What changed in this filing

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Item 1. Financial Statements

2023-04-25 compared with 2022-10-25 · 515 added, 798 removed, 1050 unchanged (56% of the section changed)

3 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

(Millions, except per share amounts) 2023 2022

4 unchanged sentences

Research, development and related expenses 472 480

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

Total operating expenses 6,790 7,188

14 unchanged sentences

3M Company and Subsidiaries

Consolidated Statement of Comprehensive Income (Loss)

Consolidated Statement of Comprehensive Income

Three months ended

September 30, Nine months ended

September 30,

(Millions) 2023 2022

11 unchanged sentences

Consolidated Balance Sheet

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

2022 December 31,

(Dollars in millions, except per share amount) March 31, 2023 December 31, 2022

Current assets

34 unchanged sentences

944,033,056 shares issued

Shares outstanding - September 30, 2022:

Shares outstanding - March 31, 2023:

Shares outstanding - December 31, 2022:

3 unchanged sentences

( 32,963 ) ( 33,255 )

Shares at September 30, 2022:

Shares at March 31, 2023:

Shares at December 31, 2022:

7 unchanged sentences

Consolidated Statement of Cash Flows

Nine months ended

September 30,

Three months ended

(Millions) 2023 2022

6 unchanged sentences

Stock-based compensation expense 135 135

Gain on business divestitures ( 2,724 ) —

Deferred income taxes ( 93 ) ( 49 )

12 unchanged sentences

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

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

Other — net 1 18

Net cash provided by (used in) investing activities ( 386 ) ( 263 )

21 unchanged sentences

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

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

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

See additional information in Note 16.

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

See additional information in Note 2.

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

Effective in the first quarter of 2023, 3M made changes in the measure of segment operating performance and segment composition used by 3M’s chief operating decision maker—impacting 3M’s disclosed measure of segment profit/loss (business segment operating income).

Also effective in the first quarter of 2023, 3M's Consumer business segment re-aligned from four divisions to three divisions, see additional information in Note 15.

3M's disclosed disaggregated revenue was also updated as a result of these changes, see additional information in Note 2.

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

Consolidation and foreign currency translation

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

See additional information in Note 14.

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

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.

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

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

Earnings Per Share

The difference in the weighted average 3M shares outstanding for calculating basic and diluted earnings per share attributable to 3M common shareholders is a result of the dilution associated with the Company’s stock-based compensation plans.

Certain options outstanding under these stock-based compensation plans were not included in the computation of diluted earnings per share attributable to 3M common shareholders because they would have had an anti-dilutive effect of 31.7 million and 28.9 million average options for the three and nine months ended September 30, 2022, respectively, and 7.9 million and 7.7 million average options for the three and nine months ended September 30, 2021, respectively.

Certain options outstanding under these stock-based compensation plans were not included in the computation of diluted earnings per share attributable to 3M common shareholders because they would have had an anti-dilutive effect of 35.6 million and 23.1 million average options for the three months ended March 31, 2023 and 2022, respectively.

The computations for basic and diluted earnings per share follow:

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

(Amounts in millions, except per share amounts) 2023 2022

1 unchanged sentence

Denominator for weighted average 3M common shares outstanding – basic

568.8 579.6 570.7 580.3

Dilution associated with the Company’s stock-based compensation plans 0.5 2.7

Denominator for weighted average 3M common shares outstanding – diluted

570.0 586.3 572.6 587.1

Earnings per share attributable to 3M common shareholders – basic

2 unchanged sentences

$ 1.76 $ 2.26

Supplier Finance Program Obligations

Under supplier finance programs, 3M agrees to pay participating banks the stated amount of confirmed invoices from its designated suppliers on the original maturity dates of the invoices, generally within 90 days of the invoice date.

3M or the banks may terminate the agreements with advance notice.

Separately, the banks may have arrangements with the suppliers that provide them the option to request early payment from the banks for invoices confirmed by 3M.

3M's outstanding balances of confirmed invoices in the programs as of March 31, 2023 and December 31, 2022 were approximately $ 310 million and $ 260 million, respectively.

These amounts are included within accounts payable on 3M's consolidated balance sheet.

New Accounting Pronouncements

Refer to Note 1 to the Consolidated Financial Statements in 3M’s Current Report on Form 8-K dated April 26, 2022 (which updated 3M's 2021 Annual Report on Form 10-K) for a discussion of applicable standards issued and not yet adopted by 3M.

Relevant New Standards Issued Subsequent to Most Recent Annual Report

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

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

Disclosure of Supplier Finance Program Obligations.

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

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

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

Refer to Note 1 to the Consolidated Financial Statements in 3M’s 2022 Annual Report on Form 10-K for a discussion of applicable standards issued and not yet adopted by 3M.

Contract Balances:

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

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

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

Deferred revenue (current portion) as of March 31, 2023 and December 31, 2022 was $ 520 million and $ 538 million, respectively.

Approximately $ 200 million of the December 31, 2022 balance and of the December 31, 2021 balance was recognized as revenue during the three months ended March 31, 2023 and during the three months ended March 31, 2022.

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 $ 145 million and $ 429 million during the three and nine months ended September 30, 2022, respectively, and $ 148 million and $ 433 million during the three and nine months ended September 30, 2021, respectively.

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 139 million and $ 136 million during the three months ended March 31, 2023 and 2022, respectively.

Disaggregated revenue information:

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

Net Sales (Millions) 2023 2022

6 unchanged sentences

Roofing Granules 110 112

Other Safety and Industrial — ( 1 ) — ( 1 )

Total Safety and Industrial Business Segment 2,779 3,051

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Transportation Safety 183 198

Other Transportation and Electronics — 1 — —

Total Transportation and Electronics Business Segment 2,050 2,340

6 unchanged sentences

Total Health Care Business Group 2,010 2,128

Consumer Health and Safety 146 145 452 446

Home Care 265 272 800 812

Home Improvement 663 680 1,854 1,929

Home, Health and Auto Care 400 437

Construction and Home Improvement Markets 529 603

Stationery and Office 263 269

Other Consumer — ( 1 ) — ( 2 )

Total Consumer Business Group 1,192 1,309

2 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

Net Sales (Millions) 2023 2022

2 unchanged sentences

Europe, Middle East and Africa 1,452 1,621

Other Unallocated — — — ( 2 )

Worldwide $ 8,031 $ 8,829

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

Americas included United States net sales to customers of $ 3.6 billion for both the three months ended March 31, 2023 and 2022.

Acquisitions and Divestitures

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

Refer to Note 3 to the Consolidated Financial Statements in 3M's 2022 Annual Report on Form 10-K for more information on relevant pre-2023 acquisitions and divestitures.

Acquisitions:

2 unchanged sentences

2023 acquisitions:

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

There were no acquisitions that closed during the three months ended March 31, 2023.

Divestitures:

2 unchanged sentences

2023 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.

There were no divestitures that closed during the three months ended March 31, 2023.

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 spin-off transaction is intended to be tax-free for U.S.

federal income tax purposes and is subject to customary conditions, including the filing and effectiveness of a Form 10 registration statement, receipt of a private letter ruling from the Internal Revenue Service and a tax opinion from external counsel, satisfactory completion of financing, and final approval by the Company’s Board of Directors, among other items.

3M continues to work towards closing the transaction by year-end 2023 or early 2024, subject to required conditions, as well as additional factors such as conditions in the equity and debt markets, other external conditions, and developments involving 3M or any of its businesses, which could delay the completion of the transaction relative to the anticipated timeline.

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

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

federal income tax purposes.

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

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

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

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

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

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

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

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

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

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

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

federal income tax purposes.

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

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

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

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

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

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

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

Operating income and held-for-sale amounts:

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

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

With respect to the businesses above, o perating income information of the Health Care business is included in Note 15.

Further, with the respect to these businesses, there were no assets and liabilities associated with disposal groups classified as held for sale as of December 31, 2022 and as of March 31, 2023.

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

Goodwill and Intangible Assets

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

There was no goodwill recorded from acquisitions during the first three months of 2023.

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

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

(Millions) Safety and Industrial Transportation and

Electronics Health Care Consumer Total Company

The goodwill balance by business segment follows:

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

Balance as of December 31, 2022 $ 4,509 $ 1,501 $ 6,515 $ 265 $ 12,790

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

Divestiture activity — — ( 16 ) — ( 16 )

Translation and other 10 6 40 9 65

Balance as of September 30, 2022

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

Balance as of March 31, 2023 $ 4,519 $ 1,507 $ 6,555 $ 274 $ 12,855

Accounting standards require that goodwill be tested for impairment annually and between annual tests in certain circumstances such as a change in reporting units or the testing of recoverability of a significant asset group within a reporting unit.

At 3M, reporting units correspond to a division.

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

As described in Note 15, effective in the first quarter of 2023, 3M changed its measure of segment operating performance and the composition of reportable segments and realigned divisions within the Consumer business segment.

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

The impacts of these changes on reported amounts were immaterial and resulted in no impairment.

As of March 31, 2023, the Company's accumulated goodwill impairment loss is $ 0.3 billion.

Acquired Intangible Assets

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

(Millions) September 30,

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

(Millions) March 31,

2023 December 31,

15 unchanged sentences

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

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

Amortization expense follows:

Three months ended

September 30, Nine months ended

September 30,

(Millions) 2023 2022

Amortization expense $ 122 $ 131

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

Expected amortization expense for acquired amortizable intangible assets recorded as of March 31, 2023 follows:

(Millions) Remainder of 2023

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Restructuring Actions

2022 and 2021 Restructuring Actions:

Operational/Marketing Capability Restructuring:

As described in Note 5 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M’s 2021 Annual Report on Form 10-K), in late 2020, 3M announced it would undertake certain actions beginning in the fourth quarter of 2020 to further enhance its operations and marketing capabilities to take advantage of certain global market trends while de-prioritizing investments in slower-growth end markets.

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

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

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

2023 to 2025 Structural Reorganization Actions

In the first quarter of 2023, 3M announced it would undertake structural reorganization actions to reduce the size of the corporate center of the Company, simplify supply chain, streamline 3M’s geographic footprint, reduce layers of management, further align business go-to-market models to customers, and reduce manufacturing roles to align with production volumes.

During the first quarter of 2023, management approved and committed to undertake associated actions impacting approximately 1,200 positions resulting in a pre-tax charge of $ 52 million.

Remaining activities related to the restructuring actions approved and committed under this initiative are expected to be largely completed through the end of 2023.

3M expects to commit to further actions under this initiative.

This aggregate initiative beginning in the first quarter of 2023 and continuing through 2025 is expected to impact approximately 8,500 positions worldwide with an expected pre-tax charge of $ 700 million to $ 900 million over that period.

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

Nine months ended

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(Millions) 2022 2021

(Millions) Three months ended March 31, 2023

Cost of sales $ 16

3 unchanged sentences

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

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Employee-Related

(Millions) 2022 2021

Three months ended March 31, 2023

(Millions) Employee Related

Safety and Industrial $ 10

3 unchanged sentences

Total operating expense $ 52

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

Restructuring actions, including cash impacts, follow:

(Millions) Employee-Related

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

Incremental expense incurred in the first quarter of 2022 18

Expense incurred in the first quarter of 2023 $ 52

Cash payments ( 13 )

Adjustments ( 9 )

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

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

Accrued restructuring action balance as of March 31, 2023

2022 Restructuring Actions

Operational/Marketing Capability Restructuring:

As described in Note 5 in 3M's 2022 Annual Report on Form 10-K, in late 2020, 3M announced it would undertake certain actions beginning in the fourth quarter of 2020 to further enhance its operations and marketing capabilities to take advantage of certain global market trends while de-prioritizing investments in slower-growth end markets.

In 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.

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

Divestiture-Related Restructuring :

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

As described in Note 5 in 3M's 2022 Annual Report on Form 10-K, 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 in 3M's 2022 Annual Report on Form 10-K) management approved and committed to undertake certain restructuring actions addressing corporate functional costs across 3M in relation to the magnitude of amounts previously allocated to the divested business.

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

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

(Millions) Third Quarter 2022

Cost of sales $ 3

Selling, general and administrative expenses 36

Research, development and related expenses 2

Total operating income impact $ 41

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

(Millions) Employee-Related

Expense incurred in the third quarter of 2022 41

Cash payments ( 3 )

Accrued restructuring action balances as of September 30, 2022

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

The associated accrued restructuring balance as of December 31, 2022 was $ 10 million and remaining activities related to this divestiture-related restructuring are expected to be largely completed through the first half of 2023.

Supplemental Income Statement Information

1 unchanged sentence

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(Millions) 2023 2022

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Total $ 52 $ 38

Interest expense includes an early debt extinguishment pre-tax charge of approximately $ 11 million in the first quarter of 2021.

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.

1 unchanged sentence

Supplemental Equity and Comprehensive Income Information

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

Cash dividends declared and paid totaled $ 1.50 and $ 1.49 per share for the first quarter of 2023 and 2022, respectively.

Consolidated Changes in Equity

Three months ended September 30, 2022

3M Company Shareholders

(Millions) Total Common

Paid-in Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Income (Loss) Non-

Balance at June 30, 2022

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

Net income 3,863 3,859 4

Other comprehensive income (loss), net of tax:

Cumulative translation adjustment ( 821 ) ( 819 ) ( 2 )

Defined benefit pension and post-retirement plans adjustment 86 86

Cash flow hedging instruments 110 110

Total other comprehensive income (loss), net of tax ( 625 )

Dividends declared ( 850 ) ( 850 )

Stock-based compensation 47 47

Reacquired stock ( 191 ) ( 191 )

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

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

Balance at September 30, 2022

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

Nine months ended September 30, 2022

Three months ended March 31, 2023

3M Company Shareholders

16 unchanged sentences

Reacquired stock ( 29 ) ( 29 )

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

Issuances pursuant to stock option and benefit plans 188 ( 133 ) 321

Balance at September 30, 2022

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

Three months ended September 30, 2021

3M Company Shareholders

(Millions) Total Common

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Income (Loss) Non-

Balance at June 30, 2021

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

Net income 1,437 1,434 3

Other comprehensive income (loss), net of tax:

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

Defined benefit pension and post-retirement plans adjustment 119 119

Cash flow hedging instruments 48 48

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

Dividends declared ( 856 ) ( 856 )

Stock-based compensation 46 46

Reacquired stock ( 563 ) ( 563 )

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

Balance at September 30, 2021

Balance at March 31, 2023

$ 15,351 $ 6,825 $ 47,966 $ ( 32,963 ) $ ( 6,530 ) $ 53

Nine months ended September 30, 2021

Three months ended March 31, 2022

3M Company Shareholders

17 unchanged sentences

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

Balance at September 30, 2021

Balance at March 31, 2022

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

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

Three months ended September 30, 2022

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

Income (Loss)

Balance at June 30, 2022, net of tax:

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

Other comprehensive income (loss), before tax:

Amounts before reclassifications ( 773 ) — 173 ( 600 )

Amounts reclassified out — 112 ( 30 ) 82

Total other comprehensive income (loss), before tax ( 773 ) 112 143 ( 518 )

Tax effect ( 46 ) ( 26 ) ( 33 ) ( 105 )

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

Balance at September 30, 2022, net of tax:

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

Nine months ended September 30, 2022

Three months ended March 31, 2023

(Millions) Cumulative

13 unchanged sentences

Total other comprehensive income (loss), net of tax 116 51 ( 24 ) 143

Balance at September 30, 2022, net of tax:

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

Three months ended September 30, 2021

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

Income (Loss)

Balance at June 30, 2021, net of tax:

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

Other comprehensive income (loss), before tax:

Amounts before reclassifications ( 286 ) — 44 ( 242 )

Amounts reclassified out — 158 18 176

Total other comprehensive income (loss), before tax ( 286 ) 158 62 ( 66 )

Tax effect ( 15 ) ( 39 ) ( 14 ) ( 68 )

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

Balance at September 30, 2021, net of tax:

Balance at March 31, 2023, net of tax:

$ ( 2,712 ) $ ( 3,787 ) $ ( 31 ) $ ( 6,530 )

Nine months ended September 30, 2021

Three months ended March 31, 2022

(Millions) Cumulative

13 unchanged sentences

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

Balance at September 30, 2021, net of tax:

Balance at March 31, 2022, net of tax:

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

2 unchanged sentences

Reclassifications out of Accumulated Other Comprehensive Income Attributable to 3M

Details about Accumulated Other

Comprehensive Income Components Amount Reclassified from

Accumulated Other Comprehensive Income Location on Income

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

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(Millions) 2023 2022

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Total reclassifications for the period, net of tax $ ( 20 ) $ ( 82 )

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

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

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

The primary factors that decreased the Company's effective tax rate for the first nine months of 2022 were the tax efficient structure associated with the third quarter 2022 gain on split-off of the Food Safety business (see Note 3) and the tax impact associated with the second quarter 2022 charge related to steps toward resolving Combat Arms Earplugs litigation (discussed in Note 14).

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of September 30, 2022 and December 31, 2021 are $ 997 million and $ 1,112 million, respectively.

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

The effective tax rate for the first quarter of 2023 was 17.7 percent, a decrease from 18.8 percent in the prior year.

The primary factor that decreased the Company's effective tax rate for first quarter 2023 was deferred tax impacts of 2023 activity.

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of March 31, 2023 and December 31, 2022 are $ 994 million and $ 965 million, respectively.

It is reasonably possible that the amount of unrecognized tax benefits could significantly change within the next 12 months.

At this time, the Company is not able to estimate the range by which these potential events could impact 3M’s unrecognized tax benefits in the next 12 months.

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

As of March 31, 2023 and December 31, 2022, the Company had valuation allowances of $ 114 million and $ 115 million on its deferred tax assets, respectively.

Marketable Securities

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

(Millions) September 30,

2022 December 31,

(Millions) March 31, 2023 December 31, 2022

Commercial paper $ 85 $ 213

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Total marketable securities $ 168 $ 261

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

The balances at September 30, 2022 for marketable securities by contractual maturity are shown below.

At March 31, 2023 and December 31, 2022, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material.

The balances at March 31, 2023 for marketable securities by contractual maturity are shown below.

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

(Millions) September 30,

(Millions) March 31, 2023

Due in one year or less $ 145

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Long-Term Debt and Short-Term Borrowings

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.

2021 issuances, maturities, and extinguishments of short- and long-term debt are described in Note 5 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M’s 2021 Annual Report on Form 10-K).

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

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

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

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

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

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

In February 2023, 3M repaid $ 500 million aggregate principal amount of fixed-rate registered notes that matured.

March 2023, 3M repaid $ 650 million aggregate principal amount of fixed-rate medium-term notes that matured.

2022 issuances, maturities, and extinguishments of short- and long-term debt are described in Note 12 to the Consolidated Financial Statements in 3M's 2022 Annual Report on Form 10-K.

The Company had $ 1.1 billion in commercial paper outstanding at March 31, 2023, compared to no commercial paper outstanding as of December 31, 2022.

Future Maturities of Long-term Debt

Maturities of long-term debt in the table below reflect the impact of put provisions associated with certain debt instruments and are net of the unamortized debt issue costs such that total maturities equal the carrying value of long-term debt as of September 30, 2022.

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

The maturities of long-term debt for the periods subsequent to March 31, 2023 are as follows (in millions):

2024 2025 2026 2027 2028 After 2028

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The other components of net periodic benefit cost are reflected in other expense (income), net.

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

Components of net periodic benefit cost and other supplemental information for the three months ended March 31, 2023 and 2022 follow:

Benefit Plan Information

Three months ended September 30,

Qualified and Non-qualified

Pension Benefits Postretirement

United States International

(Millions) 2022 2021 2022 2021 2022 2021

Net periodic benefit cost (benefit)

Operating expense

Service cost $ 64 $ 72 $ 32 $ 41 $ 10 $ 12

Non-operating expense

Interest cost 105 90 32 25 13 11

Expected return on plan assets ( 241 ) ( 264 ) ( 69 ) ( 81 ) ( 17 ) ( 19 )

Amortization of transition asset — — — 1 — —

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

Amortization of net actuarial loss 106 132 10 26 10 14

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

Total non-operating expense (benefit) ( 36 ) ( 48 ) ( 27 ) ( 29 ) ( 2 ) ( 3 )

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

Nine months ended September 30,

Three months ended March 31,

Qualified and Non-qualified

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Total net periodic benefit cost (benefit) $ 32 $ 27 $ 2 $ 6 $ 3 $ 10

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

For the three months ended March 31, 2023 contributions totaling $ 26 million were made to the Company’s U.S.

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

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

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

plans in 2022.

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

3M’s annual measurement date for pension and postretirement assets and liabilities is December 31 each year, which is also the date used for the related annual measurement assumptions.

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

Note 14 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M's 2021 Annual Report on Form 10-K) explains the types of derivatives and financial instruments used by 3M, how and why 3M uses such instruments, and how such instruments are accounted for.

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.

Note 14 to the Consolidated Financial Statements in 3M's 2022 Annual Report on Form 10-K explains the types of derivatives and financial instruments used by 3M, how and why 3M uses such instruments, and how such instruments are accounted for.

It also contains information regarding previously initiated contracts or instruments.

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

• Derivatives and/or hedging instruments associated with the Company’s long-term debt are described in Note 12 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M’s 2021 Annual Report on Form 10-K).

• Derivatives and/or hedging instruments associated with the Company’s long-term debt are described in Note 12 to the Consolidated Financial Statements in 3M's 2022 Annual Report on Form 10-K.

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

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Cash Flow Hedges:

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

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

Based on exchange rates as of September 30, 2022, of the total after-tax net unrealized balance as of September 30, 2022, 3M expects to reclassify approximately $ 166 million after-tax net unrealized gain over the next 12 months (with the impact offset by earnings/losses from underlying hedged items).

As of March 31, 2023, the Company had a balance of $ 31 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 $ 92 million (after-tax loss) related to forward starting interest rate swap and treasury rate lock contracts, which will be amortized over the respective lives of the underlying notes.

Based on exchange rates as of March 31, 2023, of the total after-tax net unrealized balance as of March 31, 2023, 3M expects to reclassify approximately $ 42 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.

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Three months ended

September 30, Nine months ended

September 30,

(Millions) 2023 2022

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Fair Value Hedges:

The following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for 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 September 30,

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 March 31,

2023 December 31,

2021 September 30,

2022 March 31,

2023 December 31,

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

Long-term debt $ 916 $ 903 $ ( 86 ) $ ( 98 )

Total $ 891 $ 997 $ ( 111 ) $ ( 4 )

Net Investment Hedges:

At September 30, 2022, the total notional amount of foreign exchange forward contracts designated in net investment hedges was approximately 150 million euros, along with a principal amount of long-term debt instruments designated in net investment hedges totaling 2.4 billion euros.

At March 31, 2023, the total notional amount of foreign exchange forward contracts designated in net investment hedges was approximately 150 million euros, along with a principal amount of long-term debt instruments designated in net investment hedges totaling 2.4 billion euros.

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

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Three months ended

September 30, Nine months ended

September 30,

(Millions) 2023 2022

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Total $ ( 45 ) $ 61

Derivatives Not Designated as Hedging Instruments:

Derivatives not designated as hedging instruments include de-designated foreign currency forward and option contracts that formerly were designated in cash flow hedging relationships (as referenced in the Cash Flow Hedges section above).

In addition, 3M enters into foreign currency contracts that are not designated in hedging relationships to offset, in part, the impacts of changes in value of various non-functional currency denominated items including certain intercompany financing balances.

These derivative instruments are not designated in hedging relationships;

therefore, fair value gains and losses on these contracts are recorded in earnings.

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

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

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Location and Amount of Gain (Loss) Recognized in Income

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

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

Three months ended March 31,

Cost of sales Other expense (income), net

(Millions) 2023 2022 2023 2022

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(Millions) Location Fair Value Amount Location Fair Value Amount

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

2023 December 31,

2022 March 31,

2023 December 31,

2022 March 31,

2023 December 31,

Derivatives designated as hedging instruments

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Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties

Gross Amounts not Offset in the

Consolidated Balance Sheet that are Subject to Master Netting Agreements

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

Collateral Received Net Amount of

Derivative Assets

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

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) March 31,

2023 December 31,

2022 March 31,

2023 December 31,

2022 March 31,

2023 December 31,

2022 March 31,

2023 December 31,

Derivatives subject to master netting agreements $ 135 $ 217 $ 49 $ 40 $ — $ — $ 86 $ 177

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Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties

Gross Amounts not Offset in the

Consolidated Balance Sheet that are Subject to Master Netting Agreements

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

Collateral Received Net Amount of

Derivative Liabilities

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

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) March 31,

2023 December 31,

2022 March 31,

2023 December 31,

2022 March 31,

2023 December 31,

2022 March 31,

2023 December 31,

Derivatives subject to master netting agreements $ 150 $ 142 $ 49 $ 40 $ — $ — $ 101 $ 102

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Currency Effects

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

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, increased pre-tax income by approximately $ 36 million and $ 17 million for the three months ended March 31, 2023 and 2022, respectively.

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

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3M follows ASC 820, Fair Value Measurements and Disclosures, with respect to assets and liabilities that are measured at fair value on a recurring basis and nonrecurring basis.

In addition to the information above, refer to Note 15 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M’s 2021 Annual Report on Form 10-K) for a qualitative discussion of the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis, a description of the valuation methodologies used by 3M, and categorization within the valuation framework of ASC 820.

In addition to the information above, refer to Note 15 to the Consolidated Financial Statements in 3M's 2022 Annual Report on Form 10-K for a qualitative discussion of the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis, a description of the valuation methodologies used by 3M, and categorization within the valuation framework of ASC 820.

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

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Level 1 Level 2 Level 3

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

Description (Millions) March 31,

2023 December 31,

2022 March 31,

2023 December 31,

2022 March 31,

2023 December 31,

2022 March 31,

2023 December 31,

Available-for-sale:

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municipal securities only Three months ended

September 30, Nine months ended

September 30,

(Millions) 2023 2022

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

Refer to Note 13 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M’s 2021 Annual Report on Form 10-K).

Refer to Note 13 to the Consolidated Financial Statements in 3M's 2022 Annual Report on Form 10-K.

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

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

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

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

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

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

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

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

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the first three months of 2023 and 2022.

As discussed in Note 15 to the Consolidated Financial Statements in 3M's 2022 Annual Report on Form 10-K, in the third quarter of 2022, management committed to a plan to exit and dispose of net assets in Russia through an intended sale of related subsidiaries and, as a result, records 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 is included.

As of March 31, 2023 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.

Fair Value of Financial Instruments:

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

(Millions) Carrying Value Fair Value Carrying Value Fair Value

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The Company and some of its subsidiaries are involved in numerous claims and lawsuits, principally in the United States, and regulatory proceedings worldwide.

These claims, lawsuits and proceedings include, but are not limited to, products liability (involving products that the Company now or formerly manufactured and sold), intellectual property, commercial, antitrust, federal healthcare program related laws and regulations, such as the False Claims Act and anti-kickback laws, securities, and environmental laws in the United States and other jurisdictions.

These claims, lawsuits and proceedings relate to matters including, but not limited to, products liability (involving products that the Company now or formerly manufactured and sold), intellectual property, commercial, antitrust, federal healthcare program related laws and regulations, such as the False Claims Act and anti-kickback laws, securities, and environmental laws in the United States and other jurisdictions.

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

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

Additional information about the Company’s process for disclosure and recording of liabilities and insurance receivables related to legal proceedings can be found in Note 16 “Commitments and Contingencies” to the Consolidated Financial Statements in the Company's Current Report on Form 8-K dated April 26, 2022 (which updates the Company’s Annual Report on Form 10-K for the year ended December 31, 2021).

Process for Disclosure and Recording of Liabilities Related to Legal Proceedings

Many lawsuits and claims involve highly complex issues relating to causation, scientific evidence, and alleged actual damages, all of which are otherwise subject to substantial uncertainties.

Assessments of lawsuits and claims can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

The categories of legal proceedings in which the Company is involved may include multiple lawsuits and claims, may be spread across multiple jurisdictions and courts which may handle the lawsuits and claims differently, may involve numerous and different types of plaintiffs, raising claims and legal theories based on specific allegations that may not apply to other matters, and may seek substantial compensatory and, in some cases, punitive, damages.

These and other factors contribute to the complexity of these lawsuits and claims and make it difficult for the Company to predict outcomes and make reasonable estimates of any resulting losses.

The Company's ability to predict outcomes and make reasonable estimates of potential losses is further influenced by the fact that a resolution of one or more matters within a category of legal proceedings may impact the resolution of other matters in that category in terms of timing, amount of liability, or both.

When making determinations about recording liabilities related to legal proceedings, the Company complies with the requirements of ASC 450, Contingencies, and related guidance, and records liabilities in those instances where it can reasonably estimate the amount of the loss and when the loss is probable.

Where the reasonable estimate of the probable loss is a range, the Company 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.

The Company either discloses the amount of a possible loss or range of loss in excess of established accruals if estimable, or states that such an estimate cannot be made.

The Company discloses significant legal proceedings even where liability is not probable or the amount of the liability is not estimable, or both, if the Company believes there is at least a reasonable possibility that a loss may be incurred.

Based on experience and developments, the Company reexamines its estimates of probable liabilities and associated expenses and receivables each period, and whether a loss previously determined to not be reasonably estimable and/or not probable is now able to be reasonably estimated or has become probable.

Where appropriate, the Company makes additions to or adjustments of its reasonably estimated losses and/or accruals.

As a result, the current accruals and/or estimates of loss and the estimates of the potential impact on the Company’s consolidated financial position, results of operations and cash flows for the legal proceedings and claims pending against the Company will likely change over time.

Because litigation is subject to inherent uncertainties, and unfavorable rulings or developments could occur, the Company may ultimately incur charges substantially in excess of presently recorded liabilities, including with respect to matters for which no accruals are currently recorded because losses are not currently probable and reasonably estimable.

Many of the matters described herein are at varying stages, seek an indeterminate amount of damages or seek damages in amounts that the Company believes are not indicative of the ultimate losses that may be incurred.

It is not uncommon for claims to be resolved over many years.

As a matter progresses, the Company may receive information, through plaintiff demands, through discovery, in the form of reports of purported experts, or in the context of settlement or mediation discussions that purport to quantify an amount of alleged damages, but with which the Company may not agree.

Such information may or may not lead the Company to determine that it is able to make a reasonable estimate as to a probable loss or range of loss in connection with a matter.

However, even when a loss or range of loss is not probable and reasonably estimable, developments in, or the ultimate resolution of, a matter could be material to the Company and could have a material adverse effect on the Company, its consolidated financial position, results of operations and cash flows.

In addition, future adverse rulings or developments, or settlements in, one or more matters could result in future changes to determinations of probable and reasonably estimable losses in other matters.

Process for Disclosure and Recording of Insurance Receivables Related to Legal Proceedings

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 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.

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

Respirator Mask/Asbestos Litigation

As of September 30, 2022, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 4,088 individual claimants, compared to approximately 3,876 individual claimants with actions pending December 31, 2021.

As of March 31, 2023, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 4,152 individual claimants, compared to approximately 4,028 individual claimants with actions pending December 31, 2022.

The vast majority of the lawsuits and claims resolved by and currently pending against the Company allege use of some of the Company’s mask and respirator products and seek damages from the Company and other defendants for alleged personal injury from workplace exposures to asbestos, silica, coal mine dust or other occupational dusts found in products manufactured by other defendants or generally in the workplace.

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The Company’s current volume of new and pending matters is substantially lower than it experienced at the peak of filings in 2003.

The Company expects that filing of claims by unimpaired claimants in the future will continue to be at much lower levels than in the past.

The Company expects that filing of claims in the future will continue to be at much lower levels than in the past.

Accordingly, the number of claims alleging more serious injuries, including mesothelioma, other malignancies, and black lung disease, will represent a greater percentage of total claims than in the past.

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In August 2018, the trial court entered judgment and the Company appealed.

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

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

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

3M has sought review by the Washington Supreme Court.

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

The rate of coal mine dust-related case filings decelerated in 2022 and has continued to decelerate in 2023.

3M moved two cases involving over 400 plaintiffs to federal court based on, among others, the Class Action Fairness Act.

The federal district court remanded the cases to state court.

In March 2023, the Sixth Circuit Court of Appeals granted 3M's petition to review the remand order, and in April 2023 reversed the district court's remand order;

accordingly, those cases will remain in federal court.

As previously reported, the State of West Virginia, through its Attorney General, filed a complaint in 2003 against the Company and two other manufacturers of respiratory protection products in the Circuit Court of Lincoln County, West Virginia, and amended its complaint in 2005.

1 unchanged sentence

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

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

In the first quarter of 2023, a bench trial for the unfair trade practices claims was continued indefinitely.

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.

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The third party assists the Company in estimating the costs to defend and resolve pending and future claims.

The Company uses these estimates to develop its best estimate of probable liability.

The Company uses this analysis to develop its estimate of probable liability.

Developments may occur that could affect the Company’s estimate of its liabilities.

These developments include, but are not limited to, significant changes in (i) the key assumptions underlying the Company’s accrual, including, the number of future claims, the nature and mix of those claims, the average cost of defending and resolving claims, and in maintaining trial readiness (ii) trial and appellate outcomes, (iii) the law and procedure applicable to these claims, and (iv) the financial viability of other co-defendants and insurers.

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

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

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

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

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

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

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

These developments include, but are not limited to, significant changes in (i) the key assumptions underlying the Company’s accrual, including the number of future claims, the nature and mix of those claims, and the average cost of defending and resolving claims and in maintaining trial readiness (ii) trial and appellate outcomes, (iii) the law and procedure applicable to these claims, and (iv) the financial viability of other co-defendants and insurers.

As a result of its review of its respirator mask/asbestos liabilities, of pending and expected lawsuits and of the cost of resolving claims of persons who claim more serious injuries, including mesothelioma, other malignancies, and black lung disease, the Company decreased its accruals in the first three months of 2023 for respirator mask/asbestos liabilities by $ 40 million.

In the first three months of 2023, the Company made payments for legal defense costs and settlements of $ 11 million related to the respirator mask/asbestos litigation.

As of March 31, 2023, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 553 million.

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

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

As of March 31, 2023, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $ 4 million.

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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Environmental Matters and Litigation

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

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.

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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

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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.

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

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

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

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

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

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

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

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

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

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

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 February 2023, the European Chemicals Agency (ECHA) published the proposal it received in January 2023 from the national authorities of Germany, Denmark, the Netherlands, Norway and Sweden to restrict PFAS under the European Union’s chemicals regulation.

The proposal aims to restrict the manufacture, placing on the market and use of PFAS under REACH.

In March 2023, the six month consultation phase on the PFAS Restriction Proposal started.

If the proposed rule becomes enforceable prior to 3M's announced exit from PFAS manufacturing by the end of 2025, depending on the scope and obligations contained in any final rule, PFAS manufacturers including 3M Belgium could incur additional costs and potential exposures, including future compliance costs, possible litigation and/or enforcement actions.

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.

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

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

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

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

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

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

January 2023 was the deadline for Member States to implement the Directive in their countries.

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.

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.

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

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

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

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.

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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.

In February 2023, the federal judicial police requested additional documents following an earlier request for documents that 3M Belgium had provided;

3M Belgium has complied with the request for additional documents.

Safety measures – wastewater discharge.

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

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

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

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

In October 2021, the Province of Antwerp unilaterally adopted lower discharge limits for the nine PFAS compounds specifically identified in the water discharge permit for the Zwijndrecht facility 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.

Subsequently, the environmental enforcement agency 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 developed an application to amend the permit to add the additional PFAS.

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

Changes in discharge limits could have a significant adverse impact on 3M Belgium’s normal operations and the Company's businesses that receive products and other materials from the facility, some of which may not be available in similar quantities from other 3M facilities, which could in turn impact these businesses’ ability to fulfill supply obligations to their customers.

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 has applied 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.

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

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

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

In October 2022, 3M Belgium received a report from the Flemish inspectorate regarding certain health and safety issues noted during inspections of the Zwijndrecht 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.

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

In September 2022, the environmental enforcement agency issued an infraction report alleging that 3M Belgium had misconstrued an exemption in the safety measure and thus not fully complied with the safety measure in the operation of certain production lines.

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

Although the authorities have approved the restart and/or continued operation of key production processes, a negative development in their ongoing oversight review, or inability to fully restart all production processes, could have a significant adverse impact on 3M Belgium’s normal operations and the Company's businesses that receive products and other materials from the facility, some of which may not be available in similar quantities from other 3M facilities, which could in turn impact these businesses’ ability to fulfill supply obligations to their customers.

Administrative measure – soil piles.

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

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

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

Notice of default – environmental law compliance.

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

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

In February 2023, the Flemish waste agency (OVAM) rejected a required descriptive soil investigation (DSI) submitted by 3M Belgium, required that a new DSI be submitted by the end of March, and also required that 3M Belgium propose a plan to implement additional precautionary measures for individuals living in designated areas near the Zwijndrecht plant.

At the end of March 2023, 3M Belgium submitted a revised DSI, along with an appeal of the rejection of the DSI.

3M Belgium also submitted a proposal regarding precautionary measures that is being discussed with OVAM.

In December 2022, the Flemish Cabinet took steps to implement an executive action (the “Site Decision”) designed to expand 3M’s remedial obligations around the Zwijndrecht site.

On March 31, 2023, the Site Decision was fully approved by the Flemish Cabinet.

While the full impact of the Site Decision remains to be determined, it appears to establish a remediation zone within 5 kilometers of Zwijndrecht, and may create a presently undetermined amount of additional financial and remedial obligations for 3M Belgium.

In July 2022, 3M Belgium and the Flemish Government announced an agreement in connection with the Zwijndrecht facility.

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

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

Civil litigation - As of March 31, 2023, a total of seven actions against 3M Belgium are pending in Belgian civil courts.

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

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

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

the other actions are in early stages.

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

While most of the actions are in early stages, one of the actions, brought by a family living near the 3M Belgium plant, had a hearing in February 2023.

Another case, involving an environmental injunction procedure, was brought by environmental NGOs originally against 3M Belgium’s contractors and later against 3M Belgium.

The case seeks to accelerate the descriptive soil investigation and remediation process, and judicial hearings in this case are scheduled for April 2023.

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

United States:

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

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

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

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

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

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

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

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

In March 2023, EPA published proposed national primary drinking water standards for six PFAS – PFOA, PFOS, PFBS, PFHxS, PFNA, and HFPO-DA, along with an economic analysis including purported estimated costs of the proposed rule.

For PFOA and PFOS, EPA has proposed a drinking water standard of 4 ppt.

For the other four PFAS, EPA is proposing to adopt for the first time a drinking water standard based on a “hazard index” approach, under which the levels of those four compounds, if detected, would be input into an EPA-provided formula to determine whether they exceed EPA's cumulative risk threshold.

If the proposed drinking water standards are finalized, 3M could incur additional costs and potential exposures, including 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 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.

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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 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 (SAB) and soliciting public comment.

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

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

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

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

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

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

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

OMB completed its review in August 2022.

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

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

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.

EPA has indicated that it intends to publish a final rule in 2023.

In addition, EPA’s Advanced Notice of Proposed Rulemaking considering CERCLA hazardous substance designations for additional PFAS, including PFBS, PFHxS, PFNA, HFPO-DA, PFBA, PFHxA, PFDA and their precursor compounds as well as the precursor compounds of PFOS and PFOA, was published for public comment in April 2023.

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.

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

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

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

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.

3M submitted comments to EPA’s proposal.

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.

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

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

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

United States:

State Activity

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

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

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

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

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

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 include the following:

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

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

• 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.

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

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.

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

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

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

The ban becomes effective in 2030.

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

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

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

In 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.

Several other states have introduced legislation that would impose similar reporting obligations.

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 and the court has scheduled oral argument for November 2022.

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

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.

The court heard oral argument in November 2022.

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, the parties have briefed the merits of the remaining claims and the court heard oral argument in June 2022.

The parties await a ruling by the court.

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.

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, including to its manufacturing operations and its products.

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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) were 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.

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

Key provisions of these agreements include 3M’s continued environmental characterization, including sampling of environmental media, such as soil, ground water, and sediment, regarding the potential presence of PFAS at the 3M Decatur facility and legacy disposal sites, as well as supporting the execution of appropriate remedial actions.

In December 2021, the court in the St.

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

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 several other parties, including previously disclosed Tennessee Riverkeeper organization, the St.

John plaintiff class, and 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 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 included representative plaintiffs who brought the complaint on behalf of themselves, and a class of all owners and possessors of property who use water provided by the Water Authority and five local water works to which the Water Authority supplies water.

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

In October 2021, with respect to the putative class claims brought by the representative plaintiffs who were supplied drinking water by the Water Authority (the “Lindsey” case), the parties reached an agreement in principle to resolve the claims for an immaterial amount.

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

In August 2016, a group of over 200 plaintiffs filed a putative class action against West Morgan-East Lawrence Water and Sewer Authority (Water Authority), 3M, Dyneon, Daikin, BFI, and the City of Decatur in state court in Lawrence County, Alabama (the “Billings” case).

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

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

In January 2017, the court in the St.

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 were approximately 4,900 named plaintiffs.

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

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

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

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

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

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

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

District Court for the Northern District of Alabama.

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

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

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 37 plaintiffs.

The case was scheduled for trial in July 2023.

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

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

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

In November 2021, 3M and the City of Decatur, Decatur Utilities and Morgan County executed a collaborative agreement under which the Company agreed to contribute approximately $ 99 million and also to continue to address certain PFAS-related matters in the area.

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.

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.

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 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.

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 worked with 3M to further investigate the presence of chemicals in the area.

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

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

The Company has filed a motion to dismiss this case.

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

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.

The case is in early stages of discovery.

In February 2023, the City of Muscle Shoals, Alabama 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 City withdraws its drinking water.

Defendants filed a joint motion to dismiss in March 2023.

Also in February 2023, two individuals who opted out of the St.

John class settlement filed suit in Alabama state court against 3M, alleging PFAS contamination of their property resulting from 3M’s operations in Decatur.

3M removed the case to federal court and answered the complaint in March 2023.

State Attorneys General Litigation related to PFAS

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

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

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

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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.

In March 2022, 3M answered the complaints.

The parties are conducting discovery.

As of March 2023, the actions are stayed pending the parties’ participation in court-mandated mediation.

New Hampshire.

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

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

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

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.

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

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

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.

In March 2023, the federal judge granted the state’s motion to remand the case back to state court.

3M has filed a notice of appeal of that decision.

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

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

This suit is proceeding in state court.

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

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

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

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

This motion is currently pending.

In late 2022, the complaint was amended to add claims related to PFBS and GenX and to add a claim under Vermont’s Waste Management Act, which had been amended to add manufacturers as liable parties for the release or threatened release of hazardous materials (which in Vermont includes certain PFAS compounds).

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 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.

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

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

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

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

In 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.

The case has been removed to federal court and the Company has filed a motion to transfer the case to the AFFF MDL.

In April 2023, the Illinois Attorney General filed a lawsuit against 3M and other defendants alleging PFAS contamination of state natural resources from AFFF.

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 transferred to the AFFF MDL.

In March 2023, Maine’s Attorney General filed two lawsuits in state court against 3M and other defendants that contain allegations related to PFAS contamination of state natural resources from AFFF and non-AFFF products, respectively.

3M has not yet been served in these cases.

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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Aqueous Film Forming Foam (AFFF) Environmental Litigation

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

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

3M manufactured and marketed AFFF containing certain PFAS for use in firefighting from approximately 1963 to 2002.

As of March 31, 2023, approximately 4,150 lawsuits (including approximately 41 putative class actions and 300 public water system cases) alleging injuries or damages from PFAS contamination or exposure allegedly caused by AFFF use have been filed against 3M (along with other defendants) in various state and federal courts.

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

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

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

AFFF MDL and Water System Cases

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.

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

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

The court's decision on the mediator is pending.

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

Oral argument on the motion was held in August 2022.

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

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

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 the MDL, there are cases filed by approximately 300 public water systems.

These include community water systems, which are public water systems that provide water for human use and consumption to a set population, and non-community water systems, which are public water systems that supply water to a varied population (for example, campgrounds or schools).

There are approximately 50,000 community water systems in the United States.

The MDL cases focus on AFFF, but also contain allegations related to the broader category of PFAS products.

3M and other defendants also face cases filed by approximately 55 public water systems outside of the MDL;

these cases do not include allegations related to AFFF, but instead address PFAS more broadly.

Public water system cases include a variety of claims, including for product liability, negligence, and public nuisance.

The cases seek damages for, among other things, remediation costs to remove PFAS from drinking water provided to communities, as well as punitive damages.

In September 2022, the MDL court selected the City of Stuart, Florida (Stuart) public water system case as the first bellwether trial.

Stuart filed its complaint in the U.S.

District Court for the Southern District of Florida in October 2018.

The case was subsequently transferred to the MDL.

Stuart asserts claims for compensatory damages, punitive damages, and attorneys’ fees against 3M and other defendants.

Stuart contends that it has suffered harm in the form of costs to construct and operate a treatment system to remove PFAS from water it provides to its customers.

Stuart also seeks to recover damages that may be associated with the investigation and remediation of Stuart’s public safety complex and fire station 2, where AFFF allegedly was used in the past.

3M asserts defenses to each of Stuart’s claims.

In December 2022, the defendants filed motions to exclude testimony by Stuart’s experts as well as summary judgment motions challenging certain of Stuart’s legal theories and its damages calculations.

These motions have now been fully briefed.

Since the beginning of 2022, Stuart has voluntarily dismissed three defendants from the case, leaving seven defendants remaining (including 3M).

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

In October 2022, the court appointed a retired federal judge as mediator, who has held several mediation sessions with plaintiff and defense leadership.

These confidential mediation sessions are ongoing.

For Stuart, if the parties are not able to resolve the matter, the trial is scheduled to begin on June 5, 2023.

An adverse ruling or judgment, settlement, or unfavorable development in the lawsuit could result in future charges that could have a material adverse effect on the Company's results of operations or cash flows in the period in which they are recorded and on the consolidated financial position of the Company.

No liability has been recorded because the Company believes any such liability is not probable and reasonably estimable at this time.

The MDL court has also directed the parties to submit a proposal for an initial set of personal injury bellwether cases.

Following the first water provider bellwether trial, the parties are expected to begin discovery on a set of 28 cases to be selected as potential 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.

Outside the MDL, the City of Rome, Georgia (Rome) filed its initial complaint in November 2019.

Rome asserts claims against 3M and other defendants for compensatory damages, statutory damages for alleged violation of the Georgia Water Quality Control Act, punitive damages, attorneys’ fees, and injunctive relief.

Rome previously installed a treatment system to remove PFAS from drinking water it provides to customers.

It seeks to recover costs associated with that system, as well as for the design, construction, and operations of a new and larger system to remove PFAS from drinking water over a period of decades.

Rome also seeks injunctive relief to require defendants to investigate and conduct extensive remediation of a land application system on an area of approximately 9,000 acres owned and operated by a utility in Dalton, Georgia.

Rome alleges that 3M is liable in relation to Scotchgard it sold to third parties in the carpet industry in and around Dalton, Georgia.

3M asserts defenses to each of Rome’s claims.

3M filed motions for summary judgment, to change the venue and to exclude certain of Rome’s expert witnesses, all of which remain pending.

The parties are engaged in confidential mediation discussions for possible resolution.

If the parties are not able to resolve the matter, the trial is scheduled to begin on June 5, 2023.

No liability has been recorded because the Company believes any such liability is not probable and reasonably estimable at this time.

Other AFFF Cases

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

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

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.

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

Two of these cases have been removed to federal court and transferred to the AFFF MDL, and one case was voluntarily dismissed.

Five cases remain pending in state courts where they are stayed by agreement of the parties.

As of March 31, 2023, the Company is aware of approximately 55 other AFFF suits originally filed in various state courts in which the Company has been named a defendant.

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

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

Two subsidiaries of Husky Energy filed suit in April 2020 against 3M and other AFFF manufacturers in Wisconsin state court relating to alleged PFAS contamination from AFFF use at Husky facilities in Superior, Wisconsin and Lima, Ohio.

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.

however, several cases (including two in Illinois and one in Arizona) are expected to remain pending in state courts.

In March 2023, the Illinois court in one of the state cases granted a motion for expedited trial and set the case for trial beginning in November 2023.

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

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

A mediation involving plaintiffs from 32 of the federal and state cases and all of the defendants is scheduled for April 2023.

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.

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

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

District Court for the Northern District of New York.

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

3M’s contribution is not considered material.

3M is also defending 13 cases in the U.S.

3M is also defending 14 individual cases in the U.S.

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

The plaintiffs in these cases allege that products manufactured by 3M, DuPont, and additional unnamed defendants contaminated plaintiffs’ water supply sources with various PFAS compounds.

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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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.

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

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

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

The settlement amounts are not considered material.

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

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 have been proceeding through discovery.

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

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

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

This case is proceeding through discovery.

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

3M and Wolverine have agreed to settle the case with the plaintiffs, and 3M's share is not considered material;

the court approved the class settlement in March 2023.

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 Centre case has been set for trial in November 2023.The City of Rome case has been scheduled for trial in June 2023, as discussed in more detail above.

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

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 was granted in March 2022.

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

This case is now proceeding through discovery.

This case is now proceeding through discovery, which has been extended by the court through November 2023.

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, which was granted in part and denied in part in February 2023.

The claims that will proceed against 3M and other defendants, including negligence, wantonness, and public nuisance, are moving into discovery.

In California, 3M, Decra Roofing and certain DuPont-related entities were named as defendants in an action brought in state court by the City of Corona and a local utility authority, alleging PFAS contamination of the plaintiffs’ water sources and also referring to 3M's industrial minerals facility in Corona, California as a potential source of contamination.

Plaintiffs filed an amended complaint in June 2021.

In October 2021, 3M filed a demurrer to the amended complaint in state court.

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

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

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

In Delaware, 3M, together with several co-defendants, is defending one putative class action brought by individuals alleging PFAS contamination of their water supply resulting from the operations of local metal plating facilities.

The court granted demurrers filed by Decra and the DuPont entities, while 3M answered the complaint in February 2022.

In February 2023, 3M removed the case to federal court and filed a motion to transfer the case 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 February 2023, 3M removed the case to federal court and filed a motion to transfer the case to the AFFF MDL.

Plaintiff has moved to remand the case to state court.

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.

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

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

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

3M’s motion to transfer the case to the AFFF MDL was denied.

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

The parties engaged in mediation.

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

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 which 3M moved to dismiss in December 2022.

This motion has been fully briefed and is pending the court decision.

In New Jersey, 3M is a defendant in an action brought in federal court by Middlesex Water Company, a publicly traded water utility serving customers in and around certain portions of Middlesex County, New Jersey, which alleges PFAS contamination of its water system.

The Court denied 3M’s motion for summary judgment in October 2022 and a trial date has been set for October 2, 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, which remains pending.

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

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

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

Fact discovery has closed in both the Hopatcong and Pequannock matters, and expert discovery is scheduled to commence in June 2023 (Hopatcong) and July 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 ten of these cases seek medical monitoring and property damages.

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

Plaintiffs in ten of these cases seek medical monitoring and property damages, and a court-ordered settlement conference has been set for May 2023 in those cases.

Plaintiffs in the 17 remaining individual cases in federal court allege personal injuries to themselves or their disabled adult children.

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

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

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

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

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.

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

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

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

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

3M filed a motion to dismiss in March 2022.

This case remains in early stages of litigation.

In 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.

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

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

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

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

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

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

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 remanded the case back to state court in March 2023, and plaintiffs have requested that the state court re-open the matter.

In addition, 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.

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

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

The case has been removed to federal court.

Plaintiff filed a second amended complaint in December 2022, which 3M has moved to dismiss.

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

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

3M has not yet been served in this case.

This case was removed to federal court.

In February 2023, the federal court consolidated this action with a previously-filed federal case involving similar allegations and claims against 3M’s co-defendants.

Thereafter, plaintiffs filed a second amended complaint asserting claims against 3M.

3M filed a motion to dismiss the second amended complaint in March 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 March 2023, plaintiffs filed a third amended complaint limiting the scope of their claims to allegations pertaining to one paper mill and three defendants that allegedly supplied PFAS-containing products to that mill, including 3M.

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.

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

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

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

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

In September 2022, the Sixth Circuit granted the defendants’ request to appeal the district court’s class certification order.

Defendants’ appeal is now fully briefed.

Other PFAS-related Matters

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

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

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

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

In 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.

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 the nature and scope of a draft EPA SDWA Administrative Consent Order received in December 2021 proposing that the Company survey and sample proposed private and public drinking water wells within the vicinity of the Cordova facility and provide alternate drinking water as appropriate.

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

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

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

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

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.

The Company continues to work with EPA and the City of Camanche as it implements the SDWA Administrative Consent Order.

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.

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

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

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 and EPA negotiated a resolution to this matter in which the Company has agreed to pay an administrative civil penalty to resolve this matter.

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

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

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

In February 2020, as previously reported, the Company received an information request from EPA for documents and information related to, among other matters, the Company’s compliance with the Clean Water Act at its facilities that manufacture, process, and use PFAS, including the Decatur, Cordova, and Cottage Grove facilities.

The Company is cooperating with this inquiry and is producing documents and information in response to the request for information.

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.

The Company continues to work with relevant federal and state agencies (including EPA, the U.S.

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The Company periodically examines whether the contingent liabilities related to the environmental matters and litigation described above are probable and reasonably estimable based on experience and ongoing developments in those matters, including discussions regarding negotiated resolutions.

During the first nine months of 2022, as a result of recent developments in ongoing environmental matters and litigation, the Company increased its accrual for PFAS-related other environmental liabilities by $ 626 million since December 31, 2021 and made related payments of $ 394 million.

As of September 30, 2022, the Company had recorded liabilities of $ 644 million for “other environmental liabilities.” The accruals represent the Company’s best estimate of the probable loss in connection with the environmental matters and PFAS-related matters and litigation described above.

During the first three months of 2023, 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 $ 32 million and made related payments of $ 5 million.

As of March 31, 2023, the Company had recorded liabilities of $ 619 million for “other environmental liabilities.” The accruals represent the Company’s estimate of the probable loss in connection with the environmental matters and PFAS-related matters and litigation described above.

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

As of September 30, 2022, the Company had recorded liabilities of $ 29 million for estimated non-PFAS related “environmental remediation” costs to clean up, treat, or remove hazardous substances at current or former 3M manufacturing or third-party sites.

As of March 31, 2023, the Company had recorded liabilities of $ 31 million for estimated non-PFAS related “environmental remediation” costs to clean up, treat, or remove hazardous substances at current or former 3M manufacturing or third-party sites.

The Company evaluates available facts with respect to each individual site each quarter and records liabilities for remediation costs on an undiscounted basis when they are probable and reasonably estimable, generally no later than the completion of feasibility studies or the Company’s commitment to a plan of action.

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The Company has both pre-1986 general and product liability occurrence coverage and post-1985 occurrence reported product liability and other environmental coverage for environmental matters and litigation.

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

As of March 31, 2023, the Company’s receivable for insurance recoveries related to the environmental matters and litigation was $ 8 million.

Various factors could affect the timing and amount of recovery of this and future expected increases in the receivable, including (i) delays in or avoidance of payment by insurers;

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3M 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.

As noted in the Respirator Mask/Asbestos Litigation — Aearo Technologie s 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 .

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

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

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.

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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.

Oral argument took place on April 4, 2023.

In March 2023, the bankruptcy court granted Aearo’s motion to extend the bankruptcy exclusivity period for Aearo to file a plan for reorganization to May 15, 2023.

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

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

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

In April 2023, the plaintiffs filed a motion to declare the mediation at an impasse and noticed it for a hearing on May 15, 2023.

3M continues to support the 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 the Aearo Entities.

The motion to dismiss hearing started on April 19, 2023.

The Bankruptcy Court has indicated that it will find compelling circumstances exist to extend the date of a ruling on the motion to dismiss beyond the required date of within 15 days from the start of the hearing.

As of March 31, 2023 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.

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

As of September 30, 2022, the Company is a named defendant in lawsuits (including 14 putative class actions) in various state and federal courts that purport to represent approximately 132,300 individual claimants making similar allegations.

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.

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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.

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.

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.

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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 reply briefs in the first two appeals filed in October 2022.

The above referenced 16 bellwether trial results do not include 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 of the first and third bellwether trials as noted above are proceeding forward, with oral argument on the two appeals scheduled for May 1, 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 1,500 cases being prepared for trial while the Company's appeals are still pending, the Aearo Entities and the Company adopted a change in strategy for managing these alleged litigation liabilities that led to the Aearo Entities initiating the chapter 11 proceedings as discussed above.

As previously disclosed, 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.

As of March 31, 2023, the Company is a named defendant in lawsuits (including 14 putative class actions) in various state and federal courts that purport to represent approximately 146,000 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 (as described below) to the active docket as the result of the transition orders the MDL judge began issuing at the end of 2021, in addition to claims filed directly on the active docket in 2022.

An administrative docket of approximately 84,000 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.

With respect to the administrative docket, 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.

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.

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

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

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.

The MDL 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.

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.

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

The Eleventh Circuit scheduled oral argument for this appeal for June 27, 2023.

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

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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.

Activity in the MDL is stayed pending resolution of this appeal.

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

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

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

As of September 30, 2022, the Company was a named defendant in approximately 5,264 lawsuits in the United States and one Canadian putative class action with a single named plaintiff, alleging that the Bair Hugger™ patient warming system caused a surgical site infection.

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

As of March 31, 2023, the Company was a named defendant in approximately 5,208 lawsuits in the United States and one Canadian putative class action with a single named plaintiff, alleging that the Bair Hugger™ patient warming system caused a surgical site infection.

As previously disclosed, 3M is a named defendant in lawsuits in federal courts involving over 5,000 plaintiffs alleging that they underwent various joint arthroplasty, cardiovascular, and other surgeries and later developed surgical site infections due to the use of the Bair Hugger™ patient warming system.

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

Judicial Panel on Multidistrict Litigation (JPML) consolidated all cases pending in federal courts to the U.S.

The JPML consolidated all cases pending in federal courts to the U.S.

District Court for the District of Minnesota to be managed in a multi-district litigation (MDL) proceeding.

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

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

Mediation sessions took place in May and August 2022.

Also, in August 2021, the Eighth Circuit court separately affirmed the 2018 jury verdict in 3M’s favor in the only bellwether trial in the MDL.

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

Mediation sessions took place in May and August 2022 without success in resolving the litigation.

The MDL court has assigned a new mediator to facilitate discussions of the litigation and possible resolution.

In April 2023, plaintiffs filed a motion to disqualify the judge and magistrate judge overseeing the MDL.

In addition to the federal cases, there are eight state court cases relating to the Bair Hugger patient warming system.

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

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

The other Missouri case is scheduled for April 2023.

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

The Hidalgo County trial is scheduled for December 2022.

The trial court denied plaintiff’s motion for a new trial, and plaintiffs have filed a notice of appeal.

Another Missouri case is scheduled for trial in September 2024.

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

There have been state court cases filed in Pennsylvania and Montana that 3M has removed or will seek to remove to federal court and seek to have transferred to the MDL.

3M resolved for an immaterial amount the final state court case, which was filed in Hidalgo County, Texas.

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

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

Oral argument is set for January 2023.

Oral argument was held in January 2023, and the motion to dismiss was granted in March 2023.

Federal False Claims Act / Qui Tam Litigation

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District Court for the Central District of California.

The complaints contain allegations that the KCI Defendants violated the federal False Claims Act by submitting false or fraudulent claims to federal healthcare programs by billing for V.A.C.® Therapy in a manner that was not consistent with the Local Coverage Determinations issued by the Durable Medical Equipment Medicare Administrative Contractors and seek monetary damages.

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

Following preliminary motions practice, two appeals, and discovery in the Godecke case, relator-plaintiff Godecke and the KCI Defendants reached a settlement in early 2022, which included a settlement payment by the KCI Defendants to relator-plaintiff of an agreed amount and a complete dismissal of all claims with prejudice by both parties and without prejudice to the United States.

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

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

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

The district court held a status conference in January 2023 where no case deadlines were set;

the litigation remains in a pre-trial stage.

The KCI Defendants filed a renewed motion for summary judgment in March 2023.

For the KCI-related 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.

The Company is not able to estimate a possible loss or range of possible loss in excess of the recorded liability at this time.

Compliance Matter

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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.

Stock-Based Compensation

At the May 2021 Annual Meeting, the shareholders approved the Amended and Restated 3M Company 2016 Long-Term Incentive Plan (LTIP), which included an increase of 26,633,508 in the number of shares available for issuance.

Awards may be issued in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock awards, and performance units and performance shares.

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

The Company’s annual stock option and restricted stock unit grant is made in February to provide a strong and immediate link between the performance of individuals during the preceding year and the size of their annual stock compensation grants.

The grant to eligible employees uses the closing stock price on the grant date.

Accounting rules require recognition of expense under a non-substantive vesting period approach, requiring compensation expense recognition when an employee is eligible to retire.

Employees are considered eligible to retire at age 55 and after having completed ten years of service.

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.

In addition to the annual grants, the Company makes other minor grants of stock options, restricted stock units and other stock-based grants.

The Company issues cash settled restricted stock units and stock appreciation rights in certain countries.

These grants do not result in the issuance of common stock and are considered immaterial by the Company.

Amounts recognized in the financial statements with respect to stock-based compensation programs, which include stock options, restricted stock, restricted stock units, performance shares and the General Employees’ Stock Purchase Plan (GESPP), are provided in the following table.

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

Stock-Based Compensation Expense

Three months ended

September 30, Nine months ended

September 30,

(Millions) 2022 2021 2022 2021

Cost of sales $ 8 $ 8 $ 41 $ 39

Selling, general and administrative expenses 31 30 145 151

Research, development and related expenses 5 5 40 37

Stock-based compensation expenses 44 43 226 227

Income tax benefits ( 10 ) ( 13 ) ( 56 ) ( 89 )

Stock-based compensation expenses (benefits), net of tax $ 34 $ 30 $ 170 $ 138

Stock Option Program

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

(Options in thousands) Number of

Options Weighted

Exercise Price Weighted Average

Remaining Contractual Life (months) Aggregate

Intrinsic Value

Under option —

January 1 34,560 $ 163.52

Granted 3,776 162.39

Exercised ( 1,722 ) 98.27

Forfeited ( 537 ) 178.08

September 30 36,077 166.30 60 $ 17

Options exercisable

September 30 28,670 $ 166.58 49 $ 17

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

As of September 30, 2022, there was $ 59 million of compensation expense that has yet to be recognized related to non-vested stock option based awards.

This expense is expected to be recognized over the remaining weighted-average vesting period of 22 months.

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

Cash received from options exercised was $ 166 million and $ 425 million for the nine months ended September 30, 2022 and 2021, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the exercise of employee stock options were $ 22 million and $ 65 million for the nine months ended September 30, 2022 and 2021, respectively.

For the primary 2022 annual stock option grant, the weighted average fair value at the date of grant was calculated using the Black-Scholes option-pricing model and the assumptions that follow.

Stock Option Assumptions

Exercise price $ 162.41

Risk-free interest rate 1.9 %

Dividend yield 2.9 %

Expected volatility 21.8 %

Expected life (months) 83

Black-Scholes fair value $ 25.34

Expected volatility is a statistical measure of the amount by which a stock price is expected to fluctuate during a period.

For the 2022 annual grant date, the Company estimated the expected volatility based upon the following three volatilities of 3M stock:

the median of the term of the expected life rolling volatility;

the median of the most recent term of the expected life volatility;

and the implied volatility on the grant date.

The expected term assumption is based on the weighted average of historical grants.

Restricted Stock and Restricted Stock Units

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

(Shares in thousands) Number of Shares Weighted Average

Grant Date Fair Value

Nonvested balance —

As of January 1 1,987 $ 175.96

Granted 1,082 160.98

Vested ( 530 ) 199.03

Forfeited ( 101 ) 167.18

As of September 30

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

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

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

The Company’s actual tax benefits realized for the tax deductions related to the vesting of restricted stock and restricted stock units was $ 16 million and $ 15 million for the nine months ended September 30, 2022 and 2021, respectively.

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

Dividend equivalents equal to the dividends payable on the same number of shares of 3M common stock accrue on these restricted stock units during the vesting period, although no dividend equivalents are paid on any of these restricted stock units that are forfeited prior to the vesting date.

Dividends are paid out in cash at the vest date on restricted stock units.

Since the rights to dividends are forfeitable, there is no impact on basic earnings per share calculations.

Weighted average restricted stock unit shares outstanding are included in the computation of diluted earnings per share.

Performance Shares

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

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.

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.

The performance share grants accrue dividends;

therefore, the grant date fair value is equal to the closing stock price on the date of grant.

Since the rights to dividends are forfeitable, there is no impact on basic earnings per share calculations.

Weighted average performance shares whose performance period is complete are included in computation of diluted earnings per share.

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

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

Undistributed balance —

As of January 1 481 $ 175.12

Granted 269 144.77

Distributed ( 116 ) 207.49

Performance change ( 166 ) 153.04

Forfeited ( 37 ) 156.76

As of September 30

As of September 30, 2022, there was $ 14 million of compensation expense that has yet to be recognized related to performance shares.

This expense is expected to be recognized over the remaining weighted-average earnings period of 16 months.

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

The Company’s actual tax benefits realized for the tax deductions related to the distribution of performance shares were $ 4 million and $ 4 million for the nine months ended September 30, 2022 and 2021, respectively.

The Company is in discussions related to potential resolution.

Business Segments

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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.

Transactions among reportable segments are recorded at cost.

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).

3M is an integrated enterprise characterized by substantial intersegment cooperation, cost allocations and inventory transfers.

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

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

Effective in the first quarter of 2023, the measure of segment operating performance and segment composition 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.

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

Eliminating inclusion of dual credit in measure of segment operating performance

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

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

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

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

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

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

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

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

3M's business segment operating performance measure with respect to its Safety and Industrial business segment was updated relative to litigation-related costs for 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 14) net costs for significant litigation associated with Combat Arms Earplugs and Aearo-respirator mask/asbestos matters are reflected in Corporate and Unallocated.

Reflecting gains/losses from sale of property, plant and equipment (PPE) and other assets within Corporate and Unallocated Change

3M updated its business segment operating performance measure to reflect all gains/losses from sales of PPE and other assets within Corporate and Unallocated.

Previously, certain of these gains/losses were included in 3M’s business segments’ operating performance.

Movement of certain businesses between segments

The businesses associated with two groups of products (each with approximately $ 25 million in sales) were realigned with one moving from the Consumer business segment to the Health Care business segment and the other moving from the Health Care business segment to the Consumer business segment.

Also effective in the first quarter of 2023, the Consumer business segment re-aligned from four divisions to the following three divisions:

Home, Health and Auto Care;

Construction and Home Improvement Markets;

and Stationery and Office.

Business Segment Information

(Millions) Three months ended

September 30, Nine months ended

September 30,

Net Sales 2023 2022

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Three months ended

September 30, Nine months ended

September 30,

Operating Performance 2023 2022

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Divestiture costs ( 102 ) —

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

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

Russia exit charges ( 109 ) — ( 109 ) —

Total corporate special items ( 184 ) ( 187 )

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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.

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, gains/losses from sales of PPE and other assets, and other net costs that 3M may choose not to allocate directly to its business segments.

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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements