What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-07 compared with 2023-02-08 · 337 added, 318 removed, 504 unchanged (57% of the section changed)

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• Financial Instruments

The term "N/M" used herein references "not meaningful" for certain percent changes.

Forward-looking statements in Item 7 may involve risks and uncertainties that could cause results to differ materially from those projected (refer to the section entitled Cautionary Note Concerning Factors That May Affect Future Results in Item 1 and the risk factors provided in Item 1A for discussion of these risks and uncertainties).

Additional information about results of operations and financial condition for 2021 and 2020 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M's 2021 Annual Report on Form 10-K).

Additional information about results of operations and financial condition for 2022 and 2021 (including the detailed discussion of the prior year 2022 to 2021 year-over-year changes) can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations sections in 3M's Annual Report on Form 10-K for the year ended December 31, 2022.

3M is a diversified global manufacturer, technology innovator and marketer of a wide variety of products and services.

Effective in the first quarter of 2023, 3M made the following changes:

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

• Changes in 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 (loss))—and realignment of 3M's Consumer business segment from four divisions to three divisions.

See additional information in Note 21.

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

3M's disclosed disaggregated revenue was also updated as a result of these changes.

See additional information in Note 2.

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and Consumer.

In July 2022, 3M announced its intention to spin off the Health Care business as a separate public company (see Note 3 for additional information).

The Company continues to make progress on the Health Care business spin-off.

The transaction is expected to be completed in the first half of 2024 and is subject to satisfaction of customary conditions, including final approval from the 3M Board of Directors and receipt of regulatory approvals, discussed in Note 3.

The completion of the spin will enable the creation of two world-class public companies well positioned to pursue their respective growth plans, tailor capital allocation strategies, and create long-term value for shareholders.

From a geographic perspective, any references to EMEA refer to Europe, Middle East and Africa on a combined basis.

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3M believes this information is useful to investors and management in understanding ongoing operations and in analysis of ongoing operating trends.

3M is impacted by the global pandemic and related effects associated with the coronavirus (COVID-19).

Risk factors with respect to COVID-19 can be found in Item 1A “Risk Factors” in this document.

Given the diversity of 3M’s businesses, some of the factors relative to COVID-19 increase the demand for 3M products, while others decrease demand or make it more difficult for 3M to serve customers.

Certain resulting impacts are referenced in various discussions within this Item 7.

Overall, the impact of the COVID-19 pandemic on 3M’s consolidated results of operations was primarily driven by factors related to changes in demand for products and disruption in global supply chains.

3M is not able to predict the extent to which the COVID-19 pandemic may have a material effect on its consolidated results of operations or financial condition.

In 2022, 3M's costs for significant litigation (see Certain amounts adjusted for special items - (non-GAAP measures section below) totaled approximately $2.3 billion pre-tax and included, among things, pre-tax charges associated with steps toward resolving Combat Arms Earplugs litigation and associated with additional commitments to address PFAS-related matters at its Zwijndrecht, Belgium site (approximately $1.3 billion and $355 million, respectively, in 2022).

These matters are further discussed in Note 16.

In 2022, 3M also completed the split-off of its Food Safety Division business resulting in a pre-tax gain of $2.7 billion and committed to a plan to exit PFAS manufacturing by the end of 2025 resulting in a 2022 pre-tax charge of $0.8 billion related to impairment as discussed in Note 15.

See Certain amounts adjusted for special items - (non-GAAP measures) section below for additional discussion of these and other special items.

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3M Belgium has experienced interruptions to portions of the manufacturing at its site in Zwijndrecht, Belgium, as more fully discussed in Note 16.

As discussed in Note 16, 3M Belgium received agreement with authorities in June 2022 to begin the process toward restarting operations at the Zwijndrecht facility.

3M Belgium has provided information required by the Flemish environmental authorities to receive agreement from the authorities to restart operations, and has done so for production or sampling purposes.

Belgian government authorities continue to maintain oversight of these operations and compliance with applicable requirements.

In December 2022, 3M Belgium received an official infraction report from the Flemish Environmental Inspectorate and continues to work with the government authorities to comply with applicable legal requirements.

See further discussion in Note 16.

3M is also impacted by the Russia-Ukraine conflict.

In light of a number of factors, 3M suspended operations of its subsidiaries in Russia in March 2022, the net sales of which were less than one percent of 3M’s consolidated net sales for 2021.

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

The associated charge in 2022 related to this action is further discussed in Note 15.

3M also has other operations that source certain raw materials from suppliers in Russia and have experienced related supply disruption due to the conflict.

Further supply disruption could lead to downstream customer impacts.

Though 3M monitors relevant factors as well as options to mitigate potential impacts, it is not able to predict the extent to which these circumstances may have a material effect on 3M’s consolidated results of operations or financial condition.

Relevant risk factors can be found in Item 1A “Risk Factors” in this Annual Report on Form 10-K.

Operating income margin and earnings per share attributable to 3M common shareholders – diluted:

The following table provides the increases (decreases) in operating income margins and diluted earnings per share.

Year ended December 31,

Percent of net sales Earnings per diluted share Percent of net sales Earnings per diluted share

3M is impacted by certain special items such as costs for significant litigation and the sales and income associated with manufactured PFAS products.

During 2023, 3M's costs for significant litigation (see Certain amounts adjusted for special items - (non-GAAP measures) section below) totaled approximately $15.2 billion pre-tax and included, among other things, pre-tax charges of $10.5 billion and $4.3 billion (inclusive of imputed interest) related to the PWS Settlement and the CAE Settlement (discussed in Note 18), respectively, both announced in 2023.

See Certain amounts adjusted for special items - (non-GAAP measures) section below for additional discussion of these and other special items, including references therein to where further information is provided.

Additional information regarding certain items impacting pre-2023 periods that may also be relevant in 2023 can be found in the Overview section of Part II, Item 7 as well as in further sections of 3M’s 2022 Annual Report on Form 10-K.

Earnings (loss) per share attributable to 3M common shareholders – diluted:

The following table provides the increases (decreases) in diluted earnings (loss) per share.

Earnings (loss) per diluted share Year ended December 31,

Same period last year $ 10.18 $ 10.12

Net costs for significant litigation 3.20 0.61

Divestiture costs

Gain on business divestitures (4.73) —

Divestiture-related restructuring actions 0.05 —

Russia exit charges 0.20 —

Manufactured PFAS products 0.90 (0.18)

Total special items (0.30) 0.43

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Total organic growth/productivity and other 0.30 0.22

Restructuring and related charges

Raw material impact (0.24) (0.99)

Divestitures — (0.05) — (0.05)

Foreign exchange impacts (0.17) (0.39)

Other expense (income), net N/A 0.02 N/A 0.27

Income tax rate N/A 0.06 N/A 0.32

Shares of common stock outstanding N/A 0.30 N/A (0.06)

Acquisitions/divestitures (0.06) (0.05)

Other expense (income), net (0.06) 0.02

Income tax rate — 0.06

Shares of common stock outstanding 0.21 0.30

Current period, excluding special items 9.24 9.88

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Divestiture-related restructuring actions — (0.05)

Russia exit charges (0.3) (0.20) — —

PFAS manufacturing exit costs (2.4) (1.12) — —

Russia exit (charges) benefits 0.04 (0.20)

Manufactured PFAS products (0.28) (0.90)

Total special items (21.87) 0.30

Current period $ (12.63) $ 10.18

The Company refers to various "adjusted" amounts or measures on an “adjusted basis”.

These exclude special items.

The Company refers to various "adjusted" amounts or measures on an “adjusted basis.” These exclude special items.

These non-GAAP measures are further described and reconciled to the most directly comparable GAAP financial measures in the Certain amounts adjusted for special items - (non-GAAP measures) section below.

A discussion related to the components of year-on-year changes in operating income margin and earnings per diluted share follows:

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A discussion related to the components of year-on-year changes in earnings (loss) per diluted share follows:

Organic growth/productivity and other:

• In 2022, the following components impacted operating margins and earnings per diluted share year-on-year:

• Declines in disposable respirator demand year-on-year negatively impacted operating margins by 0.3 percent and earnings per share by $0.29.

• Remaining organic growth/productivity and other impacts resulted in a net year-on-year benefit $0.85 to earnings per share and 1.3 percent to operating margins which was impacted by the following:

• In 2023, the following components impacted operating margins and earnings (loss) per diluted share year-on-year:

◦ Declines in disposable respirator demand year-on-year and the 2022 exit of operations in Russia negatively impacted earnings (loss) per share by $0.43.

◦ Remaining organic growth/productivity and other impacts resulted in a net year-on-year increase of $0.73 per share which was impacted by the following:

▪ Benefits from spending discipline, sourcing actions, restructuring, higher selling prices and ongoing productivity actions

▪ Lower sales volumes (particularly electronics/consumer retail);

investments in growth, productivity, and sustainability;

manufacturing/supply chain headwinds;

inflation impacts;

and Europe's geopolitical impacts

• In 2022, the following components impacted earnings per diluted share year-on-year:

◦ Declines in disposable respirator demand year-on-year negatively impacted earnings per share by $0.29.

◦ Remaining organic growth/productivity and other impacts resulted in a net year-on-year benefit $0.51 to earnings per share which was impacted by the following:

▪ Benefits from strong pricing, spending discipline and 2021 restructuring actions

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geopolitical impacts due to the Russia/Ukraine conflict as well as ongoing COVID-related challenges in China

◦ Second quarter of 2021 benefit of $91 million pre-tax ($0.12 per share after tax) from the impact of the favorable decision of the Brazilian Supreme Court regarding the calculation of past social taxes

▪ 2021 benefit of $91 million pre-tax ($0.12 per share after tax) from the impact of the favorable decision of the Brazilian Supreme Court regarding the calculation of past social taxes

▪ Increased investments in growth, productivity and sustainability

• In 2021, organic volume growth and ongoing cost management increased operating income margins and earnings per diluted share year-on-year offset by manufacturing headwinds from global supply chain challenges and increased compensation/benefit costs.

