What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-08 compared with 2022-02-09 · 834 added, 982 removed, 2072 unchanged (47% of the section changed)

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A complete summary of Form 10-K content, including the index to financial statements, is found at the beginning of this document.

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Management’s Responsibility for Financial Reporting

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The Company’s internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022.

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Report of Independent Registered Public Accounting Firm

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of 3M Company and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, of comprehensive income, of changes in equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheet of 3M Company and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, of comprehensive income (loss), of changes in equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Notes 1 and 8 to the consolidated financial statements, the Company changed the manner in which it accounts for net periodic pension and postretirement plan cost in 2021 and the manner in which it accounts for leases in 2019, respectively.

Basis for Opinions

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Legal Proceedings

As described in Note 16 to the consolidated financial statements, management records liabilities for legal proceedings in those instances where it can reasonably estimate the amount of the loss and when loss is probable.

Where the reasonable estimate of the probable loss is a range, management records as an accrual in its financial statements the most likely estimate of the loss, or the low end of the range if there is no one best estimate.

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These procedures included testing the effectiveness of controls relating to management’s evaluation of the liability related to legal proceedings, including controls over determining the likelihood of a loss and whether the amount of loss can be reasonably estimated, as well as financial statement disclosures.

These procedures also included, among others, obtaining and evaluating the letters of audit inquiry with internal and external legal counsel, evaluating the reasonableness of management’s assessment regarding whether an unfavorable outcome is reasonably possible or probable and reasonably estimable, and evaluating the sufficiency of the Company’s disclosures related to legal proceedings.

These procedures also included, among others, obtaining and evaluating the letters of audit inquiry with internal and external legal counsel, obtaining and evaluating contracts and agreements, evaluating the reasonableness of management’s assessment regarding whether an unfavorable outcome is reasonably possible or probable and reasonably estimable, and evaluating the sufficiency of the Company’s disclosures related to legal proceedings.

Tax-free Determination of the Split-Off of the Food Safety Division

As described in Note 3 to the consolidated financial statements, the Company completed the split-off of the Food Safety Division business in a transaction that involved a Reverse Morris Trust structure.

Management has determined that the Food Safety Division split-off involving the Reverse Morris Trust structure and certain internal business separation transactions (the split-off and certain internal business separation transactions referred to together as the “Transactions”) qualify as tax-free for U.S.

federal income tax purposes.

In making these determinations, management 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 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.

The principal considerations for our determination that performing procedures relating to the tax-free determination of the Transactions is a critical audit matter are (i) the significant judgment by management in applying relevant tax laws and regulations in determining the Transactions qualify as tax-free, and (ii) the significant impact to the financial statements if these tax-free determinations were determined to be inappropriate by the relevant taxing authorities.

This in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to the tax-free determination of the Transactions.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s determination of the tax-free treatment of the Transactions.

These procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in evaluating the information, including the private letter ruling from the Internal Revenue Service, third party tax opinions, U.S.

federal tax law, other external tax advice, certain representations from management, and other relevant evidence used by management, as well as the application of relevant U.S.

federal tax law to support management’s determination that the Transactions qualify as tax-free.

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Property, Plant and Equipment and Goodwill Impairment Assessments for the Advanced Materials Division

As described in Notes 1, 4, and 15 to the consolidated financial statements, the Company’s consolidated property, plant and equipment balance was $9.2 billion and goodwill balance was $12.8 billion as of December 31, 2022, and the Advanced Materials Division makes up a portion of these balances.

Management tests property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable.

An impairment loss is recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition.

The amount of the impairment loss recorded is calculated by the excess of the asset’s carrying value over its fair value.

Management also tests goodwill for impairment annually in the fourth quarter of each year, and tests for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired.

The impairment loss is measured as the amount by which the carrying value of the reporting unit’s net assets exceeds its estimated fair value, not to exceed the carrying value of the reporting unit’s goodwill.

In December 2022, the Company committed to a plan to exit per- and polyfluoroalkyl substance (PFAS) manufacturing by the end of 2025.

As a result, the Company recorded a pre-tax charge of $0.8 billion in the fourth quarter of 2022, related to the impairment of long-lived assets ($0.5 billion - primarily associated with property, plant and equipment) and impairment of goodwill ($0.3 billion) for the Advanced Materials Division.

Underlying fair values were determined primarily using discounted cash flow models based on assumptions of projected sales, EBITDA margins, capital expenditures, discount rate and other applicable items.

The principal considerations for our determination that performing procedures relating to the property, plant and equipment and goodwill impairment assessments for the Advanced Materials Division is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the Advanced Materials Division asset group and reporting unit, which in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to the appropriateness of management’s discounted cash flow models and reasonableness of management’s significant assumptions related to projected sales, EBITDA margins, capital expenditures, and discount rate and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s property, plant and equipment and goodwill impairment assessments for the Advanced Materials Division, including controls over management’s identification of events or changes in circumstances that indicate an impairment of an asset group or reporting unit has occurred and controls over the determination of the fair value estimates of the Advanced Materials Division asset group and reporting unit.

These procedures also included, among others, testing management’s process for determining the fair value estimates of the Advanced Materials Division asset group and reporting unit, evaluating the appropriateness of the discounted cash flow models, and evaluating the reasonableness of management’s significant assumptions related to projected sales, EBITDA margins, capital expenditures, and discount rate.

Evaluating management’s assumptions related to projected sales, EBITDA margins, and capital expenditures involved evaluating whether the assumptions used were reasonable considering the current and past performance of the Advanced Materials Division, external market and industry data, evidence obtained in other areas of the audit and the Company’s objectives and strategies.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the discounted cash flow models and evaluating the reasonableness of the discount rate.

/s/ PricewaterhouseCoopers LLP

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We have served as the Company’s auditor since 1975.

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3M Company and Subsidiaries

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Research, development and related expenses 1,862 1,994 1,878

Gain on sale of businesses — ( 389 ) ( 114 )

Gain on business divestitures ( 2,724 ) — ( 389 )

Goodwill impairment expense 271 — —

Total operating expenses 27,690 27,986 25,023

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The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

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3M Company and Subsidiaries

Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income (Loss)

Years ended December 31

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The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

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3M Company and Subsidiaries

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The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

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3M Company and Subsidiaries

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3M Company Shareholders

(Dollars in millions, except per share amounts) Total Common

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Income (Loss) Non-

(Dollars in millions, except per share amounts) Total Common Stock and Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Non-controlling Interest

Balance at December 31, 2019 $ 10,126 $ 5,916 $ 42,130 $ ( 29,849 ) $ ( 8,134 ) $ 63

Impact of adoption of ASU No.

2018-02 — 853 ( 853 )

Impact of adoption of ASU No.

2016-02 14 14

Net income 5,453 5,449 4

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( 3,388 ) ( 3,388 )

Purchase of non-controlling interest ( 1 ) ( 1 )

Stock-based compensation 255 255

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( 3,420 ) ( 3,420 )

Purchase of non-controlling interest ( 1 ) ( 1 )

Stock-based compensation 267 267

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Reacquired stock ( 1,464 ) ( 1,464 )

Dividend to noncontrolling interest ( 29 ) ( 29 )

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

Issuances pursuant to stock options and benefit plans 381 ( 279 ) 660

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Reacquired stock 10,865,635 11,834,681 2,286,109

Split-off of Food Safety business 15,989,536 — —

Issuances pursuant to stock options and benefit plans ( 4,254,798 ) ( 5,930,521 ) ( 4,850,912 )

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The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

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3M Company and Subsidiaries

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Depreciation and amortization 1,831 1,915 1,911

1,915 1,911 1,593

Long-lived and indefinite-lived asset impairment expense 618 — 6

Goodwill impairment expense 271 — —

Company pension and postretirement contributions ( 158 ) ( 180 ) ( 156 )

( 180 ) ( 156 ) ( 210 )

Company pension and postretirement expense 178 206 322

Stock-based compensation expense 263 274 262

Gain on sale of businesses

— ( 389 ) ( 111 )

Gain on business divestitures ( 2,724 ) — ( 389 )

Deferred income taxes ( 663 ) ( 166 ) ( 165 )

( 166 ) ( 165 ) ( 273 )

Loss on deconsolidation of Venezuelan subsidiary

Changes in assets and liabilities

Accounts receivable ( 105 ) ( 122 ) 165

( 122 ) 165 345

( 903 ) ( 91 ) 370

Inventories ( 629 ) ( 903 ) ( 91 )

Accounts payable 111 518 252

518 252 ( 117 )

Accrued income taxes (current and long-term) ( 47 ) ( 244 ) 132

( 244 ) 132 205

227 417 ( 127 )

Other — net 854 227 411

Net cash provided by (used in) operating activities 5,591 7,454 8,113

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Proceeds from sale of businesses, net of cash sold 13 — 576

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

Other — net 1 31 10

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The accompanying Notes to Consolidated Financial Statements are an integral part of this statement.

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3M Company and Subsidiaries

Notes to Consolidated Financial Statements

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As used herein, the term “3M” or “Company” refers to 3M Company and subsidiaries unless the context indicates otherwise.

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

See additional information in Note 16.

Basis of presentation:

Certain amounts in the prior years’ consolidated financial statements have been reclassified to conform to the current year presentation.

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

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

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

See below for additional information.

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

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

See additional information in Note 19.

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

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

See additional information in Note 2.

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

Foreign currency translation:

Local currencies generally are considered the functional currencies outside the United States with the exception of 3M’s subsidiaries in Argentina, the economy of which was considered highly inflationary beginning in 2018, and accordingly, the financial statements of these subsidiaries are remeasured as if their functional currency is that of their parent.

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

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

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

The financial statements of these subsidiaries are remeasured as if their functional currency is that of their parent.

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

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

3M had a consolidating subsidiary in Venezuela, the financial statements of which were remeasured as if its functional currency were that of its parent because Venezuela’s economic environment is considered highly inflationary.

The operating income of this subsidiary was immaterial as a percent of 3M’s consolidated operating income for the periods presented.

In light of circumstances, including the country’s unstable environment and heightened unrest leading to sustained lack of demand, and expectation that these circumstances will continue for the foreseeable future, during May 2019, 3M concluded it no longer met the criteria of control in order to continue consolidating its Venezuelan operations.

As a result, as of May 31, 2019, the Company began reflecting its interest in the Venezuelan subsidiary as an equity investment that does not have a readily determinable fair value.

This resulted in a pre-tax charge of $ 162 million within other expense (income) in the second quarter of 2019.

The charge primarily relates to $ 144 million of foreign currency translation losses associated with foreign currency movements before Venezuela was accounted for as a highly inflationary economy and pension elements previously included in accumulated other comprehensive loss along with write-down of intercompany receivable and investment balances associated with this subsidiary.

Beginning May 31, 2019, 3M’s consolidated balance sheets and statements of operations no longer include the Venezuelan entity’s operations other than an immaterial equity investment and associated loss or income thereon largely only to the extent, that 3M provides support or materials and receives funding or dividends.

Use of estimates:

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The classification of marketable securities as current or non-current is based on the availability for use in current operations.

3M reviews impairments associated with its marketable securities in accordance with the measurement guidance provided by ASC 320, Investments-Debt Securities and ASC 326-30, Available-

for-Sale Debt Securities, when determining whether a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors.

3M reviews impairments associated with its marketable securities in accordance with the measurement guidance provided by ASC 320, Investments-Debt Securities and ASC 326-30, Available-for-Sale Debt Securities, when determining whether a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors.

An impairment relating to credit losses is recorded through an allowance for credit losses.

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The balance of these securities is disclosed in Note 7.

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Other assets:

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Inventories are stated at the lower of cost or net realizable value (NRV), which is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.

Cost is determined on a first-in, first-out basis.

Cost is generally determined on a first-in, first-out basis.

Property, plant and equipment:

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Property, plant and equipment amounts are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable.

An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition.

An impairment loss is recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition.

The amount of the impairment loss recorded is calculated by the excess of the asset’s carrying value over its fair value.

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Over time the liabilities are accreted for the change in their present value and the initial capitalized costs are depreciated over the remaining useful lives of the related assets.

The asset retirement obligation liability was $ 176 million and $ 145 million at December 31, 2021 and 2020, respectively.

The asset retirement obligation liability was $ 177 million and $ 176 millions at December 31, 2022 and 2021, respectively.

Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination.

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3M did not combine any of its reporting units for impairment testing.

The impairment loss is measured as the amount by which the carrying value of the reporting unit’s

net assets exceeds its estimated fair value, not to exceed the carrying value of the reporting unit’s goodwill.

The estimated fair value of a reporting unit is determined based on a market approach using comparable company information such as EBITDA (earnings before interest, taxes, depreciation and amortization) multiples.

Companies have the option to first assess qualitative factors to determine whether the fair value of a reporting unit is not “more likely than not” less than its carrying amount, which is commonly referred to as “Step 0”.

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Intangible asset types include customer related, patents, other technology-based, tradenames and other intangible assets acquired from an independent party.

Intangible assets with a definite life are amortized over a period ranging from five years to twenty years on a systematic and rational basis (generally straight line) that is representative of the asset’s use.

The estimated useful lives vary by category, with customer-related largely between ten to twenty years , patents largely between seven to thirteen years , other technology-based largely between six to twenty years , definite lived tradenames largely between six and twenty years , and other intangibles largely between five to eight years .

Intangible assets with a definite life are amortized over a period ranging from six to twenty years on a systematic and rational basis (generally straight line) that is representative of the asset’s use.

The estimated useful lives vary by category, with customer-related largely between twelve to nineteen years , patents largely between eight to thirteen years , other technology-based largely between six to ten years , definite lived tradenames largely between eleven and twenty years , and other intangibles largely ten years .

Intangible assets are removed from their respective gross asset and accumulated amortization accounts when they are no longer in use.

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Costs related to internally developed intangible assets, such as patents, are expensed as incurred, within “Research, development and related expenses.”

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Intangible assets with a definite life are tested for impairment whenever events or circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable.

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Intangible assets with an indefinite life, namely certain tradenames, are not amortized.

Indefinite-lived intangible assets are tested for impairment annually, and are tested for impairment between annual tests if an event occurs or circumstances change that would indicate that the carrying amount may be impaired.

Indefinite-lived intangible assets are tested for impairment annually in the third quarter of each year, and are tested for impairment between annual tests if an event occurs or circumstances change that would indicate that the carrying amount may be impaired.

An impairment loss would be recognized when the fair value is less than the carrying value of the indefinite-lived intangible asset.

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The range of possible consideration outcomes are primarily derived from the following inputs:

sales terms, historical

experience, trend analysis, and projected market conditions in the various markets served.

sales terms, historical experience, trend analysis, and projected market conditions in the various markets served.

Because 3M serves numerous markets, the sales incentive programs offered vary across businesses, but the most common incentive relates to amounts paid or credited to customers for achieving defined volume levels or growth objectives.

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Additionally, the Company does not have material costs related to obtaining a contract with amortization periods greater than one year for any year presented.

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3M applies ASC 606 utilizing the following allowable exemptions or practical expedients:

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The allowances for bad debts and cash discounts are based on the best estimate of the amount of expected credit losses in existing accounts receivable and anticipated cash discounts.

The Company determines the allowances based on historical write-off experience by industry and regional economic data, current expectations of future credit losses, and historical cash discounts.

The Company determines the allowances based on historical write-off experience, current expectations of future credit losses informed by industry and regional economic data, and historical cash discounts.

The Company reviews the allowances monthly.

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Advertising and merchandising:

These costs are charged to operations in the period incurred , and totaled $ 327 million in 2021, $ 278 million in 2020 and $ 348 million in 2019.

These costs are charged to operations in the period incurred , and totaled $ 323 million, $ 327 million and $ 278 million in 2022, 2021 and 2020, respectively.

Research, development and related expenses:

These costs are charged to operations in the period incurred and are shown on a separate line of the Consolidated Statement of Income.

Research, development and related expenses totaled $ 1.994 billion in 2021, $ 1.878 billion in 2020 and $ 1.911 billion in 2019.

Research and development expenses, covering basic scientific research and the application of scientific advances in the development of new and improved products and their uses, totaled $ 1.243 billion in 2021, $ 1.146 billion in 2020 and $ 1.253 billion in 2019.

Research, development and related expenses totaled $ 1.9 billion, $ 2.0 billion and $ 1.9 billion in 2022, 2021 and 2020, respectively.

Research and development expenses, covering basic scientific research and the application of scientific advances in the development of new and improved products and their uses, totaled $ 1.1 billion, $ 1.2 billion and $ 1.1 billion in 2022, 2021 and 2020, respectively.

Related expenses primarily include technical support;

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The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability exists.

As of December 31, 2021 and 2020, the Company had valuation allowances of $ 142 million and $ 135 million on its deferred tax assets, respectively.

As of December 31, 2022 and December 31, 2021, the Company had valuation allowances of $ 115 million and $ 142 million on its deferred tax assets, respectively.

The Company recognizes and measures its uncertain tax positions based on the rules under ASC 740, Income Taxes .

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Earnings per share:

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Certain options outstanding under these stock-based compensation plans during the years 2022, 2021 and 2020 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 ( 30.3 million average options for 2022, 7.8 million average options for 2021, and 18.1 million average options for 2020).

The computations for basic and diluted earnings per share for the years ended December 31 follow:

The computations for basic and diluted earnings per share follow:

Earnings Per Share Computations

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Denominator for weighted average 3M common shares outstanding – basic

566.0 579.0 577.6

Dilution associated with the Company’s stock-based compensation plans 1.6 6.3 4.6

Denominator for weighted average 3M common shares outstanding – diluted

567.6 585.3 582.2

Earnings per share attributable to 3M common shareholders – basic

$ 10.21 $ 10.23 $ 9.43

Earnings per share attributable to 3M common shareholders – diluted

$ 10.18 $ 10.12 $ 9.36

Stock-based compensation:

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All derivative instruments within the scope of ASC 815, Derivatives and Hedging , are recorded on the balance sheet at fair value.

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

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

All hedging instruments that qualify for hedge accounting are designated and effective as hedges, in accordance with U.S.

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3M has elected to present the fair value of derivative assets and liabilities within the Company’s consolidated balance sheet on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation.

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Fair value measurements:

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Certain 3M leases contain immaterial variable lease payments based on number of units produced.

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

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

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

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

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

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

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

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

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

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

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

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

Consolidated Statement of Income

Year ended December 31,

(Millions, except per share amounts) Under Prior

Method As Adjusted Under Prior

Method As Adjusted

Other expense (income), net 450 366 462 531

Income before income taxes 6,711 6,795 5,712 5,643

Provision for income taxes 1,318 1,337 1,130 1,114

Income of consolidated group 5,393 5,458 4,582 4,529

Net income including noncontrolling interest 5,388 5,453 4,582 4,529

Net income attributable to 3M 5,384 5,449 4,570 4,517

Earnings per share attributable to 3M common shareholders — basic 9.32 9.43 7.92 7.83

Earnings per share attributable to 3M common shareholders — diluted 9.25 9.36 7.81 7.72

Consolidated Statement of Comprehensive Income

Year ended December 31,

(Millions) Under Prior

Method As Adjusted Under Prior

Method As Adjusted

Net income including noncontrolling interest 5,388 5,453 4,582 4,529

Other comprehensive income (loss), net of tax:

Defined benefit pension and postretirement plans adjustment 171 106 ( 560 ) ( 507 )

Total other comprehensive income (loss), net of tax 476 411 ( 421 ) ( 368 )

Comprehensive income (loss) including noncontrolling interest 5,864 5,864 4,161 4,161

Comprehensive income (loss) attributable to 3M 5,862 5,862 4,150 4,150

Consolidated Balance Sheet

As of December 31, 2020

(Millions) Under Prior

Method As Adjusted

Retained earnings 43,761 43,821

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

Consolidated Statement of Cash Flows

Year ended December 31,

(Millions) Under Prior

Method As Adjusted Under Prior

Method As Adjusted

Net income including noncontrolling interest 5,388 5,453 4,582 4,529

Company pension and postretirement expense 406 322 357 426

Other — net 398 417 ( 111 ) ( 127 )

The cumulative adjustment as of January 1, 2019, the beginning of the earliest period presented in the consolidated financial statements included herein, was a $ 5 million reduction to each of retained earnings and accumulated other comprehensive loss.

Related Party Activity:

3M does not have any material related party activity.

Other than the amounts due by and between the Aearo Entities and related entities (as described in Note 16), 3M does not have any material related party activity.

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New Accounting Pronouncements

The tables below provide summaries of new accounting pronouncements adopted by 3M during 2021 and of pronouncements issued, but not yet adopted by the Company.

Standards Adopted During 2021

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

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

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

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

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

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

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

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

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

Facilitation of the Effects of Reference Rate Reform on

Financial Reporting and ASU No.

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

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

Effective upon ASU issuances in 2020 & 2021

3M will apply this guidance to applicable contracts and instruments when/if they are modified.

Review of relevant arrangements concluded that implications of these ASUs would not have a material impact on 3M’s consolidated results of operations and financial condition.

The table below provides summaries of applicable new accounting pronouncements issued, but not yet adopted by 3M:

Standards Issued and Not Yet Adopted

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January 1, 2023 This guidance is applicable to all business combinations occurring after the effective date.

2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance

Issued in November 2021.

Requires disclosures about certain types of government assistance received.

The disclosures include information about the nature of the transactions and related accounting policy used to account for them, the line items on the balance sheet and income statement affected by the transactions and the amounts applicable to each financial statement item, and the significant terms and conditions of the transaction.

January 1, 2022 As this ASU relates to disclosures only, there will be no impact to 3M’s consolidated results of operations and financial condition.

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

Disclosure of Supplier Finance Obligations

Issued in September 2022.

Requires a buyer in a supplier finance program to disclose the key terms of the program, amount of outstanding obligations, and a rollforward of obligations confirmed and subsequently paid.

January 1, 2023, except rollforward disclosure which is not effective until the year-end December 31, 2024 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.

Refer to Note 7 for deferred revenue balances at December 31, 2020 and 2021.

Refer to Note 7 for deferred revenue balances as of December 31, 2022 and 2021.

Approximately $ 500 million of the December 31, 2021 balance was recognized as revenue during the year ended December 31, 2022, while approximately $ 470 million of the December 31, 2020 balance was recognized as revenue during the year ended December 31, 2021.

Operating Lease Revenue:

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 582 million and $ 586 million for the year ended December 31, 2021 and December 31, 2020, respectively.

Applicable rental revenue for the year ended December 31, 2019 was not material.

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 577 million, $ 582 million, and $ 586 million for the years ended December 31, 2022, 2021, and 2020 respectively .

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Disaggregated revenue information:

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Corporate and Unallocated 4 2 ( 2 )

Elimination of Dual Credit ( 2,202 ) ( 2,037 ) ( 1,618 )

Total Company $ 34,229 $ 35,355 $ 32,184

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Asia Pacific included China/Hong Kong net sales to customers of $ 3.8 billion, $ 4.0 billion and $ 3.5 billion in 2022, 2021 and 2020, respectively.

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Acquisitions and Divestitures

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2020 acquisitions:

In February 2019, 3M completed the acquisition of the technology business of M*Modal for $ 0.7 billion of cash, net of cash acquired, and assumption of $ 0.3 billion of M*Modal’s debt.

Based in Pittsburgh, Pennsylvania, M*Modal is a leading healthcare technology provider of cloud-based, conversational artificial intelligence-powered systems that help physicians efficiently capture and improve the patient narrative.

The allocation of purchase consideration related to M*Modal was completed in the fourth quarter of 2019.

Net sales and operating loss (inclusive of transaction and integration costs) of this business included in 3M’s consolidated results of operations in 2019 were approximately $ 300 million and $ 25 million, respectively.

M*Modal is reported within the Company’s Health Care business.

In October 2019, the Company completed the acquisition of all of the ownership interests of Acelity Inc.

and its KCI subsidiaries.

Acelity is a leading global medical technology company focused on advanced wound care and specialty surgical applications marketed under the KCI brand.

In the first quarter of 2020, the Company paid certain considerations previously accrued under the terms of related agreements.

Adjustments in 2020 to the purchase price allocation were approximately $ 34 million and related to identification and valuation of certain acquired assets and liabilities.

The change to provisional amounts did not result in material impacts to results of operations in 2020 or any portion related to earlier quarters in the measurement period.

The allocation of purchase consideration related to Acelity was completed in the third quarter of 2020.

Net sales and operating loss (inclusive of transaction and integration costs) of this business included in 3M’s consolidated results of operations in the fourth quarter of 2019 were approximately $ 350 million and $ 45 million, respectively.

Acelity is reported within the Company’s Health Care business.

Proforma information related to these acquisitions has not been included as the impact on the Company’s consolidated results of operations was not considered material.

The following table shows the impact on the consolidated balance sheet of the purchase price allocations related to the 2019 acquisitions and assigned finite-lived asset weighted average lives.

2019 Acquisition Activity

Asset (Liability) M*Modal Acelity Total Finite-Lived

Intangible-Asset

Weighted-Average Lives (Years)

Accounts receivable $ 75 $ 295 $ 370

Inventory — 186 186

Other current assets 2 65 67

Property, plant, and equipment 8 147 155

Purchased finite-lived intangible assets:

Customer related intangible assets 275 1,760 2,035 18

Other technology-based intangible assets 160 1,390 1,550 10

Definite-lived tradenames 11 485 496 16

Purchased goodwill 517 2,952 3,469

Other assets 58 73 131

Accounts payable and other liabilities ( 127 ) ( 438 ) ( 565 )

Interest bearing debt ( 251 ) ( 2,322 ) ( 2,573 )

Deferred tax asset/(liability) and accrued income taxes ( 24 ) ( 288 ) ( 312 )

Net assets acquired $ 704 $ 4,305 $ 5,009

Supplemental information:

Cash paid $ 708 $ 4,486 $ 5,194

Cash acquired 4 206 210

Cash paid, net of cash acquired $ 704 $ 4,280 $ 4,984

Consideration payable — 25 25

Cash paid and consideration payable, net of cash acquired $ 704 $ 4,305 $ 5,009

Purchased identifiable finite-lived intangible assets related to acquisitions which closed in 2019 totaled $ 4.081 billion.

The associated finite-lived intangible assets acquired will be amortized on a systematic and rational basis (generally straight line) over a weighted-average life of 14 years (lives ranging from 6 to 19 years).

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

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 19 (Business Segments), gains/losses on sale of businesses are reflected in Corporate and Unallocated.

2021 divestitures and announced divestitures:

There were no divestitures that closed during the year ended December 31, 2021.

In December 2021, 3M entered into a binding offer to sell its floor products business in Western Europe, part of the Consumer business.

This business has annual sales of less than $ 30 million.

The transaction is expected to close in the first quarter of 2022, subject to customary closing conditions and regulatory requirements.

3M expects an immaterial pre-tax gain as a result of this divestiture.

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.

As discussed in Note 19 (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 July 2022, 3M announced its intention to spin off the Health Care business as a separate public company.

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

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

federal income tax purposes, by year-end 2023.

The transaction is subject to customary conditions, including final approval from the 3M Board of Directors, regulatory approvals and rulings, and satisfactory completion of financing, among other items.

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 (formerly part of the Health Care business segment) 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.

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

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

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

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

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.

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

federal income tax purposes.

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

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.

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

Due to factors such as the potential nature of the transaction and underlying approvals, the Food Safety business is not considered held for sale as of December 31, 2021.

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.

2021 divestitures:

There were no divestitures that closed during the year ended December 31, 2021.

2020 divestitures:

In January 2020, 3M completed the sale of its advanced ballistic-protection business, formerly part of the Transportation and Electronics business, to Avon Rubber p.l.c for $ 86 million in cash and recognized certain contingent consideration from the outcome of pending tenders.

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3M reflected immaterial impacts in the third quarter of 2019 as a result of measuring this disposal group at the lower of its carrying amount or fair value less cost to sell and in the first quarter 2020 related to completion of the divestiture and recognition of contingent consideration.

In May 2020, 3M completed the sale of substantially all of its drug delivery business, formerly part of the Health Care business, to an affiliate of Altaris Capital Partners, LLC for $ 617 million in consideration including $ 487 million of cash, approximately $ 70 million in the form of an interest-bearing security, and approximately $ 60 million in the form of a 17 percent noncontrolling interest in the new company, Kindeva Drug Delivery (Kindeva).

In May 2020, 3M completed the sale of substantially all of its Drug Delivery Division business, formerly part of the Health Care business, to an affiliate of Altaris Capital Partners, LLC for $ 617 million in consideration including $ 487 million of cash, approximately $ 70 million in the form of an interest-bearing security, and approximately $ 60 million in the form of a 17 percent noncontrolling interest in the new company, Kindeva Drug Delivery (Kindeva).

Non-cash consideration was valued at time of initial recognition on an income-based approach using relevant estimated future cash flows and applicable market interest rates while considering impacts of restrictions related to transferability.

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3M reflected a pre-tax gain of $ 387 million as a result of the divestiture.

The Company reflects its ownership interest in Kindeva using the equity method of accounting incorporating the recording of 3M’s share of earnings/losses on a lag-basis based on availability of Kindeva financial statements.

The Company reflected its ownership interest in Kindeva using the equity method of accounting incorporating the recording of 3M’s share of earnings/losses on a lag-basis based on availability of Kindeva financial statements.

As a result, income/loss from this unconsolidated subsidiary began to be reflected in 3M’s financial statements in the third quarter of 2020.

Kindeva and 3M entered into certain limited-term agreements related to post-divestiture transition and supply services.

In the fourth quarter of 2022, 3M sold its remaining ownership interest in Kindeva resulting in an immaterial gain.

In the third quarter of 2020, 3M completed the sale of a small dermatology products business, formerly part of the Health Care business, for immaterial proceeds that approximated the business’s book value.

2019 divestitures:

During the first quarter of 2019, the Company sold certain oral care technology comprising a business and reflected an earnout on a previous divestiture resulting in an aggregate immaterial gain.

In August 2019, 3M closed on the sale of its gas and flame detection business, a leader in fixed and portable gas and flame detection, to Teledyne Technologies Incorporated.

3M’s gas and flame business was part of the overall October 2017 acquisition of underlying legal entities and associated assets of Scott Safety.

This business has annual sales of approximately $ 120 million.

The transaction resulted in a pre-tax gain of $ 112 million.

Operating income and held-for-sale amounts:

The aggregate operating income of these businesses, including the announced divestitures, was approximately $ 120 million, $ 160 million and $ 160 million in 2021, 2020 and 2019, respectively.

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

With respect to the businesses above, o perating income information of the Health Care business segment, inclusive of the Food Safety Division and Drug Delivery Division, is included in Note 19.

Further, with the respect to these businesses, there were immaterial amounts of assets and liabilities associated with disposal groups classified as held-for-sale as of December 31, 2021 and no such amounts as of December 31, 2022.

Information related to other held-for-sale disposal groups is included in Note 15.

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Goodwill and Intangible Assets

There was no goodwill recorded from acquisitions during 2022 and 2021.

The acquisition activity in the following table also includes the net impact of adjustments to the preliminary allocation of purchase price within the one year measurement-period following prior acquisitions, which decreased goodwill by $ 34 million during 2020.

The amounts in the “Translation and other”

column in the following table primarily relate to changes in foreign currency exchange rates.

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

The goodwill balance by business segment follows:

(Millions) Safety and Industrial Transportation

Electronics Health Care Consumer Total

(Millions) Safety and Industrial Transportation and Electronics Health Care Consumer Total Company

Balance as of December 31, 2020 $ 4,687 $ 1,858 $ 6,992 $ 265 $ 13,802

Acquisition activity — — ( 34 ) — ( 34 )

Divestiture activity — ( 10 ) ( 19 ) — ( 29 )

Translation and other ( 65 ) ( 33 ) ( 206 ) ( 12 ) ( 316 )

Balance as of December 31, 2021 $ 4,622 $ 1,825 $ 6,786 $ 253 $ 13,486

Divestiture activity — — ( 16 ) — ( 16 )

Goodwill impairment — ( 271 ) — — ( 271 )

Translation and other ( 113 ) ( 53 ) ( 255 ) 12 ( 409 )

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The Company also completed its annual goodwill impairment test in the fourth quarter of 2022 for all reporting units and determined that no impairment existed.

In addition, the Company had no impairments of goodwill in 2020, 2019 or cumulatively.

Additionally, in December 2022, as a result of 3M's commitment to a plan to exit per- and polyfluoroalkyl substance (PFAS) manufacturing as described in Note 15, 3M recorded a goodwill impairment charge of $ 0.3 billion related to the Advanced Materials reporting unit (within the Transportation and Electronics business) resulting in no remaining goodwill for that reporting unit.

This also represents the Company's accumulated goodwill impairment losses as of December 31, 2022.

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 December 31, follow:

The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets follow:

(Millions) 2022 2021

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Total intangible assets — net $ 4,699 $ 5,288

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

As discussed in Note 15, 3M reflected an immaterial charge related to impairment of certain indefinite-lived assets in the first quarter of 2020.

Amortization expense for the years ended December 31 follows:

As discussed in Note 15, in December 2022, as a result of 3M's commitment to a plan to exit per- and polyfluoroalkyl substance (PFAS) manufacturing, 3M recorded a charge in the fourth quarter of 2022 related to impairment of long-lived assets and an immaterial charge related to impairment of indefinite-lived assets.

Amortization expense follows:

Year ended December 31,

(Millions) 2022 2021 2020

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Restructuring Actions

2021 and 2020 Restructuring Actions:

2020 through 2022 Restructuring Action

Operational/Marketing Capability Restructuring:

In late 2020, 3M announced it would undertake certain actions to further enhance its operations and marketing capabilities to take advantage of certain global market trends while de-prioritizing investments in slower-growth end markets.

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

In late 2020, 3M announced it would undertake certain actions beginning in the fourth quarter of 2020 to further enhance its operations and marketing capabilities to take advantage of certain global market trends while de-prioritizing investments in slower-growth end markets, resulting in a pre-tax charge of $ 137 million.

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

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

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

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

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

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

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

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

(Millions) 2022 2021 2020

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

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

2022 2021 2020

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

Safety and Industrial $ 2 $ 30 $ 36 $ 7 $ 43

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Total Operating Expense $ 18 $ 124 $ 101 $ 36 $ 137

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

(Millions) Employee-

Related Asset-Related

and Other Total

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

Expense incurred in the fourth quarter of 2020 $ 101 $ 36 $ 137

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Adjustments ( 11 ) — ( 11 )

Accrued restructuring action balance as of December 31, 2021 87 — 87

Incremental expense incurred in the first quarter of 2022 18 — 18

Cash payments ( 84 ) — ( 84 )

Adjustments ( 9 ) — ( 9 )

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

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

2022 Restructuring Actions:

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) 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 ( 31 )

Accrued restructuring action balances as of December 31, 2022

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

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2020 Restructuring Actions:

Divestiture-Related Restructuring

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

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Other Restructuring

Additionally, in the second quarter of 2020, management approved and committed to undertake certain restructuring actions addressing structural enterprise costs and operations in certain end markets as a result of the COVID-19 pandemic and related

economic impacts.

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

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

2019 Restructuring Actions:

During the second quarter of 2019, in light of slower than expected 2019 sales, management approved and committed to undertake certain restructuring actions.

These actions impacted approximately 2,000 positions worldwide, including attrition.

The Company recorded second quarter 2019 pre-tax charges of $ 148 million.

Additionally, during the fourth quarter of 2019, to realign 3M’s organizational structure and operating model to improve growth and operational efficiency, management approved and committed to undertake certain restructuring actions.

These actions impacted approximately 1,500 positions worldwide.

The Company recorded fourth quarter 2019 pre-tax charges of $ 134 million.

These restructuring charges were recorded in the income statement as follows:

Cost of sales $ 72

Selling, general and administrative expenses 137

Research, development and related expenses 37

Total operating income impact 246

Other expense (income), net 36

Total income before income taxes impact $ 282

The second quarter 2019 actions included a voluntary early retirement incentive initial charge (further discussed in Note 13), the charge for which is included in other expense (income), net above.

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

Employee-Related Asset-Related Total

Safety and Industrial $ 50 $ — $ 50

Transportation and Electronics 31 — 31

Health Care 17 — 17

Consumer 8 — 8

Corporate and Unallocated 100 40 140

Total Operating Expense $ 206 $ 40 $ 246

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

(Millions) Employee-Related Asset-Related Total

Expense incurred in the second quarter and fourth quarter of 2019 $ 242 $ 40 $ 282

Non-cash changes ( 36 ) ( 40 ) ( 76 )

Cash payments ( 52 ) — ( 52 )

Adjustments ( 14 ) — ( 14 )

Accrued restructuring action balances as of December 31, 2019 140 — 140

Cash Payments ( 51 ) — ( 51 )

Adjustments ( 59 ) — ( 59 )

Accrued restructuring action balances as of December 31, 2020 30 — 30

Adjustments in the table above reflect changes in estimates from factors such as additional natural attrition and redeployment as COVID-19 delayed the start of plan execution and update of costs associated with the mix of impacted roles.

Remaining activities related to this restructuring were largely completed through early 2021.

Supplemental Income Statement Information

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Pension and postretirement net periodic benefit cost (benefit) ( 248 ) ( 297 ) ( 134 )

Loss on deconsolidation of Venezuelan subsidiary — — 162

Total $ 147 $ 165 $ 366

Interest expense includes early debt extinguishment pre-tax charges of approximately $ 11 million and $ 10 million in 2021 and 2020, respectively.

Interest expense includes an early debt extinguishment pre-tax charge of approximately $ 11 million and $ 10 million in 2021 and 2020, respectively.

Pension and postretirement net periodic benefit costs described in the table above include all components of defined benefit plan net periodic benefit costs except service cost, which is reported in various operating expense lines.

Pension and postretirement net periodic benefit costs for 2019 included a second quarter charge related to the voluntary early retirement incentive program announced in May 2019 in addition to U.S.

non-qualified pension plan settlement charges of $ 32 million recognized in the fourth quarter of 2019.

Refer to Note 13 for additional details on the voluntary early retirement incentive program in addition to the components of pension and postretirement net periodic benefit costs.

In 2019, the Company incurred a charge of $ 162 million related to the deconsolidation of its Venezuelan subsidiary.

Refer to Note 1 for additional details.

Refer to Note 13 for additional details on the components of pension and postretirement net periodic benefit costs.

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Supplemental Balance Sheet Information

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Total other liabilities $ 5,615 $ 3,403

Certain items in the table above include balances as of December 31, 2022 associated with the deconsolidated Aearo Entities as discussed further in Note 16.

These include:

• $ 0.7 billion asset balance in "equity and other investments" (within other assets).

• $ 0.3 billion in "other" (within other assets).

• $ 1.2 billion accrued liability largely reflected within "contingent liability claims and other" (within other liabilities).

• $ 0.9 billion in "other" (within other liabilities).

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Supplemental Equity and Comprehensive Income Information

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Cash dividends declared and paid totaled $ 1.49 , $ 1.48 , and $ 1.47 per share for each quarter in 2022, 2021 and 2020, respectively, which resulted in total year declared and paid dividends of $ 5.96 , $ 5.92 , and $ 5.88 per share, respectively.

In connection with 3M’s January 1, 2019 adoption of ASU No.

2018-2, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, and ASU No.

2016-2, Leases, the Company recorded an increase in retained earnings of approximately $ 0.9 billion (with offsetting increase to accumulated other comprehensive loss for the same amount) and $ 14 million, respectively.

Dividend to noncontrolling interest in 2022 of $ 29 million related to dividend paid by 3M India Limited, of which 3M’s effective ownership is 75 percent.

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

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

Income (Loss)

(Millions) Cumulative Translation Adjustment Defined Benefit Pension and Postretirement Plans Adjustment Cash Flow Hedging Instruments, Unrealized Gain (Loss) Total Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2019, net of tax:

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

Impact of Adoption of ASU No.

2018-02 ( 13 ) ( 817 ) ( 23 ) ( 853 )

Other comprehensive income (loss), before tax:

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$ ( 2,828 ) $ ( 3,838 ) $ ( 7 ) $ ( 6,673 )

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

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

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

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Reclassifications out of Accumulated Other Comprehensive Income Attributable to 3M

Details about Accumulated Other Comprehensive Income Components (Millions) Amounts Reclassified from

Accumulated Other Comprehensive Income Location on

Income Statement

Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Location on Income Statement

Year ended December 31,

2021 2020 2019

Cumulative translation adjustment

Deconsolidation of Venezuelan subsidiary $ — $ — $ ( 142 ) Other (expense) income, net

Total before tax — — ( 142 )

Tax effect — — — Provision for income taxes

Net of tax — — ( 142 )

(Millions) 2022 2021 2020

Defined benefit pension and postretirement plans adjustments

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Curtailments/Settlements ( 18 ) ( 27 ) ( 20 ) Other (expense) income, net

Deconsolidation of Venezuelan subsidiary — — ( 2 ) Other (expense) income, net

Total before tax ( 458 ) ( 658 ) ( 619 )

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Individual amounts in the Consolidated Statement of Cash Flows exclude the impacts of acquisitions, divestitures and exchange rate impacts, which are presented separately.

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Income Before Income Taxes

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Total $ 612 $ 1,285 $ 1,337

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Components of Deferred Tax Assets and Liabilities

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Foreign tax credits 112 115

Currency translation — 90

Research and experimentation capitalization 418 —

Lease liabilities 210 219

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Accelerated depreciation ( 586 ) ( 665 )

Intangible amortization ( 985 ) ( 1,023 )

Intangible assets ( 901 ) ( 985 )

Currency translation ( 69 ) —

Right-of-use asset ( 210 ) ( 222 )

Other ( 69 ) —

Total deferred tax liabilities ( 1,838 ) ( 1,872 )

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As of December 31, 2022, the Company had tax effected operating losses, capital losses, and tax credit carryovers for federal (approximately $ 112 million), state (approximately $ 79 million), and international (approximately $ 40 million), with all amounts before limitation impacts and valuation allowances.

Federal tax attribute carryovers will expire after one to 10 years, the state after one to 11 years, and the international after one year to an indefinite carryover period.

Federal tax attribute carryovers will expire after one to ten years , the state after one to eleven years , and the international after one year to an indefinite carryover period.

As of December 31, 2022, the Company has provided $ 115 million of valuation allowance against certain of these deferred tax assets based on management’s determination that it is more-likely-than-not that the tax benefits related to these assets will not be realized.

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Reconciliation of Effective Income Tax Rate

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tax rate 21.0 % 21.0 % 21.0 %

Food Safety divestiture ( 8.4 ) — —

State income taxes - net of federal benefit — 0.9 1.2

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The effective tax rate for 2022, 2021, and 2020 were 9.6 percent , 17.8 percent, and 19.7 percent, respectively.

These reflect a decrease of 1.9 percentage points from 2020 to 2021 and a flat comparison from 2019 to 2020.

The primary factors that decreased the effective tax rate for 2021 were geographical income mix and favorable adjustments in 2021 related to impacts of U.S.

These reflec t a decrease of 8.2 percen tage points from 2021 to 2022 and a decrease of 1.9 percentage points from 2020 to 2021.

The primary factor that decreased the effective tax rate for 2022 was the tax efficient structure associated with the gain on the split-off of the Food Safety business.

The primary factors that decreased the effective tax rate for 2021 in comparison to 2020 were geographical income mix and favorable adjustments in 2021 related to impacts of U.S.

international tax provisions.

The 2017 Tax Cuts and Jobs Act (TCJA) involved a transition tax that is payable over eight years beginning in 2018.

As of December 31, 2021 and December 31, 2020, 3M reflected $ 508 million and $ 584 million, respectively, in long term income taxes payable.

As of December 31, 2021 and December 31, 2020, 3M reflected $ 68 million and $ 69 million, respectively, payable within one year associated with the transition tax.

As of December 31, 2022 and December 31, 2021, 3M reflecte d $ 380 million and $ 508 million, respectively, in long term income taxes payable.

As of December 31, 2022 and December 31, 2021, 3M reflecte d $ 126 million and $ 68 million, respectively, payable within one year associated with the transition tax.

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

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Net UTB that would impact the effective tax rate at December 31 $ 965 $ 1,112 $ 1,145

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The total amount of UTB, if recognized, would affect the effective tax rate by $ 965 million as of December 31, 2022, $ 1,112 million as of December 31, 2021, and $ 1,145 million as of December 31, 2020.

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Marketable Securities

The Company invests in asset-backed securities, certificates of deposit/time deposits, commercial paper, and other securities.

1 unchanged sentence

(Millions) 2022 2021

Corporate debt securities $ — $ 7

Commercial paper $ 213 $ 109

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

The balance at December 31, 2021, for marketable securities by contractual maturity are shown below.

The balances at December 31, 2022 for marketable securities by contractual maturity are shown below.

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

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Total marketable securities $ 261

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Long-Term Debt and Short-Term Borrowings

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Long-Term Debt

(Millions) Currency/

Floating Effective

Interest Rate Final

Maturity Date Carrying Value

(Millions) Currency/ Fixed vs.

Floating Effective Interest Rate Final Maturity Date Carrying Value

Description / 2022 Principal Amount 2022 2021

Eurobond (repaid in 2021) EUR Fixed — % 2021 — 367

Eurobond (repaid in 2021) EUR Floating — % 2021 — 374

Medium-term note (repaid in 2021) USD Fixed — % 2021 — 449

Medium-term note (€ 500 million)

Medium-term note (repaid in 2022)

EUR Fixed — % 2022 — 567

Medium-term note ($ 600 million)

Medium-term note (repaid in 2022)

USD Fixed — % 2022 — 599

Medium-term note (€ 600 million)

EUR Fixed 1.14 % 2023 679 731

Registered note ($ 500 million)

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Medium-term note (€ 600 million)

EUR Fixed 1.14 % 2023 639 679

Medium-term note ($ 300 million)

USD Fixed 3.30 % 2024 300 299

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USD Floating 4.81 % 2024 300 300

Medium-term note ($ 550 million)

USD Fixed 3.04 % 2025 548 548

Registered note ($ 750 million)

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Medium-term note ($ 550 million)

EUR Fixed 1.65 % 2026 842 908

Medium-term note ($ 650 million)

USD Fixed 3.04 % 2025 549 548

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USD Fixed 2.37 % 2026 646 645

Medium-term note (€ 750 million)

EUR Fixed 1.65 % 2026 792 842

Floating rate note ($ 19 million)

USD Floating 4.37 % 2027 18 19

Medium-term note ($ 850 million)

USD Fixed 2.95 % 2027 845 844

30-year debenture ($ 220 million)

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USD Floating 6.69 % 2028 211 240

Medium-term note ($ 600 million)

USD Fixed 3.62 % 2028 598 598

Floating rate note ($ 150 million)

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USD Floating 6.73 % 2028 84 96

Registered note ($ 1 billion)

USD Fixed 2.50 % 2029 988 986

Medium-term note ($ 600 million)

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Medium-term note ($ 800 million)

EUR Fixed 1.90 % 2030 560 604

USD Fixed 3.38 % 2029 797 797

Registered note ($ 1 billion)

USD Fixed 2.50 % 2029 989 988

Registered note ($ 600 million)

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EUR Fixed 1.90 % 2030 526 560

Medium-term note (€ 500 million)

EUR Fixed 1.54 % 2031 530 563

30-year bond ($ 555 million)

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Long-term debt (excluding current portion) $ 14,001 $ 16,056

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Post-Swap Borrowing (Long-Term Debt, Including Current Portion)

(Millions) Carrying

Value Effective

Interest Rate Carrying

Value Effective

Interest Rate

(Millions) Carrying Value Effective Interest Rate Carrying Value Effective Interest Rate

Fixed-rate debt $ 14,738 2.93 % $ 16,053 2.80 %

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Short-Term Borrowings and Current Portion of Long-Term Debt

Interest Rate Carrying Value

Effective Interest Rate Carrying Value

(Millions) 2022 2021

Current portion of long-term debt 1.93 % $ 1,938 $ 1,291

dollar commercial paper — % — —

Other borrowings — % — 16

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Future Maturities of Long-term Debt

Maturities of long-term debt in the table below reflect the impact of put provisions associated with certain debt instruments and are net of the unaccreted debt issue costs such that total maturities equal the carrying value of long-term debt as of December 31, 2021.

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 December 31, 2022.

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

2022 2023 2024 2025 2026 After 2026 Total

2023 2024 2025 2026 2027 After 2027

$ 1,938 $ 1,100 $ 1,865 $ 1,438 $ 845 $ 8,753 $ 15,939

As a result of put provisions associated with certain debt instruments, long-term debt payments due in 2022 include floating rate notes totaling $ 124 million (classified as current portion of long-term debt) and $ 95 million due in 2023.

As a result of put provisions associated with certain debt instruments, long-term debt payments due in 2023 include floating rate notes totaling $ 149 million (classified as current portion of long-term debt).

Credit Facilities

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Debt covenants do not restrict the payment of dividends.

In December 2021, 3M entered into a $ 1 billion debt financing commitment related to the intended Food Safety Division spin-off or split-off transaction discussed in Note 3.

This commitment provides 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 this 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.

This commitment was undrawn at December 31, 2021.

Upon the close of the spin-off or split-off transaction, outstanding obligations under the commitment transfer with the Food Safety business and become those of the separate newly combined company.

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.

Other Credit Facilities

Apart from the committed credit facilities described above, in September 2019, 3M entered into a credit facility initially expiring in July 2020 that was further extended to August 2021 in the amount of 80 billion Japanese yen.

In November 2019,

3M entered into a credit facility expiring in November 2020 in the amount of 150 million euros.

During the third quarter of 2020, the Company paid the outstanding balances and closed these credit facilities.

The Company also had an additional $ 318 million in stand-alone letters of credit and bank guarantees issued and outstanding at December 31, 2022.

These instruments are utilized in connection with normal business activities.

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Long-Term Debt Issuances and Fixed-to-Floating Interest Rate Swaps

The principal amounts, interest rates and maturity dates of individual long-term debt issuances can be found in the long-term debt table found at the beginning of this note.

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

$ 800 million.

These swaps converted $ 500 million and $ 300 million of 3M’s $ 1.0 billion and $ 650 million principal amount of

fixed rate notes due 2049 and 2050, respectively, into floating rate debt for the portion of their terms through mid-2028 with an

interest rate based on a three-month LIBOR index.

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

These swaps converted $ 500 million and $ 300 million of 3M’s $ 1 billion and $ 650 million principal amount of fixed rate notes due 2049 and 2050, respectively, into floating rate debt for the portion of their terms through mid-2028 with an interest rate based on a three-month LIBOR index.

In March 2020, 3M issued $ 1.75 billion aggregate principal amount of fixed rate registered notes.

These were comprised of $ 500 million of 5 -year notes due 2025 with a coupon rate of 2.65 %, $ 600 million of 10 -year notes due 2030 with a coupon rate of 3.05 %, and $ 650 million of 30 -year notes due 2050 with a coupon rate of 3.70 %.

In February 2019, 3M issued $ 2.25 billion aggregate principal amount of fixed rate medium-term notes.

These were comprised of $ 450 million of 3 -year notes due 2022 with a coupon rate of 2.75 %, $ 500 million of remaining 5 -year notes due 2024 with a coupon rate of 3.25 %, $ 800 million of 10 -year notes due 2029 with a coupon rate of 3.375 %, and $ 500 million of remaining 29.5 -year notes due 2048 with a coupon rate of 4.00 %.

Issuances of the 5 -year and 29.5 -year notes were pursuant to a reopening of existing securities issued in September 2018.

In August 2019, 3M issued $ 3.25 billion aggregate principal amount of fixed rate registered notes.

These were comprised of $ 500 million of 3.5 -year notes due 2023 with a coupon rate of 1.75 %, $ 750 million of 5.5 -year notes due 2025 with a coupon rate of 2.00 %, $ 1.0 billion of 10 -year notes due 2029 with a coupon rate of 2.375 %, and $ 1.0 billion of 30 -year notes due 2049 with a coupon rate of 3.25 %.

Long-Term Debt Maturities and Extinguishments

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

In June 2022, 3M repaid $ 600 million aggregate principal amount of fixed-rate medium-term notes that matured.

In November 2021, 3M repaid 600 million euros aggregate principal amount of Eurobonds that matured.

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

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

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

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

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

In December 2020, 3M, via make-whole-call offers, repaid $ 1 billion aggregate principal amount of its outstanding notes.

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In May 2020, 3M repaid $ 650 million euros aggregate principal amount of floating-rate medium-term notes that matured.

In August 2020, 3M repaid $ 500 aggregate principal amount of floating rate medium-term notes that matured.

In June 2019, 3M repaid $ 625 million aggregate principal amount of fixed-rate medium-term notes that matured.

In 2019, 3M also assumed approximately $ 2.6 billion of debt in connection with the acquisitions of Acelity and M*Modal (See Note 3) of which $ 2.1 billion was immediately redeemed or paid at close.

In-Substance Defeasance

In conjunction with the October 2019 acquisition of Acelity (see Note 3), 3M assumed outstanding debt of the business, of which $ 445 million in principal amount of third lien senior secured notes (Third Lien Notes) maturing in 2021 with a coupon rate of 12.5 % was not immediately redeemed at closing.

Instead, at closing, 3M satisfied and discharged the Third Lien Notes via an in-substance defeasance, whereby 3M transferred cash equivalents and marketable securities to a trust with irrevocable

instructions to redeem the Third Lien Notes on May 1, 2020.

The trust assets were restricted from use in 3M’s operations and were only used for the redemption of the Third Lien Notes that occurred in May 2020.

In August 2020, 3M repaid $ 500 million aggregate principal amount of floating-rate medium-term notes that matured.

Floating Rate Notes

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3M would be required to repurchase these securities at various prices ranging from 99 percent to 100 percent of par value according to the reduction schedules for each security.

In December 2004, 3M issued a forty-year $ 60 million floating rate note, with a rate based on a floating LIBOR index.

In December 2004, 3M issued a forty-year $ 60 million floating rate note, with a rate based on a floating LIBOR index (noting contracts will be modified to apply a new reference rate where applicable).

Under the terms of this floating rate note due in 2044, holders have an annual put feature at 100 percent of par value from 2014 and every anniversary thereafter until final maturity.

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Pension and Postretirement Benefit Plans

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

and postretirement plan cost.

This impacted the expected return on plan assets and the amortization of net unamortized actuarial

gains or losses expense components of net periodic benefit cost.

This change was applied retrospectively to all periods

presented within 3M’s financial statements.

3M has company-sponsored retirement plans covering substantially all U.S.

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postretirement health care and life insurance benefit plans, the Company has set aside amounts at least equal to annual benefit payments with an independent trustee.

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The Company also sponsors employee savings plans under Section 401(k) of the Internal Revenue Code.

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Employer contributions to the international defined contribution plans were $ 108 million, $ 117 million and $ 103 million for 2022, 2021 and 2020, respectively.

In May 2019 (as part of the 2019 restructuring actions discussed in Note 5), the Company began offering a voluntary early retirement incentive program to certain eligible participants of its U.S.

pension plans who met age and years of pension service requirements.

The eligible participants who accepted the offer and retired by July 1, 2019 received an enhanced pension benefit.

Pension benefits were enhanced by adding one additional year of pension service and one additional year of age for certain benefit calculations.

Approximately 800 participants accepted the offer and retired before July 1, 2019.

As a result, the Company incurred a $ 35 million charge related to these special termination benefits in the second quarter of 2019.

In the fourth quarter of 2019, the Company recognized a non-operating $ 32 million settlement expense in its U.S.

non-qualified pension plan.

The charge is related to lump sum payments made to employees at retirement.

The settlement expense is an accelerated recognition of past actuarial losses.

In the second quarter of 2020, as a result of the divestiture of the drug delivery business, the Company recognized a curtailment in its United Kingdom Pension Plan.

The resulting re-measurement of the pension plan funded status reduced long-term prepaid

pension and post retirement assets (located within “other assets” of the Company’s balance sheet) by approximately $ 80 million, which was offset within accumulated other comprehensive income (located within the equity section of the Company’s balance sheet).

The resulting re-measurement of the pension plan funded status reduced long-term prepaid pension and post retirement assets (located within “other assets” of the Company’s balance sheet) by approximately $ 80 million, which was offset within accumulated other comprehensive income (located within the equity section of the Company’s balance sheet).

The expense impact of this re-measurement was immaterial for the second quarter of 2020 and subsequent periods.

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The obligations for these plans are included within other liabilities in the Company’s consolidated balance sheet and aggregated to less than $ 51 million as of December 31, 2022 and 2021.

Qualified and Non-Pension Benefits Postretirement

Qualified and Non-Pension Benefits Postretirement Benefits

United States International

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Benefit obligation at beginning of year $ 18,104 $ 19,376 $ 7,942 $ 8,770 $ 2,281 $ 2,397

$ 19,376 $ 17,935 $ 8,770 $ 7,931 $ 2,397 $ 2,242

Acquisitions/Transfers — — — — — —

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Foreign exchange rate changes — — ( 567 ) ( 325 ) 1 ( 4 )

— — ( 325 ) 427 ( 4 ) ( 14 )

Plan amendments — — 8 1 — —

2 unchanged sentences

Settlements, curtailments, special termination benefits and other — — ( 65 ) ( 45 ) ( 6 ) ( 6 )

— — ( 45 ) ( 57 ) ( 6 ) ( 5 )

Benefit obligation at end of year $ 13,505 $ 18,104 $ 5,072 $ 7,942 $ 1,797 $ 2,281

$ 18,104 $ 19,376 $ 7,942 $ 8,770 $ 2,281 $ 2,397

Change in plan assets

Fair value of plan assets at beginning of year 16,953 17,127 8,016 8,194 1,353 1,376

17,127 16,099 8,194 6,923 1,376 1,338

Acquisitions/Transfers — — — — — —

Actual return on plan assets ( 2,875 ) 1,079 ( 1,286 ) 321 ( 218 ) 93

1,079 2,071 321 1,102 93 147

Company contributions 65 77 90 100 3 3

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Foreign exchange rate changes — — ( 602 ) ( 265 ) — —

— — ( 265 ) 376 — —

Benefit payments ( 1,495 ) ( 1,330 ) ( 266 ) ( 298 ) ( 115 ) ( 113 )

Settlements, curtailments, special termination benefits and other — — ( 68 ) ( 46 ) ( 6 ) ( 6 )

— — ( 46 ) ( 34 ) ( 6 ) ( 5 )

Fair value of plan assets at end of year $ 12,648 $ 16,953 $ 5,891 $ 8,016 $ 1,017 $ 1,353

$ 16,953 $ 17,127 $ 8,016 $ 8,194 $ 1,353 $ 1,376

Funded status at end of year $ ( 857 ) $ ( 1,151 ) $ 819 $ 74 $ ( 780 ) $ ( 928 )

Amounts recognized in the Consolidated Balance Sheet as of December 31, (Millions) Qualified and Non-qualified Pension Benefits Postretirement

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Amounts recognized in the Consolidated Balance Sheet as of December 31, (Millions) Qualified and Non-qualified Pension Benefits Postretirement Benefits

United States International

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Ending balance $ ( 857 ) $ ( 1,151 ) $ 819 $ 74 $ ( 780 ) $ ( 928 )

Amounts recognized in accumulated other comprehensive income as of December 31, (Millions) Qualified and Non-qualified Pension Benefits Postretirement

Amounts recognized in accumulated other comprehensive income as of December 31, (Millions) Qualified and Non-qualified Pension Benefits Postretirement Benefits

United States International

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Fair value of plan assets 12,648 16,953 442 2,335

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Components of net periodic cost and other amounts recognized in other comprehensive income

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Components of net periodic benefit cost and other supplemental information for the years ended December 31 follow:

Qualified and Non-qualified Pension Benefits Postretirement

Qualified and Non-qualified Pension Benefits Postretirement Benefits

United States International

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Weighted-average assumptions used to determine benefit obligations as of December 31

Qualified and Non-qualified Pension Benefits Postretirement

Qualified and Non-qualified Pension Benefits Postretirement Benefits

United States International

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Compensation rate increase 3.37 % 3.21 % 3.21 % 2.86 % 2.86 % 2.88 % N/A N/A N/A

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Weighted-average assumptions used to determine net cost for years ended December 31

Qualified and Non-qualified Pension Benefits Postretirement

Qualified and Non-qualified Pension Benefits Postretirement Benefits

United States International

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postretirement health care benefit plans to a savings account benefits-based plan.

The contributions provided by the Company to the health savings accounts increase 3 percent per year for employees who retired prior to January 1, 2016 and increase 1.5 percent for employees who retire on or after January 1, 2016.

The contributions provided by the Company to the health savings accounts increase 3 percent per year for employees who retired prior to January 1, 2016 and increase 1.5 % for employees who retire on or after January 1, 2016.

Therefore, the Company no longer has material exposure to health care cost inflation.

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Using this methodology, the Company determined a discount rate of 5.18 % for the U.S.

pension plans and 2.88 % for the postretirement benefit plans as of December 31, 2021, which is an increase of 0.34 percentage points and 0.38 percentage points, respectively, from the rates used as of December 31, 2020.

pension plans and 5.25 % for the postretirement benefit plans as of December 31, 2022, which is an increase of 2.29 percentage points and an increase 2.37 percentage points, respectively, from the rates used as of December 31, 2021.

An increase in the discount rate decreases the Projected Benefit Obligation (PBO), the increase in the discount rate as of December 31, 2022 resulted in an approximately $ 4.5 billion lower benefit obligation for the U.S.

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Return on assets assumptions for international pension and other post-retirement benefit plans are calculated on a plan-by-plan basis using plan asset allocations and expected long-term rate of return assumptions.

As of December 31, 2019, the Company converted to the “Pri-2012 Aggregate Mortality Table”.

In 2021 the Company updated the mortality improvement scales to the Society of Actuaries Scale MP- 2021.

2 unchanged sentences

accumulated postretirement benefit obligations.

The Society of Actuaries did not release an update to the Scale MP-2021 in 2022.

During 2022, the Company contributed $ 155 million to its U.S.

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Future contributions will depend on market conditions, interest rates and other factors.

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Future Pension and Postretirement Benefit Payments

The following table provides the estimated pension and postretirement benefit payments that are payable from the plans to participants.

Qualified and Non-qualified

Pension Benefits Postretirement

Qualified and Non-qualified Pension Benefits Postretirement Benefits

(Millions) United States International

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pension plan.

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The fair values of the assets held by the U.S.

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The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the fair value of plan assets.

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The fair values of the assets held by the postretirement benefit plans by asset class are as follows:

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corporate bonds — — 61 59 — — 61 59

Derivative instruments — — — — — — — —

Total Fixed Income 96 110 461 537 — — 562 654

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government and government agency bonds and notes are valued at the closing price reported in the active market in which the individual security is traded.

Corporate bonds and notes, asset backed securities and collateralized mortgage obligations are valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments, but includes

adjustments for certain risks that may not be observable such as credit and liquidity risks.

Private placements are valued by the custodian using recognized pricing services and sources.

1 unchanged sentence

Growth equity investments are valued at the closing price reported in the active market in which the individual securities are traded.

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Absolute return consists primarily of partnership interests in hedge funds, hedge fund of funds or other private fund vehicles.

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Outside the U.S., pension plan assets are typically managed by decentralized fiduciary committees.

The disclosure below of asset categories is presented in aggregate for over 70 defined benefit plans in 25 countries;

The disclosure below of asset categories is presented in aggregate for over 70 defined benefit plans in over 25 countries;

however, there is significant variation in asset allocation policy from country to country.

3 unchanged sentences

The asset allocations are reviewed periodically and rebalanced when necessary.

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The fair values of the assets held by the international pension plans by asset class are as follows:

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Fixed Income investments include domestic and foreign government, and corporate, (including mortgage backed and other debt) securities.

ratings or valued under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks.

Governments, corporate bonds and notes and mortgage backed securities are valued at the closing price reported if traded on an active market or at yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks.

Private equity funds consist of partnership interests in a variety of funds.

1 unchanged sentence

REITS are valued at the closing price reported in the active market in which it is traded.

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Absolute return consists of private partnership interests in hedge funds, insurance contracts, derivative instruments, hedge fund of funds, and other alternative investments.

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In 2022 the aggregate of net purchases and net unrealized gains and losses decreased this balance by $ 24 million and the change in currency exchange rates decreased this balance by $ 42 million for a net decrease of $ 66 million.

In 2020 the aggregate net purchases and net unrealized gains decreased this balance by $ 1 million and the change in currency exchange rates increased the balance by $ 44 million for a net increase to this balance of $ 43 million.

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

In 2021 the aggregate net purchases and net unrealized gains decreased this balance by $ 7 million and the change in currency exchange rates decreased the balance by $ 44 million for a net decrease to this balance of $ 51 million.

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

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

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• Derivatives and/or hedging instruments associated with the Company’s long-term debt are also described in Note 12.

Refer to the section below titled Statement of Income Location and Impact of Cash Flow and Fair Value Derivative Instruments

and Derivatives Not Designated as Hedging Instruments for details on the location within the consolidated statements of

income for amounts of gains and losses related to derivative instruments designated as cash flow or fair value hedges (along

with similar information relative to the hedged items) and derivatives not designated as hedging instruments.

information relative to cash flow hedges, fair value hedges, net investment hedges and derivatives not designated as hedging

instruments is included below as applicable.

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

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

Cash Flow Hedges:

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

During 2019, the Company entered into additional forward starting interest rate swaps with a notional amount of $ 743 million.

These swaps, as well as $ 700 million of notional amount in existing outstanding swaps had been designated as hedges against interest rate volatility associated with forecasted issuances of fixed rate debt.

Concurrent with the issuance of the medium-term notes in February 2019 and the additional issuance of registered notes in August 2019, 3M terminated all outstanding interest rate swaps related to forecasted issuances of debt.

These terminations resulted in a net loss of $ 143 million within accumulated other comprehensive income that will be amortized over the respective lives of the debt.

In March 2020, the Company entered into treasury rate lock contracts with a notional amount of $ 500 million that were terminated concurrently with the March 2020 issuance of registered notes as discussed in Note 12.

The termination resulted in an immaterial net loss within accumulated other comprehensive income that will be amortized for the respective lives of the debt.

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In periods prior to 2020, the 3M entered into other forward starting interest rate swaps designated as hedges against interest rate volatility associated with forecasted issuances of fixed rate debt.

These included swaps terminated in 2019 concurrent with associated debt issuances.

These 2019 terminations resulted in a net loss of $ 143 million within accumulated other comprehensive income that is being amortized over the respective lives of the debt.

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

As of December 31, 2022, the Company had a balance of $ 7 million associated with the after-tax net unrealized loss associated with cash flow hedging instruments recorded in accumulated other comprehensive income.

This includes a remaining balance of $ 100 million (after-tax loss) related to the forward starting interest rate swap and treasury rate lock contacts, which will be amortized over the respective lives of the notes.

This includes a remaining balance of $ 94 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 December 31, 2022, of the total after-tax net unrealized balance as of December 31, 2022, 3M expects to reclassify approximately $ 68 million after-tax net unrealized gain over the next 12 months (with the impact offset by earnings/losses from underlying hedged items).

The amount of pretax gain (loss) recognized in other comprehensive income related to derivative instruments designated as cash

flow hedges is provided in the following table.

Pretax Gain (Loss) Recognized in Other

Comprehensive Income on Derivative

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

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

(Millions) 2022 2021 2020

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This interest rate swap matured in conjunction with the repayment of the Eurobond in November 2021.

In June 2014, 3M issued $ 950 million aggregate principal amount of medium-term notes.

Upon debt issuance, the Company entered into an interest rate swap to convert $ 600 million of a $ 625 million note that was due in 2019, included in this issuance, to an interest rate based on a floating three-month LIBOR index as a fair value hedge of a portion of the fixed interest rate medium-term note obligation.

This interest rate swap matured in conjunction with the repayment of the $ 625 million aggregate principal amount of fixed-rate medium notes that matured in June 2019.

In August 2015, 3M issued $ 1.5 billion aggregate principal amount of medium-term notes.

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The Company terminated this interest rate swap in conjunction with the early debt repayment in December 2020 of $ 400 million aggregate principal amount of fixed-rate medium notes further described in Note 12.

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

$ 800 million.

These swaps converted $ 500 million and $ 300 million of 3M’s $ 1.0 billion and $ 650 million principal amount of

fixed rate notes due 2049 and 2050, respectively, into floating rate debt for the portion of their terms through mid-2028 with an

interest rate based on a three-month LIBOR index.

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

Carrying Value of the

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

Location on the Consolidated Balance Sheet (Millions) 2021 2020 2021 2020

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

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

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

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3M had a fixed-to-floating interest rate swap that was terminated in 2007 with respect to the Company's 30 -year $ 220 million principal amount debenture due in 2028.

As this debt is still outstanding, its carrying value includes the remaining basis adjustment from this discontinued fair value hedge.

The following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for active fair value hedges, as well as remaining amounts for discontinued fair value hedges:

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

Location on the Consolidated Balance Sheet 2022 2021 2022 2021

Long-term debt $ 903 $ 997 $ ( 98 ) $ ( 4 )

Total $ 997 $ 598 $ ( 4 ) $ 11

Net Investment Hedges:

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The maturity dates of these derivative and nonderivative instruments designated in net investment hedges range from 2023 to 2031.

The amount of gain (loss) excluded from effectiveness testing recognized in income relative to instruments designated in net investment hedge relationships is no t material.

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

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

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

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

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

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

Location and Amount of Gain (Loss) Recognized in Income

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Information regarding cash flow and fair value hedging relationships:

Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded $ 18,795 $ 16,605 $ 17,136 165 366 531

Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of derivatives are recorded $ 19,232 $ 18,795 $ 16,605 $ 147 $ 165 $ 366

Gain or (loss) on cash flow hedging relationships:

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Foreign currency forward/option contracts ( 76 ) 5 2 45 ( 11 ) 43

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

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Gross Notional Amount Assets Liabilities

Location Fair Value Amount Location Fair Value Amount

(Millions) 2021 2020 2021 2020 2021 2020

(Millions) Location Fair Value Amount Location Fair Value Amount

2022 2021 2022 2021 2022 2021

Derivatives designated as hedging instruments

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Foreign currency forward/option contracts 835 800 Other assets 55 41 Other liabilities 9 1

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

Interest rate contracts 800 800 Other assets — — Other liabilities 102 9

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

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Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties

Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements Net Amount of Derivative Assets

Gross Amount of Eligible Offsetting Recognized Derivative Liabilities Cash Collateral Received

Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements

Gross Amount of Eligible Offsetting Recognized Derivative Liabilities Cash Collateral Received Net Amount of Derivative Assets

(Millions) 2022 2021 2022 2021 2022 2021 2022 2021

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Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties

Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements Net Amount of Derivative Liabilities

Gross Amount of Eligible Offsetting

Recognized Derivative Assets Cash Collateral Received

Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements

Gross Amount of Eligible Offsetting Recognized Derivative Assets Cash Collateral Received Net Amount of Derivative Liabilities

(Millions) 2022 2021 2022 2021 2022 2021 2022 2021

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Total $ 142 $ 33 $ 102 $ 8

Foreign Currency Effects

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by approximately $ 105 million in 2021, decreased pre-tax income by approximately $ 21 million in 2020, and increased pre-tax income by approximately $ 201 million in 2019.

Currency Effects

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, increased pre-tax income by approximately $ 127 million in 2022, decreased pre-tax income by approximately $ 105 million in 2021, and decreased pre-tax income by approximately $ 21 million in 2020.

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

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For 3M, assets and liabilities that are measured at fair value on a recurring basis primarily relate to available-for-sale marketable securities and certain derivative instruments.

Derivatives include cash flow hedges, interest rate swaps and net investment hedges.

The information in the following paragraphs and tables primarily addresses matters relative to these financial assets and liabilities.

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3M classifies U.S.

treasury securities as level

1, while all other marketable securities (excluding certain U.S.

treasury securities as level 1, while all other marketable securities (excluding certain U.S.

municipal securities) are classified as level 2.

Marketable securities are discussed further in Note 11.

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Available-for-sale marketable securities —certain U.S.

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

Fair Value Measurements Using Inputs Considered as

Description Fair Value Level 1 Level 2 Level 3

At December 31, (Millions) 2021 2020 2021 2020 2021 2020 2021 2020

Fair Value at Fair Value Measurements Using Inputs Considered as

Level 1 Level 2 Level 3

Description (Millions) 2022 2021 2022 2021 2022 2021 2022 2021

Available-for-sale:

Marketable securities:

Corporate debt securities $ — $ 7 $ — $ — $ — $ 7 $ — $ —

Commercial paper $ 213 $ 109 $ — $ — $ 213 $ 109 $ — $ —

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Foreign currency forward/option contracts 217 119 — — 217 119 — —

Interest rate contracts — 7 — — — 7 — —

Derivative instruments — liabilities:

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Change in unrealized gains or losses for the period included in earnings for securities held at the end of the reporting period — — —

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

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Disclosures are required for certain assets and liabilities that are measured at fair value, but are recognized and disclosed at fair value on a nonrecurring basis in periods subsequent to initial recognition.

For 3M, such measurements of fair value primarily relate 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 long-lived asset impairments for 2019 and 2021.

There were no material adjustments to equity securities using the measurement alternative for 2019 and 2021.

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

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 2022 and 2021.

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 recorded a pre-tax charge of $ 109 million, primarily within selling, general and administrative expense 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 December 31, 2022 the amounts of major assets and liabilities of this held-for-sale disposal group primarily included approximately $ 50 million within other current liabilities that largely represented a reserve against the balance of cumulative translation adjustment.

Additionally, in December 2022, 3M committed to a plan to exit per- and polyfluoroalkyl substance (PFAS) manufacturing by the end of 2025.

As a result, 3M recorded a pre-tax charge of $ 0.8 billion in the fourth quarter of 2022, related to impairment of long-lived and indefinite-lived assets ($ 0.5 billion — primarily associated with property, plant, and equipment) and impairment of goodwill ($ 0.3 billion).

These charges were reflected within selling, general and administrative expense and goodwill impairment expense, respectively.

The plan affects each of the Electronics Materials Solutions Division and Advanced Materials Division asset groupings/reporting units (both part of the Transportation and Electronics business) with impairment resulting for the Advanced Materials Division.

Significant unobservable inputs used to estimate the fair values of the asset groupings included discount rates, which were 11 % to 12 %.

Fair Value of Financial Instruments:

The Company’s financial instruments include cash and cash equivalents, marketable securities, held-to-maturity debt securities, accounts receivable, certain investments, accounts payable, borrowings, and derivative contracts.

The fair values of cash equivalents, accounts receivable, held-to-maturity debt securities, accounts payable, and short-term borrowings and current portion of long-term debt approximated carrying values because of the short-term nature of these instruments.

The Company’s financial instruments include cash and cash equivalents, marketable securities, accounts receivable, certain investments, accounts payable, borrowings, and derivative contracts.

The fair values of cash equivalents, accounts receivable, accounts payable, and short-term borrowings and current portion of long-term debt approximated carrying values because of the short-term nature of these instruments.

Available-for-sale marketable securities, in addition to certain derivative instruments, are recorded at fair values as indicated in the preceding disclosures.

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

December 31, 2021 December 31, 2020

(Millions) Carrying Value Fair Value Carrying Value Fair Value

Long-term debt, excluding current portion $ 14,001 $ 12,484 $ 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.

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

Commitments and Contingencies

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3M guarantees of loans with third parties and other guarantee arrangements are not material.

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Legal Proceedings:

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

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

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

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

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The Company estimates insurance receivables based on an analysis of the terms of its numerous policies, including their exclusions, pertinent case law interpreting comparable policies, its experience with similar claims, and assessment of the nature of the claim and remaining coverage, and records an amount it has concluded is recognizable and expects to receive in light of the loss recovery and/or gain contingency models under ASC 450, ASC 610-30, and related guidance.

For those insured legal proceedings where the Company has recorded an accrued liability in its financial statements, the Company also records

receivables for the amount of insurance that it concludes as recognizable from the Company’s insurance program.

For those insured legal proceedings where the Company has recorded an accrued liability in its financial statements, the Company also records receivables for the amount of insurance that it concludes as recognizable from the Company’s insurance program.

For those insured matters where the Company has not recorded an accrued liability because the liability is not probable or the amount of the liability is not estimable, or both, but where the Company has incurred an expense in defending itself, the Company records receivables for the amount of insurance that it concludes as recognizable for the expense incurred.

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Respirator Mask/Asbestos Litigation

As of December 31, 2021, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 3,876 individual claimants, compared to approximately 2,075 individual claimants with actions pending on December 31, 2020.

As of December 31, 2022, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 4,028 individual claimants, compared to approximately 3,876 individual claimants with actions pending December 31, 2021.

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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.

The jury delivered a complete defense verdict in favor of 3M, concluding that the 8710 respirator was not defective in design or warnings and any conduct by 3M was not a cause of plaintiff’s mesothelioma.

The plaintiff’s appeal is pending.

A ruling is expected during the first quarter of 2022.

The plaintiff appealed the verdict.

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

The Washington Supreme Court declined to review the matter.

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 August 2022.

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

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 rescheduled for late February 2023.

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.

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Respirator Mask/Asbestos Liabilities and Insurance Receivables

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In 2022, the Company made payments for legal defense costs and settlements of $ 67 million related to the respirator mask/asbestos litigation.

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

As of December 31, 2022, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 604 million.

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As of December 31, 2022, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $ 4 million.

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

In addition, the Company continues to seek coverage under the policies of certain insolvent and other insurers.

Once those claims for coverage are resolved, the Company will have collected substantially all of its remaining insurance coverage for respirator mask/asbestos claims.

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

As of December 31, 2021, Aearo and/or other companies that previously owned and operated Aearo’s respirator business (American Optical Corporation, Warner-Lambert LLC, AO Corp.

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

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

As of December 31, 2021, the Company, through its Aearo subsidiary, had accruals of $ 46 million for product liabilities and defense costs related to current and future Aearo-related asbestos, silica-related and coal mine dust claims.

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

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

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

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

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

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

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

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

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

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

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

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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, many for which private parties in the United States and abroad have rights of action.

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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Environmental Matters

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.

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

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

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.

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

The engagement is ongoing.

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

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

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

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

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

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

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.

3M announced in December 2022 it will take two actions:

exiting all PFAS manufacturing by the end of 2025;

and working to discontinue the use of PFAS across its product portfolio by the end of 2025.

3M’s decision is based on careful consideration and a thorough evaluation of the evolving external landscape, including multiple factors such as accelerating regulatory trends focused on reducing or eliminating the presence of PFAS in the environment and changing stakeholder expectations.

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 of PFAS or certain PFAS compounds under the EU’s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) and the EU’s Persistent Organic Pollutants (POPs) Regulation.

PFOA, PFOS and PFHxS (and their related compounds) have also 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).

In January 2023, the European Chemicals Agency (ECHA) received a proposal for a broad restriction of PFAS as a class under REACH.

ECHA has stated it expects to publish the proposal for public consultation in February 2023.

Effective January 2023, the EU Food Contaminants Regulation targeting four PFAS (PFOS, PFOA, PFNA, PFHxS) in foodstuff (eggs and animal derived meat) prohibits the sale in all member states of foods containing levels of these chemicals exceeding the regulatory thresholds.

As member states implement the regulation, Dyneon, a 3M subsidiary that operates the Gendorf facility in Germany, in coordination with local authorities and farmers, has proposed a pilot program of food sampling to determine if any remedial action is necessary.

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.

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Dyneon 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.

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.

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.

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

3M Belgium testified at Flemish parliamentary committee hearings in June and September 2021 on PFAS-related matters.

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

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

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

Certain additional parties reportedly joined the complaint .

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

Safety measures – wastewater discharge.

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

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

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

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

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

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

A decision on the appeal is pending.

An adverse ruling on the appeal would restrict the discharge of wastewater under the special condition noted above, which would materially and adversely impact the facility’s operations including the possibility of causing the facility to cease operations.

Company is exploring multiple options to mitigate the impact of an adverse ruling, a prolonged suspension or interruption of the facility's operations could have a significant adverse impact on the Company's businesses that receive products and other materials from the facility, some of which may not be available in similar quantities from other 3M facilities .

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

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

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 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.

In December 2022, 3M Belgium received an official infraction report from the Flemish Environmental Inspectorate regarding the discharge of certain short chain PFAS compounds in wastewater from the Zwijndrecht facility.

3M Belgium previously identified these compounds and shared the results with the Inspectorate.

The compounds at issue do not have specific discharge limits in the applicable wastewater discharge permit, and the infraction report references a special condition in the permit that prohibits detectable discharge of PFAS compounds that do not have a specific discharge limit in the permit.

3M Belgium disagrees with the Inspectorate’s interpretation of the special condition and the time period permitted for compliance with it.

Moreover, 3M Belgium instituted a capturing process to prevent wastewaters containing short chain PFAS identified in the infraction report from entering the treatment system or its discharge.

3M Belgium notified the Inspectorate that complying with the special condition means ceasing the legally required extraction and treatment of contaminated groundwater.

The Inspectorate acknowledged this fact but insisted that 3M Belgium continue to extract and treat groundwater.

Groundwater treatment continues and 3M Belgium expects to apply for a modification of the water discharge permit to add parameters for the short chain PFAS.

3M Belgium will continue its efforts to comply with the special condition and to minimize discharge of all PFAS, including the PFAS identified in the infraction report, but an inability to meet discharge limits for short chain PFAS 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 agency issued a new safety measure that prohibits all emissions of all forms of PFAS from the facility unless and until specifically approved on a process-by-process basis.

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

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

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.

At the same time, 3M Belgium complied with the safety measure by idling the affected production at the facility.

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

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

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

The authorities have accepted the third-party experts proposed by 3M Belgium who are required by the safety measure to review and opine on proposals necessary for process restart.

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

Administrative measure – soil piles.

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

3M Belgium continues to have discussions with the relevant authorities to explain the timing constraints for certain actions.

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.

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In October 2022, 3M Belgium received a report from the Flemish inspectorate regarding certain health and safety issues noted during inspections of the Zwjindrecht facility in March 2022, alleging certain related deficiencies, some dating back to 2010.

In December 2022, 3M Belgium provided the inspectorate with responses to the allegations, including plans and timelines for compliance where applicable, and plans to continue to inform the inspectorate on corrective actions to be taken.

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.

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.

A previously reported administrative measure by the Flemish Government regarding soil piles has been complied with and 3M Belgium removed the soil piles prior to the deadline.

Notice of default – environmental law compliance.

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

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

An accredited third-party soil remediation expert has 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 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, including through a proposed executive decision that may be finalized in 2023 following an anticipated advisory opinion from the Belgian administrative court.

3M Belgium submitted a letter to that court identifying several procedural and legal issues with the proposed executive decision.

A response is planned to a notice received in January 2023 from the Flemish government regarding the remediation action plans under the Flemish 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), 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 December 31, 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 has been rescheduled for judicial hearings in April 2023 and another is scheduled 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.

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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 at 70 parts per trillion (ppt) (superseding the provisional levels established by the EPA in 2009 of 400 ppt for PFOA and 200 ppt for PFOS).

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

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

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.

In the draft report, ATSDR proposed draft minimal risk levels (MRLs) for PFOS, PFOA and several other PFAS.

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.

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 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.

In May 2021, the U.S.

Agency for Toxic Substances and Disease Registry (ATSDR) within the Department of Health and Human Services finalized a Toxicological Profile for certain PFAS that established minimal risk levels (MRLs) for PFOS, PFOA and several other PFAS.

An MRL is an estimate of the daily human exposure to a hazardous substance that is likely to be without appreciable risk of adverse non-cancer health effects over a specified duration of exposure.

MRLs establish a screening level and are not intended to define cleanup or action levels for ATSDR or other agencies.

In May 2021, ATSDR released a final toxicological profile for certain PFAS that preserved the draft MRLs.

Earlier, in April 2021, EPA released a final toxicity assessment for PFBS.

As periodically required under the Safe Drinking Water Act (SDWA), the EPA published in May 2012 a list of unregulated substances, including six PFAS chemicals, required to be monitored during the period 2013-2015 by public water system suppliers to determine the extent of their occurrence.

Through January 2017, the EPA reported results for 4,920 public water supplies nationwide.

Based on the 2016 lifetime health advisory, 13 public water supplies exceeded the level for PFOA and 46 exceeded the level for PFOS (unchanged from the July 2016 EPA summary).

These results are based on one or more samples collected during the period 2012-2015 and do not necessarily reflect current conditions of these public water supplies.

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

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

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

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.

The Company submitted initial comments in December 2021.

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.

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.

EPA began the process of establishing a national primary drinking water regulation for PFOA and PFOS in November 2021 by referring its proposed approach to developing a Maximum Contaminant Level Goal (MCLG) 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 August 2022, the Science Advisory Board published its final report analyzing EPA’s proposed approach to developing a MCLG.

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

EPA is expected to publish a proposed MCLG and national primary drinking water standard in early 2023.

In November 2022, EPA published its final Drinking Water Contaminant Candidates List 5 (CCL 5), which includes a broad group of PFAS that are not currently subject to national primary drinking water regulations but which EPA is considering for regulation under the Safe Drinking Water Act (SDWA).

In December 2022, EPA issued guidance to states for incorporating PFAS requirements into the Clean Water Act National Pollution Discharge Elimination System (NPDES) permit program, including recommendations to require PFAS monitoring and incorporating limits for PFAS in industrial discharges.

In October 2021, 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 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.

3M submitted comments on EPA’s proposal in November 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 June 2021, EPA published a proposed rule under TSCA that, if adopted, would require certain persons that manufacture (including import) or have manufactured PFAS in any year since 2011 to report information regarding PFAS uses, production volumes, disposal, exposures, and hazards.

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

In December 2022, EPA published a proposed rule to adding 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 January 2023, EPA issued a test order under TSCA to manufacturers, including the Company, requiring them to conduct certain health and safety testing related to HFPO, a PFAS, and submit the results to EPA.

3M has submitted its initial response.

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

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

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

United States:

State Activity

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

Those states include the following:

• Minnesota Department of Health in May 2017 stated that 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.

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

In November 2021, MPCA published for public notice its “Draft PFAS Monitoring Plan,” which proposes a system for voluntary PFAS monitoring at solid waste, wastewater and stormwater facilities, facilities with air emissions, and sites in the Superfund or the state’s Brownfield programs.

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

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

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

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

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

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

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

In Minnesota, 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) published the final version of its PFAS Monitoring Plan in March 2022.

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

States with finalized drinking water standards for certain PFAS include California, Vermont, New Jersey, New York, New Hampshire, Michigan, Massachusetts, Pennsylvania and Wisconsin.

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

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

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

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

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

The ban becomes effective in 2030.

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

In October 2022, California passed 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 the Summer of 2021, the State of Maine passed its Act To Stop Perfluoroalkyl and Polyfluoroalkyl Substances Pollution, which bans intentionally added PFAS in products effective January 1, 2030 and requires broad reporting of products containing intentionally-added PFAS effective January 1, 2023.

In December 2022, 3M submitted to the Maine Department of Environmental Protection a list of products containing intentionally added PFAS that have been sold in the U.S.

in the past two years in compliance with the law.

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

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

The parties completed briefing on the merits in October 2021.

The court heard oral argument in 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.

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

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

The Company has filed a notice of appeal in July 2022 and decided in January 2023 not to pursue the 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.

EGLE moved to dismiss that lawsuit.

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

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

In November 2022, the court granted 3M’s motion for summary judgment on the merits and invalidated EGLE’s rule based on its failure to properly consider relevant costs.

The court stayed the effect of its decision pending appeal.

EGLE appealed the decision in December 2022.

Between 2018 and 2022, seven states have enacted laws requiring written notification of firefighting personal protective equipment (PPE) that contains PFAS, with most such laws providing for potential civil penalties for non-compliance.

In November 2022, the Company identified it likely did not provide required notifications for some of its products, including its Scott Safety Self-Contained Breathing Apparatuses.

The Company began providing written notices with those products starting November 2022.

In addition, the Company continues to work to determine the extent of any potential non-compliance, has made voluntary self-disclosures to states as applicable, and has expressed its willingness to work with those states to address and resolve any potential non-compliance.

The Company cannot predict at this time the ultimate outcome or actions that may be taken by those states.

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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

As previously reported, a former employee filed a putative class action lawsuit against 3M, BFI Waste Management Systems of Alabama, and others in the Circuit Court of Morgan County, Alabama (the “St.

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

The parties have agreed to repeated stays of the St.

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

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

In June 2016, the Tennessee Riverkeeper, Inc.

(Riverkeeper), a non-profit corporation, filed a lawsuit in the U.S.

District Court for the Northern District of Alabama against 3M;

BFI Waste Systems of Alabama;

the City of Decatur, Alabama;

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

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

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

This case was also stayed pending ongoing mediation and discussions between the parties in conjunction with the St.

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

John (including Stover, Owens and Chandler ) matters.

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

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

In December 2021, the court in the St.

John action granted preliminary approval of the class settlement, and a hearing for final approval is scheduled for April 2022.

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

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

District Court for the Northern District of Alabama.

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

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

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

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

In November 2021, the court entered an order of preliminary approval of the class settlement.

A hearing on final approval of the settlement is scheduled for March 2022.

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

Alabama (the “Billings” case).

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

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

In January 2017, the court in the St.

John case, discussed above, stayed this litigation pending resolution of the St.

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

There are now approximately 4,500 named plaintiffs.

The parties have reached an agreement in principle to resolve the litigation.

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

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

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

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

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

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

The parties have reached an agreement in principle to resolve the litigation .

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

District Court for the Northern District of Alabama.

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

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

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

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

The case is scheduled for trial in July 2023.

Discovery in this case is proceeding.

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

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

As previously reported, 3M has resolved numerous claims relating to alleged PFAS contamination of properties and water supplies by 3M’s Decatur, Alabama manufacturing facility.

In April 2019, 3M settled a lawsuit brought by the West Morgan-East Lawrence Water & Sewer Authority for $ 35 million, which will fund a new water filtration system, with 3M indemnifying the Water Authority from liability resulting from the resolution of certain lawsuits against the Water Authority alleging liability or damages related to 3M PFAS.

In October 2021, 3M settled a class action brought by plaintiffs who were supplied drinking water by the Water Authority (the “Lindsey” case) for an immaterial amount.

The court issued a final order approving the class settlement and dismissing the action in March 2022.

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

John plaintiff class, plaintiffs in the Stover, Owens, and Chandler matters.

A court granted final approval of the St.

John class settlement in April 2022, and plaintiffs in the Stover, Owens, and Chandler matters filed dismissals thereafter.

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

In November 2021, 3M and the City of Decatur, Decatur Utilities and Morgan County executed a collaborative agreement under which the Company agreed to contribute approximately $ 99 million and also to continue to address certain PFAS-related matters in the area.

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

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

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

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

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

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

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

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

In March 2022, 3M reached a settlement agreement with plaintiffs in the Billings matter, resulting in dismissal of the case in August 2022.

In August 2022, 3M reached an agreement to settle personal injury claims brought by 37 individual plaintiffs in the King matter.

3M continues to negotiate with individual property owners regarding claims relating to former 3M disposal sites and has resolved several such claims for an immaterial amount.

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

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

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

Litigation Related to Historical PFAS Manufacturing Operations in Minnesota

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

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

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

Guin WWSB dismissed its lawsuit without prejudice in order to work with 3M to further investigate the presence of chemicals in the area;

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

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

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

The case has been removed to federal court and was transferred to the AFFF MDL in December 2022.

In August 2022, Colbert County, Alabama, which opted out of the St.

John settlement, filed a lawsuit against 3M and several co-defendants alleging that discharge from operations in Decatur, Alabama has contaminated the Tennessee River, from which the County withdraws its drinking water.

The Company’s motion to dismiss was denied in December 2022.

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.

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

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

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

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.

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

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

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

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

A hearing on case scheduling has been set for March 2022, and the case remains in early stages of litigation.

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

The Company recently removed the other 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.

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 th e environment from a variety of products, including AFFF.

This lawsuit was removed to federal court and transferred to the AFFF MDL in August 2021.In addition, in July 2021, the State of Alaska named 3M as a third-party d efendant 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.

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, where the parties are engaging in discovery and the court has set a trial-ready date in October 2024.

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

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, which was denied at this stage in the litigation.

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

In January 2023, the Illinois Attorney General filed a new lawsuit against 3M and other defendants in Illinois state court, alleging contamination of a number of drinking water systems and natural resource damages at several sites statewide, and seeking to recover monetary damages, injunctive relief for remediation, civil penalties and other relief.

The complaint states that the Attorney General is not seeking damages for AFFF by this lawsuit.

In November 2022, the California Attorney General filed a lawsuit in state court against 18 defendants, including the Company, alleging environmental contamination by PFAS chemicals and seeking injunctive relief, civil penalties, and damages 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 December 31, 2021, 2,043 lawsuits (including 32 putative class actions) alleging injuries or damages by AFFF use have been filed against 3M (along with other defendants) in various state and federal courts.

As of December 31, 2022, 3,350 lawsuits (including approximately 34 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.

In December 2018, the U.S.

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

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

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

The parties in the MDL are currently in the process of conducting discovery.

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

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

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

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

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

In December 2021, the plaintiffs filed a response.

Over the past four years, the parties in the MDL have conducted substantial discovery, including ongoing master discovery and several rounds of discovery involving potential water supplier bellwether cases.

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.

The court has also directed the parties to submit a proposal for an initial set of personal injury bellwether cases.

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

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

In October 2022, the court appointed a retired federal judge as mediator, who has held several initial mediation sessions with plaintiff and defense leadership in November and December 2022.

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

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

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

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

As of December 31, 2021, the Company is aware of 15 other AFFF suits originally filed in various state courts in which the Company has been named a defendant.

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

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

The parties have entered into a tolling agreement deferring further action on the plaintiffs’ claims.

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

Five cases remain pending in state courts where they are stayed by agreement of the parties.

As of December 31, 2022, the Company is aware of approximately 50 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.

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

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

In New York, 3M is defending 40 individual cases and one putative class action filed in the U.S.

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

In New York, 3M is defending 40 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.

(Saint-Gobain), Honeywell International Inc.

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

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

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

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

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

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.

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

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.

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.

3M is also defending 13 cases in the U.S.

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

DuPont’s motion to transfer these cases to the AFFF MDL was denied in March 2020.

3M has filed answers in these cases and discovery is ongoing.

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The action arises from Wolverine’s allegedly improper disposal of materials and wastes, including 3M Scotchgard, related to Wolverine’s shoe manufacturing operations.

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 had ongoing mediation discussions.

The court has set a trial date in June 2022.

In addition to the consolidated federal court putative class action, as of December 31, 2021, 3M is a defendant in approximately 275 private individual actions in Michigan state court based on similar allegations.

These cases are coordinated for pre-trial purposes.

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

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

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

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

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

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

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

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

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

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

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

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

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

3M’s portion is not considered material.

The court approved the settlement in September 2021.

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

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

The three water utility cases are proceeding through discovery.

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

This case has been removed to federal court, where 3M 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.

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.

3M and Wolverine have agreed to settle the case with the plaintiffs, and 3M's share is not considered material, pending final court approval in March 2023.

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

These water utility cases have been proceeding through discovery.

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

In September 2022, the Company reached an agreement with the Gadsden Water Works and Sewer Board to resolve a similar 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 the case is proceeding through discovery.

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 remains pending.

3M has moved to dismiss this case.

This case remains in early stages of litigation.

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

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

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

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

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

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

In 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 has appealed the remand decision to the U.S.

Court of Appeals for the Ninth Circuit, which is hearing the appeal on an expedited basis, with oral argument scheduled in February 2022.

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

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

Plaintiffs filed an amended complaint in June 2021.

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

District Court for the Central District of California.

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

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

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

Company, a local water supplier.

The complaint alleges PFAS contamination from 3M products generally.

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

District Court for the Central District of California.

The plaintiffs have indicated they intend to amend their complaint.

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.

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

This case is now proceeding through discovery.

In July 2022, a putative class action was filed against 3M and other PFAS manufacturers by The Utilities Board of Tuskegee on behalf of all drinking water utilities within Alabama whose finished drinking water has contained a detectable concentration level of PFOA, PFOS, GenX, or PFBS that exceed the June 2022 health advisory levels issued by the U.S.

3M filed a motion to dismiss the complaint in October 2022.

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.

The court granted demurrers filed by Decra and the DuPont entities, while 3M answered the complaint in February 2022.

The case is proceeding through discovery as to plaintiff and 3M.

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.

That case has now been transferred to the AFFF MDL.

In October 2022, a putative class action was filed against the Company and other parties on behalf of individuals who have been drinking water from the Temescal Subbasin, from which the City of Corona gets its water, seeking injunctive relief, damages, and medical monitoring.

In North Carolina, the town of Pittsboro filed a lawsuit in January 2023 against 3M and other defendants in state court related to alleged PFAS contamination of its property and water supply.

The complaint references AFFF as a potential source of alleged contamination.

In Delaware, 3M, 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.

Plaintiffs allege that 3M supplied PFAS to the metal plating facilities.

DuPont, Chemours, and the metal platers have also been named as defendants.

This case has been removed from state court to federal court, and plaintiffs have withdrawn its motion to remand to state court and filed an amended complaint.

3M has filed a motion to dismiss the amended complaint.

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

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.

This case was removed to federal court, and in September 2022, the court dismissed all but plaintiffs’ negligence claim.

Plaintiffs have filed a third amended complaint and the parties are currently negotiating a scheduling order to be proposed to the court.

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

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

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

The parties are engaged in mediation.

The Court denied 3M’s motion for summary judgment in October 2022 and has set a pre-trial conference for March 2023.

A trial date has been set for October 2023.

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 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 Hopatcong and Pequannock matters.

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

Fact discovery has closed in both the Hopatcong and Pequannock matters, and expert discovery is set to commence in February 2023 (Hopatcong) and March 2023 (Pequannock).

3M, together with several co-defendants, is also defending 27 cases in New Jersey federal court brought by individuals with private drinking water wells near certain DuPont and Solvay facilities that were allegedly supplied with PFAS by 3M.

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

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

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

Plaintiffs in the six 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 it has not yet been served in the sixth.

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.

3M has not yet been served in these cases.

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

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

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

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

3M plans to respond to the complaints.

This case remains in early stages of litigation.

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

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

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.

Nine of the 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.

In December 2022, an additional personal injury case was filed in New Jersey State court.

3M and Middlesex Water Company are 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.

The court denied 3M’s motion to dismiss, and the case is proceeding through discovery.

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

After Middlesex Water Company removed the case to federal court in July 2022, plaintiffs 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.

The plaintiff voluntarily dismissed his complaint without prejudice and later re-filed in the MDL.

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

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

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

The case has been removed to federal court.

Plaintiff recently filed a second amended complaint.

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.

This case was removed to federal court.

3M anticipates responding to the complaint in the first quarter of 2023.

In Maine, a group of landowners filed a second amended complaint in October 2022 in federal district court, adding 3M and several other alleged chemical suppliers as defendants in a case previously filed against several paper mills, alleging PFAS contamination from waste generated by the paper mills.

The lawsuit seeks to recover for alleged property damage.

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 plaintiff brings claims for negligence, battery, and conspiracy and seeks injunctive relief, including an order “establishing an independent panel of scientists” to evaluate PFAS.

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

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

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

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

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

In September 2022, the Sixth Circuit granted the defendants’ request to appeal the district court’s class certification order.

Defendants’ appeal is scheduled to be fully briefed by April 2023.

Other PFAS-related Matters

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and Cordova, Illinois plants.

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

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

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

In addition, the Company is treating its pumped groundwater at its Cordova wastewater treatment plant.

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

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

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

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

During the spring and summer of 2010, 3M began implementing the agreed upon remedial options at the Cottage Grove and Woodbury sites.

3M commenced the remedial option at the Oakdale site in late 2010.

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

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

In the spring and summer of 2010, 3M began implementing the approved remedial options at the Cottage Grove and Woodbury sites, and in late 2010, 3M commenced the approved remedial option at the Oakdale site.

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

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

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

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

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

Further remediation activities, including certain on-site and off-site investigations and studies, will be conducted in accordance with the July 2020 Interim Consent Order described below.

The Company operates under a 2009 consent order issued under the federal Toxic Substances Control Act (TSCA) (the “2009 TSCA consent order”) for the manufacture and use of two perfluorinated materials (FBSA and FBSEE) at its Decatur, Alabama site that does not permit release of these materials into “the waters of the United States.” In March 2019, the Company halted the manufacture, processing, and use of these materials at the site upon learning that these materials may have been released from certain specified processes at the Decatur site into the Tennessee River.

The Company operates under a 2009 consent order issued under the federal Toxic Substances Control Act (TSCA) (the “2009 TSCA consent order”) for the manufacture and use of two perfluorinated materials (FBSA and FBSEE) at its Decatur, Alabama site that prohibits release of these materials into “the waters of the United States.” In March 2019, the Company halted the manufacture, processing, and use of these materials at the site upon learning that these materials may have been released from certain specified processes at the Decatur site into the Tennessee River.

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

EPA and ADEM.

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

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

These processes have been back on-line and in operation since July 2019.

The Company continues to cooperate with the EPA and ADEM in their investigations and will work with the regulatory authorities to demonstrate compliance with the release restrictions.

The Company is authorized to discharge wastewater from its Decatur plant pursuant to the terms of a Clean Water Act National Pollutant Discharge Elimination System (NPDES) permit issued by ADEM.

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

The Company is authorized to discharge wastewater from its Decatur plant pursuant to a Clean Water Act National Pollutant Discharge Elimination System (NPDES) permit issued by ADEM.

The NPDES permit requires monthly and quarterly reporting on the quality and quantity of pollutants discharged to the Tennessee River.

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

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

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

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

In September 2019, the Company disclosed the matter to the EPA and ADEM temporarily idled certain manufacturing processes at 3M Decatur, and installed wastewater treatment controls.

The Company restarted idled processes in October 2019.

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

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

and (ii) remediation activities, including certain on-site and off-site investigations and studies.

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

and (ii) remediation activities, including on-site and off-site investigations and studies.

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

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

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

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

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

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

The Company is cooperating and providing responsive documents with respect to this and other inquiries regarding its manufacturing facilities.

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

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

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

In November 2019, the Company disclosed this matter to the EPA, and in January 2020 disclosed this matter to the Illinois Environmental Protection Agency (IEPA), submitted an NPDES permit application for the PFAS in its discharge, and in October 2019, put on-line and in operation wastewater treatment specifically designed to treat PFAS.

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

In November 2022, the Company entered into an SDWA Administrative Consent Order that requires the Company to continue to sample and survey private and public drinking water wells within the vicinity of the Cordova facility, provide treatment of private water wells within a three-mile radius of the Cordova facility, and to provide alternate treatment/supply for the Camanche, Iowa public drinking water system.

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

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

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

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

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

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

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

The Company continues to work with the MPCA to address WAP/FAP implementation issues disclosed in June 2020.

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

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

The Company and MPCA resolved the issues associated with the foregoing disclosure in a May 2022 stipulation agreement, and permanently retired the Cottage Grove hazardous waste incinerator in December 2021.

In connection with the now closed incinerator, the Company in December 2022 received from EPA a draft Consent Agreement and Penalty Order (CAFO) under the Clean Air Act, with a proposed civil penalty to resolve issues raised in a Finding of Violation issued in 2019.

The Company is engaging with EPA in discussions towards resolving this matter.

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

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

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

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

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

The Company worked with MPCA to develop a plan to address its stormwater, which is embodied in an order issued by MPCA in December 2022.

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

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

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Whether, and to what extent, the Company may be required to contribute to the costs at issue in the case remains to be determined.

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For environmental matters and litigation described above, unless otherwise described below, no liability has been recorded as the Company believes liability in those matters 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.

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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 2021, as a result of recent developments in ongoing environmental matters and litigation, the Company increased its accrual for PFAS-related other environmental liabilities by $ 138 million since December 31, 2020 and made related payments of $ 142 million.

As previously disclosed, in the first and fourth quarters of 2019, in conjunction with other adjustments as a result of developments in then ongoing environmental matters and litigation, 3M recorded pre-tax charges aggregating to $ 449 million.

These pre-tax charges were in light of the EPA issuance of its PFAS Action Plan;

the Company’s settlement of litigation with the Water Authority;

updates to evaluation of certain customer-related litigation based on continued, productive settlement discussions with multiple parties;

completion of and then ongoing updates to a comprehensive review with the assistance of environmental consultants and other experts regarding environmental matters and litigation related to historical PFAS manufacturing operations;

and expanded evaluation of other 3M sites that may have used certain PFAS-containing materials and locations at which they were disposed.

As of December 31, 2021, the Company had recorded liabilities of $ 412 million for “other environmental liabilities.” The accruals represent the Company’s best estimate of the probable loss in connection with the environmental matters and PFAS-related litigation described above.

During 2022, as a result of ongoing review and recent developments in ongoing environmental matters and litigation, the Company increased its accrual for PFAS-related other environmental liabilities by $ 659 million since December 31, 2021 and made related payments of $ 479 million.

As of December 31, 2022, the Company had recorded liabilities of $ 592 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.

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(ii) the extent to which insurers may become insolvent in the future, (iii) the outcome of negotiations with insurers, and (iv) the scope of the insurers’ purported defenses and exclusions to avoid coverage.

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Product Liability Litigation

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

3M and Aearo Technologies believe the Combat Arms Earplugs were effective and safe when used properly, but nevertheless, as discussed below, face litigation from approximately 232,000 claimants.

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

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

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

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

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

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

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.

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.

In December 2022, Aearo filed its opening brief with the Seventh Circuit appealing the bankruptcy court’s decision.

Also in December 2022, the parties to the Aearo bankruptcy agreed to extend the exclusivity period for Aearo to file a plan for reorganization to March 31, 2023.

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

As noted in the co-mediators' report issued on January 20, 2023, 3M continues to support Aearo Entities by engaging in confidential mediation discussions toward a resolution of the Combat Arms Earplugs litigation in the chapter 11 process.

In February 2023, the plaintiffs filed with the Bankruptcy Court a motion to dismiss the bankruptcy filings of Aearo Entities.

As of December 31, 2022 3M's consolidated balance sheet reflected amounts associated with the deconsolidated Aearo Entities as follows:

• $ 0.7 billion asset balance in equity and 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:

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

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

As of December 31, 2021, the Company is a named defendant in approximately 3,616 lawsuits (including 14 putative class actions) in various state and federal courts that purport to represent approximately 13,531 individual claimants making similar allegations.

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As of December 31, 2022, the Company is a named defendant in lawsuits (including 14 putative class actions) in various state and federal courts that purport to represent approximately 141,000 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 in 2022.

In April 2019, the U.S.

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

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

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

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

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

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

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

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

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

3M has appealed the verdict.

3M appealed the verdict.

In January 2023, the Eleventh Circuit Court of Appeals scheduled oral argument for the appeals of the first and third bellwether trials for the week of May 1, 2023.

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

3M plans to appeal the verdict.

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

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

3M plans to appeal these verdicts.

A post-trial order reduced the award in the seventh bellwether trial to $ 8 million.

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

3M plans to appeal these verdicts.

The next five bellwether cases are scheduled for trial in March, April and May 2022.

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

An administrative docket of approximately 240,000 unfiled and unverified claims (after factoring in approximately 50,000 claims in a transitional process as described below) has also been maintained at the MDL court.

A post-trial order reduced the compensatory and punitive damages award to one of the plaintiffs from $ 55 million to $ 22 million.

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

3M prevailed in the fourteenth bellwether trial.

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

In December 2022, the plaintiff voluntarily dismissed her Eleventh Circuit appeal of a jury verdict in favor of 3M and Aearo.

No other cases that resulted in a defense verdict are on appeal before the Eleventh Circuit at this time.

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

A post-trial order reduced the compensatory damages award to $ 1.2 million.

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

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

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

The Company's appeals to the Eleventh Circuit from the adverse verdicts are proceeding forward, with oral argument on the first two appeals scheduled for May 2023.

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 2,000 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 90,700 unfiled and unverified claims has also been maintained at the MDL court.

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

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

To date approximately 50,000 claims are in the process of being transitioned to the active docket or dismissed.

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

The MDL court also ordered the parties to prepare for trial 2,000 cases in four waves of 500 cases over the next 14 months.

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

In November 2021, the judge issued the first wave order of the first 500 cases over the next eight months .

In October 2022, the MDL court ordered that while the successor liability issue described below is on appeal, all wave discovery would be stayed, the transition of cases from the administrative docket to the active docket would stop, and that monthly settlement conferences involving all parties (except Aearo) would occur in the MDL.

In January 2023, the MDL judge ordered that the MDL mediation would stop while the bankruptcy court mediation is ongoing.

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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, and then stayed.

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 January 2023, the Eleventh Circuit scheduled oral argument for this appeal for the week of May 1, 2023.

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.

In December 2022, the court dismissed the lawsuit on jurisdictional grounds.

Also in December 2022, the MDL court granted plaintiffs’ motion for summary judgment that successor liability, claiming that 3M is fully and independently liable for injuries allegedly caused by the CAEv2 and certified the order for appeal to the Eleventh Circuit.

In January 2023, 3M sought the Eleventh Circuit’s acceptance of the appeal.

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

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

There are approximately 65 lawsuits involving approximately 1,100 plaintiffs pending in the state court, but the number of plaintiffs is expected to decline as cases are remanded to federal court.

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

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

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

There are approximately 40 lawsuits involving approximately 1,000 plaintiffs pending in the state court.

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

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

As of December 31, 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.

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

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

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

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Supreme Court.

In May 2022, the U.S.

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

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

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

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

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

Mediation sessions took place in May and August 2022 without success in resolving the litigation.

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

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

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

Two of the Missouri cases are set for trial;

one in September 2022 and one in April 2023.

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

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.

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.

Another Missouri case is scheduled for trial in 2024.

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

3M resolved for an immaterial amount the final state court case, which was filed in Hidalgo County, Texas.

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

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

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

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

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

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

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

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

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

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

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

Securities and Shareholder Litigation

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

The state court cases were consolidated and stayed pending a decision on the motion to dismiss in the securities class action, and the Minnesota state plaintiffs are likely to have until March 2022 to file an amended

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

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

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

The Minnesota federal plaintiffs have until February 16, 2022 to file an amended complaint.

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

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

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

Oral argument was held in January 2023.

Federal False Claims Act / Qui Tam Litigation

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In 2011, following the completion of the government’s review and its decision declining to intervene in two qui tam actions described further below, the qui tam relator-plaintiffs’ pleadings were unsealed.

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The government inquiry followed two qui tam actions filed in 2008 by two former employees against Kinetic Concepts, Inc.

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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.

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

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

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

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

In September 2019, the U.S.

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

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

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

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

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

As 3M has previously disclosed, one qui tam action (the Godecke case) was dismissed in January 2022.

In the remaining action (the Hartpence case), the complaint contains 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 seeks monetary damages.

In June 2019, the district court entered summary judgment in the KCI Defendants’ favor on all of the relator-plaintiff’s claims.

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

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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.

The district court held a status conference in January 2023 where no case deadlines were set;

the litigation remains in a pre-trial stage.

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

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

The Company is in discussions related to potential resolution but cannot predict at this time the ultimate outcome or actions that may be taken by the Department of Justice or Securities and Exchange Commission.

The components of lease expense are as follows:

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Short-term lease cost and income related to sub-lease activity is immaterial for the Company.

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Supplemental balance sheet information related to leases is as follows:

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Finance leases 6 3 18

Sale leased-back activity in 2021 was not material.

In the first quarter of 2020, 3M sold and leased-back certain recently constructed machinery and equipment in return for municipal securities, which in aggregate, were recorded as a finance lease asset and obligation of approximately $ 10 million.

In the first quarter of 2019, 3M sold and leased-back certain recently constructed machinery and equipment in return for municipal securities, which in aggregate, were recorded as a finance lease asset and obligation of approximately $ 9 million.

During 2019, the Company sold and leased-back an office location and a manufacturing site resulting in a combined gain of $ 82 million.

Sale leased-back activity in 2022, 2021 and 2020 was not material.

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Maturities of lease liabilities were as follows:

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2023 $ 19 $ 268

Total 107 893

Amounts representing interest 4 50

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Employees are considered eligible to retire at age 55 and after having completed ten years of service.

This retiree-eligible

population represents 35 percent of the annual grant’s stock-based compensation expense;

This retiree-eligible population represents 36 percent of the annual grant stock-based compensation expense;

therefore, higher stock-based compensation expense is recognized in the first quarter.

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Stock-based compensation expenses (benefits), net of tax $ 201 $ 174 $ 180

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Stock Option Program

The following table summarizes stock option activity for the years ended December 31:

The following table summarizes stock option activity during the year ended December 31:

2022 2021 2020

(Options in thousands) Number of

Options Weighted

Exercise Price Number of

Options Weighted

Exercise Price Number of

Options Weighted

Exercise Price

(Options in thousands) Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price

Under option —

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December 31 28,210 $ 167.42 26,956 $ 161.25 27,537 $ 149.67

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

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

As of December 31, 2022, there was $ 45 million of compensation expense that has yet to be recognized related to non-vested stock option based awards.

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The expected term assumption is based on the weighted average of historical grants.

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Restricted Stock and Restricted Stock Units

The following table summarizes restricted stock and restricted stock unit activity for the years ended December 31:

The following table summarizes restricted stock and restricted stock unit activity during the year ended December 31:

2022 2021 2020

(Shares in thousands) Number of

Shares Weighted

Fair Value Number of

Shares Weighted

Fair Value Number of

Shares Weighted

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

Nonvested balance —

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As of December 31

As of December 31, 2021, there was $ 94 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 24 months.

The total fair value of restricted stock and restricted stock units that vested during December 31, 2021, 2020 and 2019 was $ 83 million, $ 91 million and $ 144 million, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the vesting of restricted stock and restricted stock units for 2021, 2020 and 2019 was $ 16 million, $ 17 million and $ 28 million, respectively.

2,375 164.07 1,987 175.96 1,722 189.78

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

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Weighted average restricted stock unit shares outstanding are included in the computation of diluted earnings per share.

As of December 31, 2022, there was $ 108 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 23 months.

The total fair value of restricted stock and restricted stock units that vested during December 31, 2022, 2021 and 2020 was $ 88 million, $ 83 million and $ 91 million, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the vesting of restricted stock and restricted stock units for 2022, 2021 and 2020 was $ 17 million, $ 16 million and $ 17 million, respectively.

Performance Shares

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

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

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

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

When granted, these performance shares are awarded at 100 % of

the estimated number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.

When granted, these performance shares are awarded at 100 % of the estimated number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.

Non-substantive vesting requires that expense for the performance shares be recognized over one or three years depending on when each individual became a 3M executive.

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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 for the years ended December 31:

The following table summarizes performance share activity during the year ended December 31:

2022 2021 2020

(Shares in thousands) Number of

Shares Weighted

Fair Value Number of

Shares Weighted

Fair Value Number of

Shares Weighted

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

Undistributed balance —

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As of December 31

391 157.98 481 175.12 423 188.61

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As of December 31, 2022, there was $ 7 million of compensation expense that has yet to be recognized related to performance shares.

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The fair value of GESPP options was based on the 15 % purchase price discount.

The Company recognized compensation expense for GESSP options of $ 32 million in 2021, $ 31 million in 2020, and $ 30 million in 2019.

The Company recognized compensation expense for GESPP options of $ 31 million in 2022, $ 32 million in 2021, and $ 31 million in 2020.

Business Segments and Geographic Information

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3M’s four business segments bring together common or related 3M technologies, enhancing the development of innovative products and services and providing for efficient sharing of business resources.

In July 2022, 3M announced its intention to spin off the Health Care business as a separate public company (see Note 3 for additional information).

Transactions among reportable segments are recorded at cost.

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

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

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

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

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

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

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

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

The change included the following:

Changes in cost attribution

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

See the updated description of Corporate and Unallocated below.

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

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

Continued alignment of customer account activity

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

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

Also effective in the first quarter of 2021, within 3M’s Consumer business segment, certain safety products formerly within the

Construction and Home Improvement Division and the Stationery and Office Division were moved to the newly named

Consumer Health and Safety Division (formerly the Consumer Health Care Division).

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

The changes included the items described below.

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

Effective in the first quarter of 2022:

Eliminating inclusion of dual credit in measure of segment operating performance

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

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

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

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

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

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

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

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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 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 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 16) net costs for significant litigation associated with Combat Arms Earplugs and Aearo-respirator mask/asbestos matters are reflected in Corporate and Unallocated.

Business Segment Products

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• Closure systems for personal hygiene products, masking, and packaging materials

○ Electrical products and materials for construction and maintenance, power distribution and electrical OEMs

• Electrical products and materials for construction and maintenance, power distribution and electrical original equipment manufacturers (OEMs)

• Structural adhesives and tapes

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• Reflective signage for highway, and vehicle safety

Health Care ○ Food safety indicator solutions

○ Health care procedure coding and reimbursement software

Health Care • Health care procedure coding and reimbursement software

• Skin, wound care, and infection prevention products and solutions

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• Stationery products

Some seasonality impacts this business segment related to back-to-school, generally in the third quarter of each year

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Business Segment Information

Net Sales (Millions) 2021 2020 2019

Net Sales 2022 2021 2020

Safety and Industrial $ 11,604 $ 11,981 $ 10,972

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Corporate and Unallocated 4 2 ( 2 )

Elimination of Dual Credit ( 2,202 ) ( 2,037 ) ( 1,618 )

Total Company $ 34,229 $ 35,355 $ 32,184

Operating Performance (Millions)

Operating Performance 2022 2021 2020

Safety and Industrial $ 1,199 $ 2,466 $ 2,588

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Consumer 994 1,162 1,119

Elimination of Dual Credit ( 553 ) ( 521 ) ( 399 )

Total business segment operating income 5,020 7,545 7,070

Corporate and Unallocated

Special items:

Significant litigation-related (charges)/benefits — ( 17 ) ( 762 )

Gain/(loss) on sale of businesses — 389 114

Corporate special items:

Net costs for significant litigation ( 877 ) ( 214 ) ( 148 )

Divestiture costs ( 60 ) — —

Gain on business divestitures 2,724 — 389

Divestiture-related restructuring actions ( 41 ) — ( 55 )

Russia exit charges ( 109 ) — —

Total corporate special items 1,637 ( 214 ) 186

Other corporate expense - net ( 118 ) 38 ( 95 )

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This depreciation also includes allocated depreciation associated with a number of the assets reflected in Corporate and Unallocated as described above.

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Corporate and Unallocated

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

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

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

Other corporate expense-net also includes costs and income from contract manufacturing, transition services and other arrangements with the acquirer of the Communication Markets Division following its 2018 divestiture through 2019 and the acquirer of the former Drug Delivery business following its 2020 divestiture.

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 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 16).

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 15).

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 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.

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

Elimination of Dual Credit

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

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

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

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

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

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

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

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

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

Geographic Information

2 unchanged sentences

Refer to Note 2 for geographic net sales.

Property, Plant and

Equipment - net

Property, Plant and Equipment - net

(Millions) 2022 2021

5 unchanged sentences

China/Hong Kong net property, plant and equipment (PP&E) was $ 518 million and $ 578 million at December 31, 2022 and 2021, respectively.

T able of Contents

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data