What changed in this filing

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Item 1. Financial Statements

2023-07-25 compared with 2023-04-25 · 456 added, 336 removed, 1229 unchanged (39% of the section changed)

1 unchanged sentence

3M Company and Subsidiaries

Consolidated Statement of Income

Consolidated Statement of Income (Loss)

Three months ended

June 30, Six months ended

(Millions, except per share amounts) 2023 2022 2023 2022

5 unchanged sentences

Total operating expenses 17,283 8,592 24,073 15,780

Operating income 1,241 1,641

Operating income (loss) ( 8,958 ) 110 ( 7,717 ) 1,751

Other expense (income), net 65 50 117 88

Income before income taxes 1,189 1,603

Provision for income taxes 210 302

Income of consolidated group 979 1,301

Income (loss) before income taxes ( 9,023 ) 60 ( 7,834 ) 1,663

Provision (benefit) for income taxes ( 2,184 ) ( 23 ) ( 1,974 ) 279

Income (loss) of consolidated group ( 6,839 ) 83 ( 5,860 ) 1,384

Income (loss) from unconsolidated subsidiaries, net of taxes 3 ( 1 ) 5 1

Net income including noncontrolling interest 981 1,303

Net income (loss) including noncontrolling interest ( 6,836 ) 82 ( 5,855 ) 1,385

Net income (loss) attributable to noncontrolling interest 5 4 10 8

Net income attributable to 3M $ 976 $ 1,299

Net income (loss) attributable to 3M $ ( 6,841 ) $ 78 $ ( 5,865 ) $ 1,377

Weighted average 3M common shares outstanding — basic 553.9 571.0 553.3 571.6

Earnings per share attributable to 3M common shareholders — basic $ 1.77 $ 2.27

Earnings (loss) per share attributable to 3M common shareholders — basic $ ( 12.35 ) $ 0.14 $ ( 10.60 ) $ 2.41

Weighted average 3M common shares outstanding — diluted 553.9 572.7 553.3 573.8

Earnings per share attributable to 3M common shareholders — diluted $ 1.76 $ 2.26

Earnings (loss) per share attributable to 3M common shareholders — diluted $ ( 12.35 ) $ 0.14 $ ( 10.60 ) $ 2.40

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

3M Company and Subsidiaries

Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income (Loss)

Three months ended

June 30, Six months ended

(Millions) 2023 2022 2023 2022

Net income including noncontrolling interest $ 981 $ 1,303

Net income (loss) including noncontrolling interest $ ( 6,836 ) $ 82 $ ( 5,855 ) $ 1,385

Other comprehensive income (loss), net of tax:

9 unchanged sentences

Consolidated Balance Sheet

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

(Dollars in millions, except per share amount) June 30, 2023 December 31, 2022

Current assets

34 unchanged sentences

944,033,056 shares issued

Shares outstanding - March 31, 2023:

Shares outstanding - June 30, 2023:

Shares outstanding - December 31, 2022:

3 unchanged sentences

( 32,926 ) ( 33,255 )

Shares at March 31, 2023:

Shares at June 30, 2023:

Shares at December 31, 2022:

7 unchanged sentences

Consolidated Statement of Cash Flows

Three months ended

Six months ended

(Millions) 2023 2022

Cash Flows from Operating Activities

Net income including noncontrolling interest $ 981 $ 1,303

Adjustments to reconcile net income including noncontrolling interest to net cash provided by operating activities

Net income (loss) including noncontrolling interest $ ( 5,855 ) $ 1,385

Adjustments to reconcile net income (loss) including noncontrolling interest to net cash provided by operating activities

Depreciation and amortization 915 921

16 unchanged sentences

Proceeds from sale of businesses, net of cash sold 3 13

Other — net 37 ( 13 )

Net cash provided by (used in) investing activities ( 619 ) ( 814 )

22 unchanged sentences

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).

In the second quarter of 2023, 3M re-consolidated the Aearo Technology and certain of its related entities (collectively, the "Aearo Entities") as a result of the court dismissal of their voluntary bankruptcy proceedings.

3M had previously deconsolidated these entities in the third quarter of 2022.

The Aearo Entities have appealed the court’s dismissal decision.

See additional information in Note 14.

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.

1 unchanged sentence

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

Earnings Per Share

Earnings (Loss) 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 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:

Earnings Per Share Computations

Certain options outstanding under these stock-based compensation plans were not included in the computation of diluted earnings (loss) per share attributable to 3M common shareholders because they would have had an anti-dilutive effect of 36.9 million and 36.5 million average options for the three and six months ended June 30, 2023, respectively, and 31.9 million and 27.5 million average options for the three and six months ended June 30, 2022, respectively.

In periods of net losses, these antidilutive effects include all weighted option shares outstanding and weighted average shares is the same for the calculations of both basic and diluted loss per share.

The computations for basic and diluted earnings (loss) per share follow:

Earnings (Loss) Per Share Computations

Three months ended

June 30, Six months ended

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

Net income attributable to 3M $ 976 $ 1,299

Net income (loss) attributable to 3M $ ( 6,841 ) $ 78 $ ( 5,865 ) $ 1,377

Denominator for weighted average 3M common shares outstanding – basic

553.9 571.0 553.3 571.6

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

Denominator for weighted average 3M common shares outstanding – diluted

Earnings per share attributable to 3M common shareholders – basic

553.9 572.7 553.3 573.8

Earnings per share attributable to 3M common shareholders – diluted

$ 1.76 $ 2.26

Earnings (loss) per share attributable to 3M common shareholders — basic $ ( 12.35 ) $ 0.14 $ ( 10.60 ) $ 2.41

Earnings (loss) per share attributable to 3M common shareholders — diluted $ ( 12.35 ) $ 0.14 $ ( 10.60 ) $ 2.40

Supplier Finance Program Obligations

2 unchanged sentences

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.

3M's outstanding balances of confirmed invoices in the programs as of June 30, 2023 and December 31, 2022 were approximately $ 290 million and $ 260 million, respectively.

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

3 unchanged sentences

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

Deferred revenue (current portion) as of March 31, 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.

Deferred revenue (current portion) as of June 30, 2023 and December 31, 2022 was $ 521 million and $ 538 million, respectively.

Approximately $ 150 million and $ 350 million of the December 31, 2022 balance was recognized as revenue during the three and six months ended June 30, 2023, respectively, while approximately $ 140 million and $ 340 million of the December 31, 2021 balance was recognized as revenue during the three and six months ended June 30, 2022, respectively.

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 $ 139 million and $ 136 million during the three months ended March 31, 2023 and 2022, respectively.

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 146 million and $ 285 million during the three and six months ended June 30, 2023, respectively, and $ 148 million and $ 284 million during the three and six months ended June 30, 2022, respectively.

Disaggregated revenue information:

1 unchanged sentence

Three months ended

June 30, Six months ended

Net Sales (Millions) 2023 2022 2023 2022

20 unchanged sentences

Total Health Care Business Group 2,075 2,179 4,085 4,307

Home, Health and Auto Care 400 437

Construction and Home Improvement Markets 542 560 1,071 1,163

Home, Health and Auto Care 428 428 828 865

Stationery and Office 323 342 586 611

3 unchanged sentences

Three months ended

June 30, Six months ended

Net Sales (Millions) 2023 2022 2023 2022

3 unchanged sentences

Worldwide $ 8,325 $ 8,702 $ 16,356 $ 17,531

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

Americas included United States net sales to customers of $ 3.8 billion and $ 7.4 billion for the three and six months ended June 30, 2023, respectively, and $ 3.9 billion and $ 7.5 billion for the three and six months ended June 30, 2022, respectively.

Acquisitions and Divestitures

4 unchanged sentences

2023 acquisitions:

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

There were no acquisitions that closed during the six months ended June 30, 2023.

Divestitures:

2 unchanged sentences

2023 divestitures and previously announced divestitures:

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

In May 2023, 3M entered into agreements to sell the assets associated with its dental local anesthetic business (part of the Health Care business) to Pierrel S.p.A.

for $ 70 million in cash, subject to closing and other adjustments.

The dental local anesthetic business has annual sales of approximately $ 30 million.

This transaction is expected to close in the third quarter of 2023.

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

5 unchanged sentences

Operating income and held-for-sale amounts:

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.

With respect to the businesses above, operating 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 there were immaterial amounts of assets and liabilities associated with disposal groups classified as held-for-sale as of June 30, 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 three months of 2023.

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

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

3 unchanged sentences

Translation and other 12 9 56 2 79

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.

Balance as of June 30, 2023 $ 4,521 $ 1,510 $ 6,571 $ 267 $ 12,869

Accounting standards require that goodwill be tested for impairment annually and between annual tests in certain circumstances such as when events or conditions indicate that goodwill assigned to a reporting unit may be impaired.

At 3M, reporting units correspond to a division.

2 unchanged sentences

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.

As of June 30, 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 follow:

(Millions) March 31,

(Millions) June 30,

2023 December 31,

17 unchanged sentences

Three months ended

June 30, Twelve months ended

(Millions) 2023 2022 2023 2022

Amortization expense $ 121 $ 129 $ 243 $ 260

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

Expected amortization expense for acquired amortizable intangible assets recorded as of June 30, 2023 follows:

(Millions) Remainder of 2023

7 unchanged sentences

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.

During the first six months of 2023, management approved and committed to undertake associated actions impacting approximately 5,100 positions resulting in a pre-tax charge of $ 52 million and $ 212 million in the first and second quarters of 2023, respectively.

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

1 unchanged sentence

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:

(Millions) Three months ended March 31, 2023

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

(Millions) Three months ended June 30, 2023 Six months ended June 30, 2023

Cost of sales $ 47 $ 63

2 unchanged sentences

Total operating income impact $ 212 $ 264

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

Three months ended March 31, 2023

(Millions) Employee Related

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

Three months ended June 30, 2023 Six months ended June 30, 2023

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

Safety and Industrial $ 44 $ — $ 44 $ 54 $ — $ 54

1 unchanged sentence

Health Care 10 — 10 12 — 12

Consumer 13 — 13 16 — 16

Corporate and unallocated 100 20 120 125 20 145

Total operating expense $ 192 $ 20 $ 212 $ 244 $ 20 $ 264

Restructuring actions, including cash impacts, follow:

(Millions) Employee-Related

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

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

Expense incurred in the first quarter of 2023 $ 52 $ — $ 52

Incremental expense incurred in the second quarter of 2023 192 20 212

Non-cash changes — ( 20 ) ( 20 )

Cash payments ( 56 ) — ( 56 )

Accrued restructuring action balance as of March 31, 2023

Accrued restructuring action balance as of June 30, 2023

$ 188 $ — $ 188

2022 Restructuring Actions

7 unchanged sentences

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 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

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

Supplemental Income (Loss) Statement Information

Other expense (income), net consists of the following:

Three months ended

June 30, Six months ended

(Millions) 2023 2022 2023 2022

5 unchanged sentences

Refer to Note 11 for additional details on the components of pension and postretirement net periodic benefit costs.

Supplemental Equity and Comprehensive Income Information

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

Supplemental Equity and Comprehensive Income (Loss) Information

Cash dividends declared and paid totaled $ 1.50 and $ 1.49 per share for the first and second quarters of 2023 and 2022, respectively, or $ 3.00 and $ 2.98 per share for the first six months of 2023 and 2022, respectively.

Consolidated Changes in Equity

Three months ended March 31, 2023

Three months ended June 30, 2023

3M Company Shareholders

(Millions) Total Common

Paid-in Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Income (Loss) Non-

Balance at December 31, 2022

(Millions) Total Common Stock and Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Non-controlling Interest

Balance at March 31, 2023

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

Net income (loss) ( 6,836 ) ( 6,841 ) 5

Other comprehensive income (loss), net of tax:

Cumulative translation adjustment 25 24 1

Defined benefit pension and post-retirement plans adjustment 50 50

Cash flow hedging instruments 23 23

Total other comprehensive income (loss), net of tax 98

Dividends declared ( 828 ) ( 828 )

Stock-based compensation 42 42

Issuances pursuant to stock option and benefit plans 30 ( 7 ) 37

Balance at June 30, 2023

$ 7,857 $ 6,867 $ 40,290 $ ( 32,926 ) $ ( 6,433 ) $ 59

Three months ended June 30, 2022

3M Company Shareholders

(Millions) Total Common Stock and Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Non-controlling Interest

Balance at March 31, 2022

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

Net income 82 78 4

6 unchanged sentences

Stock-based compensation 48 48

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

Balance at June 30, 2022

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

Six months ended June 30, 2023

3M Company Shareholders

(Millions) Total Common Stock and Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Non-controlling Interest

Balance at December 31, 2022

$ 14,770 $ 6,700 $ 47,950 $ ( 33,255 ) $ ( 6,673 ) $ 48

Net income (loss) ( 5,855 ) ( 5,865 ) 10

Other comprehensive income (loss), net of tax:

Cumulative translation adjustment 141 140 1

Defined benefit pension and post-retirement plans adjustment 101 101

Cash flow hedging instruments ( 1 ) ( 1 )

Total other comprehensive income (loss), net of tax 241

Dividends declared ( 1,655 ) ( 1,655 )

Stock-based compensation 167 167

Reacquired stock ( 29 ) ( 29 )

Issuances pursuant to stock option and benefit plans 218 ( 140 ) 358

Balance at March 31, 2023

Balance at June 30, 2023

$ 7,857 $ 6,867 $ 40,290 $ ( 32,926 ) $ ( 6,433 ) $ 59

Three months ended March 31, 2022

Six months ended June 30, 2022

3M Company Shareholders

(Millions) Total Common

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Income (Loss) Non-

(Millions) Total Common Stock and Additional Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) Non-controlling Interest

Balance at December 31, 2021

10 unchanged sentences

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

Balance at March 31, 2022

Balance at June 30, 2022

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

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

Three months ended March 31, 2023

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

Income (Loss)

Balance at December 31, 2022, net of tax:

Three months ended June 30, 2023

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

Balance at March 31, 2023, net of tax:

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

5 unchanged sentences

Total other comprehensive income (loss), net of tax 24 50 23 97

Balance at June 30, 2023, net of tax:

$ ( 2,688 ) $ ( 3,737 ) $ ( 8 ) $ ( 6,433 )

Three months ended June 30, 2022

Balance at March 31, 2022, net of tax:

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

Three months ended March 31, 2022

(Millions) Cumulative

Adjustment Defined Benefit

Postretirement

Adjustment Cash Flow

Gain (Loss) Total

Comprehensive

Income (Loss)

Other comprehensive income (loss), before tax:

Amounts before reclassifications ( 664 ) — 128 ( 536 )

Amounts reclassified out — 112 ( 15 ) 97

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

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

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

Balance at June 30, 2022, net of tax:

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

Six months ended June 30, 2023

Balance at December 31, 2022, net of tax:

6 unchanged sentences

Total other comprehensive income (loss), net of tax 140 101 ( 1 ) 240

Balance at March 31, 2022, net of tax:

Balance at June 30, 2023, net of tax:

$ ( 2,688 ) $ ( 3,737 ) $ ( 8 ) $ ( 6,433 )

Six months ended June 30, 2022

Balance at December 31, 2021, net of tax:

$ ( 1,943 ) $ ( 4,753 ) $ ( 54 ) $ ( 6,750 )

Other comprehensive income (loss), before tax:

Amounts before reclassifications ( 814 ) — 134 ( 680 )

Amounts reclassified out — 227 ( 22 ) 205

Total other comprehensive income (loss), before tax ( 814 ) 227 112 ( 475 )

Tax effect ( 57 ) ( 55 ) ( 25 ) ( 137 )

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

Balance at June 30, 2022, net of tax:

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

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

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

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 Statement

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

Reclassifications out of Accumulated Other Comprehensive Income (Loss) Attributable to 3M

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

Three months ended

June 30, Six months ended

(Millions) 2023 2022 2023 2022

Cumulative translation adjustment

Reclassification adjustment associated with Russia (see Note 13)

$ ( 39 ) $ — $ ( 39 ) $ — Selling, general and administrative expenses

Total before tax ( 39 ) — ( 39 ) —

Tax effect — — — —

Net of tax ( 39 ) — ( 39 ) —

Defined benefit pension and postretirement plans adjustments

14 unchanged sentences

Total reclassifications for the period, net of tax $ ( 57 ) $ ( 73 ) ( 77 ) $ ( 155 )

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.

The effective tax rate for the second quarter of 2023 was 24.2 percent on a pre-tax loss, compared to ( 38.3 ) percent on pre-tax income in the prior year.

The primary factor that impacted the comparison of these rates was the second quarter 2022 charge related to steps toward resolving Combat Arms Earplugs litigation (see Note 14).

The effective tax rate for the first six months of 2023 was 25.2 percent, compared to 16.8 percent in the prior year.

The primary factor that impacted the comparison of the six-month rates was the second quarter 2023 charge related to the proposed settlement agreement with public water systems in the United States regarding PFAS (discussed in Note 14).

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June 30, 2023 and December 31, 2022 are $ 989 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 March 31, 2023 and December 31, 2022, the Company had valuation allowances of $ 114 million and $ 115 million on its deferred tax assets, respectively.

At June 30, 2023, 3M’s deferred tax assets, a component of other assets on the consolidated balance sheet, also included a balance of approximately $ 2.4 billion as a result of the pre-tax charge related to the proposed settlement agreement announced in the second quarter of 2023 with public water systems in the United States regarding PFAS (see Note 14).

As of June 30, 2023 and December 31, 2022, the Company had valuation allowances of $ 128 million and $ 115 million on its deferred tax assets, respectively.

Marketable Securities

1 unchanged sentence

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

(Millions) March 31, 2023 December 31, 2022

(Millions) June 30, 2023 December 31, 2022

Commercial paper $ 10 $ 213

Certificates of deposit/time deposits 42 21

treasury securities — —

municipal securities 4 4

3 unchanged sentences

Total marketable securities $ 79 $ 261

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.

At June 30, 2023 and December 31, 2022, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material.

The balances at June 30, 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) March 31, 2023

(Millions) June 30, 2023

Due in one year or less $ 56

4 unchanged sentences

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.

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

In May 2023, 3M repaid 600 million euros 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.

The Company had $ 1.8 billion in commercial paper outstanding at June 30, 2023, compared to no commercial paper outstanding as of December 31, 2022.

In May 2023, 3M entered into a $ 4.25 billion five-year revolving credit facility expiring in 2028;

the facility was amended in July 2023.

The revolving credit agreement includes a provision under which 3M may request an increase of up to $ 1.0 billion (at lender’s discretion), bringing the total facility up to $ 5.25 billion.

The agreement replaced the amended and restated $ 3.0 billion, five-year revolving credit agreement and the $ 1.25 billion 364-day credit facility that would have expired in November 2024 and November 2023, respectively.

The credit facility was undrawn at June 30, 2023.

Under the $ 4.25 billion credit facility, the Company is required to maintain its EBITDA to Interest Ratio as of the end of each fiscal quarter at not less than 3.0 to 1.

This is calculated (based on amounts defined in the amended agreement) as the ratio of consolidated total EBITDA for the four consecutive quarters then ended to total interest expense on all funded debt for the same period.

At June 30, 2023, this ratio, reflecting the July 2023 amendment, was approximately 17 to 1.

Debt covenants do not restrict the payment of dividends.

Future Maturities of Long-term Debt

Maturities of long-term debt in the table below reflect the impact of put provisions associated with certain debt instruments and are net of the unamortized debt issue costs such that total maturities equal the carrying value of long-term debt as of March 31, 2023.

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

The maturities of long-term debt for the periods subsequent to June 30, 2023 are as follows (in millions):

2024 2025 2026 2027 2028 After 2028

5 unchanged sentences

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

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

Components of net periodic benefit cost and other supplemental information for the three and six months ended June 30, 2023 and 2022 follow:

Benefit Plan Information

Three months ended March 31,

Qualified and Non-qualified

Pension Benefits Postretirement

Three months ended June 30,

Qualified and Non-qualified Pension Benefits Postretirement Benefits

United States International

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Total net periodic benefit cost (benefit) $ 32 $ 27 $ 2 $ 5 $ 4 $ 8

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

Six months ended June 30,

Qualified and Non-qualified Pension Benefits Postretirement Benefits

United States International

(Millions) 2023 2022 2023 2022 2023 2022

Net periodic benefit cost (benefit)

Operating expense

Service cost $ 86 $ 128 $ 39 $ 68 $ 12 $ 21

Non-operating expense

Interest cost 331 208 109 64 45 26

Expected return on plan assets ( 488 ) ( 482 ) ( 150 ) ( 142 ) ( 38 ) ( 35 )

Amortization of transition asset — — 1 1 — —

Amortization of prior service benefit ( 12 ) ( 12 ) 1 — ( 16 ) ( 16 )

Amortization of net actuarial loss 147 212 4 20 4 20

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

Total non-operating expense (benefit) ( 22 ) ( 74 ) ( 35 ) ( 57 ) ( 5 ) ( 3 )

Total net periodic benefit cost (benefit) $ 64 $ 54 $ 4 $ 11 $ 7 $ 18

For the six months ended June 30, 2023 contributions totaling $ 53 million were made to the Company’s U.S.

and international pension plans and $ 4 million to its postretirement plans.

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• 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.

Refer to the section below titled Statement of Income (Loss) 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 (loss) for amounts of gains and losses related to derivative instruments designated as cash flow or fair value hedges (along with similar information relative to the hedged items) and derivatives not designated as hedging instruments.

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

Cash Flow Hedges:

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.

As of June 30, 2023, the Company had a balance of $ 8 million associated with the after-tax net unrealized loss associated with cash flow hedging instruments recorded in accumulated other comprehensive income (loss).

This includes a remaining balance of $ 90 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.

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

Based on exchange rates as of June 30, 2023, of the total after-tax net unrealized balance as of June 30, 2023, 3M expects to reclassify approximately $ 75 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 (loss) related to derivative instruments designated as cash flow hedges is provided in the following table.

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

Three months ended

June 30, Six months ended

(Millions) 2023 2022 2023 2022

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(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,

Location on the Consolidated Balance Sheet June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

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Net Investment Hedges:

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.

At June 30, 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 1.8 billion euros.

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

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

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

Pretax Gain (Loss) Recognized as Cumulative Translation within Other Comprehensive Income

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

Pretax Gain (Loss) Recognized as Cumulative Translation within Other Comprehensive Income (Loss)

Three months ended

June 30, Six months ended

(Millions) 2023 2022 2023 2022

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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

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

Location and Amount of Gain (Loss) Recognized in Income

Three months ended March 31,

Cost of sales Other expense (income), net

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

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

Location and Amount of Gain (Loss) Recognized in Income (Loss)

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

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

(Millions) 2023 2022 2023 2022 2023 2022 2023 2022

Information regarding cash flow and fair value hedging relationships:

Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of derivatives are recorded $ 4,613 $ 4,826 $ 52 $ 38

Total amounts of income and expense line items presented in the consolidated statement of income (loss) in which the effects of derivatives are recorded $ 4,606 $ 5,093 $ 65 $ 50 $ 9,219 $ 9,919 $ 117 $ 88

Gain or (loss) on cash flow hedging relationships:

Foreign currency forward/option contracts:

Amount of gain or (loss) reclassified from accumulated other comprehensive income into income 43 9 — —

Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) into income 42 17 — — 85 26 — —

Interest rate contracts:

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2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

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

(Millions) March 31,

(Millions) June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

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

(Millions) March 31,

(Millions) June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

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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 $ 36 million and $ 17 million for the three months ended March 31, 2023 and 2022, respectively.

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, increased pre-tax income (loss) by approximately $ 38 million and $ 74 million for the three and six months ended June 30, 2023, respectively, and increased pre-tax income (loss) by approximately $ 10 million and $ 27 million for the three and six months ended June 30, 2022, respectively.

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

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Level 1 Level 2 Level 3

Description (Millions) March 31,

Description (Millions) June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

2022 March 31,

2022 June 30,

2023 December 31,

3 unchanged sentences

Certificates of deposit/time deposits 42 21 — — 42 21 — —

treasury securities — — — — — — — —

municipal securities 27 27 — — — — 27 27

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municipal securities only Three months ended

June 30, Six months ended

(Millions) 2023 2022 2023 2022

1 unchanged sentence

Total gains or losses:

Included in earnings — —

Included in other comprehensive income — —

Included in earnings (losses) — — — —

Included in other comprehensive income (loss) — — — —

Purchases and issuances — — — —

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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 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.

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the first six 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, recorded 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 would be eliminated upon sale was included and a current liability of approximately $ 50 million was recorded largely representing a reserve against the balance of cumulative translation adjustment.

In the second quarter of 2023, 3M closed on the sale of these subsidiaries, resulting in an immaterial gain after reversing this reserve while reclassifying the balance of cumulative translation adjustment into earnings.

Fair Value of Financial Instruments:

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

(Millions) Carrying Value Fair Value Carrying Value Fair Value

39 unchanged sentences

Respirator Mask/Asbestos Litigation

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.

As of June 30, 2023, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 4,066 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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Since the second half of 2020, the Company has experienced an increase in the number of cases filed that allege injuries from exposures to coal mine dust;

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

that increase represents a 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.

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These developments include, but are not limited to, significant changes in (i) the key assumptions underlying the Company’s accrual, including the number of future claims, the nature and mix of those claims, 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.

As a result of its review of its respirator mask/asbestos liabilities, of pending and expected lawsuits and of the cost of resolving claims of persons who claim more serious injuries, including mesothelioma, other malignancies, and black lung disease, the Company increased its accruals in the first six months of 2023 for respirator mask/asbestos liabilities by $ 33 million.

In the first six months of 2023, the Company made payments for legal defense costs and settlements of $ 49 million related to the respirator mask/asbestos litigation.

As of June 30, 2023, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 588 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.

As of June 30, 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.

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

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

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

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

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

Bankruptcy Court had stayed the Aearo respirator mask/asbestos litigation matters during the chapter 11 proceedings.

With the June 2023 dismissal of the Aearo bankruptcy that is described in the Product Liability Litigation section below, the stay of respirator mask/asbestos litigation is no longer in effect.

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

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

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

During the voluntary chapter 11 proceedings, 3M's accrual relating to the commitments associated with funding that trust included Aearo respirator mask/asbestos matters.

However, following the June 2023 dismissal of the Aearo bankruptcy, the Company, through its Aearo subsidiary, had accruals of $ 44 million as of June 30, 2023 for product liabilities and defense costs related to current and future Aearo-related asbestos, silica-related and coal mine dust claims.

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

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

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

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

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

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

The Company continues to manufacture a variety of shorter chain length PFAS compounds, including, but not limited to, pre-cursor compounds to perfluorobutane sulfonate (PFBS).

The Company continues to manufacture a variety of shorter chain length PFAS compounds, including, but not limited to, pre-cursor compounds to PFBS.

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

14 unchanged sentences

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.

In February 2023, an EU-wide restriction on the manufacturing, use, placing on the market and import of certain perfluorocarboxylic acids (C9-C14 PFCAs), which are PFAS substances, went into effect.

In February 2023, the European Chemicals Agency 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.

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 and manufacturers of PFAS containing products 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, perfluorononanoic acid ("PFNA"), and, 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.

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The implementation of process improvements and analytical work is ongoing.

Dyneon and the predecessor operators of the Gendorf facility have commissioned a voluntary feasibility study by an independent soil consultant and shared with the competent authority the initial study including soil management concept related to the Chemical Park in which Dyneon and other companies operate their plants.

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.

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

3M Belgium testified at Flemish parliamentary committee hearings in September and December 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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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.

In June 2023, the federal judicial police requested additional documents following earlier requests for documents that 3M Belgium had provided, and 3M Belgium has complied with the request for additional documents.

Safety measures – wastewater discharge.

29 unchanged sentences

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.

In July 2023, the Flemish Environmental Inspectorate issued an infraction report stating the actions taken are insufficient to ensure all necessary measures to reduce dust formation from the facility, and seeking a response from 3M Belgium by August 1.

3M Belgium has implemented additional control measures to address potential dust formation and is working to outline more structural actions to reduce potential dust formation.

Although the authorities have approved the restart and/or continued operation of key production processes, a negative development in their ongoing oversight review, such as the infraction reports referenced above, could impact or delay 3M Belgium's ability to fully restart all production processes, which in turn 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 impact these businesses’ ability to fulfill supply obligations to their customers.

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.

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.

In February 2023, 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.

In May 2023, OVAM confirmed the main findings of the DSI for certain zones and set an October 2023 deadline to submit a remedial action plan related to these zones.

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

3M Belgium submitted two additional DSIs in May 2023 for areas around the Zwijndrecht plant.

In July 2023, an appeal was filed by a local NGO with the Flemish government regarding the additional DSIs.

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.

On March 31, 2023, the Site Decision was fully approved by the Flemish Cabinet and the Site Decision was published in April 2023.

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 June 2023, 3M Belgium submitted a petition for annulment of the Site Decision to the Belgian Council of State.

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

1 unchanged sentence

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

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

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

Civil litigation - As of 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.

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.

Civil litigation - As of June 30, 2023, a total of eight actions against 3M Belgium are pending in Belgian civil courts, and 3M Belgium has received pre-litigation notices from individuals in Belgium indicating potential claims.

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

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

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 and, in May 2023, the presiding judge awarded provisional damages in the amount of 500 euros each to four family members, and denied other damages.

Another case, involving an environmental injunction procedure, was brought by environmental NGOs originally against 3M Belgium’s contractors and later against 3M Belgium and seeks to accelerate the descriptive soil investigation and remediation process.

In May 2023, the court denied the environmental injunction claim, subject to appeal.

In May 2023, the Netherlands government sent 3M Belgium a notice of liability stating it holds 3M Belgium liable for damages related to alleged PFAS contamination in the Netherlands.

The notice purports to identify claims by the Netherlands government and references potential damages to other parties.

3M Belgium plans to meet with the Netherlands government to discuss the notice.

3M Belgium has also met with representatives of some of the private parties involved, which have indicated they may separately pursue claims.

United States:

Federal Activity

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

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

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

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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.

3M submitted comments on EPA’s proposal in May 2023.

EPA has indicated that final rules will be published in January 2024.

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.

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

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

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.

In May 2022, EPA added five PFAS substances – HFPO-DA, PFOS, PFOA PFNA, and PFHxS - to its list of Regional Screening and Removal Management Levels based on the May 2021 MRLs.

EPA had previously added PFBS to both lists in 2014.

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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.

EPA has announced it plans to issue the proposed rule in August 2023.

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.

In June 2023, EPA indicated that the timeline for issuance of a final rule would be extended from August 2023 to February 2024.

In addition, EPA’s Advanced Notice of Proposed Rulemaking considering CERCLA hazardous substance designations for additional PFAS, including PFBS, PFHxS, PFNA, HFPO-DA, PFBA,perfluorohexanoic acid ("PFHxA"), PFDA and their precursor compounds as well as the precursor compounds of PFOS and PFOA, was published for public comment in April 2023 with comments due in August 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 December 2022, EPA published a proposed rule to adding PFAS subject to reporting under the Emergency Planning and Community Right-to-know Act (EPCRA) to the list of Lower Thresholds for Chemicals of Special Concern (Chemicals of Special Concern), which would require Toxic Release Inventory (TRI) reporting of de minimis uses of those PFAS.

In December 2022, EPA published a proposed rule to adding PFAS subject to reporting under the Emergency Planning and Community Right-to-know Act to the list of Lower Thresholds for Chemicals of Special Concern, which would require TRI reporting of de minimis uses of those PFAS.

3M submitted comments to EPA’s proposal.

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3M has submitted its initial response.

3M is in the process of amending its 2020 TSCA Chemical Data Reporting rule report for 3M’s Cordova plant due to the discovery of relatively small amounts of HFPO formed as a commercial byproduct by the facility.

This issue has been self-disclosed to EPA.

In June 2023, EPA notified 3M that it intends to issue a TSCA test order for HFPO-DAF, a PFAS, to 3M.

3M expects that test order to be issued in July or August 2023.

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

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

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.

In Minnesota, the Minnesota Department of Health ("MDH") in 2022 stated that Health Based Values ("HBVs") “are levels that the MDH considers safe for all people to consume, including sensitive populations.” The current HBVs are 35 ppt for PFOA, 15 ppt for PFOS, 47 ppt for PFHxS, 7,000 ppt for PFBA, 200 ppt for PFHxA, and 100 ppt 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.

Several 3M facilities - including Cottage Grove, Maplewood, Hutchinson, St.

Paul, and Woodbury - are among the Minnesota facilities that are preliminarily scoped to be within the Monitoring Plan.

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

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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 December 2022, 3M submitted to the Maine Department of Environmental Protection ("DEP") 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.

3M submitted an updated copy of that list to the Maine DEP in May 2023.

In June 2023, Maine enacted legislation retroactive to January 1, 2023, that includes certain changes to the notification requirement in the original legislation, including an extension of the compliance date until January 2025.

In May 2023, Minnesota enacted legislation that includes a broad PFAS prohibition and reporting statute.

The statute requires product notifications starting in 2025 and a general prohibition on sales of PFAS-containing products no later than 2032 for all product categories, subject to exemptions that may be adopted by rulemaking.

Several other states have introduced legislation that would impose similar 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.

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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.

EGLE appealed the decision in December 2022, and the court scheduled oral argument in the case for July 2023.

Between 2018 and 2022, seven states have enacted laws requiring written notification of firefighting personal protective equipment 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.

In addition, the Company continues to work to determine the extent of any potential non-compliance, has made voluntary self-disclosures to states and customers as applicable, and has expressed its willingness to work with those states to address and resolve any potential non-compliance.

The Company cannot predict at this time the ultimate outcome or actions that may be taken by those states.

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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.

This work will complement the Interim Consent Order that 3M entered with the Alabama Department of Environmental Management (“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.

In March 2022, 3M reached a settlement agreement with plaintiffs in the Billings matter, resulting in dismissal of the case in August 2022.

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

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

Defendants include 3M, the Guin landfill, the Guin WWSB, and some waste transporters.

The case has been removed to federal court and was transferred to the AFFF MDL in December 2022.

In August 2022, Colbert County, Alabama, which opted out of the St.

John settlement, filed a lawsuit against 3M and several co-defendants alleging that discharge from operations in Decatur, Alabama has contaminated the Tennessee River, from which the County withdraws its drinking water.

The Company’s motion to dismiss was denied in December 2022.

Defendants' joint motion to dismiss was denied in December 2022, and defendants have filed a petition for mandamus with the Supreme Court of Alabama, which remains pending.

The case is in early stages of discovery.

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

The case is in early stages of discovery.

State Attorneys General Litigation related to PFAS

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

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

New Hampshire;

Vermont, Michigan;

North Carolina;

Massachusetts;

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

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

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).

Currently in the AFFF MDL, state attorneys general lawsuits have been brought against 3M on behalf of the people of the states of Alaska, California, Florida, Illinois, Maine, Massachusetts, Michigan, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Ohio, Vermont, and Wisconsin, as well as on behalf of the people of the territories of Guam, Puerto Rico, and the Northern Mariana Islands.

Since March 2023, attorneys general have also brought suit against 3M on behalf of the people of Arizona, Arkansas, the District of Columbia, Kentucky, Maine (a second case, a purported “non-AFFF” case), Maryland (both AFFF and purported “non-AFFF” cases), New Mexico, Oregon, Rhode Island, Tennessee, Texas, and Washington.

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

In March 2019, the New Jersey Attorney General filed two actions against 3M, E.I.

DuPont De Nemours and Co.

(“DuPont”), and Chemours Co.

("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).

3M is included as a defendant in both cases because it allegedly supplied PFOA to DuPont for use at the facilities at issue.

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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.

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

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

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

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.

The case has been removed to federal court and, in June 2023, the U.S.

Judicial Panel on Multidistrict Litigation (“JPML”) transferred 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.

The Company removed the previously-disclosed lawsuit filed by the California Attorney General to federal court and sought to have it 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.

As described above, the AFFF lawsuit was removed to federal court and transferred to the AFFF MDL.

3M has removed the other lawsuit to federal court, where it has moved to transfer the case to the AFFF MDL, and the State has filed a motion for remand.

In May 2023, Maryland’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.

In addition to the above state attorneys general actions, several other states and the District of Columbia, through their attorneys general, have announced selection processes to retain outside law firms to bring PFAS-related lawsuits against certain manufacturers including the Company.

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3M manufactured and marketed AFFF 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.

As of June 30, 2023, approximately 4,996 lawsuits (including approximately 46 putative class actions and 451 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 MDL court in South Carolina.

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

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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.

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

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

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.

In the MDL, there are cases filed by approximately 451 public water systems ("PWS").

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.

The MDL cases focus on AFFF, but the MDL also contains a number of cases with 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 repeatedly encouraged the parties in the MDL to negotiate to resolve cases, including these PWS cases.

In October 2022, the court appointed a retired federal judge as mediator.

On June 22, 2023, 3M entered into a proposed class-action settlement to resolve a wide range of drinking water claims by public water systems in the United States (“PWS Settlement”), subject to court approval.

Eligible class members are United States public water systems as defined in the PWS Settlement.

Subject to court approval, the PWS Settlement would resolve the portion of the MDL that involves PWS drinking water claims in the United States by providing funding for treatment technologies to PWS that have tested positive for PFAS, funding for future testing, and funding for systems that test positive in the future.

Under the PWS Settlement, class members would agree to release 3M from any claim arising out of, relating to, or involving (i) PFAS that has entered or may enter drinking water or the class member’s water system;

(ii) the development, manufacture, formulation, distribution, sale, transportation, storage, loading, mixing, application, or use of PFAS or any product (including AFFF) manufactured with or containing PFAS;

(iii) the transport, disposal, or arrangement for disposal of PFAS-containing waste or PFAS-containing wastewater, or a class member’s use of PFAS-containing water for irrigation or manufacturing;

or (iv) representations about PFAS or any product (including AFFF) manufactured with or containing PFAS.

The PWS Settlement would also require class members to release punitive- or exemplary-damages claims that arise out of conduct occurring at least in part before the PWS Settlement’s effective date and that relate to PFAS or any product (including AFFF) manufactured with or containing PFAS.

If the court approves the PWS Settlement and all conditions in the PWS Settlement are met, 3M will pay $ 10.5 billion to $ 12.5 billion in total to resolve the claims released by the PWS Settlement.

3M recorded a pre-tax charge of $ 10.3 billion in the second quarter of 2023.

The charge reflects the present value (discounted at an estimated 5.2 % interest rate at time of proposed settlement) of the expected $ 12.5 billion nominal value of 3M’s payments under the PWS Settlement.

The PWS Settlement calls for 3M to make payments annually from 2024 through 2036.

The actual amounts that 3M will pay will be determined in part by which, if any, class members that do not have a positive test result for the presence of PFAS in their drinking water (as defined by the PWS Settlement) as of the date of the PWS Settlement receive such a test result by the end of 2025.

The PWS Settlement gives 3M the option to terminate the PWS Settlement if the numbers of eligible class members opting out of the Settlement exceed specified levels.

The PWS Settlement provides that 3M does not admit any liability or wrongdoing and does not waive any defenses.

The Settlement remains subject to preliminary and final approval from the MDL court.

The previously disclosed case filed by the City of Stuart, Florida that was selected by the MDL court as the first bellwether trial was also settled as a part of the PWS Settlement.

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.

The MDL court has indicated that the parties will be 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.

Outside the MDL, trial was also scheduled to occur in June 2023 in a lawsuit brought by the City of Rome, Georgia, which asserted 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.

The parties reached a settlement agreement to resolve the case and, under the terms of the PWS Settlement, associated estimated payments factor in amounts related to the City of Rome settlement.

The PWS Settlement amounts discussed above therefore include the City of Rome settlement.

Other AFFF Cases

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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.

As of June 30, 2023, the Company is aware of approximately 185 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, 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.

however, several cases are expected to remain pending in state courts.

Separately, the Company is aware of pre-suit claims or demands by other parties related to the use and disposal of AFFF, one of which purports to represent a large group of firefighters.

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f/k/a Allied-Signal Inc.

and/or AlliedSignal Laminate Systems, Inc., Wolverine World Wide Inc., Georgia-Pacific LLC, E.I.

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

and/or AlliedSignal Laminate Systems, Inc., Wolverine World Wide Inc.

("Wolverine"), Georgia-Pacific LLC, DuPont, Chemours, and various carpet manufacturers.

The cases brought on behalf of drinking water providers described below will fall under the PWS Settlement if the water providers do not opt out of the PWS Settlement.

In New York, 3M is defending 40 individual cases filed in the U.S.

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

(Saint-Gobain), Honeywell International Inc.

DuPont De Nemours and Co.

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

(Taconic) is also a defendant in the state court actions.

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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.

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.

A mediation involving plaintiffs from 32 of the federal and state cases and all of the defendants was held in April 2023.

3M and certain of the other defendants have agreed to settle the case with the plaintiffs involved in the mediation, subject in certain cases to court approval, and 3M’s share is not considered material.

These cases will continue to move forward as to certain remaining defendants, and the other remaining cases continue.

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

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

Oral argument on a motion to dismiss that was filed by 3M and the other defendants is scheduled for July 2023.

3M is also defending 22 individual cases in the U.S.

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

District Court for the Eastern District of New York filed by various drinking water providers, including 9 new complaints filed on behalf of additional water districts during the quarter ended June 30, 2023.

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.

3M has filed answers in these cases and discovery is ongoing.

In Michigan, one consolidated putative class action is pending in the U.S.

District Court for the Western District of Michigan against 3M and Wolverine World Wide (Wolverine).

The action arises from Wolverine’s allegedly improper disposal of materials and wastes, including 3M Scotchgard, related to Wolverine’s shoe manufacturing operations.

In Michigan, one consolidated putative class action was pending in the U.S.

District Court for the Western District of Michigan against 3M and Wolverine.

The action arose from Wolverine’s allegedly improper disposal of materials and wastes, including 3M Scotchgard, related to Wolverine’s shoe manufacturing operations.

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

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.

3M and Wolverine 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 and 3M's final payment related to the settlement was made in June 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.

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, Alabama.

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.

The plaintiffs in these two water utilities 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 Centre, Alabama and Rome, Georgia.

The Centre case has been set for trial in November 2023.The City of Rome case had been scheduled for trial in June 2023, as discussed in more detail above but, the case resolved by settlement between the parties shortly before trial.

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.

That case continues, with class certification and other motions recently briefed.

In April 2023, another case that included similar allegations was filed by Shelby County, Alabama, and Talladega County, Alabama, against 3M and other defendants.

Those cases have been removed to federal court, where they are 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.

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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.

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

In October 2022, a putative class action was filed against the Company and other parties on behalf of individuals who have been drinking water from the Temescal Subbasin, from which the City of Corona gets its water, seeking injunctive relief, damages, and medical monitoring.

In 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.

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

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.

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The Court denied 3M’s motion for summary judgment in October 2022 and a trial date has been set for October 2, 2023.

The parties are exploring potential resolution in advance of trial.

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

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These cases have all been coordinated for discovery, which is ongoing.

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.

3M has agreed to settle with the plaintiffs in ten cases that sought property damages, subject in certain cases to court approval, and 3M’s share is not considered material.

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

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

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, which motion was denied by the 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.

In December 2022, an additional personal injury case was filed in New Jersey State court.

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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.

The federal court remanded the case back to state court in April 2023 and 3M has since answered the third-party complaint.

In March 2023, a personal injury lawsuit was filed against 3M by another Middlesex Water Company customer.

In May 2023, 3M filed a motion to dismiss certain of the claims in that lawsuit.

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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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.

3M has moved to dismiss this case.

In October 2018, 3M and other defendants, including DuPont and Chemours, were named in a putative class action in the U.S.

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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.

In Minnesota, the Company continues to work with the 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.

Under this agreement, the Company’s principal obligations include (i) evaluating releases of certain PFAS compounds from these sites and proposing response actions;

(ii) providing treatment or alternative drinking water upon identifying any level exceeding a HBV or Health Risk Limit (HRL) (i.e., the amount of a chemical in drinking water determined by the Minnesota Department of Health (MDH) to be safe for human consumption over a lifetime) for certain PFAS compounds for which a HBV and/or HRL exists as a result of contamination from these sites;

(ii) providing treatment or alternative drinking water upon identifying any level exceeding a HBV or Health Risk Limit ("HRL") (i.e., the amount of a chemical in drinking water determined by the MDH to be safe for human consumption over a lifetime) for certain PFAS compounds for which a HBV and/or HRL exists as a result of contamination from these sites;

(iii) remediating identified sources of other PFAS compounds at these sites that are not controlled by actions to remediate PFOA and PFOS;

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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 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.

In Alabama, as previously reported, the Company entered into a voluntary remedial action agreement with the 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 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.

The Company operates under a 2009 consent order issued under the federal 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.

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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 a Clean Water Act National Pollutant Discharge Elimination System (NPDES) permit issued by ADEM.

The Company is authorized to discharge wastewater from its Decatur plant pursuant to an 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.

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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), 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.

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, 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.

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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.

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 RCRA related to the use of emergency spill containment units associated with certain chemical processes at the Cordova facility.

In July 2023, 3M received from the EPA a draft of a federal administrative order for discussion, which would require 3M to determine the nature and extent of PFAS contamination around its Cordova facility, among other items.

The Company is also reviewing operations at its other plants with similar manufacturing processes, such as the plant in Cottage Grove, Minnesota, to ensure those operations are in compliance with applicable environmental regulatory requirements and Company policies and procedures.

As a result of these reviews, as previously reported, the Company discovered it had not fully characterized its PFAS discharge in its NPDES permit for the Cottage Grove facility.

In March 2020, the Company disclosed this matter to the Minnesota Pollution Control Agency (MPCA) and the EPA.

In March 2020, the Company disclosed this matter to the MPCA and the EPA.

In July 2020, the Company received an information request from MPCA for documents and information related to, among other matters, the Company’s compliance with the Clean Water Act at its Cottage Grove facility.

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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 connection with the now closed incinerator, the Company in December 2022 received from EPA a draft Consent Agreement and Penalty Order 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 resolved this matter in which the Company has agreed to pay an administrative civil penalty.

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

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The Company worked with MPCA to develop a plan to address its stormwater, which is embodied in an order issued by MPCA in December 2022.

MPCA issued to the Company a Notice of Violation in March 2023, alleging that the Company is discharging stormwater containing PFAS at the 3M’s facility in Hutchinson, Minnesota.

The Company is working with MPCA regarding the allegations in the Notice of Violation.

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

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

During the first three months of 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.

During the first six months of 2023, as a result of ongoing review and recent developments in ongoing environmental matters and litigation (including the proposed PWS Settlement), the Company increased its accrual for PFAS-related other environmental liabilities by $ 10.3 billion and made related payments of $ 38 million.

As of June 30, 2023, the Company had recorded liabilities of $ 10.9 billion for “other environmental liabilities.” These amounts are reflected in the consolidated balance sheet within other current liabilities ($ 0.3 billion) and other liabilities ($ 10.6 billion).

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 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.

As of June 30, 2023, the Company had recorded liabilities of $ 32 million for estimated non-PFAS related “environmental remediation” costs to clean up, treat, or remove hazardous substances at current or former 3M manufacturing or third-party sites.

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

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

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

As of June 30, 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 entered into an agreement with the Aearo Entities to fund this trust and to support the Aearo Entities as they continue to operate during the chapter 11 proceedings.

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

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

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

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

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

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

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

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

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

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

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

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

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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.

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.

Oral argument took place in April 2023.

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.

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

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

In June 2023, the Bankruptcy Court granted the plaintiffs’ motion to dismiss.

As a result of this dismissal, the Court’s previous stay on the Aearo Combat Arms and Aearo respirator mask/asbestos litigation was lifted.

Also in June 2023, the bankruptcy judge certified a direct appeal of the motion to dismiss decision to the U.S.

Court of Appeals for the Seventh Circuit.

Aearo has appealed the decision.

As a result of the June 2023 bankruptcy dismissal, 3M reconsolidated the former deconsolidated Aearo Entities, in the second quarter of 2023, resulting in an immaterial income statement impact.

A summary of affected material consolidated balance sheet amounts is included at the end of this Combat Arms litigation discussion.

Preceding Combat Arms Earplugs matters:

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

In April 2019, the U.S.

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

In April 2019, the JPML granted motions to transfer and consolidate all cases pending in federal courts to the U.S.

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

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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.

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.

Oral argument on the two appeals occurred in May 2023 and the Company expects a decision later in 2023.

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.

As of June 30, 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 151,000 individual claimants making similar allegations.

An administrative docket of approximately 88,000 unfiled and unverified claims has also been maintained at the MDL court.

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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, and then stayed.

In January 2023, the MDL judge ordered that the MDL mediation would stop while the bankruptcy court mediation was ongoing.

In May 2023, plaintiffs in the MDL filed a motion to lift the stay on 13 cases, which motion is pending, and the MDL court issued an order identifying 31 cases that would be the first cases to be remanded for trial.

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.

The Eleventh Circuit heard oral argument for this appeal in June 2023.

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

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

In June 2023, the MDL court lifted the stay as to the Aearo Entities but the MDL stay pending resolution of the Eleventh Circuit’s acceptance of the appeal of the successor liability decision remains in place.

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 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 first trial in Hennepin County is scheduled to start in August 2023.

In May 2023, the federal and state MDL courts issued orders providing that mediation would resume, and appointing additional mediators.

The parties participated in multiple mediation sessions and discussions in May, June and July 2023.

The substance of the ongoing mediation discussions is confidential pursuant to the courts' mediation orders.

Attempts to comprehensively resolve with finality all Combat Arms earplugs claims against the Aearo Entities and 3M outside of the bankruptcy proceedings and in a litigation settlement involve significant challenges that could cause the Company to incur substantial and material costs.

Other than 3M’s funding commitment of approximately $ 1.0 billion relative to Combat Arms earplugs for its Aearo subsidiaries’ chapter 11 proceedings as described above and associated expenses, 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.

The accrued liability for the approximate $ 1.0 billion commitment is reflected within contingent liability claims and other (within other liabilities) on 3M’s consolidated balance sheet.

Additionally, as a result of reconsolidation in the second quarter of 2023 of the former deconsolidated Aearo Entities, the following balances on 3M’s consolidated balance sheet as of December 31, 2022 do not appear on the comparative consolidated balance sheet as of June 30, 2023:

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

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

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

As of June 30, 2023, the Company was a named defendant in approximately 5,493 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 infections in various joint arthroplasty, cardiovascular, and other surgeries.

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.

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.

District Court for the District of Minnesota to be managed in an MDL proceeding.

In July 2019, the court excluded several of the plaintiffs’ causation experts, and granted summary judgment for 3M in all cases pending at that time in the MDL.

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

The motion was denied by both the district court judge and magistrate judge.

The plaintiffs appealed the denial of the motion to dismiss the magistrate judge to the district court and the parties are awaiting a ruling on the appeal.

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

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

The Company is also a defendant in a Ramsey County, Minnesota putative class action filed in June 2023 on behalf of patients who claim to have used the Bair Hugger™ patient warming system alleging economic damages relating to representations made about the system.

The Company has moved to dismiss the Ramsey County matter and anticipates a ruling later in 2023.

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

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District Court for the District of New Jersey was dismissed, without prejudice, for failure to serve the complaint within the required time period.

In May 2023, the Minnesota court dismissed the Minnesota state derivative action.

In August 2020, a stockholder who had previously submitted a books and records demand filed an additional follow-on derivative lawsuit in the U.S.

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

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

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

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

The defendants moved to dismiss the consolidated federal derivative action in May 2022, and the court dismissed the case in March 2023, which judgment is now final.

Federal False Claims Act / Qui Tam Litigation

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

Briefing on the motion for summary judgment is complete, but the district court granted a joint motion to vacate the hearing date to allow the parties to discuss a potential resolution of the case.

The parties must provide a joint status report by the end of July 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.

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Therefore, management does not represent that these segments, if operated independently, would report the operating income information shown.

3M discloses business segment operating income as its measure of segment profit/loss, reconciled to both total 3M operating income and income before taxes.

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

3M discloses business segment operating income (loss) as its measure of segment profit/loss, reconciled to both total 3M operating income (loss) and income before taxes.

Business segment operating income (loss) 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 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.

The change to business segment operating income (loss) aligns with the update to how the CODM assesses performance and allocates resources for the Company’s business segments.

The changes included the items described below.

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(Millions) Three months ended

June 30, Six months ended

Net Sales 2023 2022 2023 2022

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Three months ended

June 30, Six months ended

Operating Performance 2023 2022 2023 2022

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Consumer 235 248 414 467

Total business segment operating income 1,434 1,755

Total business segment operating income (loss) 1,590 508 3,024 2,263

Corporate and Unallocated

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Divestiture costs ( 125 ) — ( 227 ) —

Russia exit (charges) benefits 18 — 18 —

Total corporate special items ( 10,464 ) ( 379 ) ( 10,648 ) ( 566 )

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Total Corporate and Unallocated ( 10,548 ) ( 398 ) ( 10,741 ) ( 512 )

Total Company operating income 1,241 1,641

Total Company operating income (loss) ( 8,958 ) 110 ( 7,717 ) 1,751

Other expense/(income), net 65 50 117 88

Income before income taxes $ 1,189 $ 1,603

Income (loss) before income taxes $ ( 9,023 ) $ 60 $ ( 7,834 ) $ 1,663

Corporate and Unallocated

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

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

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

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

Corporate special items include net costs for significant litigation impacting operating income (loss) associated with PFAS-related other environmental and Combat Arms Earplugs matters.

In addition, during the voluntary chapter 11 bankruptcy period (which began in July 2022 and ended in June 2023—see Note 14), costs associated with the Aearo portion of respirator mask/asbestos matters were also included in corporate special items.

Prior to the bankruptcy, costs associated with Combat Arms Earplugs matters were not included in the Corporate net costs for significant litigation special item, instead being reflected in the Safety and Industrial business segment.

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

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

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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