The following also impacted results or provide additional information:

• 2021 benefit of $91 million pre-tax ($0.12 per share after tax) from a favorable Brazilian Supreme Court decision that concluded on the impact of state value-added tax when determining Brazil’s federal sales-based social tax—essentially lowering the social tax that 3M should have paid in prior periods.

• 3M continued prioritization of investments in growth and sustainability.

• 2021 benefit from higher selling prices, restructuring actions taken in 2020 and positive/negative impact of year-over-year change in non-divestiture-related restructuring charges, net of adjustments, for respective periods.

Note 5 provides additional information relative to restructuring actions.

• Lower year-on-year net gains related to certain property sales.

• COVID-impacts recognized on certain assets in 2020.

• In 2021, higher defined benefit pension and postretirement service cost increased expense year-on-year.

• In 2023, lower defined benefit pension and postretirement service cost decreased expense year-on-year.

Restructuring and related charges:

• 3M recorded restructuring pre-tax charges of $437 million and $59 million in 2023 and 2022, respectively, (refer to Note 5 for additional discussion).

In addition, 3M recorded certain related accelerated depreciation.

Raw material impact:

• In 2022, 3M continued to experience inflationary pressures with year-on-year increases in raw material and logistics costs driven by many geopolitical, logistics, and disruptive events that caused imbalance in the global supply chain.

• In 2021, 3M experienced higher raw material, logistics, and outsourced manufacturing costs from strong end-market demand, ongoing COVID-19 and related global supply chain challenges that were further magnified by extreme weather events, such as February 2021 winter storm Uri in the U.S.

Acquisitions/divestitures:

• Divestiture impacts in 2022 include lost income from divested businesses and remaining stranded costs (net of transition arrangement income).

3M completed the split-off of the Food Safety business in September 2022 (discussed in Note 3).

The impact also includes lost income from deconsolidation of the Aearo Entities in July 2022 (discussed in Note 16).

• Divestiture impacts in 2021 are primarily comprised of the lost income from the divestiture of the Company’s drug delivery business (sale completed in May 2020).

• In 2023, 3M continued to experience headwinds year-on-year from the carryover impact of raw material, logistics and energy cost inflation.

• In 2022, 3M experienced inflationary pressures with year-on-year increases in raw material and logistics costs driven by many geopolitical, logistics, and disruptive events that caused imbalance in the global supply chain.

Foreign exchange impacts:

• Foreign currency impacts (net of hedging) decreased operating income by approximately $271 million and $103 million (or a decrease in pre-tax earnings of approximately $280 million and $119 million) year-on-year for 2022 and 2021, respectively.

• Foreign currency impacts (net of hedging) increased operating loss by approximately $162 million and decreased operating income by approximately $271 million (or an increase of pre-tax loss by approximately $159 million and a decrease in pre-tax earnings of approximately $280 million) year-on-year for 2023 and 2022, respectively.

These estimates include:

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dollars and on current period non-functional currency denominated purchases or transfers of goods between 3M operations, and (b) year-on-year changes in transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate risks.

Acquisitions/divestitures:

• Acquisition and divestiture impacts are measured separately for the first 12 months post-transaction.

• Divestiture impact includes lost income from divested businesses and remaining stranded costs (net of transition arrangement income).

◦ In 2023, 3M completed the sale of its dental local anesthetic business (discussed in Note 3).

In 2022, 3M completed the split-off of the Food Safety business (discussed in Note 3).

◦ In 2022, 3M deconsolidated the Aearo Entities and, in 2023, reconsolidated those entities (discussed in Note 18).

For each of the 12-months post-deconsolidation and post-reconsolidation, impacts are each reflected separately as divestiture and acquisition, respectively.

Other expense (income), net:

• Lower income related to higher non-service cost components of pension and postretirement expense increased expense year-on-year for 2022.

Higher income related to non-service cost components of pension and postretirement expense decreased expense year-on-year for 2021.

• Interest expense (net of interest income) included in other expense (income), net as presented above decreased in 2023 compared to the same period year-on-year driven by interest income on invested cash.

• Interest expense (net of interest income) decreased in 2022 compared to the same period year-on-year driven by debt maturities in the ordinary course and interest income on invested cash.

• Interest expense (net of interest income) decreased in 2021 compared to the same period year-on-year due in part to interest expense savings from early debt extinguishment actions in 2020.

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• Lower income related to non-service cost components of pension and postretirement expense increased expense year-on-year for both 2023 and 2022.

Income tax rate :

• Certain items above reflect specific income tax rates associated therewith.

Overall, the effective tax rates for 2022, 2021, and 2020 were 9.6 percent, 17.8 percent, and 19.7 percent, respectively.

These reflect a decrease of 8.2 percentage points from 2021 to 2022 and a decrease of 1.9 percentage points from 2020 to 2021.

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

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

international tax provisions.

• On an adjusted basis (as discussed below), the effective tax rates for 2022, 2021, and 2020 were 17.7 percent, 18.1 percent, and 20.5 percent, respectively.

These reflect a decrease of 0.4 percent percentage points from 2021 to 2022 and a decrease of 2.4 percentage points from 2020 to 2021.

Overall, the effective tax rates for 2023, 2022, and 2021 were 27.8 percent on a pre-tax loss, 9.6 percent on pre-tax income and 17.8 percent on pre-tax income, respectively.

The primary factors that impacted the comparison of the 2023 and 2022 rates were the 2023 charges related to the PWS Settlement and the CAE Settlement (discussed in Note 18) and the tax impact associated with the 2022 charge related to steps toward resolving Combat Arms Earplugs litigation (discussed in Note 18), along with the tax efficient structure associated with the 2022 gain on split-off of the Food Safety business.

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

• On an adjusted basis (see section entitled Certain amounts adjusted for special items - (non-GAAP measures)) , the effective tax rates for 2023, 2022, and 2021 were 17.5 percent, 17.5 percent, and 18.1 percent, respectively.

Shares of common stock outstanding:

• Lower shares outstanding increased earnings per share per diluted share for 2022, while higher shares outstanding decreased earnings per share diluted share for 2021.

• Lower shares outstanding increased earnings per share per diluted share for 2023 and 2022.

Certain amounts adjusted for special items - (non-GAAP measures):

In addition to reporting financial results in accordance with U.S.

GAAP, 3M also provides non-GAAP measures that adjust for the impacts of special items.

For the periods presented, special items include the items described below.

Operating income, segment operating income (loss), income before taxes, net income, earnings per share, and the effective tax rate are all measures for which 3M provides the reported GAAP measure and a measure adjusted for special items.

The adjusted measures are not in accordance with, nor are they a substitute for, GAAP measures.

While the Company includes certain items in its measure of segment operating performance, it also considers these non-GAAP measures in evaluating and managing its operations.

The Company believes that discussion of results adjusted for special items is useful to investors in understanding underlying business performance, while also providing additional transparency to the special items.

Special items impacting operating income are reflected in Corporate and Unallocated, except as described below with respect to net costs for significant litigation and PFAS manufacturing exit costs.

The determination of these items may not be comparable to similarly titled measures used by other companies.

In the first quarter of 2022, the Company changed the extent of matters and charges/benefits it includes within special items with respect to net costs for significant litigation.

Previously, 3M included net costs, when significant, associated with changes in accrued liabilities related to respirator mask/asbestos litigation and PFAS-related other environmental matters, along with the associated tax impacts.

These non-GAAP measure changes involved including net costs for litigation related to 3M’s Combat Arms Earplugs, expanding net costs to include external legal fees and insurance recoveries associated with the applicable matters in addition to changes in accrued liabilities, and to include all such net costs for the applicable matters, not just when considered significant.

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

GAAP, 3M also provides certain non-GAAP measures.

These measures are not in accordance with, nor are they a substitute for GAAP measures, and may not be comparable to similarly titled measures used by other companies.

Certain measures adjust for the impacts of special items.

Special items for the periods presented include the items described below.

Because 3M provides certain information with respect to business segments, it is noteworthy that special items impacting operating income (loss) are reflected in Corporate and Unallocated, except as described below with respect to net costs for significant litigation and manufactured PFAS products items.

In 2023, 3M changed certain of its non-GAAP measures by adjusting for the results of manufactured PFAS products in arriving at results, adjusted for special items.

In the fourth quarter of 2022, 3M recorded a charge for PFAS manufacturing exit costs and included it as an adjustment in arriving at results, adjusted for special items.

The 2023 non-GAAP measure change involved expanding the extent of adjustment to include the sales and estimates of income (including exit costs) and associated activity regarding manufactured PFAS products that 3M plans to exit by the end of 2025.

The information herein reflects the impacts of these changes for all periods presented.

This document contains measures for which 3M provides the reported GAAP measure and a non-GAAP measure adjusted for special items.

These measures and reasons 3M believes they are useful to investors (and, as applicable, used by 3M) include:

GAAP amounts for which a measure adjusted for special items is also provided:

Reasons 3M believes the measure is useful:

• Net sales (and sales change)

Considered, in addition to segment operating performance, in evaluating and managing operations;

useful in understanding underlying business performance, provides additional transparency to special items

• Operating income (loss), segment operating income (loss) and operating income (loss) margin

• Income (loss) before taxes

• Provision for income taxes and effective tax rate

• Net income (loss)

• Earnings (loss) per share

Special items for the periods presented include:

Net costs for significant litigation:

• These relate to 3M's respirator mask/asbestos, PFAS-related other environmental, and Combat Arms Earplugs matters (as discussed in Note 16).

Net costs include the impacts of any changes in accrued liabilities, external legal fees, and insurance recoveries, along with associated tax impacts.

Prior to initiating voluntary chapter 11 bankruptcy proceedings in July 2022, net costs related to Combat Arms Earplugs and Aearo-respirator mask/asbestos matters along with non-Aearo respirator mask/asbestos matters were reflected as special items in the Safety and Industrial business segment.

During the bankruptcy period, net costs related to Combat Arms Earplugs and Aearo-respirator mask/asbestos matters are reflected as corporate special items in Corporate and Unallocated while those associated with non-Aearo respirator mask/asbestos matters continue to be reflected as special items in the Safety and Industrial business segment.

Net costs associated with PFAS-related other environmental matters are primarily reflected as corporate special items in Corporate and Unallocated.

• These relate to 3M's respirator mask/asbestos (which include Aearo and non-Aearo items), PFAS-related other environmental, and Combat Arms Earplugs matters (as discussed in Note 18).

Net costs include the impacts of changes in accrued liabilities (including interest imputation on applicable settlement obligations), external legal fees, and insurance recoveries, along with the associated tax impacts.

3M does not consider the elements of the net costs associated with these matters to be normal, operating expenses related to the Company’s ongoing operations, revenue generating activities, business strategy, industry, and regulatory environment.

Net costs related to respirator mask/asbestos are reflected as special items in the Safety and Industrial business segment while those impacting operating income (loss) associated with PFAS-related other environmental and Combat Arms Earplugs matters are reflected as corporate special items in Corporate and Unallocated.

In addition, during the voluntary chapter 11 bankruptcy period (which began in July 2022 and ended in June 2023—see Note 18), costs associated with the Aearo portion of respirator mask/asbestos matters were reflected in corporate special items in Corporate and Unallocated.

Prior to the bankruptcy, costs associated with Combat Arms Earplugs matters were reflected as part of special items in the Safety and Industrial business segment.

Gain/loss on sale of business divestitures:

• In 2023, 3M recorded a gain related to the sale of its dental local anesthetic business partially offset by a loss associated with a previously contingent indemnification obligation from a 2020 divestiture.

Refer to Note 3 for further details.

• In 2022, 3M recorded a gain related to the split-off and combination of its Food Safety business with Neogen Corporation.

Divestiture costs:

• These 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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Gain on business divestitures:

• In 2022, 3M recorded a gain related to the split-off and combination of its Food Safety business with Neogen Corporation.

In 2020, 3M recorded a gain primarily related to the divestiture of its Drug Delivery business.

Refer to Note 3 for further details.

Divestiture-related restructuring actions:

• In the third quarter of 2022, following the split-off of the Food Safety business, and in 2020, following the divestiture of the Drug Delivery business, (see Note 3) management approved and committed to undertake certain restructuring actions addressing corporate functional costs across 3M in relation to the magnitude of amounts previously allocated to the divested businesses.

Refer to Note 5 for further details.

Russia exit charges:

• In the third quarter of 2022, 3M recorded a charge primarily related to impairment of net assets in Russia in connection with management's committed exit and disposal plan.

• In the third quarter of 2022, following the split-off of the Food Safety business, management approved and committed to undertake certain restructuring actions addressing corporate functional costs across 3M in relation to the magnitude of amounts previously allocated to the divested businesses.

Refer to Note 5 for further details.

PFAS manufacturing exit costs:

• These costs relate to 3M's December 2022 commitment to a plan to exit PFAS manufacturing by the end of 2025.

Charges for the applicable period relate to asset impairments.

These charges were reflected within the Transportation and Electronics business segment.

Manufactured PFAS products:

• These amounts relate to sales and estimates of income (loss) regarding manufactured PFAS products that 3M plans to exit by the end of 2025 included within the Transportation and Electronics business segment.

Along with other costs in arriving at this associated income, these amounts include estimates of costs of sales of $1,267 million, $970 million, and $890 million for 2023, 2022 and 2021, respectively.

Estimated income does not contemplate impacts on non-operating items such as net interest income/expense and the non-service cost components portion of defined benefit plan net periodic benefit costs.

Russia exit charges/benefits:

• In the second quarter of 2023, 3M recorded a gain on final disposal of net assets in Russia.

Previously, in the third quarter of 2022, 3M recorded a charge primarily related to impairment of these assets in connection with management's committed exit and disposal plan.

Refer to Note 17 for further details.

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Operating Income (Loss)

(Dollars in millions, except per share amounts) Safety and Industrial Safety and Industrial Margin Transportation and Electronics Transportation and Electronics Margin Total Company Total Company Margin Income Before Taxes Provision for Income Taxes Effective Tax Rate Net Income Attributable to 3M Earnings per Diluted Share Earnings per diluted share percent change

Year ended December 31, 2020 GAAP

$ 2,588 23.6% $ 1,701 20.2% $ 7,161 22.3 % $ 6,795 $ 1,337 19.7 % $ 5,449 $ 9.36

Year ended December 31, 2021

(Dollars in millions, except per share amounts) Net sales Operating income (loss) Operating income (loss) margin Income (loss) before taxes Provision (benefit) for income taxes Effective tax rate Net income (loss) attributable to 3M Earnings per diluted share

Safety and Industrial

GAAP amounts $ 2,460 20.5 %

Adjustments for special items:

Net costs for significant litigation 249

Gain on business divestitures — — (389) (389) (86) (303) (0.52)

Divestiture-related restructuring actions — — 55 55 9 46 0.08

Total special items 249

Year ended December 31, 2020 adjusted amounts (non-GAAP measures)

$ 2,793 25.5% $ 1,701 20.2% $ 7,180 22.3 % $ 6,814 $ 1,396 20.5 % $ 5,409 $ 9.29

Year ended December 31, 2021 GAAP

$ 2,466 20.6% $ 1,880 20.3% $ 7,369 20.8 % $ 7,204 $ 1,285 17.8 % $ 5,921 $ 10.12 8 %

Adjusted amounts (non-GAAP measures) $ 2,709 22.6 %

Transportation and Electronics

GAAP amounts $ 9,262 $ 1,869 20.2 %

Adjustments for special items:

Manufactured PFAS products (1,258) (135)

Total special items (1,258) (135)

Adjusted amounts (non-GAAP measures) $ 8,004 $ 1,734 21.7 %

Total Company

GAAP amounts $ 35,355 $ 7,369 20.8 % $ 7,204 $ 1,285 17.8 % $ 5,921 $ 10.12

Adjustments for special items:

Net costs for significant litigation — 463 463 104 359 0.61

Manufactured PFAS products (1,258) (135) (135) (29) (106) (0.18)

Total special items (1,258) 328 328 75 253 0.43

Year ended December 31, 2021 adjusted amounts (non-GAAP measures)

$ 2,715 22.7% $ 1,880 20.3% $ 7,832 22.2 % $ 7,667 $ 1,389 18.1 % $ 6,280 $ 10.73 16 %

Year ended December 31, 2022 GAAP

$ 1,199 10.3% $ 1,012 11.4% $ 6,539 19.1 % $ 6,392 $ 612 9.6 % $ 5,777 $ 10.18 1 %

Adjusted amounts (non-GAAP measures) $ 34,097 $ 7,697 22.6 % $ 7,532 $ 1,360 18.1 % $ 6,174 $ 10.55

Year ended December 31, 2022

(Dollars in millions, except per share amounts) Net sales Sales change Operating income (loss) Operating income (loss) margin Income (loss) before taxes Provision (benefit) for income taxes Effective tax rate Net income (loss) attributable to 3M Earnings per diluted share Earnings (loss) per diluted share percent change

Safety and Industrial

GAAP amounts $ 1,135 9.8 %

Adjustments for special items:

Net costs for significant litigation 1,414

Divestiture costs — — 60 60 13 47 0.08

Total special items 1,414

Adjusted amounts (non-GAAP measures) $ 2,549 22.0 %

Transportation and Electronics

GAAP amounts $ 8,902 (3.9) % $ 973 10.9 %

Adjustments for special items:

Manufactured PFAS products (1,351) 631

Total special items (1,351) 631

Adjusted amounts (non-GAAP measures) $ 7,551 (5.6) % $ 1,604 21.2 %

Total Company

GAAP amounts $ 34,229 (3.2) % $ 6,539 19.1 % $ 6,392 $ 612 9.6 % $ 5,777 $ 10.18 1 %

Adjustments for special items:

Net costs for significant litigation — 2,291 2,291 476 1,815 3.20

Manufactured PFAS products (1,351) 631 631 121 510 0.90

Gain on business divestitures — (2,724) (2,724) (39) (2,685) (4.73)

Russia exit charges (benefits) — 109 109 (2) 111 0.20

Divestiture-related restructuring actions — 41 41 9 32 0.05

Russia exit charges — — 109 109 (2) 111 0.20

PFAS manufacturing exit costs — 800 800 800 162 638 1.12

Divestiture costs — 60 60 13 47 0.08

Total special items (1,351) 408 408 578 (170) (0.30)

Year ended December 31, 2022 adjusted amounts (non-GAAP measures)

Adjusted amounts (non-GAAP measures) $ 32,878 (3.6) % $ 6,947 21.1 % $ 6,800 $ 1,190 17.5 % $ 5,607 $ 9.88 (6) %

Year ended December 31, 2023

(Dollars in millions, except per share amounts) Net sales Sales change Operating income (loss) Operating income (loss) margin Income (loss) before taxes Provision (benefit) for income taxes Effective tax rate Net income (loss) attributable to 3M Earnings (loss) per diluted share Earnings (loss) per diluted share percent change

Safety and Industrial

GAAP amounts $ 2,324 21.2 %

Adjustments for special items:

Net costs for significant litigation 84

Total special items 84

Adjusted amounts (non-GAAP measures) $ 2,408 22.0 %

Transportation and Electronics

GAAP amounts $ 8,501 (4.5) % $ 1,312 15.4 %

Adjustments for special items:

Manufactured PFAS products (1,289) 205

Total special items (1,289) 205

Adjusted amounts (non-GAAP measures) $ 7,212 (4.5) % $ 1,517 21.0 %

Total Company

GAAP amounts $ 32,681 (4.5) % $ (9,128) (27.9) % $ (9,688) $ (2,691) 27.8 % $ (6,995) $ (12.63) N/M

Adjustments for special items:

Net costs for significant litigation 1

— 14,869 15,245 3,615 11,630 21.00

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Manufactured PFAS products (1,289) 205 205 50 155 0.28

Gain on business divestitures — (36) (36) (11) (25) (0.05)

Russia exit charges (benefits) — (18) (18) 3 (21) (0.04)

Divestiture costs — 496 496 118 378 0.68

Total special items (1,289) 15,516 15,892 3,775 12,117 21.87

Adjusted amounts (non-GAAP measures) $ 31,392 (4.5) % $ 6,388 20.3 % $ 6,204 $ 1,084 17.5 % $ 5,122 $ 9.24 (6) %

1 For the per share amount, this includes adjusting-out the impact of this item causing weighted average shares outstanding to be the same for both basic and diluted loss per share in periods of resulting net losses.

Year ended December 31, 2022

Sales Change Organic sales Acquisitions Divestitures Translation Total sales change

Total Company 1.2 % — % (0.5) % (3.9) % (3.2) %

Remove manufactured PFAS products special item impact (0.4) — — — (0.4)

Adjusted total Company (non-GAAP measures) 0.8 % — % (0.5) % (3.9) % (3.6) %

Transportation and Electronics 1.2 % — % (0.5) % (4.6) % (3.9) %

Remove manufactured PFAS products special item impact (2.2) — — 0.5 (1.7)

Adjusted Transportation and Electronics (non-GAAP measures) (1.0) % — % (0.5) % (4.1) % (5.6) %

Year ended December 31, 2023

Sales Change Organic sales Acquisitions Divestitures Translation Total sales change

Total Company (3.2) % 0.2 % (0.9) % (0.6) % (4.5) %

Remove manufactured PFAS products special item impact — — (0.1) 0.1 —

Adjusted total Company (non-GAAP measures) (3.2) % 0.2 % (1.0) % (0.5) % (4.5) %

Transportation and Electronics (3.5) % 0.7 % (0.7) % (1.0) % (4.5) %

Remove manufactured PFAS products special item impact — 0.2 (0.2) — —

Adjusted Transportation and Electronics (non-GAAP measures) (3.5) % 0.9 % (0.9) % (1.0) % (4.5) %

Sales and operating income (loss) by business segment:

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Corporate and Unallocated 3 — (15,271) 4 — 1,654

Total Company $ 34,229 100.0 % $ 6,539 $ 35,355 100.0 % $ 7,369 (3.2) % (11.3) %

Total Company $ 32,681 100.0 % $ (9,128) $ 34,229 100.0 % $ 6,539 (4.5) N/M

Year ended December 31, 2023

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Total Company (3.2) 0.2 (0.9) (0.6) (4.5)

Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details on the impact of special items on sales (and sales change) and operating income (loss) by business segment.

Sales by geographic area:

Percent change information compares the years ended December 31, 2022 and 2021 with the same prior year period, unless otherwise indicated.

Percent change information compares the years ended December 31, 2023 with the same prior year period, unless otherwise indicated.

Additional discussion of business segment results is provided in the Performance by Business Segment section.

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Organic sales 0.4 (10.5) (2.2) (3.2)

Acquisitions 0.3 0.1 — 0.2

Divestitures (0.9) (0.9) (0.9) (0.9)

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Total sales change 1.7 % (6.6) % (11.0) % (3.2) %

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Additional information beyond what is included in the preceding tables is as follows:

• For the full year 2022, in the Americas geographic area, U.S.

total sales were flat which included increased organic sales of 1 percent.

• For 2023, in the Americas geographic area, U.S.

total sales were flat which included flat organic sales.

Total sales in Mexico increased 12 percent which included increased organic sales of 10 percent.

In Canada, total sales increased 9 percent which included increased organic sales of 13 percent.

In Canada, total sales decreased 9 percent which included decreased organic sales of 5 percent.

In Brazil, total sales increased 4 percent which included increased organic sales of 3 percent.

In the Asia Pacific geographic area, China total sales decreased 15 percent which included decreased organic sales of 11 percent.

In Japan, total sales decreased 12 percent which included increased organic sales of 2 percent.

• For the full year 2021, in the Americas geographic area, U.S.

total sales increased 8 percent which included increased organic sales of 8 percent.

In Japan, total sales decreased 15 percent which included decreased organic sales of 9 percent.

• For 2022, in the Americas geographic area, U.S.

total sales were flat which included increased organic sales of 1 percent.

Total sales in Mexico increased 8 percent which included increased organic sales of 12 percent.

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In Brazil, total sales increased 15 percent which included increased organic sales of 12 percent.

In the Asia Pacific geographic area, China total sales increased 17 percent which included increased organic sales of 11 percent.

In Japan, total sales were flat which included increased organic sales of 2 percent.

In the Asia Pacific geographic area, China total sales decreased 6 percent which included decreased organic sales of 3 percent.

In Japan, total sales decreased 12 percent which included increased organic sales of 2 percent.

Managing currency risks:

The stronger U.S.

dollar had a negative impact on sales in full year 2022 compared to the same periods last year.

Net of the Company’s hedging strategy, foreign currency negatively impacted earnings in full year 2022 compared to the same period last year.

3M utilizes a number of tools to manage currency risk related to earnings including natural hedges such as pricing, productivity, hard currency, hard currency-indexed billings, and localizing source of supply.

3M also uses financial hedges to mitigate currency risk.

In the case of more liquid currencies, 3M hedges a portion of its aggregate exposure, using a 12, 24 or 36 month horizon, depending on the currency in question.

In the case of more liquid currencies, 3M hedges a portion of its aggregate exposure, using a 12, 24 or 36 month horizon, depending on the currency.

For less liquid currencies, financial hedging is frequently more expensive with more limitations on tenor.

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This new program authorizes the repurchase of up to $10 billion of 3M’s outstanding common stock, with no pre-established end date.

In 2022, the Company purchased $1.5 billion of its own stock, compared to $2.2 billion of stock purchases in 2021.

In 2023, the Company purchased $33 million of its own stock, compared to $1.5 billion of stock purchases in 2022.

As of December 31, 2023, approximately $4.2 billion remained available under the authorization.

In February 2024, 3M’s Board of Directors declared a first-quarter 2024 dividend of $1.51 per share, an increase of 1 percent.

This marked the 65th consecutive year of dividend increases for 3M.

Raw materials:

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The primary U.S.

qualified pension plan year-end 2022 discount rate was 5.18%, up 2.29 percentage points from the year-end 2021 discount rate of 2.89%.

The increase in U.S.

discount rates resulted in a decreased valuation of the projected benefit obligation (PBO).

qualified pension plan year-end 2023 discount rate was 4.98%, down 20 basis points from the year-end 2022 discount rate of 5.18%.

The decrease in U.S.

discount rates resulted in a increased valuation of the projected benefit obligation (PBO).

The primary U.S.

qualified pension plan’s funded status remained at 97% as of December 31, 2022 due to the lower PBO resulting from the discount rate increase, offset by the negative returns of the plan's assets.

qualified pension plan’s funded status decreased to 94% as of December 31, 2023 due to the higher PBO resulting from the discount rate decrease and the mortality table update discussed in Note 14, partially offset by the postive returns of the plan's assets.

Additional detail and discussion of international plan asset returns and discount rates is provided in Note 14 (Pension and Postretirement Benefit Plans).

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plans in 2024.

3M expects global defined benefit pension and postretirement expense in 2023 to decrease by approximately $30 million pre-tax when compared to 2022.

3M expects global defined benefit pension and postretirement expense in 2024 to increase by approximately $75 million pre-tax when compared to 2023.

Refer to “Critical Accounting Estimates” within MD&A and Note 14 (Pension and Postretirement Benefit Plans) for additional information concerning 3M’s pension and post-retirement plans.

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Results of Operations

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Goodwill impairment expense — 0.8 (0.8)

Operating income margin 19.1 % 20.8 % (1.7) %

The Company is continuing the ongoing deployment of an enterprise resource planning (ERP) system on a worldwide basis, with these investments impacting cost of sales, SG&A, and R&D.

Operating income (loss) margin (27.9) % 19.1 % (47.0) %

The Company continues to make investments in the implementation of new business systems and solutions, including enterprise resource planning, with these investments impacting cost of sales, SG&A, and R&D.

Cost of Sales:

Cost of sales, measured as a percent of sales, increased in 2022 when compared to the same period last year.

Increases were primarily due to 2022 special item costs for significant litigation from additional commitments to address PFAS-related matters at 3M's Zwijndrecht, Belgium site (discussed in Note 16), higher raw materials and logistics costs, manufacturing productivity headwinds which were further magnified by the shutdown of certain operations in Belgium and progress on restarting previously-idled operations, and investments in growth, productivity and sustainability.

On a percent of sales basis, these increases were partially offset by increases in selling prices.

Cost of sales, measured as a percent of sales, increased in 2023 when compared to 2022.

Increases were primarily due to investments in growth, productivity and sustainability;

restructuring charges, and carryover impact of higher energy cost inflation partially offset by lower year-on-year net costs for significant litigation to address certain PFAS-related matters at 3M's Zwijndrecht, Belgium site, higher selling prices, spending discipline, sourcing actions and restructuring benefits.

Selling, General and Administrative Expenses:

SG&A, measured as a percent of sales, increased in 2022 when compared to the same period last year.

SG&A was impacted by increased special item costs for significant litigation primarily related to steps toward resolving Combat Arms Earplugs litigation (discussed in Note 16) resulting in a 2022 second quarter pre-tax charge of approximately $1.2 billion, certain impairment costs related to exiting PFAS manufacturing (see Note 15), costs related to exiting Russia (see Note 15), divestiture-related restructuring charges (see Note 5), and continued investment in key growth initiatives.

These increases were partially offset by restructuring benefits and ongoing general 3M cost management.

SG&A, measured as a percent of sales, increased in 2023 when compared to 2022.

SG&A in 2023 was primarily impacted by pre-tax charges of $10.3 billion and $4.2 billion in the second and third quarters related to the PWS Settlement and the CAE Settlement, respectively (both discussed in Note 18).

SG&A was also impacted by restructuring charges (see Note 5), divestiture costs (related to separating and preparing the Health Care business for spin-off) and continued investment in key growth initiatives.

These impacts were partially offset by 2022 net costs for significant litigation to address Combat Arms Earplugs litigation matters (for which a pre-tax charge of approximately $1.2 billion was reflected in 2022, discussed in Note 18), certain impairment costs related to exiting PFAS manufacturing (see Note 17), costs related to exiting Russia (see Note 17), divestiture-related restructuring charges (see Note 5), restructuring benefits and ongoing general 3M cost management.

Research, Development and Related Expenses:

R&D, measured as a percent of sales, decreased in 2022 when compared to the same period last year.

R&D, measured as a percent of sales, increased in 2023 when compared to 2022.

3M continues to invest in a range of R&D activities from application development, product and manufacturing support, product development and technology development aimed at disruptive innovations.

R&D was also impacted by restructuring charges.

Gain on Business Divestitures:

In the third quarter of 2022, 3M recorded a pre-tax gain of $2.7 billion ($2.7 billion after tax) related to the split-off and combination of its Food Safety business with Neogen Corporation.

In 2023, 3M recorded a pre-tax gain of $36 million related to the sale of assets associated with its dental local anesthetic business net of a previous contingent indemnification obligation from a 2020 divestiture.

In 2022, 3M recorded a pre-tax gain of $2.7 billion related to the split-off and combination of its Food Safety business with Neogen Corporation.

Refer to Note 3 for further details.

Goodwill Impairment Expense:

As a result of 3M's commitment to exit per- and polyfluoroalkyl substance (PFAS) manufacturing, 3M recorded a goodwill impairment charge related to the Advanced Materials reporting unit (within the Transportation and Electronics business).

Refer to Note 17 for further details.

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Other Expense (Income), Net:

See Note 6 for a detailed breakout of this line item.

Interest expense (net of interest income) decreased in 2022 compared to the same period year-on-year driven by debt maturities in the ordinary course and interest income on invested cash.

Interest expense (net of interest income) decreased in 2021 compared to the same period year-on-year due in part to interest expense savings from early debt extinguishment actions in 2020.

The non-service pension and postretirement net benefit decreased $49 million and increased $163 million in 2022 and 2021, respectively.

The lower year-on-year benefit in 2022 was primarily due to higher interest costs due to higher discount rates as of the year-end 2021, lower expected returns on plan assets for 2023, partially offset by a reduction in actuarial loss amortization, which was driven by the lower discount rates.

Interest expense (net of interest income) increased in 2023 compared to 2022 driven by the addition of imputed interest associated with the obligations resulting from the PWS Settlement and the CAE Settlement (discussed in Note 18).

The non-service pension and postretirement net benefit decreased $119 million in 2023.

The lower year-on-year benefit in 2023 was primarily due to higher interest costs due to higher discount rates as of the year-end 2022, partially offset by a reduction in actuarial loss amortization, which was driven by the lower discount rates.

Refer to Note 14 for additional details.

Provision for Income Taxes:

(Percent of pre-tax income) 2022 2021

Provision (benefit) for Income Taxes:

(Percent of pre-tax income/loss) 2023 2022

Effective tax rate 27.8 % 9.6 %

Factors that impacted the tax rates between years are further discussed in the Overview section above and in Note 10.

The tax rate can vary from quarter to quarter due to discrete items, such as the settlement of income tax audits, changes in tax laws, and employee share-based payment accounting;

as well as recurring factors, such as the geographic mix of income before taxes.

Refer to Note 10 for further discussion of income taxes.

Income from Unconsolidated Subsidiaries, Net of Taxes:

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Income (loss) from unconsolidated subsidiaries, net of taxes $ 18 $ 11

Income (loss) from unconsolidated subsidiaries, net of taxes, is attributable to the Company’s accounting under the equity method for ownership interests in certain entities such as Kindeva following 3M's divestiture of the drug delivery business in 2020.

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

Income (loss) from unconsolidated subsidiaries, net of taxes, is attributable to the Company’s accounting under the equity method for ownership interests in certain entities.

Net Income (Loss) Attributable to Noncontrolling Interest:

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In addition, disclosures relating to 3M’s business segments are provided in Note 21.

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

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 (see Note 19 for additional details).

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 for all comparative periods presented.

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 (see Note 21 for additional details).

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

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and Consumer.

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Corporate and Unallocated:

In addition to these four business segments, 3M assigns certain costs to “Corporate and Unallocated,” which is presented separately in the preceding business segments table and in Note 21.

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

Corporate special items include net costs for significant litigation associated with Combat Arms Earplugs and Aearo-respirator mask/asbestos matters during the chapter 11 bankruptcy period (which began in July 2022) and with PFAS-related other environmental matters (see Note 16).

Corporate special items also include divestiture costs, gain/loss on business divestitures (see Note 3), divestiture-related restructuring costs (see Note 5), and Russia exit costs (see Note 15).

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 18) 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 17).

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

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

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

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

Other corporate expense-net also includes costs and income from transition supply, manufacturing and service arrangements with divested businesses.

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

Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.

Corporate and Unallocated operating expenses decreased in 2022, when compared to the same period last year.

Corporate and Unallocated operating expenses increased in 2023, when compared to the same period last year.

The subsections below provide additional information.

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Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details on the impact of special items and to Note 21 for additional information on the components of corporate special items.

Corporate special item net costs decreased in 2022 year over year primarily due to the gain on divestiture associated with the 2022 split-off of the Food Safety business (discussed in Note 3) partially offset by additional commitments in 2022 to address PFAS-related matters, including at 3M's Zwijndrecht, Belgium site (discussed in Note 16).

Corporate special item net costs increased year-over-year primarily due to increased net costs for significant litigation as a result of pre-tax charges of $10.3 billion and $4.2 billion in the second and third quarters of 2023 related to the PWS Settlement and the CAE Settlement, respectively (both discussed in Note 18), and divestiture costs.

Other Corporate Expense - Net:

Other corporate operating expenses, net, increased when compared to the same period last year primarily due to a $91 million pre-tax benefit from the impact of the favorable decision of the Brazilian Supreme Court included in the second quarter of 2021 regarding the calculation of past social taxes.

Other corporate operating expenses, net, increased in 2023 primarily due to higher pre-tax restructuring charges (see Note 5).

Operating Business Segments:

Information related to 3M’s business segments is presented in the tables that follow with additional context in the corresponding narrative below the tables.

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Safety and Industrial Business (33.5% of consolidated sales):

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Total sales change (5.6) % (3.2) %

Business segment operating income (loss) (millions) $ 1,199 $ 2,466

Business segment operating income (millions)

$ 2,324 $ 1,135

Percent change 104.7 % (53.9) %

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The preceding table also displays business segment operating income (loss) information adjusted for special items.

For Safety and Industrial these adjustments include net costs for respirator mask/asbestos (Aearo-related and non-Aearo related) and Combat Arms Earplugs litigation matters.

During the Aearo chapter 11 bankruptcy period (which began in July 2022 — see Note 16), net costs related to Combat Arms Earplugs and Aearo-respirator mask/asbestos matters are reflected as corporate special items in Corporate and Unallocated while those associated with non-Aearo respirator mask/asbestos matters continue to be reflected as special items in the Safety and Industrial business segment.

For Safety and Industrial these adjustments include net costs related to respirator mask/asbestos (Aearo-related and non-Aearo related).

During the voluntary Aearo chapter 11 bankruptcy period (which began in July 2022 and ended in June 2023 —see Note 18), net costs related to Aearo-respirator mask/asbestos matters were reflected as corporate special items in Corporate and Unallocated while those associated with non-Aearo respirator mask/asbestos matters continued to be reflected as special items in the Safety and Industrial business segment.

Prior to the bankruptcy, costs associated with Combat Arms Earplugs matters were reflected in the Safety and Industrial business segment (rather than reflected in Corporate and Unallocated--see Note 21 for additional information).

Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details.

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On an organic sales basis:

• Sales increased in roofing granules and automotive aftermarket, and decreased in personal safety, closure and masking systems, industrial adhesives and tapes, abrasives, and electrical markets.

• Growth was held back by the disposable respirator sales decline within personal safety along with the exit of Russia (which, together, negatively impacted year-on-year organic growth by 5.2 percentage points);

declines within industrial adhesives and tapes due to consumer electronics softness, closure and masking systems was down as consumers pulled back on discretionary spending impacting e-commerce shipments (slowing down in packaging and shipping activity).

Business segment operating income margins increased year-on-year primarily due to lower special item costs for significant litigation.

2022 was impacted by a pre-tax charge of approximately $1.2 billion related to steps toward resolving Combat Arms Earplugs litigation (discussed in Note 18).

Margins were also impacted by aggressive spending discipline, benefits from restructuring, pricing and productivity actions offset by the lower sales volume, higher restructuring costs, inflation impacts, investments in the business and China-related challenges.

Adjusting for special item costs for significant litigation (non-GAAP measure), business segment operating income margins were consistent year-on-year as displayed above.

Year 2022 results:

Sales in Safety and Industrial were down 3.2 percent in U.S.

On an organic sales basis:

• Sales increased in electrical markets, abrasives, automotive aftermarket, roofing granules, closure and masking systems, and industrial adhesives and tapes and decreased in personal safety.

• Growth from continued improving general industrial manufacturing activity and other end-market demand was partially offset by the disposable respirator sales decline within personal safety, which negatively impacted year-on-year organic growth by 4.5 percentage points.

Business segment operating income margins decreased year-on-year due to special item costs for significant litigation primarily related to steps toward resolving Combat Arms Earplugs litigation (discussed in Note 16) resulting in a 2022 second quarter pre-tax charge of approximately $1.2 billion.

Business segment operating income margins decreased year-on-year due to special item costs for significant litigation primarily related to steps toward resolving Combat Arms Earplugs litigation (discussed in Note 18) resulting in a 2022 pre-tax charge of approximately $1.2 billion.

Margins were also impacted by increased raw materials and logistics costs, manufacturing productivity headwinds, partially offset by selling price actions, spending discipline and restructuring actions.

Adjusting for special item costs for significant litigation (non-GAAP measure), business segment operating income margins decreased year-on-year as displayed above.

Year 2021 results:

Sales in Safety and Industrial were up 9.2 percent in U.S.

On an organic sales basis:

• Sales increased in abrasives, industrial adhesives and tapes, automotive aftermarket, electrical markets, roofing granules, and closure and masking systems and decreased in personal safety.

• Growth was driven by improving general industrial manufacturing activity and other end-market demand partially offset by prior-year strong pandemic-related respirator mask demand.

Business segment operating income margins decreased year-on-year due to increases in raw materials, logistics and special item costs for significant litigation;

lower gain on sale of properties;

and manufacturing productivity impacts that were partially offset by sales growth leverage, and benefits from restructuring actions and lower related charges.

Adjusting for special item costs for significant litigation (non-GAAP measure), business segment operating income margins decreased year-on-year as displayed above.

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Transportation and Electronics Business (26.0% of consolidated sales):

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Organic sales (3.5) % 1.2 %

Acquisitions 0.7 —

Divestitures (0.7) (0.5)

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Percent of sales 15.4 % 10.9 %

Adjusted sales (millions) (non-GAAP measure) $ 7,212 $ 7,551

Sales change analysis:

Organic sales (3.5) % (1.0) %

Acquisitions 0.9 —

Divestitures (0.9) (0.5)

Translation (1.0) (4.1)

Total sales change (4.5) % (5.6) %

Adjusted business segment operating income (millions) (non-GAAP measure) $ 1,517 $ 1,604

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Percent of sales 21.0 % 21.2 %

The preceding table also displays business segment operating income (loss) information adjusted for special items.

For Transportation and Electronics these adjustments include PFAS manufacturing exit costs.

The preceding table also displays business segment sales (and sales change) and operating income (loss) information adjusted for special items.

For Transportation and Electronics these adjustments include the sales and estimates of income regarding PFAS manufactured products that 3M plans to exit by the end of 2025.

Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details.

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Sales in Transportation and Electronics were down 4.5 percent in U.S.

Adjusting for special item PFAS manufactured products (non-GAAP measure), sales were down 4.5 percent in U.S.

On an organic sales basis:

• Sales increased in automotive and aerospace, commercial solutions and advanced materials, and decreased in transportation safety and electronics.

• Sales increased in automotive and aerospace, were flat in commercial solutions, and decreased in electronics, advanced materials and transportation safety.

• Growth continued to be held back by consumer electronics end-market weakness.

Acquisitions/divestitures:

• Divestiture and acquisition impacts relate to lost/gained Transportation and Electronics sales year-on-year from the Aearo Entities.

In the third quarter of 2022, 3M deconsolidated the Aearo Entities and, in the second quarter of 2023, reconsolidated those entities (discussed in Note 18).

For each of the 12-months post-deconsolidation and post-reconsolidation, impacts are each reflected separately as divestiture and acquisition, respectively.

Business segment operating income margins increased year-on-year due to lower operating losses on PFAS manufactured products.

In 2022, PFAS manufacturing products results included a $0.8 billion asset impairment charge (discussed in Note 17).

Margins were also impacted by lower sales volumes, inflation impacts, investments in the business, higher restructuring costs, manufacturing and supply chain headwinds and China-related challenges partially offset by benefits from aggressive spending discipline, pricing and productivity actions.

Adjusting for special item PFAS manufactured products (non-GAAP measure), business segment operating income margins decreased year-on-year as displayed above.

Year 2022 results:

Sales in Transportation and Electronics were down 3.9 percent in U.S.

On an organic sales basis:

• Sales increased in automotive and aerospace, commercial solutions, and advanced materials and decreased in electronics, and transportation safety.

• Growth was held back by weaker consumer electronics end-market demand and ongoing impacts of semiconductor supply chain constraints on automotive markets.

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• Divestiture impact relates to lost Transportation and Electronics sales year-on-year from deconsolidation of the Aearo Entities in July 2022.

Business segment operating income margins decreased year-on-year due to special item charges for PFAS manufacturing exit costs related to asset impairments (discussed in Note 15) resulting in a 2022 fourth quarter pre-tax charge of $0.8 billion.

Business segment operating income margins decreased year-on-year due to a 2022 asset impairment charge of $0.8 billion as a result of 3M's announced exit from PFAS manufacturing (discussed in Note 17).

Margins were also impacted by increased raw materials and logistics costs, manufacturing productivity headwinds which were further magnified by the shutdown of certain operations in Belgium and investments in auto electrification, partially offset by selling price actions, strong spending discipline and restructuring actions.

Adjusting for special item PFAS manufacturing exit costs (non-GAAP measure), business segment operating income margins increased year-on-year as displayed above.

Year 2021 results:

Sales in Transportation and Electronics were up 10.2 percent in U.S.

On an organic sales basis:

• Sales increased in advanced materials, commercial solutions, automotive and aerospace, electronics and transportation safety.

• Growth benefited from improving automotive-end market activity such as increases in car and light truck builds, strong demand in data center, semiconductor, interconnect and consumer electronics markets and increased advertising spend and return to workplace trends partially offset by impacts from semiconductor supply chain constraints.

Business segment operating income margins increased year-on-year due to sales growth leverage, benefits from restructuring actions and lower related charges, and COVID impacts recognized on certain assets in 2020 that were partially offset by increases in raw materials and logistic costs, manufacturing productivity impacts, and increased compensation and benefit costs.

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Adjusting for special item PFAS manufacturing exit costs (non-GAAP measure), business segment operating income margins decreased year-on-year as displayed above.

Health Care Business (25.1% of consolidated sales):

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On an organic sales basis:

• Sales increased in separation and purification, health information systems, food safety and medical solutions, and was flat in oral care.

• Growth continues to be impacted by COVID-related trends on elective procedure volumes and ongoing inflationary pressures.

• Sales increased in oral care and medical solutions and decreased in separation and purification and health information systems.

• Growth was held back by declines in separation and purification due to the normalization of post-COVID-related biopharma demand, declines in health information systems from tighter hospital budgets along with overall headwinds from the exit of Russia.

Divestitures:

• Divestiture impact relates to the lost sales year-on-year from the divestiture from the Food Safety Division split-off transaction and combination with Neogen completed in the third quarter of 2022.

Business segment operating income margins decreased year-on-year due to increased raw materials and logistics costs along with manufacturing productivity headwinds, investments in the business and transaction-related costs associated with the announced divestiture of the food safety business (see Note 3), partially offset by sales growth (including selling price actions), strong spending discipline and restructuring actions.

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

• Divestiture impact relates to the lost sales year-on-year from the third quarter 2023 sale of the dental local anesthetic business and the third quarter 2022 split-off of the Food Safety business.

Business segment operating income margins decreased year-on-year due to manufacturing and supply chain headwinds, inflation impacts, investments in the business, restructuring costs, and added costs of building out the team ahead of the spin (referenced below) partially offset by benefits from aggressive spending discipline, pricing, productivity actions, and restructuring.

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

3M expects to initially retain a 19.9% ownership position in the Health Care business.

Year 2022 results:

Sales in Health Care were up 9.8 percent in U.S.

Sales in Health Care were down 2.0 percent in U.S.

On an organic sales basis:

• Sales increased in oral care, separation and purification, food safety, health information systems and medical solutions.

• Growth benefited from higher year-on-year dental procedures, continued high demand for biopharma filtration solutions for COVID-related vaccine and therapeutic development and manufacturing, rising elective procedure volumes in the first six months of 2021 and due to improving hospital information technology investments.

• Sales increased in separation and purification, health information systems, food safety, and medical solutions and was flat in oral care.

• Growth was impacted by COVID-related trends on elective procedure volumes and ongoing inflationary pressures.

Divestitures:

• In May 2020, 3M completed the sale of substantially all of its drug delivery business.

Business segment operating income margins increased year-on-year due to sales growth leverage and benefits from restructuring actions and lower related charges that were partially offset by supply chain disruptions, increases in raw materials and logistics costs, deal-related costs associated with the announced divestiture of the food safety business (see Note 3), manufacturing productivity impacts, increased compensation and benefit costs, and increased investments in growth.

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Consumer Business (15.4% of consolidated sales):

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On an organic sales basis:

• Sales increased in stationery and office and home care, was flat in consumer health and safety, and decreased in home improvement.

• Sales decreased in home improvement, stationery and office, and home health and auto care.

• Growth was negatively impacted as consumers have shifted their spending patterns to more non-discretionary items.

Business segment operating income margins decreased year-on-year from lower sales volumes, inflation impacts, investments, manufacturing and supply chain headwinds, and higher restructuring costs partially offset by benefits from aggressive spending discipline, pricing, productivity actions and restructuring.

Year 2022 results:

Sales in Consumer were down 3.9 percent in U.S.

On an organic sales basis:

• Sales increased in stationery and office and decreased in home improvement, and home health and auto care.

• Growth was impacted by softening trends in the Consumer retail business as consumers pulled back on discretionary spending and retailers took actions to reduce their inventories.

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Business segment operating income margins decreased year-on-year as a result of increased raw materials, logistics and outsourced hardgoods manufacturing costs along with manufacturing productivity headwinds and investments in the business, partially offset by sales growth (including selling price actions), strong spending discipline and restructuring actions.

Year 2021 results:

Sales in Consumer were up 10.8 percent in U.S.

On an organic sales basis:

• Sales increased in stationery and office, home improvement, consumer health and safety and home care.

• Growth driven by continued strength in the market with strong demand for Command TM adhesives, Filtrete TM air quality solutions, Meguiars TM auto care and Scotch Blue TM painter’s tape and from ongoing strength in demand for packaging and shipping products, Post-it ® -solutions and Scotch ® brand office tapes as the business laps last year’s COVID-related comparisons.

Business segment operating income margins decreased year-on-year as a result of increases in raw materials, logistics, and outsourced hardgoods manufacturing costs, manufacturing productivity impacts, and increased compensation and benefit costs that more than offset leverage from sales growth and benefits from restructuring actions and lower related charges.

Performance by Geographic Area

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Refer to the Overview section for a summary of net sales by geographic area and business segment.

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Geographic Area Supplemental Information

Employees as of December 31, Capital Spending Property, Plant and Equipment - net as of December 31,

Employees as of December 31, Capital Spending

for years ended December 31,

Property, Plant and Equipment - net as of December 31,

(Millions, except Employees) 2023 2022 2023 2022 2023 2022

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Note 14 provides the weighted averages of these assumptions as of applicable dates and for respective periods and additional information on how the rates were determined.

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Discount rate

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For the year ended December 31, 2023, the Company recognized consolidated defined benefit pre-tax pension and postretirement service cost expense of $274 million and a benefit of $129 million related to all non-service pension and postretirement net benefit costs (after settlements, curtailments, special termination benefits and other) for a total consolidated defined benefit pre-tax pension and postretirement expense of $145 million, down from $178 million in 2022.

In 2023, defined benefit pension and postretirement service cost expense is anticipated to total approximately $270 million while non-service pension and postretirement net benefit costs is anticipated to be a benefit of approximately $125 million, for a total consolidated defined benefit pre-tax pension and postretirement expense of approximately $145 million, a decrease of approximately $30 million compared to 2022.

In 2024, defined benefit pension and postretirement service cost expense is anticipated to total approximately $250 million while non-service pension and postretirement net benefit costs is anticipated to be a benefit of approximately $30 million, for a total consolidated defined benefit pre-tax pension and postretirement expense of approximately $220 million, an increase of approximately $75 million compared to 2023.

Assessments of Goodwill:

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If future non-cash asset impairment charges are taken, 3M would expect that only a portion of the goodwill would be impaired.

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Impairment testing for goodwill is done at a reporting unit level, with all goodwill assigned to a reporting unit.

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

3M also performs a discounted cash flow analysis for certain reporting units where the market approach indicates additional review is warranted.

3M also performs a discounted cash flow analysis for certain reporting units if the market approach indicates additional review is warranted.

A discounted cash flow analysis involves key assumptions including projected sales, EBITDA margins, capital expenditures, and discount rates.

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These ten reporting units were comprised of the following divisions:

Advanced Materials, Display Materials and Systems, Electronics Materials Solutions, Health Information Systems, Industrial Adhesives and Tapes, Medical Solutions, Oral Care, Personal Safety, Separation and Purification Sciences, and Transportation Safety.

Abrasives, Display Materials and Systems, Electronics Materials Solutions, Health Information Systems, Industrial Adhesives and Tapes, Medical Solutions, Oral Care, Personal Safety, Separation and Purification Sciences, and Transportation Safety.

3M is a highly integrated enterprise, where businesses share technology and leverage common fundamental strengths and capabilities, thus many of 3M’s businesses could not easily be sold on a stand-alone basis.

3M’s focus on research and development has resulted in a portion of 3M’s value being comprised of internally developed businesses.

Following the annual impairment test, as a result of 3M's December 2022 announced commitment to a plan to exit per- and polyfluoroalkyl substance (PFAS) manufacturing as described in Notes 4 and 15, 3M tested the Advanced Materials and Electronics Materials Solutions reporting units (within the Transportation and Electronics business) for impairment resulting in a goodwill impairment charge related to the Advanced Materials reporting unit.

As a result of 3M's December 2022 announced commitment to a plan to exit per- and polyfluoroalkyl substance (PFAS) manufacturing as described in Notes 4 and 17, 3M tested the Advanced Materials and Electronics Materials Solutions reporting units (within the Transportation and Electronics business) for impairment resulting in a goodwill impairment charge related to the Advanced Materials reporting unit.

3M will continue to monitor its reporting units and asset groups in 2024 for any triggering events or other indicators of impairment.

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Information regarding new accounting pronouncements is included in Note 1 to the Consolidated Financial Statements.

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Financial Condition and Liquidity

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3M’s commercial paper program permits the Company to have a maximum of $5 billion outstanding with a maximum maturity of 397 days from date of issuance.

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

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

The strength of 3M’s credit profile and significant ongoing cash flows provide 3M proven access to capital markets.

Additionally, the Company’s debt maturity profile is staggered to help ensure refinancing needs in any given year are reasonable in proportion to the total portfolio.

As of December 2022, 3M has a credit rating of A1, stable outlook from Moody's Investors Service, and a credit rating of A+, CreditWatch negative from S&P Global Ratings.

The Company’s total debt was lower at December 31, 2022 when compared to December 31, 2021.

Decreases in debt were largely due to the repayments of 500 million euros and $600 million aggregate principal amounts of fixed-rate medium-term notes in February 2022 and June 2022, respectively.

As of the date of this report, 3M has a credit rating of A3, negative outlook from Moody's Investors Service, a credit rating of BBB+, CreditWatch negative from S&P Global Ratings, and a credit rating of A-, stable outlook from Fitch.

The Company’s total debt at December 31, 2023 was consistent when compared to December 31, 2022 as maturities of $1.8 billion of fixed-rate notes were offset by issuances of commercial paper of $1.8 billion.

For discussion of repayments of and proceeds from debt refer to the following Cash Flows from Financing Activities section.

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Subsequently, in March of 2021, IBA ceased publication of certain LIBOR rates after December 31, 2021.

USD LIBOR rates that did not cease on December 31, 2021 will continue to be published through June 30, 2023.

The Company has reviewed its debt securities, bank facilities, derivative instruments, and commercial contracts that may utilize LIBOR as the reference rate.

Contracts will be modified to apply a new reference rate where applicable.

Certain USD LIBOR rates subject to a synthetic methodology will continue to be published until September 2024.

The Company's material debt securities, bank facilities, and derivative instruments that previously utilized LIBOR as the reference rate have transitioned to the Secured Overnight Financing Rate, or SOFR, as a reference rate as necessary.

Effective February 8, 2023, the Company updated its “well-known seasoned issuer” (WKSI) shelf registration statement, which registers an indeterminate amount of debt or equity securities for future issuance and sale.

This replaced 3M’s previous shelf registration dated February 10, 2020.

In May 2016, in connection with the WKSI shelf, 3M entered into an amended and restated distribution agreement relating to the future issuance and sale (from time to time) of the Company’s medium-term notes program (Series F), up to the aggregate principal amount of $18 billion, which was an increase from the previous aggregate principal amount up to $9 billion of the same Series.

In May 2016, 3M entered into an amended and restated distribution agreement relating to the future issuance and sale (from time to time) of the Company’s medium-term notes program (Series F), up to the aggregate principal amount of $18 billion, which was an increase from the previous aggregate principal amount up to $9 billion of the same Series.

As of December 31, 2023, the total amount of debt issued as part of the medium-term notes program (Series F), inclusive of debt issued in February 2019 and prior years is approximately $17.6 billion (utilizing the foreign exchange rates applicable at the time of issuance for the euro denominated debt).

Information with respect to long-term debt issuances and maturities for the periods presented is included in Note 13.

As disclosed in Note 12, 3M had debt financing facilities providing commitments for term loans and potential bridge financing aggregating $1.0 billion related to the Food Safety Division split-off transaction and combination with Neogen (discussed in Note 3).

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

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

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

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

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

the facility was amended in July and September 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 December 31, 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 December 31, 2023, this ratio was approximately 15 to 1.

Debt covenants do not restrict the payment of dividends.

The Company also had $355 million in stand-alone letters of credit and bank guarantees issued and outstanding at December 31, 2023.

These instruments are utilized in connection with normal business activities.

Cash, cash equivalents and marketable securities:

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At December 31, 2022, 3M had $3.9 billion of cash, cash equivalents and marketable securities, of which approximately $2.7 billion was held by the Company’s foreign subsidiaries and $1.2 billion was held by the United States.

The decrease from December 31, 2021 primarily resulted from cash flow from operations and Food Safety transaction-related cash consideration and earlier borrowings (see Note 3) offset by ongoing dividend payments, purchases of treasury stock, capital expenditures, and the fixed-rate medium-term note maturities in 2022.

The increase from December 31, 2022 primarily resulted from cash flow from operations.

Net Debt (non-GAAP measure):

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3M believes net debt is meaningful to investors as 3M considers net debt and its components to be important indicators of liquidity and financial position.

The following table provides net debt as of December 31, 2022 and 2021.

The following table provides net debt as of December 31, 2023 and December 31, 2022.

(Millions) 2023 2022 Change

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Working capital decreased $4.1 billion compared with December 31, 2022.

Balance changes in current assets decreased working capital by $0.7 billion, driven largely by decreases in cash and cash equivalents.

Balance changes in current liabilities decreased working capital by $0.5 billion, primarily due to increases in short-term borrowings and current-portion of long-term debt offset by decreases in accrued payroll.

Inventory increased $387 million from December 31, 2021, primarily as a result of increased underlying operating activity partially offset by foreign currency translation impacts.

Current portion of long-term debt increased as upcoming debt maturities now considered current were partially offset by the bond maturities in 2022, while accounts payable also increased as a result of increased sequential operating activity partially offset by foreign currency translation impacts.

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Cash flows from operating, investing and financing activities are provided in the tables that follow.

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

Thus, the amounts presented in the following operating, investing and financing activities tables reflect changes in balances from period to period adjusted for these effects.

Balance changes in current assets increased working capital by $1.7 billion, driven largely by increases in cash and cash equivalents partially offset by decreases in inventories.

Balance changes in current liabilities decreased working capital by $5.8 billion, primarily due to increases in the current portion of obligations resulting from the PWS Settlement and the CAE Settlement (discussed in Note 18).

Discussions of cash flows from operating, investing and financing activities are provided in the sections that follow.

Cash Flows from Operating Activities:

Year ended December 31, (Millions) 2022 2021

Net income including noncontrolling interest $ 5,791 $ 5,929

Depreciation and amortization 1,831 1,915

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

Goodwill impairment expense 271 —

Company pension and postretirement contributions (158) (180)

Company pension and postretirement expense 178 206

Stock-based compensation expense 263 274

Gain on business divestitures (2,724) —

Income taxes (deferred and accrued income taxes) (710) (410)

Accounts receivable (105) (122)

Inventories (629) (903)

Accounts payable 111 518

Other — net 854 227

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

Cash flows from operating activities can fluctuate significantly from period to period, as working capital movements, tax timing differences and other items can significantly impact cash flows.

In 2022, cash flows provided by operating activities decreased $1,863 million compared to the same period last year, with this decrease primarily due to lower net income and the cash impact from capitalization of R&D for U.S.

tax purposes.

The combination of accounts receivable, inventories and accounts payable decreased operating cash flow by $623 million in 2022, compared to an operating cash flow decrease of $507 million in 2021.

Additional discussion on working capital changes is provided earlier in the “Financial Condition and Liquidity” section.

The 2022 second quarter pre-tax charge of approximately $1.2 billion related to steps toward resolving Combat Arms Earplugs litigation (discussed in Note 16) largely impacted the 2022 net income component above, with offsets in the other-net and deferred tax elements.

The 2022 non-cash impairment expenses added back to net income in arriving at net cash provided by operating activities above primarily relate to 3M's commitment to a plan to exit per- and polyfluoroalkyl substance (PFAS) manufacturing as described in Note 15.

Cash flows from operating activities can fluctuate significantly from period to period, as working capital movements, tax timing differences and other items such as litigation payments can significantly impact cash flows.

In 2023, cash flows provided by operating activities increased $1,089 million compared to the same period last year, primarily driven by decreases in inventories, increasing operating cash flow by $567 million in 2023, compared to inventory increases that decreased operating cash flow by $629 million in 2022.

The 2023 pre-tax charges of $10.5 billion and $4.3 billion (inclusive of imputed interest) related to the PWS Settlement and the CAE Settlement, respectively, along with the $1.2 billion pre-tax charge in 2022 related to steps toward resolving Combat Arms Earplugs litigation (all discussed in Note 18) largely impacted the net income component, with offsets in the other-net and deferred tax elements in each of those periods.

Cash Flows from Investing Activities:

Year ended December 31, (Millions) 2022 2021

Purchases of property, plant and equipment (PP&E) $ (1,749) $ (1,603)

Proceeds from sale of PP&E and other assets 200 51

Purchases and proceeds from maturities and sale of marketable securities and investments, net 11 204

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

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

Other — net 1 31

Net cash provided by (used in) investing activities $ (1,046) $ (1,317)

Investments in property, plant and equipment enable growth across many diverse markets, helping to meet product demand and increasing manufacturing efficiency.

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and associated unpaid liabilities and grant proceeds receivable are considered non-cash changes in such balances for purposes of preparation of statement of cash flows.

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3M invests in renewal and maintenance programs, which pertain to cost reduction, cycle time, maintaining and renewing current capacity, eliminating pollution, and compliance.

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Cash Flows from Financing Activities:

Year ended December 31, (Millions) 2022 2021

Change in short-term debt — net $ 340 $ (2)

Repayment of debt (maturities greater than 90 days) (1,179) (1,144)

Proceeds from debt (maturities greater than 90 days) 1 1

Total cash change in debt (838) (1,145)

Purchases of treasury stock (1,464) (2,199)

Proceeds from issuances of treasury stock pursuant to stock option and benefit plans 381 639

Dividends paid to shareholders (3,369) (3,420)

Other — net (60) (20)

Net cash provided by (used in) financing activities $ (5,350) $ (6,145)

2023 Debt Activity :

Total debt was approximately $16.0 billion at December 31, 2023 and $15.9 billion at December 31, 2022.

Decreases in debt were largely due to the repayments of 500 million euros and $600 million aggregate principal amounts of fixed-rate medium-term notes in February 2022 and June 2022, respectively.

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

In conjunction with the Food Safety Division split-off transaction and combination with Neogen (discussed in Note 3), the associated non-cash debt-for-debt exchange in the third quarter of 2022 reduced then-outstanding 3M commercial paper indebtedness of $350 million (borrowed earlier in the year) which became new term-debt obligations of Neogen.

Net commercial paper issuances in addition to repayments and borrowings by international subsidiaries are largely reflected in “Change in short-term debt – net” in the preceding table.

Maturities of $1.8 billion of fixed-rate notes were offset by net issuances of commercial paper of $1.8 billion (issuance and subsequent repayments/reissuances).

The gross commercial paper issuances and repayments, in addition to repayments of the fixed-rate notes, are largely reflected in “Proceeds from debt (maturities greater than 90 days)” and "Repayment of debt (maturities greater than 90 days)".

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

3M’s primary short-term liquidity needs are met through cash on hand and U.S.

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2022 Debt Activity :

Decreases in debt were largely due to the March 2021 early redemption of $450 million in debt maturing in 2022 via make-whole call offers and the November 2021 repayment of 600 million euros aggregate principal amount of Eurobonds that matured.

The Company had no commercial paper outstanding at December 31, 2021 and December 31, 2020.

Net commercial paper issuances in addition to repayments and borrowings by international subsidiaries are largely reflected in “Change in short-term debt – net” in the preceding table.

Decreases in debt were largely due to the repayments of 500 million euros and $600 million aggregate principal amounts of fixed-rate medium-term notes in February 2022 and June 2022, respectively.

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

Net commercial paper issuances in addition to repayments and borrowings by international subsidiaries are largely reflected in “Change in short-term debt – net”.

Repurchases of Common Stock :

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The Company does not utilize derivative instruments linked to the Company’s stock.

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Dividends Paid to Shareholders:

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In February 2024, 3M’s Board of Directors declared a first-quarter 2024 dividend of $1.51 per share, an increase of 1 percent.

This is equivalent to an annual dividend of $6.00 per share and marked the 65th consecutive year of dividend increases.

Other cash flows from financing activities may include various other items, such as cash paid associated with certain derivative instruments, distributions to or sales of noncontrolling interests, changes in overdraft balances, and principal payments for finance leases.

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generally accepted accounting principles (GAAP).

Therefore, they should not be considered a substitute for income or cash flow data prepared in accordance with U.S.

Therefore, they should not be considered a substitute for income (loss) or cash flow data prepared in accordance with U.S.

GAAP and may not be comparable to similarly titled measures used by other companies.

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It should not be inferred that the entire free cash flow amount is available for discretionary expenditures.

The Company defines free cash flow conversion as free cash flow divided by net income attributable to 3M.

The Company defines free cash flow conversion as free cash flow divided by net income (loss) attributable to 3M.

The Company believes free cash flow and free cash flow conversion are meaningful to investors as they are useful measures of performance and the Company uses these measures as an indication of the strength of the company and its ability to generate cash.

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Refer to the preceding Cash Flows from Operating Activities and Cash Flows from Investing Activities sections for discussion of items that impacted the operating cash flow and purchases of PP&E components of the calculation of free cash flow.

Refer to the preceding “Results of Operations” section for discussion of items that impacted the net income attributable to 3M component of the calculation of free cash flow conversion.

Refer to the preceding Results of Operations section for discussion of items that impacted the net income (loss) attributable to 3M component of the calculation of free cash flow conversion.

Year ended December 31, (Millions) 2023 2022

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Free cash flow 5,065 3,842

Net income attributable to 3M $ 5,777 $ 5,921

Free cash flow conversion 66 % 99 %

Net income (loss) attributable to 3M $ (6,995) $ 5,777

Free cash flow conversion N/M 66 %

Material Cash Requirements from Known Contractual and Other Obligations:

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• Commitments and contingencies—Refer to Note 18.

In addition to other matters discussed therein, Note 18 references that the Company expects to pay up to $12.5 billion in the aggregate from 2023 through 2036 pursuant to the terms of the PWS Settlement and expects to pay up to $6.0 billion in the aggregate from 2023 to 2029 pursuant to the terms of the CAE Settlement.

Note 7 provides further information regarding amounts due under these settlements.

See the settlement agreements that are included in the exhibit list to this filing for additional information.

• Operating and finance leases—Refer to Note 19.

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Additionally, contractual capital commitments represent a small part of the Company’s expected capital spending.

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Financial Instruments

The Company enters into foreign exchange forward contracts, options and swaps to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies and to offset, in part, the impacts of changes in value of various non-functional currency denominated items including certain intercompany financing balances.

The Company enters into foreign exchange forward and option contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies and to offset, in part, the impacts of changes in value of various non-functional currency denominated items including certain intercompany financing balances.

As circumstances warrant, the Company also uses foreign exchange contracts and foreign currency denominated debt as hedging instruments to hedge portions of the Company’s net investments in foreign operations.

The Company manages interest rate risks using a mix of fixed and floating rate debt.

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The Company manages commodity price risks through negotiated supply contracts and price protection agreements.

Refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”, for further discussion of foreign exchange rates risk, interest rates risk, commodity prices risk and value at risk analysis.

Refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”, for further discussion of foreign exchange rates risk, interest rates risk and commodity prices risk.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis