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Risks Related to the Global Economy and Public Health Crises
−Removed: * The Company’s results are impacted by the effects of, and changes in, worldwide economic, political, regulatory, international trade and other external conditions.
−Removed: The Company operates in more than 70 countries and derives approximately 60 percent of its revenues from outside the United States, and, accordingly, the Company’s business is subject to global competition and geopolitical risks that are beyond its control, such as disruptions in financial markets, economic downturns, military conflicts, government actions impacting international trade agreements, imposing trade restrictions such as tariffs, and retaliatory counter measures, inflation, government deficit reduction and other austerity measures in specific countries or regions, or in the various industries in which the Company operates;
−Removed: social, political or labor conditions in specific countries or regions;
−Removed: or adverse changes in the availability and cost of capital, interest rates, or exchange control, ability to expatriate earnings and other regulations in the jurisdictions in which the Company operates.
+Added: * The Company’s results are impacted by the effects of, and changes in, worldwide economic, political, regulatory, international trade, geopolitical and other external conditions.
+Added: The Company operates in more than 70 countries and derives approximately 60 percent of its revenues from outside the United States, and, accordingly, the Company’s operations and the execution of its business strategies and plans are subject to global competition, economic and geopolitical risks that are beyond its control, such as disruptions in financial markets, economic downturns, military conflicts, public health emergencies such as COVID-19, political changes and trends such as protectionism, economic nationalism resulting in government actions impacting international trade agreements, imposing trade restrictions such as tariffs, and retaliatory counter measures, government deficit reduction and other austerity measures in specific countries or regions, or in the various industries in which the Company operates.
+Added: Further escalation of specific trade tensions, including those between the U.S.
+Added: and China, or more broadly in global trade conflict, could adversely impact the Company's business and operations around the world.
+Added: The Company's business is also impacted by social, political or labor conditions in specific countries or regions;
+Added: or adverse changes in the availability and cost of capital, monetary policy, interest rates, inflation, recession, commodity prices, currency volatility or exchange control, ability to expatriate earnings and other regulations in the jurisdictions in which the Company operates.
+Added: For example, changes in local economic condition or outlooks, such as lower economic growth rates in China, Europe or other key markets, impact the demand or profitability of the Company's products and services.
The global economy has been impacted by the military conflict between Russia and Ukraine.
and other governments have imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia.
−Removed: The Company has suspended its operations in Russia.
−Removed: If the environment were to deteriorate, such as a lack of currency exchangeability coupled with an acute degradation in the ability to make key operational decisions, a need to deconsolidate these subsidiaries' operations could arise.
−Removed: Additionally, the Company continues to evaluate options, some of which could lead to termination of activities of these subsidiaries and substantially their liquidation.
+Added: In light of a number of factors, 3M suspended operations of its subsidiaries in Russia in March 2022.
+Added: Further, in September 2022, management committed to a plan to exit the related net assets through an intended sale of the subsidiaries.
3M also has other operations that source certain raw materials from suppliers in Russia and have experienced related supply disruption due to the conflict.
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* The Company faces liabilities related to certain fluorochemicals, which could adversely impact our results.
−Removed: As previously reported, the Company has been voluntarily cooperating with various local, state, federal (primarily the U.S.
−Removed: Environmental Protection Agency (EPA)), and international agencies in their review of the environmental and health effects of a broad group of perfluoroalkyl and polyfluoroalkyl substances produced by the Company, collectively known as “PFAS.” The PFAS group contains several categories and classes of durable chemicals and materials with properties that include oil, water, temperature, chemical and fire resistance, as well as electrical insulating properties.
+Added: As previously reported, governments in the United States and internationally have increasingly been regulating a broad group of perfluoroalkyl and polyfluoroalkyl substances produced by the Company, collectively known as “PFAS.” 3M has noticed several global regulatory trends related to PFAS, including declining emission standards and limits set as to the presence of certain compounds in various media, and the inclusion of a broadening group of PFAS.
+Added: Developments in these and other global regulatory trends may require additional actions by 3M, including investigation, remediation and compliance, or may result in additional litigation and enforcement action costs.
+Added: The Company has been voluntarily cooperating with various local, state, federal (primarily the U.S.
+Added: Environmental Protection Agency (EPA)), and international agencies in their review of the environmental and health effects of certain PFAS produced by the Company.
+Added: The PFAS group contains several categories and classes of durable chemicals and materials with properties that include oil, water, temperature, chemical and fire resistance, as well as electrical insulating properties.
The strength of the carbon-fluorine bond also means that these compounds do not easily degrade.
−Removed: These characteristics have made PFAS critical to the manufacture of electronic devices such as cell phones, tablets and semi-conductors.
−Removed: They are also used to help prevent infections in products like surgical gowns and drapes.
+Added: These characteristics have made PFAS substances critical to the manufacture of electronic devices such as cell phones, tablets and semi-conductors.
+Added: They are also used to help prevent contamination of medical products like surgical gowns and drapes.
Commercial aircraft and low-emissions vehicles also rely on PFAS technology.
−Removed: PFAS compounds are currently manufactured by various companies, including 3M, and are used in everyday products.
−Removed: As science and technology evolve and advance, and in response to evolving knowledge and the understanding that PFAS compounds had the potential to build up over time, 3M announced in 2000 that we would voluntarily phase out production of perfluorooctanoate (PFOA) and perfluorooctane sulfonate (PFOS) globally as a precautionary measure.
+Added: PFAS compounds are manufactured by various companies, including 3M, and are used in everyday products, including some manufactured by 3M.
+Added: As science and technology evolve and advance, and in response to evolving knowledge and the understanding that certain PFAS compounds had the potential to build up over time, 3M announced in 2000 that we would voluntarily phase out production of two PFAS substances, perfluorooctanoate (PFOA) and perfluorooctane sulfonate (PFOS) globally as a precautionary measure.
We phased out of materials used to produce certain repellants and surfactant products, with most of these activities in the U.S.
completed by the end of 2002.
−Removed: Phased out products included Aqueous Film Forming Foam (AFFF) and coatings for food packaging, for example.
+Added: Phased out products included Aqueous Film Forming Foam (AFFF) and certain coatings for food packaging, for example.
+Added: The Company continues to review, control or eliminate the presence of certain PFAS in purchased materials, as intended substances in products, or as byproducts of some of 3M’s current manufacturing processes, products, and waste streams.
3M currently is defending lawsuits concerning various PFAS-related products and chemistries, and is subject to unasserted and asserted claims and governmental regulatory proceedings and inquiries related to the production and use of PFAS in a variety of jurisdictions, as discussed in Note 14, “Commitments and Contingencies,” within the Notes to Consolidated Financial Statements.
−Removed: An adverse outcome in any one or more of these matters could be material to our financial results.
+Added: 3M has seen increased public and private lawsuits being filed on behalf of states, counties, cities, and utilities alleging, among other things, harm to the general public and damages to natural resources, some of which are pending in the Aqueous Film Forming Foam (AFFF) multi-district litigation and some of which are pending in other jurisdictions.
+Added: Various factors or developments in these and other disclosed actions could result in future charges that could have a material adverse effect on 3M.
For example, we recorded a pre-tax charge of $897 million, inclusive of legal fees and other related obligations, in the first quarter of 2018 with respect to the settlement of a matter brought by the State of Minnesota involving the presence of PFAS in the groundwater, surface water, fish or other aquatic life, and sediments in the state.
−Removed: Governmental inquiries or lawsuits involving PFAS could lead to our incurring liability for damages or other costs, civil or criminal proceedings, the imposition of fines and penalties, or other remedies, as well as restrictions on or added costs for our business operations going forward, including in the form of restrictions on discharges at our manufacturing facilities, suspension of their operations, switching costs in seeking alternative sources of supply, potential customer damage claims due to supply disruptions or otherwise.
+Added: Governmental inquiries, lawsuits or laws and regulations involving PFAS could lead to our incurring liability for damages or other costs, civil or criminal proceedings, the imposition of fines and penalties, or other remedies, including orders to conduct remediation, as well as restrictions on or added costs for our business operations going forward, including in the form of restrictions on discharges at our manufacturing facilities, requiring the installation of control technologies, suspension or shutdown of facility operations, switching costs in seeking alternative sources of supply, potential customer damage claims due to supply disruptions or otherwise, and reporting requirements or bans on PFAS and PFAS-containing products manufactured by the Company.
* The Company’s future results may be affected by various asserted and unasserted legal and regulatory proceedings and legal compliance risks, including those involving product liability, antitrust, intellectual property, environmental, tax, the U.S.
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There are no guarantees that new products will prove to be commercially successful.
−Removed: * The Company’s future results are subject to vulnerability with respect to materials and fluctuations in the costs and availability of purchased components, compounds, raw materials, energy, and labor due to shortages, increased demand and wages, logistics, supply chain interruptions, manufacturing site disruptions, natural disasters and other disruptive factors.
+Added: * The Company’s future results are subject to vulnerability with respect to materials and fluctuations in the costs and availability of purchased components, compounds, raw materials, energy, and labor due to shortages, increased demand and wages, logistics, supply chain interruptions, manufacturing site disruptions, regulatory developments, natural disasters and other disruptive factors.
The Company depends on various components, compounds, raw materials, and energy (including oil and natural gas and their derivatives) supplied by others for the manufacturing of its products.
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This evaluation is based on a number of factors, which include financial strength, business and financial risk, as well as transparency with rating agencies and timeliness of financial reporting.
−Removed: As of July 2022, 3M has a credit rating of A1, stable outlook from Moody's Investors Service and a credit rating of A+, CreditWatch negative from S&P Global Ratings.
+Added: As of September 2022, 3M has a credit rating of A1, stable outlook from Moody's Investors Service and a credit rating of A+, CreditWatch negative from S&P Global Ratings.
The Company’s credit ratings have served to lower 3M’s borrowing costs and facilitate access to a variety of lenders.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.