for sale disposal groups is included in Note 13.

Goodwill and Intangible Assets

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

There was no goodwill recorded from acquisitions during the first nine 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 June 30, 2022, follow:

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

(Millions) Safety and Industrial Transportation and

2 unchanged sentences

$ 4,622 $ 1,825 $ 6,786 $ 253 $ 13,486

Divestiture activity — — ( 16 ) — ( 16 )

Translation and other ( 172 ) ( 94 ) ( 510 ) ( 25 ) ( 801 )

Balance as of June 30, 2022

Balance as of September 30, 2022

$ 4,450 $ 1,731 $ 6,260 $ 228 $ 12,669

3 unchanged sentences

Acquired Intangible Assets

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

(Millions) June 30,

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

(Millions) September 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 and six months ended June 30, 2022 and 2021 follows:

Amortization expense for the three and nine months ended September 30, 2022 and 2021 follows:

Three months ended

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September 30,

(Millions) 2022 2021 2022 2021

Amortization expense $ 124 $ 131 $ 384 $ 398

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

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

(Millions) Remainder of 2022

12 unchanged sentences

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

Six months ended

Nine months ended

September 30,

(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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Nine months ended

September 30,

Employee-Related

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Accrued restructuring action balances as of June 30, 2022 $ 12

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

Remaining activities related to this restructuring were largely completed in the third quarter of 2022.

Divestiture-Related Restructuring

During the third quarter of 2022, following the Food Safety Division split-off transaction and combination with Neogen completed in September 2022 (see Note 3) management approved and committed to undertake certain restructuring actions addressing corporate functional costs across 3M in relation to the magnitude of amounts previously allocated to the divested business.

These actions affected approximately 850 positions worldwide and resulted in a third quarter 2022 pre-tax charge of $ 41 million, within Corporate and Unallocated.

The divestiture-related restructuring actions were recorded in the income statement as follows:

(Millions) Third Quarter 2022

Cost of sales $ 3

Selling, general and administrative expenses 36

Research, development and related expenses 2

Total operating income impact $ 41

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

(Millions) Employee-Related

Expense incurred in the third quarter of 2022 41

Cash payments ( 3 )

Accrued restructuring action balances as of September 30, 2022

Remaining activities related to this divestiture-related restructuring are expected to be largely completed through the first half of 2023.

Supplemental Income Statement Information

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(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 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.

Cash dividends declared and paid totaled $ 1.49 and $ 1.48 per share for the first, second, and third quarters of 2022 and 2021, respectively, or $ 4.47 and $ 4.44 per share for the first nine months of 2022 and 2021, respectively.

Consolidated Changes in Equity

Three months ended June 30, 2022

Three months ended September 30, 2022

3M Company Shareholders

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Income (Loss) Non-

Balance at March 31, 2022

Balance at June 30, 2022

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

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Reacquired stock ( 191 ) ( 191 )

Split-off of Food Safety business ( 1,988 ) ( 1,988 )

Issuances pursuant to stock option and benefit plans 84 ( 33 ) 117

Balance at June 30, 2022

Balance at September 30, 2022

$ 14,156 $ 6,663 $ 48,245 $ ( 32,843 ) $ ( 7,985 ) $ 76

Six months ended June 30, 2022

Nine months ended September 30, 2022

3M Company Shareholders

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Reacquired stock ( 964 ) ( 964 )

Split-off of Food Safety business ( 1,988 ) ( 1,988 )

Issuances pursuant to stock option and benefit plans 310 ( 262 ) 572

Balance at June 30, 2022

Balance at September 30, 2022

$ 14,156 $ 6,663 $ 48,245 $ ( 32,843 ) $ ( 7,985 ) $ 76

Three months ended June 30, 2021

Three months ended September 30, 2021

3M Company Shareholders

5 unchanged sentences

Income (Loss) Non-

Balance at March 31, 2021

Balance at June 30, 2021

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

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

Balance at June 30, 2021

Balance at September 30, 2021

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

Six months ended June 30, 2021

Nine months ended September 30, 2021

3M Company Shareholders

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

Balance at June 30, 2021

Balance at September 30, 2021

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

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

Three months ended June 30, 2022

Three months ended September 30, 2022

(Millions) Cumulative

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Income (Loss)

Balance at March 31, 2022, net of tax:

Balance at June 30, 2022, net of tax:

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

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Total other comprehensive income (loss), net of tax ( 819 ) 86 110 ( 623 )

Balance at June 30, 2022, net of tax:

Balance at September 30, 2022, net of tax:

$ ( 3,633 ) $ ( 4,495 ) $ 143 $ ( 7,985 )

Six months ended June 30, 2022

Nine months ended September 30, 2022

(Millions) Cumulative

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Total other comprehensive income (loss), net of tax ( 1,690 ) 258 197 ( 1,235 )

Balance at June 30, 2022, net of tax:

Balance at September 30, 2022, net of tax:

$ ( 3,633 ) $ ( 4,495 ) $ 143 $ ( 7,985 )

Three months ended June 30, 2021

Three months ended September 30, 2021

(Millions) Cumulative

5 unchanged sentences

Income (Loss)

Balance at March 31, 2021, net of tax:

Balance at June 30, 2021, net of tax:

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

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

Balance at June 30, 2021, net of tax:

Balance at September 30, 2021, net of tax:

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

Six months ended June 30, 2021

Nine months ended September 30, 2021

(Millions) Cumulative

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

Balance at June 30, 2021, net of tax:

Balance at September 30, 2021, net of tax:

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

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September 30,

(Millions) 2022 2021 2022 2021

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Total reclassifications for the period, net of tax $ ( 63 ) $ ( 133 ) ( 218 ) $ ( 389 )

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.

The effective tax rate for the third quarter of 2022 was 6.6 percent, a decrease from 18.4 percent in the prior year.

The effective tax rate for the first nine months of 2022 was 9.5 percent, as compared to 18.8 percent in the prior year.

The primary factor that decreased the Company's effective tax rate for third quarter 2022 was the tax efficient structure associated with the third quarter 2022 gain on split-off of the Food Safety business (see Note 3).

The primary factors that decreased the Company's effective tax rate for the first nine months of 2022 were the tax efficient structure associated with the third quarter 2022 gain on split-off of the Food Safety business (see Note 3) and 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 September 30, 2022 and December 31, 2021 are $ 997 million and $ 1,112 million, respectively.

The decrease in unrecognized tax benefits includes a decrease associated with the resolution of the 2017 IRS audit.

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

As of September 30, 2022 and December 31, 2021, the Company had valuation allowances of $ 114 million and $ 142 million on its deferred tax assets, respectively.

Marketable Securities

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

(Millions) June 30,

(Millions) September 30,

2022 December 31,

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Total marketable securities $ 212 $ 228

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.

At September 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 September 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) June 30,

(Millions) September 30,

Due in one year or less $ 185

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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.

The Company had no commercial paper outstanding at September 30, 2022 and December 31, 2021.

In December 2021 and June 2022, 3M entered into debt financing facilities providing commitments for term loans and potential bridge financing aggregating $ 1.0 billion related to the Food Safety Division split-off transaction and combination with Neogen (discussed in Note 3).

The debt commitments also included a $ 150 million revolving credit facility for the Food Safety business.

Coincident with completion of the September 2022 split-off, the Food Safety business term loan borrowings funded the cash payment to 3M discussed in Note 3.

The bridge financing component of these facilities was terminated early and not utilized.

Obligations under the commitments (including the $ 150 million revolving credit facility) transferred with the Food Safety business and became those of Neogen.

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 June 30, 2022.

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

The maturities of long-term debt for the periods subsequent to September 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 and six months ended June 30, 2022 and 2021 follow:

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

Benefit Plan Information

Three months ended June 30,

Three months ended September 30,

Qualified and Non-qualified

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Total net periodic benefit cost (benefit) $ 28 $ 24 $ 5 $ 12 $ 8 $ 9

Six months ended June 30,

Nine months ended September 30,

Qualified and Non-qualified

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Total net periodic benefit cost (benefit) $ 82 $ 72 $ 16 $ 36 $ 26 $ 29

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

For the nine months ended September 30, 2022 contributions totaling $ 99 million were made to the Company’s U.S.

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

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Cash Flow Hedges:

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.

As of September 30, 2022, the Company had a balance of $ 143 million associated with the after-tax net unrealized gain associated with cash flow hedging instruments recorded in accumulated other comprehensive income.

This includes a remaining balance of $ 95 million (after-tax loss) related to the forward starting interest rate swap and treasury rate lock contracts, which will be amortized over the respective lives of the notes.

Based on exchange rates as of June 30, 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).

Based on exchange rates as of September 30, 2022, of the total after-tax net unrealized balance as of September 30, 2022, 3M expects to reclassify approximately $ 166 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

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September 30,

(Millions) 2022 2021 2022 2021

6 unchanged sentences

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

Location on the Consolidated Balance Sheet June 30,

Location on the Consolidated Balance Sheet September 30,

2022 December 31,

2021 June 30,

2021 September 30,

2022 December 31,

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Net Investment Hedges:

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.

At September 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

September 30, Nine months ended

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(Millions) 2022 2021 2022 2021

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Location and Amount of Gain (Loss) Recognized in Income

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

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

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

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(Millions) Location Fair Value Amount Location Fair Value Amount

2022 December 31,

2021 June 30,

2022 December 31,

2021 June 30,

2022 December 31,

September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021

Derivatives designated as hedging instruments

24 unchanged sentences

Derivative Assets

(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

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

Derivatives subject to master netting agreements $ 341 $ 119 $ 43 $ 25 $ — $ — $ 298 $ 94

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Derivative Liabilities

(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

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

Derivatives subject to master netting agreements $ 194 $ 33 $ 43 $ 25 $ — $ — $ 151 $ 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 $ 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.

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, increased pre-tax income by approximately $ 43 million and $ 70 million for the three and nine months ended September 30, 2022, respectively, and decreased pre-tax income by approximately $ 36 million and $ 94 million for the three and nine months ended September 30, 2021, respectively.

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

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Level 1 Level 2 Level 3

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

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

Available-for-sale:

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municipal securities only Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(Millions) 2022 2021 2022 2021

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

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the three and six months ended June 30, 2022 and 2021.

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

For the three and nine months ended September 30, 2022 there were no material adjustments to equity securities using the measurement alternative.

Additionally, in September 2022, management committed to a plan to exit and dispose of net assets in Russia through an intended sale of related subsidiaries.

As a result, 3M reflected a pre-tax charge of $ 109 million, primarily related to recording this held for sale disposal group at the lower of its fair value less cost to sell or carrying amount.

In determining the carrying amount, the balance of cumulative translation adjustment within accumulated other comprehensive loss that will be eliminated upon sale was included and contributed to the impairment charge.

As of September 30, 2022 the amounts of major assets and liabilities of this held for sale disposal group primarily included approximately $ 70 million within other current liabilities that largely represented a reserve against the balance of cumulative translation adjustment.

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:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(Millions) Carrying Value Fair Value Carrying Value Fair Value

Long-term debt, excluding current portion $ 13,849 $ 12,068 $ 16,056 $ 17,601

The fair values reflected above consider the terms of the related debt absent the impacts of derivative/hedging activity.

The fair values reflected in the sections above consider the terms of the related debt absent the impacts of derivative/hedging activity.

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.

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Respirator Mask/Asbestos Litigation

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.

As of September 30, 2022, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 4,088 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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In August 2018, the trial court entered judgment and the Company appealed.

During March and April 2019, the Company agreed in principle to settle a substantial majority of the then-pending coal mine dust lawsuits in Kentucky and West Virginia for $ 340 million, including the jury verdict in April 2018 in the Kentucky case mentioned above.

That settlement was completed in 2019, and the appeal has been dismissed.

In 2019, the Company settled a substantial majority of the then-pending coal mine dust lawsuits in Kentucky and West Virginia for $ 340 million, including the jury verdict in April 2018 in the Kentucky case mentioned above and the appeal has been dismissed.

In October 2020, 3M defended a respirator case before a jury in King County, Washington, involving a former shipyard worker who alleged 3M’s 8710 respirator was defective and that 3M acted negligently in failing to protect him against asbestos fibers.

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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.

3M has sought 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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The amended complaint seeks substantial, but unspecified, compensatory damages primarily for reimbursement of the costs allegedly incurred by the State for worker’s compensation and healthcare benefits provided to all workers with occupational pneumoconiosis and unspecified punitive damages.

In October 2019, the court granted the State’s motion to sever its unfair trade practices claim.

In January 2020, the manufacturers filed a petition with the West Virginia Supreme Court, challenging the trial court’s rulings;

that petition was denied in November 2020.

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.

In addition, the Company is not able to estimate a possible loss or range of loss given the lack of any meaningful discovery responses by the State of West Virginia, the otherwise minimal activity in this case, and the assertions of claims against two other manufacturers where a defendant’s share of liability may turn on the law of joint and several liability and by the amount of fault, if any, a jury may allocate to each defendant if the case were ultimately tried.

In October 2019, the court granted the State’s motion to sever its unfair trade practices claim, which seeks civil penalties of up to $ 5,000 per violation under the state's Consumer Credit Protection Act relating to statements that the State contends were misleading about 3M’s respirators.

A bench trial for the unfair trade practices claims has been set for November 2022.

An expert witness retained by the State has recently estimated that 3M sold over five million respirators into the state during the relevant time period, and the State alleges that each respirator sold constitutes a separate violation under the Act.

3M disputes the expert's estimates and the State's position regarding what constitutes a separate violation of the Act.

3M has asserted various additional defenses, including that the Company's marketing did not violate the Act at any time, and that the State's claims are barred under the applicable statute of limitations.

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

In addition, the Company is not able to estimate a possible loss or range of loss given the lack of any meaningful discovery responses by the State of West Virginia as to key issues, and the assertions of claims against two other manufacturers where a defendant’s share of liability may turn on the law of joint and several liability and by the amount of fault, if any, a factfinder may allocate to each defendant if the case were ultimately tried.

Respirator Mask/Asbestos Liabilities and Insurance Receivables

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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 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.

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

In the first nine months of 2022, the Company made payments for legal defense costs and settlements of $ 56 million related to the respirator mask/asbestos litigation.

As of September 30, 2022, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 622 million.

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

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

As of June 30, 2022, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $ 4 million.

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

Bankruptcy Court has stayed the Aearo respirator mask/asbestos litigation matters as the chapter 11 proceedings move forward.

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

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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

The Company’s operations are subject to environmental laws and regulations including those pertaining to air emissions, wastewater discharges, toxic substances, and the handling and disposal of solid and hazardous wastes enforceable by national, state, and local authorities around the world, and private parties in the United States and abroad.

These laws and regulations provide, under certain circumstances, a basis for the remediation of contamination, for capital investment in pollution control equipment, for restoration of or compensation for damages to natural resources, and for personal injury and property damage claims.

The Company’s operations are subject to environmental laws and regulations including those pertaining to air emissions, wastewater discharges, toxic or hazardous substances, and the handling and disposal of solid and hazardous wastes enforceable by national, state, and local authorities around the world, and private parties in the United States and abroad.

These laws and regulations can form the basis of, under certain circumstances, claims for the investigation and remediation of contamination, for capital investment in pollution control equipment, for restoration of and/or compensation for damages to natural resources, and for personal injury and property damage claims.

The Company has incurred, and will continue to incur, costs and capital expenditures in complying with these laws and regulations, defending personal injury and property damage claims, and modifying its business operations in light of its environmental responsibilities.

In its effort to satisfy its environmental responsibilities and comply with environmental laws and regulations, the Company has established, and periodically updates, policies relating to environmental standards of performance for its operations worldwide.

Under certain environmental laws, including the United States Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and similar state laws, the Company may be jointly and severally liable, typically with other companies, for the costs of remediation of environmental contamination at current or former facilities and at off-site locations.

The Company has identified numerous locations, most of which are in the United States, at which it may have some liability.

Under certain environmental laws, including the United States Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and similar state laws, the Company may be jointly and severally liable, sometimes with other potentially responsible parties, for the costs of remediation of environmental contamination at current or former facilities and at off-site locations where hazardous substances have been released or disposed of.

The Company has identified numerous locations, many of which are in the United States, at which it may have some liability for remediation of contamination.

Please refer to the section entitled “ Environmental Liabilities and Insurance Receivables” that follows for information on the amount of the accrual for such liabilities.

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As previously reported, the Company has been voluntarily cooperating with ongoing reviews by local, state, federal (primarily the U.S.

Environmental Protection Agency (EPA)), and international agencies of possible environmental and health effects of various perfluorinated compounds, including perfluorooctanoate (PFOA), perfluorooctane sulfonate (PFOS), perfluorohexane sulfonate (PFHxS), or other per- and polyfluoroalkyl substances (collectively PFAS).

As a result of its phase-out decision in May 2000, the Company no longer manufactures certain PFAS compounds including PFOA, PFOS, PFHxS, and their pre-cursor compounds.

Environmental Protection Agency (EPA)), and international agencies of possible environmental and health effects of various perfluorinated compounds, including perfluorooctanoate (PFOA), perfluorooctane sulfonate (PFOS), perfluorohexane sulfonate (PFHxS), perfluorobutane sulfonate (PFBS), h exafluoropropylene oxide dimer acid (HFPO-DA) and other per- and polyfluoroalkyl substances (collectively PFAS).

As a result of a phase-out decision in May 2000, the Company no longer manufactures certain PFAS compounds including PFOA, PFOS, PFHxS, and their pre-cursor compounds.

The Company ceased manufacturing and using the vast majority of these compounds within approximately two years of the phase-out announcement and ceased all manufacturing and the last significant use of this chemistry by the end of 2008.

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These compounds are used as input materials to a variety of products, including engineered fluorinated fluids, fluoropolymers and fluorelastomers, as well as surfactants, additives, and coatings.

Through its ongoing life cycle management and its raw material composition identification processes associated with the Company’s policies covering the use of all persistent and bio-accumulative materials, the Company continues to review, control or eliminate the presence of certain PFAS in purchased materials or as byproducts in some of 3M’s current fluorochemical manufacturing processes, products, and waste streams.

PFAS Regulatory Activity

Regulatory activities concerning PFAS continue in the United States, Europe and elsewhere, and before certain international bodies.

These activities include gathering of exposure and use information, risk assessment, and consideration of regulatory approaches.

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.

Through its ongoing life cycle management and its raw material composition identification processes associated with the Company’s policies covering the use of all persistent and bio-accumulative materials, the Company continues to review, control or eliminate the presence of certain PFAS in purchased materials, as intended substances in products, or as byproducts in some of 3M’s current manufacturing processes, products, and waste streams.

PFAS Regulatory and Legislative Activity

Regulatory and legislative activities concerning PFAS are accelerating in the United States, Europe and elsewhere, and before certain international bodies.

These activities include gathering of exposure and use information, risk assessment activities, consideration of regulatory approaches, and increasingly strict restrictions on various uses of PFAS in products and on PFAS in manufacturing emissions, in some cases moving towards non-detectable limits for certain PFAS compounds.

Regulations of PFAS in emissions and in environmental media such as soil and water (including drinking water) are increasingly being set at levels that continue to decrease.

Global regulations also appear to be increasingly focused on a broader group of PFAS, and may include those PFAS compounds used in current products.

If such activity continues and regulations become final and enforceable, 3M may incur material costs to comply with new regulatory requirements or as a result of litigation or additional enforcement actions.

Such regulatory changes may also have an impact on 3M’s reputation and may also increase its costs and potential litigation exposure to the extent legal defenses rely on regulatory thresholds, or changes in regulation influence public perception.

Given divergent and rapidly evolving regulatory drinking water and other standards, there is currently significant uncertainty about the potential costs to industry and communities associated with remediation and control technologies that may be required

In the European Union, where 3M has PFAS 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 EU’s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), including the restriction of PFAS in certain usages uses and broader restrictions of PFAS as a class.

Various PFAS, including PFBS and a certain 3M fluorochemical product have been identified or proposed to be identified as Substances of Very High Concern (SVHC) under REACH.

Substances subject to an SVHC designation are subject to notification and other requirements.

In March 2022, the European Chemicals Agency (ECHA) introduced a ban on all PFAS substances in firefighting foams.

ECHA has also indicated that it expects to introduce a proposal for a broad ban on PFAS, including PFAS-containing products, in early 2023.

PFOA, PFOS and PFHxS (and their related compounds) have been listed in the Stockholm Convention, which has been ratified by more than 180 countries and aims for global elimination of certain listed substances (with narrow exceptions).

PFOA and PFOS are also subject to broad restrictions under the EU’s Persistent Organic Pollutants (POPs) Regulation.

The EU regulates PFAS in drinking water via a Drinking Water Directive, which includes a limit of 0.1 micrograms per liter (µg/l) (or 0.1 parts for billion (ppb)) for a sum of 20 PFAS in drinking water.

Member States have until January 2023 to implement the Directive in their countries.

The European Commission is expected to pass a binding regulation setting maximum levels for certain PFAS in specified foods, including eggs, fish, mussels and meat.

Once finalized, foods containing levels of these chemicals exceeding the regulatory thresholds will be prohibited from being sold in all EU Member States starting in January 2023.

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

The recycling process removes and concentrates the PFOA for incineration in accordance with applicable waste law.

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

With respect to the applicability of the amendment of the EU POPs Regulation with PFOA applicable since 2021, Dyneon proactively consulted with the relevant German competent authority regarding process improvements underway that are designed to achieve compliance with the PFOA limits in the recycled material used in its manufacturing process.

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

The engagement is ongoing.

The implementation of process improvements and analytical work is ongoing.

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.

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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.

In October 2021, the Province of Antwerp unilaterally 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.

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 received a new two-year permit in May 2022 which contains strict new limits for 24 different PFAS, effective July 1, 2022.

3M Belgium believes that the recently installed additional control systems will enable it to meet these limits.

Subsequently, the environmental enforcement agency has recently informed 3M Belgium that the agency believes that 3M Belgium must apply for discharge limits for certain additional “short-chain” PFAS pursuant to the special condition.

Although disagreeing with the agency’s position, 3M Belgium is in the process of developing the application to amend the permit to add the additional PFAS.

3M Belgium has insufficient information to predict the limits that will be set forth for additional short-chain PFAS and is therefore unable to assess whether the current or future wastewater treatment system, as currently conceived, will meet future limits imposed.

Changes in discharge limits 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 – emissions.

As previously disclosed, in October 2021, the Flemish environmental enforcement 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 appeal process to the Council of States, seeking, among other things, urgent suspension of the safety measure during the pendency of the appeal process.

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

The agency recently clarified that the safety measure applies to release of PFAS into water, and as such, reviews have been expanded as requested.

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.

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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.

Belgian government authorities continue to maintain oversight of 3M Belgium’s operations and compliance with applicable requirements at the Zwijndrecht facility.In September 2022, the environmental enforcement agency issued an infraction report alleging that 3M Belgium had misconstrued an exemption in the safety measure and thus not fully complied with the safety measure in the operation of certain production lines.

Discussions are underway with the environmental enforcement agency and those production lines are now being addressed in accordance with the review and approval provisions of the safety measure.

Although the authorities have approved the restart and/or continued operation 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.

Administrative measure – soil piles.

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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.

3M Belgium removed the soil piles prior to the deadline.

Notice of default – environmental law compliance.

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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.

3M Belgium representatives continue to have discussions with the relevant authorities regarding further soil remedial actions in connection with the Flemish Soil Decree, which requires both public authorities and private parties to remediate contaminated soil and groundwater in Flanders.

3M Belgium cannot exclude the possibility of future government executive decisions expanding its remedial obligations under the Soil Decree.

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.

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), 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.

Civil litigation - As of September 30, 2022, a total of nine actions against 3M Belgium are pending in Belgian civil courts.

The cases include claims by neighboring and other companies for alleged soil and wastewater or rainwater contamination with PFAS;

and tort liability claims and environmental injunction procedure by environmental NGOs and several hundred individuals.

One of the actions is scheduled for judicial hearings in November 2022 and another in February 2023;

the other actions are in early stages.

The Netherlands government has indicated they are investigating potential claims to recover damages from companies related to alleged PFAS contamination in the Western Scheldt, a river that flows through Belgium and the Netherlands.

United States:

Federal Activity

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

EPA's Commitments to Action 2021-2024,” which presents EPA’s approach to PFAS, including investing in research to increase the understanding of PFAS, pursuing a comprehensive approach to proactively control PFAS exposures to humans and the environment, and broadening and accelerating the scope of clean-up of PFAS in the environment.

The 2021-2024 Roadmap sets timelines by which EPA plans to take specific actions, including, among other items, publishing a national PFAS testing strategy, proposing to designate PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), restricting PFAS discharges from industrial sources through effluent limitations guidelines, publishing final toxicity assessments for five additional PFAS compounds, requiring water systems to test for 29 PFAS compounds under the SDWA, and publishing improved analytical methods in eight different environmental matrices to monitor 40 PFAS compounds present in wastewater and stormwater discharges.

In May 2016, the EPA announced lifetime health advisory levels for PFOA and PFOS, separate or together, at 70 parts per trillion (ppt).

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.

Lifetime health advisories 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.

The health advisories are non-enforceable and non-regulatory, but if EPA uses the same methodology in setting national primary drinking water standards, discussed further below, or other national or state regulations, 3M could incur additional costs and potential exposures, including in future compliance costs, possible litigation and/or enforcement actions.

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.

In May 2022, EPA added five PFAS substances – HFPO-DA, 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:

EPA's Commitments to Action 2021-2024,” which presents EPA’s approach to PFAS, including investing in research to increase an understanding of PFAS, pursuing a comprehensive approach to proactively control PFAS exposures to humans and the environment, and broadening and accelerating the scope of clean-up of PFAS in the environment.

The 2021-2024 Roadmap sets timelines by which EPA plans to take specific actions, including, among other items, publishing a national PFAS testing strategy, proposing to designate PFOA and PFOS as CERCLA hazardous substances, restricting PFAS discharges from industrial sources through Effluent Limitations Guidelines, publishing the final toxicity assessment for five additional PFAS compounds, requiring water systems to test for 29 PFAS compounds under the SDWA, and publishing improved analytical methods in eight different environmental matrices to monitor 40 PFAS compounds present in wastewater and stormwater discharges.

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

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

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

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

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

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

The Science Advisory Board will hold public hearings in July 2022 before finalizing its report to EPA.

The Science Advisory Board held public hearings in July 2022 and issued its final report in August 2022.

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

EPA submitted the draft MCL and MCLG for PFOA and PFOS to OMB for review in October 2022.

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

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

That proposal continues to undergo OMB review.

OMB completed its review in August 2022.

In September 2022, EPA published in the Federal Register its proposal to list PFOA and PFOS, including their salts and structural isomers, as CERCLA hazardous substances.

Public comments on EPA’s proposal are due on November 7, 2022.

If CERCLA or RCRA designations are finalized and become enforceable, 3M may be required to undertake additional investigative or remediation activities where 3M conducts operations or where 3M has disposed of waste.

3M may also face additional litigation from other entities that have liability under these laws for contribution to clean-up costs other entities might have.

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

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

In August 2022, EPA submitted to OMB a proposal to add PFAS subject to reporting under the Emergency Planning and Community Right-to-know Act (EPCRA) to the list of Lower Thresholds for Chemicals of Special Concern (Chemicals of Special Concern), which would require Toxic Release Inventory (TRI) reporting of de minimis uses of those PFAS.

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

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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.

States with finalized standards include the following:

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

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

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

United States:

State Activity

Various states have also taken action to address PFAS in the environment.

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

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

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

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

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

States with finalized drinking water standards include the following:

• California finalized, non-enforceable drinking water notification and response levels for PFOA and PFOS in February 2020.

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

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

• Wisconsin established drinking water standards for PFOA and PFOS in drinking water in August 2022.

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

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

In October 2022, California passed additional legislation prohibiting the manufacture, distribution of sale of textiles and cosmetics containing certain PFAS.

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 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 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.

The same legislation requires manufacturers to meet notification requirements for all products sold into Maine that contain intentionally added PFAS starting in January 2023.

Washington has also passed manufacturer reporting requirements, which would require PFAS manufacturers to report PFAS-containing products sold in the state under a broad definition of PFAS.

Such reporting requirements could result in additional legal actions related to additional 3M products.

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

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

The parties completed briefing on the merits in October 2021.

The parties completed briefing on the merits in October 2021 and the court has scheduled oral argument for November 2022.

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

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

The Company has filed a notice of appeal.

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.

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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.

The parties await a ruling by the court.

Given divergent and rapidly evolving regulatory standards, there is currently significant uncertainty about the potential costs to industry and communities associated with remediation and control technologies that may be required.

Litigation Related to Historical PFAS Manufacturing Operations in Alabama

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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, 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.

The case was scheduled for trial in July 2023.

In August 2022, the parties agreed to enter into a settlement agreement to resolve this case.

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.

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The Company has filed a motion to dismiss this case.

The case has been removed to federal court and 3M has moved to transfer the case to the AFFF MDL.

State Attorneys General Litigation related to PFAS

In December 2010, the State of Minnesota, by its Attorney General, filed a lawsuit in Hennepin County District Court against 3M seeking damages and injunctive relief with respect to the presence of PFAS in the groundwater, surface water, fish or other aquatic life, and sediments in the state of Minnesota (the “NRD Lawsuit”).

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

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

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

3M recorded a pre-tax charge of $ 897 million, inclusive of legal fees and other related obligations, in the first quarter of 2018 associated with the resolution of this matter.

In connection with the above referenced settlement, the Minnesota Pollution Control Agency and the Department of Natural Resources, as co-trustees of the Fund, released in September 2020 a conceptual drinking water supply plan for the communities in the East Metro area, seeking public comment on three recommended options for utilizing the Fund.

In December 2020, 3M submitted preliminary comments on the co-trustees’ draft conceptual drinking water supply plan to address legal and technical aspects of the draft plan.

The Company and the State continue to discuss those aspects of the draft plan.

The State of New York, by its Attorney General, has filed four lawsuits (in June 2018, February 2019, July 2019, and November 2019) against 3M and other defendants seeking to recover the costs incurred in responding to PFAS contamination allegedly caused by Aqueous Film Forming Foam (AFFF) manufactured by 3M and others.

Each of the four suits was filed in Albany County Supreme Court before being removed to federal court, and each has been transferred to the multi-district litigation (MDL) proceeding for AFFF cases, which is discussed further below.

The state is seeking compensatory and punitive damages, and injunctive and equitable relief in the form of a monetary fund for the State’s reasonably expected future damages, and/or requiring defendants to perform investigative and remedial work.

In December 2018, the State of Ohio, by its Attorney General, filed a lawsuit in the Common Pleas Court of Lucas County, Ohio against 3M, Tyco Fire Products LP, Chemguard, Inc., Buckeye Fire Equipment Co., National Foam, Inc., and Angus Fire Armour Corp., seeking injunctive relief and compensatory and punitive damages for remediation costs and alleged injury to Ohio natural resources from AFFF manufacturers.

This case was removed to federal court and transferred to the MDL.

As previously reported, several state attorneys general have filed lawsuits against 3M and other defendants that are now pending in a federal Multi-District Litigation (MDL) court in South Carolina regarding Aqueous Film Forming Foam (AFFF), described further below.

The lawsuits generally seek, on a state-wide basis:

injunctive relief, investigative and remedial work, compensatory damages, natural resource damages, attorneys’ fees, and, where available, punitive damages related to the states’ response to PFAS contamination.

Currently in the AFFF MDL, state attorneys general lawsuits have been brought against 3M on behalf of the people of the states of Alaska;

New Hampshire;

Vermont, Michigan;

North Carolina;

Massachusetts;

and on behalf of the people of the territory of Guam and Commonwealth of Northern Mariana Islands.

There are also multiple state attorneys general lawsuits that are pending outside the AFFF MDL, as described below.

3M and other companies have also received a notice of intent to commence litigation regarding PFAS from the California Attorney General.

In March 2019, the New Jersey Attorney General filed two actions against 3M, DuPont, and Chemours on behalf of the New Jersey Department of Environmental Protection (NJDEP), the NJDEP’s commissioner, and the New Jersey Spill Compensation Fund regarding alleged discharges at two DuPont facilities in Pennsville, New Jersey (Salem County) and Parlin, New Jersey (Middlesex County).

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The parties are conducting discovery.

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

This case was removed to federal court and transferred to the AFFF MDL.

New Hampshire.

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

The first lawsuit was filed against 3M and seven co-defendants, alleging PFAS contamination resulting from the use of AFFF products at several sites around the state.

This case was removed to federal court and transferred to the AFFF MDL.

The second suit asserts PFAS contamination from non-AFFF sources and names 3M, DuPont, and Chemours as defendants.

As described above, one lawsuit was transferred to the AFFF MDL.

The other suit asserts PFAS contamination from non-AFFF sources and names 3M, DuPont, and Chemours as defendants.

In its June 2020 ruling on defendants’ motions to dismiss, the court dismissed the state’s trespass claim, but allowed several claims to proceed.

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

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.

The Company removed the case to federal court and attempted to transfer it to the AFFF MDL, which was denied at this juncture in the litigation.

The state has moved to remand the case back to state court, which remains 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.

The first lawsuit was filed against 3M and ten co-defendants, alleging PFAS contamination resulting from the use of AFFF products at several sites around the state.

This case was removed to federal court and transferred to the AFFF MDL.

The second suit asserts PFAS contamination from non-AFFF sources and names 3M and several entities related to DuPont and Chemours as defendants.

As described above, one lawsuit was transferred to the AFFF MDL.

The other suit asserts PFAS contamination from non-AFFF sources and names 3M and several entities related to DuPont and Chemours as defendants.

This suit is proceeding in state court.

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

The parties are now engaged in discovery and the court has set a trial-ready date in October 2023.

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

The case was removed to federal court in March 2021 and subsequently transferred to the AFFF MDL.

The state has filed a motion to remand the case to state court.

In addition, in August 2020, the Michigan Attorney General filed two lawsuits against numerous AFFF manufacturers and distributors, and suppliers of PFAS to AFFF manufacturers.

3M is named a defendant in one of the lawsuits, filed in federal court, and the case has been transferred to the AFFF MDL, where it remains in early stages of litigation.

In September 2019, the Attorney General of Guam filed a lawsuit against 3M and other defendants relating to contamination of the territory’s drinking water supplies and other natural resources by PFAS, allegedly resulting from the use of AFFF products at several sites around the island.

This lawsuit has been removed to federal court and transferred to the AFFF MDL.

Commonwealth of Northern Mariana Islands.

In December 2019, the Attorney General of the Commonwealth of Northern Mariana Islands, a U.S.

territory, filed a lawsuit against 3M and other defendants relating to contamination of the territory’s drinking water supplies and other natural resources by PFAS, allegedly resulting from the use of AFFF products.

This lawsuit has been removed to federal court and transferred to the AFFF MDL.

In December 2020, the Mississippi Attorney General filed an AFFF-related PFAS lawsuit against 3M and other defendants directly with the AFFF MDL court in South Carolina.

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

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

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.

North Carolina .

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

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

The parties are now engaged in discovery and the court extended the trial-ready date to October 2024.

In October 2022, the Vermont Attorney General moved to amend the complaint in the non-AFFF lawsuit, seeking to add claims related to PFBS and GenX to the lawsuit.

The motion also seeks to add a claim under Vermont’s Waste Management Act, which was recently amended to add manufacturers as liable parties for the release or threatened release of hazardous materials (which in Vermont includes certain PFAS compounds).

This motion is currently pending.

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

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

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.

The case was removed to federal court and 3M moved to transfer it to the AFFF MDL, which was denied at this stage in the litigation.

The state has moved to remand the case back to state court.

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.

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

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

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 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 of September 30, 2022, 3,095 lawsuits (including 33 putative class actions and more than 200 public water systems) alleging injuries or damages by AFFF use have been filed against 3M (along with other defendants) in various state and federal courts.

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

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

Claims in the MDL are asserted by individuals, public water systems, putative class members, state and territorial sovereigns, and other entities.

Plaintiffs seek a variety of relief in cases in the MDL, including, where applicable, damages for personal injury, property damage, water treatment costs, medical monitoring, natural resource damages, and punitive damages.

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.

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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 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.

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

The parties jointly recommended a mediator to assist their efforts in seeking to resolve some or all of the claims asserted in the MDL.

The court's decision on the mediator is pending.

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 was completed in July 2022.

Oral argument on the motion is set for August 2022.

Oral argument on the motion was held in August 2022.

In September 2022, the court issued an order denying defendants’ summary judgment motions on the government contractor defense, which can be presented to a jury at future trials.

In September 2022, the court selected the City of Stuart, Florida public water supplier case as the first bellwether trial, to begin in June 2023.

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

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

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

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.

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

As of September 30, 2022, the Company is aware of 24 other AFFF suits originally filed in various state courts in which the Company has been named a defendant.

3M anticipates that most of these cases will eventually be removed to federal court and transferred to the AFFF MDL;

however, at least two personal injury cases are expected to remain pending in state courts.

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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DuPont De Nemours and Co., Chemours Co., and various carpet manufacturers.

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

In New York, 3M is defending 39 individual cases filed in the U.S.

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

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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-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.

Additionally, 3M is defending a case in New York state court filed by the Town of Petersburgh in September 2022.

Plaintiff alleges that 3M and several other manufacturers contributed to PFOA contamination in the town’s public water supply.

In February 2022, the district court granted final approval authorizing a settlement between certain parties, including 3M, for a putative class action filed in the U.S.

District Court for the Northern District of New York.

Under the agreement, 3M, Saint-Gobain and Honeywell collectively contributed 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.

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

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Plaintiffs allege Wolverine used 3M Scotchgard in its manufacturing process and that chemicals from 3M’s product contaminated the environment and drinking water sources after disposal.

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

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

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

The 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 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.

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

Following substantial discovery, motions practice, and productive mediation sessions, 3M and Wolverine agreed to settle the case with the plaintiffs in an amount that is not considered material, and in September 2022 the court granted preliminary approval of the settlement agreement and set a final approval hearing date in March 2023.

In addition to the consolidated federal court putative class action, 3M had been a defendant in approximately 280 private individual actions in Michigan state court based on similar allegations.

3M and Wolverine have finalized settlement agreements for all such actions except one.

The settlement amounts are not considered material.

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

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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 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.

The three water utility cases have been proceeding through discovery.

In September 2022, the Company reached an agreement with the Gadsden Water Works and Sewer Board to resolve the matter.

This development, as with developments on other PFAS matters, was reflected in determining changes to 3M’s accrual for PFAS-related "other environmental liabilities." Another case originally filed in Georgia state court was brought by individuals asserting PFAS contamination by the Georgia carpet manufacturers and seeking economic damages and injunctive relief on behalf of a putative class of Rome and Floyd County water subscribers.

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

This case is proceeding through discovery.

The City of Rome case has been scheduled for trial in June 2023.

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

In May 2021, the City of Summerville filed a motion to intervene in the lawsuit, which was granted in March 2022.

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

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

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

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

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

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

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

The court granted plaintiffs’ motion to remand.

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

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

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.

3M's motion to dismiss the case was denied in March 2022.

This case is now proceeding through discovery.

In California, 3M, Decra Roofing and certain DuPont-related entities were named as defendants in an action brought in state court by the City of Corona and a local utility authority, 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.

Plaintiffs filed an amended complaint in June 2021.

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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.

3M filed its motion to dismiss in August 2022, and that motion is scheduled for a hearing in October 2022.

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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An oral argument was held in September 2021.

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

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

In September 2022, the court dismissed all but plaintiffs’ negligence claim as to each moving defendant.

The parties are currently negotiating a scheduling order to be proposed to the court.

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

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

In December 2020, 3M filed a motion to dismiss the Hopatcong matter.

In December 2020, 3M filed a motion to dismiss the Hopatcong matter, which remains pending.

In January 2021, 3M was named a defendant in another similar lawsuit brought by the Pequannock Township.

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

Discovery is ongoing in both the Hopatcong and Pequannock matters.

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.

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

Fact discovery has closed in both the Hopatcong and Pequannock matters.

3M, together with several co-defendants, is also defending 26 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 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.

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

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

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

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.

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

Plaintiffs in the 16 remaining individual cases in federal court allege personal injuries to themselves or their disabled adult children.

3M moved to dismiss the first five of these cases, and these motions were granted in part in February 2022.

By stipulation, the parties have agreed to treat the parties’ motion to dismiss briefing and the Court’s ruling from the first five cases as filed in two additional cases.

In July 2022, Plaintiffs sought leave to amend their complaints in the first five cases to add claims concerning seven non-PFAS chemistries as against defendants other than 3M.

The nine remaining personal injury cases were filed in state court and removed to federal court.

Plaintiffs are currently seeking remand in four of these cases.

In three of these cases, Plaintiffs also assert claims against Clemente Property and the Covanta Waste Disposal Facility.

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

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

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

Plaintiffs then filed a motion to remand the case to state court.

The federal court stayed 3M’s deadline to respond to the third-party complaint until after the motion to remand is decided.

Finally, in June 2022, a personal injury lawsuit was filed against 3M by a Middlesex Water Company customer.

In October 2022, after 3M filed its motion to dismiss, plaintiff voluntarily dismissed his complaint without prejudice.

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.

The case has been removed to federal court.3M and DuPont filed a joint motion to dismiss in September 2022.

In Massachusetts, a putative class action lawsuit was filed in August 2022 in state court against 3M and several other defendants alleging PFAS contamination from waste generated by local paper manufacturing facilities.

The lawsuit alleges property damage and also seeks medical monitoring on behalf of plaintiffs within the Town of Westminster.

3M has not yet been served in this case.

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

In September 2022, the Sixth Circuit granted the defendants’ request to appeal the district court’s class certification order, finding that interlocutory review is warranted because the class certification order raised important and unsettled questions.

The defendants have filed a notice of appeal with the Sixth Circuit.

Other PFAS-related Matters

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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 September 2022, following discussions with EPA, the Company began sharing water sampling results with private well owners within the vicinity of the Cordova facility and offered to provide, install and maintain water treatment systems to residents with private drinking wells in the area.

In October 2022, EPA and 3M began discussions on the terms of a proposed agreed order regarding further private well and public water systems sampling and treatment in the vicinity of the Cordova facility.

Discussions are underway regarding the scope and terms of the proposed order.

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.

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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.

3M paid the penalty in June 2022 and received a letter from the MPCA that the Stipulation Agreement has been terminated.

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

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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 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.

During the first nine 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 $ 626 million since December 31, 2021 and made related payments of $ 394 million.

As of September 30, 2022, the Company had recorded liabilities of $ 644 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 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.

As of September 30, 2022, the Company had recorded liabilities of $ 29 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 June 30, 2022, the Company’s receivable for insurance recoveries related to the environmental matters and litigation was $ 8 million.

As of September 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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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.

As a result of the bankruptcy proceedings, 3M deconsolidated the Aearo Entities in the third quarter of 2022, resulting in a charge that was not 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.

In August 2022, the Bankruptcy Court denied Aearo’s motion for a preliminary injunction to stay all Combat Arms related litigation against 3M.

In September 2022, the bankruptcy judge certified Aearo’s request to appeal the decision directly to the Seventh Circuit Court of Appeals and in October the Seventh Circuit accepted the appeal.

Confidential mediation is underway with court-appointed mediators and settlement discussions between Aearo and the plaintiffs are ongoing.

As of September 30, 2022, 3M's consolidated balance sheet reflected amounts associated with the deconsolidated Aearo Entities as follows:

• $ 0.7 billion asset balance in other investments (within other assets), reflecting 3M's equity investment interest in the entities.

• $ 0.6 billion net liability for former intercompany amounts due from 3M to the deconsolidated entities.

The gross balances are reflected in other liabilities ($ 0.9 billion) and other assets ($ 0.3 billion).

• $ 1.2 billion accrued liability related to the commitments describe above, largely reflected within contingent liability claims and other (within other liabilities) on 3M's consolidated balance sheet.

Preceding Combat Arms Earplugs matters:

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

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.

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 and second quarters of 2022.

As of September 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 132,300 individual claimants making similar allegations.

In April 2019, the U.S.

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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.

The Company's appeals to the Eleventh Circuit from the adverse verdicts are proceeding forward, with reply briefs in the first two appeals filed in October 2022.

Other than the Company's funding commitment for its Aearo subsidiaries' chapter 11 proceedings as described above, no liability has been recorded for the Combat Arms earplugs litigation because the Company believes any such liability is not probable and reasonably estimable and the Company is not able to estimate a possible loss or range of possible loss at this time.

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.

An administrative docket of approximately 94,500 unfiled and unverified claims has also been maintained at the MDL court.

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

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

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.

Since November 2021, the court has issued four wave orders with approximately 500 cases in each wave.

The court ordered a three-day mediation in July 2022;

and again in September 2022, a two-day mediation session.

The court also set the date for a single plaintiff trial for October 2022, which was postponed to February 2023.

In August 2022, subsequent to Aearo’s chapter 11 filing, the MDL court issued an order prohibiting 3M from attempting to relitigate issues in the bankruptcy court and from financially supporting any collateral dispute regarding the MDL court’s previous rulings.

3M has appealed the order to the Eleventh Circuit Court of Appeals and made a motion to stay the order pending appeal.

In October 2022, the Eleventh Circuit granted 3M’s motion to stay the order pending appeal.

In September 2022, two MDL plaintiffs filed a lawsuit with the U.S.

District Court for the Northern District of Florida, seeking to permanently enjoin 3M from transferring assets, issuing dividends or completing the announced spin-off of its Health Care business, to allegedly preserve assets for the Combat Arms claimants.

The Company has filed a motion to dismiss the lawsuit and an opposition to the injunction motion.

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 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.

The first trial in Hennepin County was scheduled for October 2022, but has been postponed to January 2023.

As of September 30, 2022, the Company was a named defendant in approximately 5,264 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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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, and initial sessions took place in May 2022.

Additional sessions will take place in August 2022.

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

Mediation sessions took place in May and 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.

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

Two of the Missouri cases are set for trial;

one in September 2022 and one in April 2023.

One of the Missouri cases was tried in September and October of 2022;

the jury returned a verdict in 3M’s favor on all the claims.

The other Missouri case is scheduled for April 2023.

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.

That plaintiff has appealed the order to the U.S.

Court of Appeals for the Eighth Circuit, which heard oral argument on this appeal in March 2021.

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

The court has set a trial date in December 2022.

The Hidalgo County trial is scheduled for December 2022.

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

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

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

Plaintiffs filed their opposition to the motion to dismiss in August 2022 and the defendants filed their reply brief in October 2022.

Oral argument is set for January 2023.

Federal False Claims Act / Qui Tam Litigation

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District Court for the Central District of California.

The complaints contain allegations that the KCI Defendants violated the federal False Claims Act by submitting false or fraudulent claims to federal healthcare programs by billing for V.A.C.

® 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.

The complaints contain allegations that the KCI Defendants violated the federal False Claims Act by submitting false or fraudulent claims to federal healthcare programs by billing for V.A.C.® 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 contained allegations that the KCI Defendants retaliated against the relator-plaintiff for alleged whistle-blowing behavior.

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Oral argument in the Hartpence case was held in July 2020.

The appellate court’s opinion remains pending.

The appellate court issued an opinion in August 2022 reversing the decision of the district court and remanding the case for further proceedings

For the 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.

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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 June 30, 2022, the remaining shares available for grant under the LTIP Program are 32 million.

As of September 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 and six months ended June 30, 2022 and 2021.

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

Stock-Based Compensation Expense

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(Millions) 2022 2021 2022 2021

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Stock Option Program

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

The following table summarizes stock option activity during the nine months ended September 30, 2022:

(Options in thousands) Number of

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Forfeited ( 537 ) 178.08

June 30 36,667 165.61 63 $ 72,356

September 30 36,077 166.30 60 $ 17

Options exercisable

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

September 30 28,670 $ 166.58 49 $ 17

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

As of June 30, 2022, there was $ 72 million of compensation expense that has yet to be recognized related to non-vested stock option based awards.

As of September 30, 2022, there was $ 59 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 22 months.

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.

The total intrinsic values of stock options exercised were $ 107 million and $ 306 million during the nine months ended September 30, 2022 and 2021, respectively.

Cash received from options exercised was $ 166 million and $ 425 million for the nine months ended September 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 $ 22 million and $ 65 million for the nine months ended September 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 six months ended June 30, 2022:

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

(Shares in thousands) Number of Shares Weighted Average

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Forfeited ( 101 ) 167.18

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.

As of September 30

As of September 30, 2022, there was $ 134 million of compensation expense that has yet to be recognized related to non-vested restricted stock and restricted stock units.

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

The total fair value of restricted stock and restricted stock units that vested during the six months ended June 30, 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.

The total fair value of restricted stock and restricted stock units that vested during the nine months ended September 30, 2022 and 2021 was $ 84 million and $ 81 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 nine months ended September 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 six months ended June 30, 2022:

The following table summarizes performance share activity during the nine months ended September 30, 2022:

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

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Forfeited ( 37 ) 156.76

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.

As of September 30

As of September 30, 2022, there was $ 14 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 16 months.

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.

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

Business Segments

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

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

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

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

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

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

Note, however, that prospectively during the Aearo chapter 11 bankruptcy period (which began in July 2022 — see Note 14) net costs for significant litigation associated with Combat Arms Earplugs and Aearo-respirator mask/asbestos matters are reflected in Corporate and Unallocated.

Business Segment Information

(Millions) Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

Net Sales 2022 2021 2022 2021

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

Operating Performance 2022 2021 2022 2021

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Net costs for significant litigation ( 246 ) ( 37 ) ( 812 ) ( 182 )

Divestiture costs ( 6 ) — ( 6 ) —

Gain on business divestitures 2,724 — 2,724 —

Divestiture-related restructuring actions ( 41 ) — ( 41 ) —

Russia exit charges ( 109 ) — ( 109 ) —

Total corporate special items 2,322 ( 37 ) 1,756 ( 182 )

Other corporate expense - net ( 43 ) 10 ( 40 ) 66

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

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

Corporate special items include net costs for significant litigation associated with Combat Arms Earplugs and Aearo-respirator mask/asbestos matters during the chapter 11 bankruptcy period (which began in July 2022) and with PFAS-related other environmental matters (see Note 14).

Corporate special items also include divestiture costs, gain/loss on business divestitures (see Note 3), divestiture-related restructuring costs (see Note 5), and Russia exit costs (see Note 13).

Divestiture costs include costs related to separating and divesting substantially an entire business segment of 3M following public announcement of its intended divestiture.

Other corporate expense-net includes items such as net costs related to limited unallocated corporate staff and centrally managed material resource centers of expertise costs, corporate philanthropic activity, and other net costs that 3M may choose not to allocate directly to its business segments.

Other corporate expense-net also includes costs and income from contract manufacturing, transition services and other arrangements with the acquirer of the former Drug Delivery business following its 2020 divestiture.

Other corporate expense-net also includes costs and income from transition supply, manufacturing, and service arrangements with Neogen Corporation following the 2022 split-off of 3M's Food Safety business and with the acquirer of the former Drug Delivery business following its 2020 divestiture.

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

1 unchanged sentence

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