What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-07 compared with 2023-02-08 · 920 added, 1247 removed, 1659 unchanged (57% of the section changed)

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

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Management’s Responsibility for Financial Reporting

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The Company’s internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.

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Report of Independent Registered Public Accounting Firm

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Opinions on the Financial Statements and Internal Control over Financial Reporting

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

We have audited the accompanying consolidated balance sheet of 3M Company and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income (loss), of comprehensive income (loss), of changes in equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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

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Critical Audit Matters

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

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

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

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

Legal Proceedings

As described in Note 18 to the consolidated financial statements, management records liabilities for legal proceedings in those instances where it can reasonably estimate the amount of the loss and when the loss is probable.

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

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

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

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

The principal considerations for our determination that performing procedures relating to legal proceedings is a critical audit matter are the significant judgment by management when assessing the likelihood of a loss being incurred and when estimating the loss or range of loss for each claim, which in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s assessment of the liabilities and disclosures associated with legal proceedings.

The principal considerations for our determination that performing procedures relating to legal proceedings is a critical audit matter are (i) the significant judgment by management when determining the likelihood of a loss being incurred and when estimating the loss or range of loss for each claim and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s assessment of the liabilities and disclosures related to legal proceedings.

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

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

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

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

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

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

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

federal income tax purposes.

In making these determinations, management applied U.S.

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

The applicable facts and circumstances that existed at the time of the Transactions may be reviewed as part of an audit by the Internal Revenue Service.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

/s/ PricewaterhouseCoopers LLP

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

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3M Company and Subsidiaries

Consolidated Statement of Income

Consolidated Statement of Income (Loss)

Years ended December 31

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Total operating expenses 41,809 27,690 27,986

Operating income 6,539 7,369 7,161

Operating income (loss) ( 9,128 ) 6,539 7,369

Other expense (income), net 560 147 165

Income before income taxes 6,392 7,204 6,795

Provision for income taxes 612 1,285 1,337

Income of consolidated group 5,780 5,919 5,458

Income (loss) before income taxes ( 9,688 ) 6,392 7,204

Provision (benefit) for income taxes ( 2,691 ) 612 1,285

Income (loss) of consolidated group ( 6,997 ) 5,780 5,919

Income (loss) from unconsolidated subsidiaries, net of taxes 18 11 10

Net income including noncontrolling interest 5,791 5,929 5,453

Net income (loss) including noncontrolling interest ( 6,979 ) 5,791 5,929

Net income (loss) attributable to noncontrolling interest 16 14 8

Net income attributable to 3M $ 5,777 $ 5,921 $ 5,449

Net income (loss) attributable to 3M $ ( 6,995 ) $ 5,777 $ 5,921

Weighted average 3M common shares outstanding — basic 553.9 566.0 579.0

Earnings per share attributable to 3M common shareholders — basic $ 10.21 $ 10.23 $ 9.43

Earnings (loss) per share attributable to 3M common shareholders — basic $ ( 12.63 ) $ 10.21 $ 10.23

Weighted average 3M common shares outstanding — diluted 553.9 567.6 585.3

Earnings per share attributable to 3M common shareholders — diluted $ 10.18 $ 10.12 $ 9.36

Earnings (loss) per share attributable to 3M common shareholders — diluted $ ( 12.63 ) $ 10.18 $ 10.12

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

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3M Company and Subsidiaries

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(Millions) 2023 2022 2021

Net income including noncontrolling interest $ 5,791 $ 5,929 $ 5,453

Net income (loss) including noncontrolling interest $ ( 6,979 ) $ 5,791 $ 5,929

Other comprehensive income (loss), net of tax:

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

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3M Company and Subsidiaries

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

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3M Company and Subsidiaries

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Other comprehensive income (loss), net of tax

Cumulative translation adjustment 447 449 ( 2 )

Defined benefit pension and post-retirement plans adjustment 106 106

Cash flow hedging instruments - unrealized gain (loss) ( 142 ) ( 142 )

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

970 971 ( 1 )

Dividends declared ($ 5.92 per share, Note 8)

( 3,420 ) ( 3,420 )

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

Stock-based compensation 267 267

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Other comprehensive income (loss), net of tax

Cumulative translation adjustment ( 494 ) ( 493 ) ( 1 )

Defined benefit pension and post-retirement plans adjustment 1,345 1,345

Cash flow hedging instruments - unrealized gain (loss) 119 119

Total other comprehensive income (loss), net of tax 970

Dividends declared ($ 5.96 per share, Note 8)

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

Dividend to noncontrolling interest

( 29 ) ( 29 )

Split-off of Food Safety business

( 1,988 ) ( 1,988 )

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

Balance at December 31, 2022 14,770 6,700 47,950 ( 33,255 ) ( 6,673 ) 48

Net income 5,791 5,777 14

Net income (loss)

( 6,979 ) ( 6,995 ) 16

Other comprehensive income (loss), net of tax

Cumulative translation adjustment ( 893 ) ( 885 ) ( 8 )

Defined benefit pension and post-retirement plans adjustment 915 915

Cash flow hedging instruments - unrealized gain (loss) 47 47

Total other comprehensive income (loss), net of tax 69

( 105 ) ( 105 ) —

Dividends declared ($ 6.00 per share, Note 8)

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Dividend to noncontrolling interest ( 3 ) ( 3 )

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

Issuances pursuant to stock options and benefit plans 264 ( 165 ) 429

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

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3M Company and Subsidiaries

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Cash Flows from Operating Activities

Net income including noncontrolling interest $ 5,791 $ 5,929 $ 5,453

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

Net income (loss) including noncontrolling interest $ ( 6,979 ) $ 5,791 $ 5,929

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

Depreciation and amortization 1,987 1,831 1,915

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Proceeds from sale of PP&E and other assets 119 200 51

Acquisitions, net of cash acquired — — ( 25 )

Purchases of marketable securities and investments ( 1,466 ) ( 1,250 ) ( 2,202 )

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

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3M Company and Subsidiaries

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Significant Accounting Policies

Consolidation:

Nature of Operations and Basis of Presentation:

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

All applicable subsidiaries are consolidated.

All intercompany transactions are eliminated.

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

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

See additional information in Note 16.

Basis of presentation:

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

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

See additional information in Note 19.

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

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States.

Preparation of the consolidated financial statements requires management to make estimates and assumptions that affect amounts reported in the consolidated financial statements and notes.

Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from these estimates.

The financial statements consolidate all applicable subsidiaries;

intercompany transactions and balances are eliminated.

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

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

See additional information in Note 18.

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

Foreign currency translation:

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

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

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

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

Local currencies generally are considered the functional currencies outside the United States, with the exception of subsidiaries operating in highly inflationary economies, which are not material to 3M.

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

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

Use of estimates:

The preparation of financial statements in conformity with U.S.

generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

The Company considered the coronavirus (COVID-19) related impacts on its estimates, as appropriate, within its consolidated financial statements and there may be changes to those estimates in future periods.

3M believes that the accounting estimates are appropriate after giving consideration to the increased uncertainties surrounding the severity and duration of the COVID-19 pandemic.

Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from these estimates.

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

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

Also effective in the first quarter of 2023, 3M's Consumer business segment re-aligned from four divisions to three divisions, see additional information in Note 21.

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

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

Cash and Cash Equivalents:

Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when acquired.

Marketable securities:

Marketable securities include available-for-sale debt securities and are recorded at fair value.

Cost of securities sold use the first in, first out (FIFO) method.

3M invests in marketable and equity securities.

Marketable securities include available-for-sale debt securities and are recorded at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income.

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

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

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

The allowance is limited by the amount that the fair value is less than the amortized cost basis.

All equity securities that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in net income.

3M utilizes the measurement alternative for equity investments that do not have readily determinable fair values and measures these investments at cost less impairment plus or minus observable price changes in orderly transactions.

The balances associated with equity securities are disclosed in Note 7.

3M regularly reviews investment securities for impairment.

For debt securities, an impairment relating to credit losses is recorded through an allowance for credit losses.

A change in the allowance for credit losses is recorded into earnings in the period of the change.

Any impairment that has not been recorded through an allowance for credit losses is recorded through accumulated other comprehensive income as a component of shareholders’ equity.

The factors considered in determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis, changes in the credit quality of the underlying loan obligors, credit ratings actions, as well as other factors.

When a credit loss exists, the Company compares the present value of cash flows expected to be collected from the debt security with the amortized cost basis of the security to determine what allowance amount, if any, should be recorded.

Amounts are reclassified out of accumulated other comprehensive income and into earnings upon sale or a change in the portions of impairment related to credit losses and not related to credit losses.

All equity securities that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in net income.

The balance of these securities is disclosed in Note 7.

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Other assets:

Other assets include deferred income taxes, product and other insurance receivables, the cash surrender value of life insurance policies, medical equipment in rental arrangements utilized primarily by hospitals and other medical clinics, prepaid pension and postretirement and other long-term assets.

Investments in life insurance policies are reported at the amount that could be realized under contract at the balance sheet date, with any changes in cash surrender value or contract value during the period accounted for as an adjustment of premiums paid.

Cash outflows and inflows associated with life insurance activity are included in “Purchases of marketable securities and investments” and “Proceeds from maturities and sale of marketable securities and investments,” respectively.

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

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

Property, plant and equipment:

Property, Plant and Equipment (PPE) and Definite-Lived Intangible Assets:

Property, plant and equipment, including capitalized interest and internal direct engineering costs, are recorded at cost.

Depreciation of property, plant and equipment generally is computed using the straight-line method based on the estimated useful lives of the assets.

The estimated useful lives of buildings and improvements primarily range from ten to forty years , with the majority in the range of twenty to forty years .

The estimated useful lives of machinery and equipment primarily range from three to fifteen years , with the majority in the range of five to ten years .

Fully depreciated assets other than capitalized internally developed software are retained in property, plant and equipment and accumulated depreciation accounts until disposal.

The Company capitalizes direct costs of services used in the development of, and external software acquired for use as, internal-use software.

These software amounts are reported as a component of machinery and equipment within PPE.

Depreciation of PPE generally is computed using the straight-line method.

Refer to Note 7 for depreciable life and additional details on PPE.

Internal-use software elements of PPE are depreciated over a period of three to seven years .

3M records capital-related government grants earned as reductions to the cost of PPE 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.

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

These assets are amortized on a on a systematic and rational basis (generally straight-line) that is representative of the asset's use.

Refer to Note 4 for amortizable life and additional details on intangible assets.

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

Fully depreciated PPE other than capitalized internally developed software are retained in PPE and accumulated depreciation accounts until disposal.

Upon disposal, assets and related accumulated depreciation are removed from the accounts and the net amount, less proceeds from disposal, is charged or credited to operations.

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

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

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

Definite-lived intangible assets are removed from their respective gross asset and accumulated amortization accounts when they are no longer in use.

PPE and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable.

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

Fair value is generally determined using a discounted cash flow analysis.

3M records capital-related government grants earned as reductions to the cost of property, plant and equipment;

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.

Conditional Asset Retirement Obligations:

A liability is initially recorded at fair value for an asset retirement obligation associated with the retirement of tangible long-lived assets in the period in which it is incurred if a reasonable estimate of fair value can be made.

Conditional asset retirement obligations exist for certain long-term assets of the Company.

The obligation is initially measured at fair value using expected present value techniques.

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

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

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

Goodwill is not amortized.

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

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

Reporting units are one level below the business segment level, but are required to be combined when reporting units within the same segment have similar economic characteristics.

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

The asset retirement obligation liability was $ 190 million and $ 177 million at December 31, 2023 and 2022, respectively.

Goodwill and Indefinite-Lived Intangible Assets:

Goodwill and indefinite-lived intangible assets (namely certain tradenames), are not amortized and are assessed for impairment annually (fourth quarter and third quarter, respectively) and whenever an event occurs or circumstances change that would indicate the carrying amount may be impaired.

Impairment testing for goodwill is performed at a reporting unit level, which at 3M, corresponds to a division.

An impairment loss is recognized when the carrying value of the reporting unit’s net assets exceeds its estimated fair value.

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 or, in some cases, based on a discounted cash flow analysis.

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

3M has chosen not to apply Step 0 for its annual goodwill assessments.

Intangible assets:

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

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

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

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

Refer to Note 4 for additional details on the gross amount and accumulated amortization of the Company’s intangible assets.

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

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

An impairment loss is recognized when the carrying amount exceeds the estimated undiscounted cash flows from the asset’s or asset group’s ongoing use and eventual disposition.

If an impairment is identified, the amount of the impairment loss recorded is calculated by the excess of the asset’s carrying value over its fair value.

Fair value is generally determined using a discounted cash flow analysis.

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

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

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

An impairment loss is recognized for an indefinite-lived intangible asset when its fair value (generally determined on a discounted cash flow basis) is less than its carrying value.

Restructuring Actions:

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Revenue (Sales) Recognition:

The Company sells a wide range of products to a diversified base of customers around the world and has no material concentration of credit risk or significant payment terms extended to customers.

The vast majority of 3M’s customer arrangements contain a single performance obligation to transfer manufactured goods as the promise to transfer the individual goods is not separately identifiable from other promises in the contracts and, therefore, not distinct.

The Company sells products to a diversified base of customers around the world and has no material concentration of credit risk or significant payment terms extended to customers.

The vast majority of 3M’s customer arrangements contain a single performance obligation to transfer manufactured goods.

However, to a limited extent 3M also enters into customer arrangements that involve intellectual property out-licensing, multiple performance obligations (such as equipment, installation and service), software with coterminous post-contract support, services and non-standard terms and conditions.

The Company recognizes revenue in light of the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers .

Revenue is recognized when control of goods has transferred to customers.

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Revenue is recognized at the transaction price which the Company expects to be entitled.

When determining the transaction price, 3M estimates variable consideration applying the portfolio approach practical expedient under ASC 606.

When determining the transaction price, 3M estimates variable consideration applying the portfolio approach practical expedient.

The main sources of variable consideration for 3M are customer rebates, trade promotion funds, and cash discounts.

These sales incentives are recorded as a reduction to revenue at the time of the initial sale using the most-likely amount estimation method.

The most-likely amount method is based on the single most likely outcome from a range of possible consideration outcomes.

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

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

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

The most-likely amount method is based on the single most likely outcome from a range of possible consideration outcomes (derived from sales terms, historical experience, trend analysis, and projected market conditions in the various markets served).

The most common incentive relates to amounts paid or credited to customers for achieving defined volume levels or growth objectives.

There are no material instances where variable consideration is constrained and not recorded at the initial time of sale.

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The Company has elected to present revenue net of sales taxes and other similar taxes.

The Company applies the “right to invoice” practical expedient based on 3M’s right to invoice the customer at an amount that reasonably represents the value to the customer of 3M’s performance completed to date.

For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using 3M’s best estimate of the standalone selling price of each distinct good or service in the contract.

The Company did not recognize any material revenue in the current reporting period for performance obligations that were fully satisfied in previous periods.

The Company does not have material unfulfilled performance obligation balances for contracts with an original length greater than one year in any years presented.

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

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

• Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less.

• Practical expedient relative to costs of obtaining a contract by expensing sales commissions when incurred because the amortization period would have been one year or less.

• Portfolio approach practical expedient relative to estimation of variable consideration.

• “Right to invoice” practical expedient based on 3M’s right to invoice the customer at an amount that reasonably represents the value to the customer of 3M’s performance completed to date.

• Election to present revenue net of sales taxes and other similar taxes.

• Sales-based royalty exemption permitting future intellectual property out-licensing royalty payments to be excluded from the otherwise required remaining performance obligations disclosure

The Company recognizes revenue from the rental of durable medical devices in accordance with the guidance of ASC 842, Leases .

The Company recognizes rental revenue based on the length of time a device is used by the patient/organization, (i) at the contracted rental rate for contracted customers and (ii) generally, retail price for non-contracted customers.

The Company utilizes the allowable exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less as the Company does not have material unfulfilled performance obligation balances for contracts with an original length greater than one year in any years presented.

Further, the Company did not recognize any material revenue in the current reporting period for performance obligations that were fully satisfied in previous periods.

The Company applies the practical expedient relative to costs of obtaining a contract by expensing sales commissions when incurred because the amortization period would have been one year or less as the Company does not have material costs related to obtaining a contract with amortization periods greater than one year for any year presented.

The Company recognizes revenue from the rental of durable medical devices based on the length of time a device is used by the patient/organization, (i) at the contracted rental rate for contracted customers and (ii) generally, retail price for non-contracted customers.

The leases are short-term in nature, generally providing for daily or monthly pricing, and are all classified as operating leases.

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Trade accounts receivable are recorded at the invoiced amount and do not bear interest.

The Company maintains allowances for bad debts, cash discounts, and various other items.

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

The Company maintains allowances for bad debts, cash discounts, and various other items for potential credit losses.

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

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and gains/losses associated with certain corporate approved investments in R&D-related ventures.

Internal-use software:

The Company capitalizes direct costs of services used in the development of, and external software acquired for use as, internal-use software.

Amounts capitalized are amortized over a period of three to seven years , generally on a straight-line basis, unless another systematic and rational basis is more representative of the software’s use.

Amounts are reported as a component of either machinery and equipment or finance leases within property, plant and equipment.

Fully depreciated internal-use software assets are removed from property, plant and equipment and accumulated depreciation accounts.

Environmental:

Environmental expenditures relating to existing conditions caused by past operations that do not contribute to current or future revenues are expensed.

Reserves for liabilities related to anticipated remediation costs are recorded on an undiscounted basis when they are probable and reasonably estimable, generally no later than the completion of feasibility studies, the Company’s commitment to a plan of action, or approval by regulatory agencies.

Environmental expenditures for capital projects that contribute to current or future operations generally are capitalized and depreciated over their estimated useful lives.

Reserves for liabilities related to anticipated environmental related remediation costs are recorded when they are probable and reasonably estimable, generally no later than the completion of feasibility studies, the Company’s commitment to a plan of action, or approval by regulatory agencies.

Environmental costs for capital projects that contribute to current or future operations generally are capitalized and depreciated over their estimated useful lives.

Income taxes:

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

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

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

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Earnings per share:

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

Certain options outstanding under these stock-based compensation plans during the years 2022, 2021 and 2020 were not included in the computation of diluted earnings per share attributable to 3M common shareholders because they would have had an anti-dilutive effect ( 30.3 million average options for 2022, 7.8 million average options for 2021, and 18.1 million average options for 2020).

The computations for basic and diluted earnings per share follow:

Earnings Per Share Computations

(Amounts in millions, except per share amounts) 2022 2021 2020

Net income attributable to 3M $ 5,777 $ 5,921 $ 5,449

Denominator for weighted average 3M common shares outstanding – basic

566.0 579.0 577.6

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

Denominator for weighted average 3M common shares outstanding – diluted

567.6 585.3 582.2

Earnings per share attributable to 3M common shareholders – basic

$ 10.21 $ 10.23 $ 9.43

Earnings per share attributable to 3M common shareholders – diluted

$ 10.18 $ 10.12 $ 9.36

Stock-based compensation:

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Under applicable accounting standards, the fair value of share-based compensation is determined at the grant date and the recognition of the related expense is recorded over the period in which the share-based compensation vests.

However, with respect to income taxes, the related deduction from taxes payable is based on the award’s intrinsic value at the time of exercise (for an option) or on the fair value upon vesting of the award (for RSUs), which can be either greater (creating an excess tax benefit) or less (creating a tax deficiency) than the deferred tax benefit recognized as compensation cost is recognized in the financial statements.

These excess tax benefits/deficiencies are recognized as income tax benefit/expense in the statement of income and, within the statement of cash flows, are classified in operating activities in the same manner as other cash flows related to income taxes.

The extent of excess tax benefits/deficiencies is subject to variation in 3M stock price and timing/extent of RSU vestings and employee stock option exercises.

Comprehensive income:

Total comprehensive income and the components of accumulated other comprehensive income (loss) are presented in the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Changes in Equity.

Accumulated other comprehensive income (loss) is composed of foreign currency translation effects (including hedges of net investments in international companies), defined benefit pension and postretirement plan adjustments, unrealized gains and losses on available-for-sale debt securities, and unrealized gains and losses on cash flow hedging instruments.

The Company uses the portfolio approach for releasing income tax effects from accumulated other comprehensive income.

Derivatives and Hedging Activities:

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

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

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

generally accepted accounting principles.

If the underlying hedged transaction ceases to exist, all changes in fair value of the related derivatives that have not been settled are recognized in current earnings.

Instruments that do not qualify for hedge accounting are marked to market with changes recognized in current earnings.

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The Company does not hold or issue derivative financial instruments for trading purposes and is not a party to leveraged derivatives.

The Company is exposed to credit loss in the event of nonperformance by counterparties in interest rate swaps, currency swaps, and forward and option contracts.

However, the Company’s risk is limited to the fair value of the instruments.

The Company actively monitors its exposure to credit risk through the use of credit approvals and credit limits, and by selecting major international banks and financial institutions as counterparties.

3M enters into master netting arrangements with counterparties when possible to mitigate credit risk in derivative transactions.

A master netting arrangement may allow each counterparty to net settle amounts owed between a 3M entity and the counterparty as a result of multiple, separate derivative transactions.

The Company does not anticipate nonperformance by any of these counterparties.

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

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See Note 16 for more information on the Company's derivative instruments and hedging programs.

Fair Value Measurements:

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

Under the standard, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

The standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company.

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Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Acquisitions:

The Company accounts for business acquisitions in accordance with ASC 805, Business Combinations .

This standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination.

Certain provisions of this standard prescribe, among other things, the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration) and the exclusion of transaction and acquisition-related restructuring costs from acquisition accounting.

In addition to business combinations, 3M periodically acquires certain tangible and/or intangible assets and purchases interests in certain enterprises that do not otherwise qualify for accounting as business combinations.

These transactions are largely reflected as additional asset purchase and investment activity.

3M determines if an arrangement is a lease upon inception.

A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used.

3M determines if an arrangement is a lease upon inception by establishing if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

3M determines certain service agreements that contain the right to use an underlying asset are not leases because 3M does not control how and for what purpose the identified asset is used.

Examples of such agreements include master supply agreements, product processing agreements, warehouse and distribution services agreements, power purchase agreements, and transportation purchase agreements.

Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

The discount rate used to calculate present value is 3M’s incremental borrowing rate or, if available, the rate implicit in the lease.

The discount rate used is 3M’s incremental borrowing rate or, if available, the rate implicit in the lease.

3M determines the incremental borrowing rate for leases using a portfolio approach based primarily on the lease term and the economic environment of the applicable country or region.

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Related Party Activity:

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

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Other than amounts due by and between 3M and the Aearo Entities while the Aearo Entities were deconsolidated (as described in Note 18), 3M does not have any material related party activity.

New Accounting Pronouncements:

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

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

Issued in October 2021.

Requires acquiring entities to apply ASC 606 to recognize and measure contract assets and liabilities acquired through a business combination.

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

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

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

January 1, 2023, except rollforward disclosure which is not effective until the year-end December 31, 2024 As this ASU relates to disclosures only, there will be no impact to 3M’s consolidated results of operations and financial condition.

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

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

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

Issued in November 2023.

Requires incremental disclosures to provide more disaggregated expense information about a Company's reportable segments.

Year-end December 31, 2024

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

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

Issued in December 2023.

Requires disaggregated information about a Company's effective tax rate reconciliation as well as information on income taxes paid.

Year-end December 31, 2025

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

Contract Balances:

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Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 590 million, $ 577 million, and $ 582 million for the years ended December 31, 2023, 2022, and 2021 respectively .

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Disaggregated Revenue Information:

The Company views the following disaggregated disclosures as useful to understanding the composition of revenue recognized during the respective reporting periods:

Year ended December 31,

Net Sales (Millions) 2022 2021 2020

Net Sales by Division (millions) 2023 2022 2021

Abrasives $ 1,327 $ 1,343 $ 1,296

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Total Transportation and Electronics Business Segment 8,501 8,902 9,262

Drug Delivery — — 146

Food Safety — 244 368

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Total Health Care Business Group 8,195 8,427 8,601

Consumer Health and Safety 569 588 540

Home Care 1,046 1,074 1,043

Home Improvement 2,392 2,548 2,260

Construction and Home Improvement Markets 2,221 2,346 2,465

Home, Health and Auto Care 1,583 1,655 1,741

Stationery and Office 1,222 1,291 1,306

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Total Company $ 32,681 $ 34,229 $ 35,355

Year ended December 31,

Net Sales (Millions) 2022 2021 2020

Net Sales by Geographic Area (millions) 2023 2022 2021

Americas $ 18,375 $ 18,400 $ 18,097

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Asia Pacific included China/Hong Kong net sales to customers of $ 3.2 billion, $ 3.8 billion and $ 4.0 billion in 2023, 2022 and 2021, respectively.

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Acquisitions and Divestitures

Acquisitions:

3M makes acquisitions of certain businesses from time to time that are aligned with its strategic intent with respect to, among other factors, growth markets and adjacent product lines or technologies.

Goodwill resulting from business combinations is largely attributable to the existing workforce of the acquired businesses and synergies expected to arise after 3M’s acquisition of these businesses.

2022 acquisitions:

There were no acquisitions that closed during the year ended December 31, 2022.

2021 acquisitions:

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

2020 acquisitions:

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

Divestitures:

3M may divest certain businesses from time to time based upon review of the Company’s portfolio considering, among other items, factors relative to the extent of strategic and technological alignment and optimization of capital deployment, in addition to considering if selling the businesses results in the greatest value creation for the Company and for shareholders.

As discussed in Note 19 (Business Segments), gains/losses on business divestitures are reflected in Corporate and Unallocated.

2023 Divestitures and Previously Announced Divestitures:

In March 2022, 3M completed the sale of its floor products business in Western Europe, formerly part of the Consumer business, for immaterial proceeds that approximated the business's book value.

In August 2023, 3M completed the sale of assets associated with its dental local anesthetic business (part of the Health Care business) to Pierrel S.p.A.

for approximately $ 60 million in cash.

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

The gain on this transaction, net of a loss associated with a previous contingent indemnification obligation from a 2020 divestiture, resulted in a 2023 net pre-tax gain of $ 36 million.

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

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

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

federal income tax purposes, by year-end 2023.

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

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

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

3M expects to close the transaction in the first half of 2024, subject to required conditions, as well as additional factors such as conditions in the equity and debt markets, other external conditions, and developments involving 3M or any of its businesses, which could delay the completion of the transaction relative to the anticipated timeline.

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

2022 Divestitures:

In March 2022, 3M completed the sale of its floor products business in Western Europe, formerly part of the Consumer business, for immaterial proceeds that approximated the business's book value.

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

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

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

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

2021 divestitures:

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

2020 divestitures:

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

Further contingent consideration of less than $ 25 million may be recognized depending on outcomes in the future.

The business, with annual sales of approximately $ 85 million, consists of ballistic helmets, body armor, flat armor and related helmet-attachment products serving government and law enforcement.

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

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

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

The divested business had annual sales of approximately $ 380 million.

3M retained its transdermal drug delivery components business.

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

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

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

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

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

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

Operating Income and Held-for-Sale Amounts:

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

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

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

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With respect to the businesses above, operating income information of the Health Care business segment, inclusive of the Food Safety Division, is included in Note 21.

Information related to held for sale disposal groups is also included in Note 17.

Goodwill and Intangible Assets

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

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

The goodwill balance by business segment follows:

The change in the carrying amount of goodwill by business segment was as follows:

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

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

Divestiture activity — — ( 16 ) — ( 16 )

Goodwill impairment

— ( 271 ) — — ( 271 )

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

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Divestiture activity — — ( 4 ) — ( 4 )

Goodwill impairment — ( 271 ) — — ( 271 )

Translation and other 33 11 92 5 141

Balance as of December 31, 2023 $ 4,542 $ 1,512 $ 6,603 $ 270 $ 12,927

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

At 3M, reporting units correspond to a division.

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

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

The Company completed its annual goodwill impairment test in the fourth quarter of 2023 for all reporting units and determined that no impairment existed.

As described in Note 21, effective in the first quarter of 2023, the Company changed its business segment reporting.

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

Goodwill balances reported above reflect these business segment reporting changes in the earliest period presented.

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

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

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

In December 2022, as a result of 3M's commitment to a plan to exit per- and polyfluoroalkyl substance (PFAS) manufacturing as described in Note 17, 3M recorded a goodwill impairment charge of $ 0.3 billion related to the Advanced Materials reporting unit (within the Transportation and Electronics business) resulting in no remaining goodwill for that reporting unit.

Acquired Intangible Assets:

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(Millions) 2023 2022

Customer related intangible assets $ 4,062 $ 4,216

Patents 426 513

Other technology-based intangible assets 2,081 2,111

Definite-lived tradenames 1,166 1,171

Other amortizable intangible assets 84 105

Customer related (original lives largely 11 to 19 years)

$ 4,073 $ 4,062

Patents (original lives largely 9 to 13 years)

Other technology-based (original lives largely 6 to 20 years)

Definite-lived tradenames (original lives largely 6 to 20 years)

Other (original lives largely 10 years)

Total gross carrying amount

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Total finite-lived intangible assets — net 3,619 4,082

Non-amortizable intangible assets (primarily tradenames) 617 653

Indefinite lived intangible assets (primarily tradenames)

Total intangible assets — net $ 4,226 $ 4,699

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

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Amortization expense $ 453 $ 423 $ 418 $ 394 $ 367 $ 1,564

The preceding expected amortization expense is an estimate.

Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets, accelerated amortization of intangible assets and other events.

3M expenses the costs incurred to renew or extend the term of intangible assets.

Restructuring Actions

2020 through 2022 Restructuring Action

Operational/Marketing Capability Restructuring:

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

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

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

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

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

2023 to 2025 Structural Reorganization Actions:

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

During 2023, management approved and committed to undertake associated actions impacting approximately 6,000 positions resulting in a 2023 pre-tax charge of $ 437 million.

Remaining activities related to the restructuring actions approved and committed through December 31, 2023 under this initiative are expected to be largely completed in the first half of 2024.

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

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

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

(Millions) 2023

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Total operating income impact $ 437

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

2022 2021 2020

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

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

(Millions) Employee Related Asset-Related and Other Total

Safety and Industrial $ 89 $ — $ 89

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Total operating expense $ 370 $ 67 $ 437

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

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

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

Non-cash changes — ( 36 ) ( 36 )

Accrued restructuring action balances as of December 31, 2020 101 — 101

Incremental expense incurred in 2021 124 — 124

Cash payments ( 127 ) — ( 127 )

Adjustments ( 11 ) — ( 11 )

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

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

Cash payments ( 84 ) — ( 84 )

Adjustments ( 9 ) — ( 9 )

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

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

2022 Restructuring Actions:

Divestiture-Related Restructuring

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

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

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

(Millions) 2022

Cost of sales $ 3

Selling, general and administrative expenses 36

Research, development and related expenses 2

Total operating income impact $ 41

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

(Millions) Employee-Related

Expense incurred in the third quarter of 2022 41

Cash payments ( 31 )

Accrued restructuring action balances as of December 31, 2022

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

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2020 Restructuring Actions:

Divestiture-Related Restructuring

During the second quarter of 2020, following the divestiture of substantially all of the drug delivery business (see Note 3) management approved and committed to undertake certain restructuring actions addressing corporate functional costs and manufacturing footprint across 3M in relation to the magnitude of amounts previously allocated/burdened to the divested business.

These actions affected approximately 1,300 positions worldwide and resulted in a second quarter 2020 pre-tax charge of $ 55 million, within Corporate and Unallocated.

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

(Millions) 2020

Cost of sales $ 42

Selling, general and administrative expenses 12

Research, development and related expenses 1

Total operating income impact $ 55

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

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

Expense incurred in the second quarter of 2020 $ 32 $ 23 $ 55

Expense incurred in 2023

Non-cash changes — ( 67 ) ( 67 )

( 10 ) — ( 10 )

Cash payments ( 261 ) — ( 261 )

Adjustments ( 3 ) — ( 3 )

Accrued restructuring action balance as of December 31, 2023

Cash Payments ( 5 ) — ( 5 )

Adjustments ( 1 ) — ( 1 )

Accrued restructuring action balance as of June 30, 2021 $ 9 $ 9 $ 18

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

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Other Restructuring

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

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

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

(Millions) 2020

Cost of sales $ 13

Selling, general and administrative expenses 37

Research, development and related expenses 8

Total operating income impact $ 58

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

Employee-Related Asset-Related and Other Total

Safety and Industrial $ 7 $ — $ 7

Transportation and Electronics 11 — 11

Health Care 12 — 12

Consumer 5 — 5

Corporate and Unallocated — 23 23

Total Operating Expense $ 35 $ 23 $ 58

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

(Millions) Employee-Related Asset-Related Total

Expense incurred in the second quarter of 2020 $ 35 $ 23 $ 58

Non-cash changes — ( 23 ) ( 23 )

Cash payments ( 2 ) — ( 2 )

Adjustments ( 9 ) — ( 9 )

Accrued restructuring action balances as of December 31, 2020 24 — 24

Cash Payments ( 4 ) — ( 4 )

Adjustments ( 9 ) — ( 9 )

Accrued restructuring action balances as of March 31, 2021 $ 11 $ — $ 11

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

Supplemental Income Statement Information

$ 99 $ — $ 99

2023 to 2025 PFAS Exit Actions:

As further discussed in Note 18, 3M announced in 2022 that it will exit all PFAS manufacturing by the end of 2025.

In 2023, 3M management approved and committed to undertake certain related workforce actions impacting approximately 550 positions resulting in a pre-tax charge of $ 64 million primarily impacting cost of sales.

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

Related cash payments and adjustments to the accrued liability in 2023 were not material.

The accrued restructuring action balance as of December 31, 2023 was $ 60 million.

The remaining period of activities related to these approved and committed actions aligns with 3M's PFAS exit timeframe.

2020 through 2022 Operational/Marketing Capability Restructuring Actions:

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

In 2021, management approved and committed to undertake additional actions under this initiative resulting in a 2021 pre-tax charge of $ 124 million impacting all business segments (Corporate & Unallocated ($ 42 million), Safety and Industrial ($ 30 million), Transportation and Electronics ($ 24 million), Health Care ($ 21 million) and Consumer ($ 7 million)), of which $ 88 million was recorded in selling, general and administrative expense.

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

The accrued restructuring action balance was $ 101 million at December 31, 2020, $ 87 million at December 31, 2021 and was completed in 2022.

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

2022 Divestiture-Related Restructuring Actions:

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

These actions affected approximately 850 positions worldwide and resulted in a 2022 pre-tax charge of $ 41 million primarily impacting selling, general and administrative expenses within Corporate and Unallocated.

The related accrued restructuring balance as of December 31, 2022 was $ 10 million after associated payments during 2022.

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

Supplemental Income (Loss) Statement Information

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

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Total $ 560 $ 147 $ 165

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

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

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

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Interest expense includes $ 566 million, $ 462 million and $ 488 million in 2023, 2022 and 2021, respectively, related to outstanding debt.

Beginning in 2023, interest expense also includes imputed interest associated with the obligations resulting from the PWS Settlement and the CAE Settlement (discussed in Note 18).

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

Refer to Note 14 for additional details on the components of pension and postretirement net periodic benefit cost (benefit).

Supplemental Balance Sheet Information

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Land $ 255 $ 255

Buildings and leasehold improvements 7,560 8,086

Machinery and equipment 16,455 17,305

Buildings and leasehold improvements (original lives 10 to 40 years)

Machinery and equipment (original lives 3 to 15 years)

16,855 16,455

Construction in progress 1,852 1,728

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Total other liabilities $ 14,322 $ 5,615

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

As of December 31, 2023, contingent liability claims and other (within other current liabilities) includes $ 2.9 billion and $ 1.5 billion, respectively, and contingent liability claims and other (within other liabilities) includes $ 7.5 billion and $ 3.5 billion, respectively of amounts due under the PWS Settlement and CAE Settlement (refer to Note 18), both reached in 2023.

As of December 31, 2022, balances include amounts associated with the deconsolidated Aearo Entities, which were reconsolidated in 2023 (refer to Note 18).

These include:

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

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

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

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

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Supplemental Equity and Comprehensive Income Information

$ 0.7 billion in equity and other investments (within other assets), $ 0.3 billion in other (within other assets), $ 1.2 billion accrued liability largely reflected within contingent liability claims and other (within other liabilities), and $ 0.9 billion in other (within other liabilities).

Supplemental Equity and Comprehensive Income (Loss) Information

Common stock ($ .01 par value per share) of 3 billion shares is authorized, with 944,033,056 shares issued as of December 31, 2023, 2022 and 2021.

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Cash dividends declared and paid totaled $ 1.50 , $ 1.49 , and $ 1.48 per share for each quarter in 2023, 2022 and 2021, respectively, which resulted in total year declared and paid dividends of $ 6.00 , $ 5.96 , and $ 5.92 per share, respectively.

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

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

The table below presents the changes in accumulated other comprehensive income (loss) attributable to 3M (AOCI), including the reclassifications out of AOCI by component :

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

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Tax effect (1)

( 65 ) ( 536 ) ( 36 ) ( 637 )

Total other comprehensive income (loss), net of tax ( 493 ) 1,345 119 971

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Tax effect (1)

( 35 ) ( 409 ) ( 14 ) ( 458 )

Total other comprehensive income (loss), net of tax ( 885 ) 915 47 77

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Tax effect (1)

( 9 ) 131 15 137

Total other comprehensive income (loss), net of tax 322 ( 380 ) ( 47 ) ( 105 )

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$ ( 2,506 ) $ ( 4,218 ) $ ( 54 ) $ ( 6,778 )

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

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

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Reclassifications out of Accumulated Other Comprehensive Income Attributable to 3M

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

Year ended December 31,

(1) Includes tax expense (benefit) reclassified out of AOCI related to the following:

(millions) 2023 2022 2021

Defined benefit pension and postretirement plans adjustments

Gains (losses) associated with defined benefit pension and postretirement plans amortization

Transition asset $ ( 2 ) $ ( 2 ) $ ( 2 ) Other (expense) income, net

Prior service benefit 55 60 62 Other (expense) income, net

Net actuarial loss ( 493 ) ( 689 ) ( 659 ) Other (expense) income, net

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

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

Tax effect 108 160 148 Provision for income taxes

Net of tax ( 350 ) ( 498 ) ( 471 )

Cash flow hedging instruments gains (losses)

Foreign currency forward/option contracts 107 ( 38 ) 80 Cost of sales

Interest rate contracts ( 9 ) ( 9 ) ( 9 ) Interest expense

Total before tax 98 ( 47 ) 71

Tax effect ( 23 ) 11 ( 17 ) Provision for income taxes

Net of tax 75 ( 36 ) 54

Total reclassifications for the period, net of tax $ ( 275 ) $ ( 534 ) $ ( 417 )

Defined benefit pension and postretirement plans adjustment ( 60 ) $ ( 108 ) $ ( 160 )

Cash flow hedging instruments, unrealized gain/loss 33 23 ( 11 )

The Company uses the portfolio approach for releasing income tax effects from accumulated other comprehensive income.

Additional details on the amounts reclassified from accumulated other comprehensive income (loss) into consolidated income (loss) include:

• Cumulative translation adjustment:

amounts were reclassified into selling, general and administrative expense.

In 2023, this was associated with the Russia exit (see Note 17) and other country exits as part of streamlining 3M’s geographic footprint (see Note 5).

• Defined benefit pension and postretirement plan adjustments:

amounts were reclassified into other (expense) income, net (see Note 14).

• Cash flow hedging instruments, unrealized gain (loss):

foreign currency forward/option contacts amounts were reclassified into cost of sales;

interest rate contract amounts were reclassified into interest expense (see Note 16).

• The tax effects, if applicable, associated with these reclassifications were reflected in provision for income taxes.

Supplemental Cash Flow Information

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Cash interest payments include interest paid on debt and finance lease balances.

Cash interest payments exclude the cash paid for early debt extinguishment costs.

Additional details are described in Note 12.

Cash interest payments exclude cash paid for early debt extinguishment costs.

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

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Income Before Income Taxes

Income (loss) before income taxes consisted of the following:

(Millions) 2023 2022 2021

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Total $ ( 9,688 ) $ 6,392 $ 7,204

Provision for Income Taxes

Provision (benefit) for income taxes consisted of the following:

(Millions) 2023 2022 2021

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Total $ ( 2,691 ) $ 612 $ 1,285

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Components of Deferred Tax Assets and Liabilities

Components of deferred tax assets and (liabilities) are comprised of the following:

(Millions) 2023 2022

4 unchanged sentences

Miscellaneous accruals 160 117

Pension costs 7 351

Stock-based compensation 275 259

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Lease liabilities 192 210

Product and other insurance receivables — 48

Inventory 95 68

Other 157 102

Gross deferred tax assets 6,052 2,353

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Deferred tax liabilities:

Product and other insurance receivables ( 3 ) —

Accelerated depreciation ( 535 ) ( 586 )

Intangible assets ( 226 ) ( 901 )

Currency translation ( 69 ) —

Right-of-use asset ( 194 ) ( 210 )

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Net deferred tax assets $ 4,391 $ 400

As displayed in the table above, as of December 31, 2023, the Company has provided $ 706 million of valuation allowance against certain of these deferred tax assets based on management’s determination that it is more-likely-than-not that the tax benefits related to these assets will not be realized.

The net deferred tax assets are included as components of Other Assets and Other Liabilities within the Consolidated Balance Sheet.

At December 31, 2023, 3M’s deferred tax assets, a component of other assets on the consolidated balance sheet, also included a balance of approximately $ 3.6 billion as a result of the 2023 pre-tax charges related to the PWS Settlement and the CAE Settlement (both discussed in Note 18).

See Note 7 “Supplemental Balance Sheet Information” for further details.

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

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

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Reconciliation of Effective Income Tax Rate

A reconciliation of the U.S.

federal statutory income tax rate to 3M's worldwide effective income tax rate is provided below:

A positive rate reconciliation percent for the year ended 2023 is a tax benefit on a pretax loss.

2023 2022 2021

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Effective worldwide tax rate 27.8 % 9.6 % 17.8 %

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

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

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

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

international tax provisions.

The 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 2023 rate were the charges related to the PWS Settlement and the CAE Settlement (as discussed in Note 18).

The primary factors that impacted the 2022 rate were the charges related to steps toward resolving Combat Arms Earplugs litigation (as discussed in Note 18) and the tax efficient structure associated with the split-off of the Food Safety business (as discussed in Note 3).

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

As of December 31, 2023 and December 31, 2022, 3M reflecte d $ 218 million and $ 380 million, respectively, in long term income taxes payable.

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

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

As of December 31, 2023 and December 31, 2022, 3M reflected $ 189 million and $ 126 million, respectively, payable within one year associated with the transition tax.

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

federal income tax returns through 2018, but the years 2005 through 2018 have not closed as the Company is in the process of resolving issues identified during those examinations.

Currently, the Company is under examination by the IRS for its U.S.

federal income tax returns for the years ended 2019 and 2020.

In addition to the U.S.

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A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (UTB) is as follows:

Federal, State and Foreign Tax

(Millions) 2023 2022 2021

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Additions for tax positions of prior years 63 36 22

Additions related to recent acquisitions — — —

Reductions for tax positions of prior years ( 53 ) ( 138 ) ( 60 )

2 unchanged sentences

Gross UTB Balance at December 31 $ 800 $ 927 $ 1,071

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

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

The total amount of net UTB, if recognized, would affect the effective tax rate by $ 884 million as of December 31, 2023.

The ending net UTB results from adjusting the gross balance for deferred items, interest and penalties, and deductible taxes.

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China (2025), Switzerland (2026), Brazil (2029) and Singapore (2032).

The income tax benefits attributable to the tax status of these subsidiaries are estimated to be $ 170 million ( 30 cents per diluted share) in 2022, $ 204 million ( 36 cents per diluted share) in 2021, and $ 163 million ( 28 cents per diluted share) in 2020.

T he income tax benefits attributable to the tax status of these subsidiaries are estimated to be $ 112 million ( 20 cents per diluted share) in 2023, $ 170 million ( 30 cents per diluted share) in 2022, and $ 204 million ( 36 cents per diluted share) in 2021.

As of December 31, 2023, the Company has approximately $ 16.1 billion of undistributed earnings in its foreign subsidiaries.

4 unchanged sentences

Because of the multiple avenues by which to repatriate the earnings to minimize tax cost, and because a large portion of these earnings are not liquid, it is not practical to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely.

Earnings (Loss) Per Share

Certain awards outstanding under these stock-based compensation plans during the years 2023, 2022 and 2021 were not included in the computation of diluted earnings per share attributable to 3M common shareholders because they would have had an anti-dilutive effect ( 36.1 million average shares for 2023, 30.3 million average shares for 2022, and 7.8 million average shares for 2021).

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

The computations for basic and diluted earnings per share follow:

(Amounts in millions, except per share amounts) 2023 2022 2021

Net income (loss) attributable to 3M $ ( 6,995 ) $ 5,777 $ 5,921

Denominator for weighted average 3M common shares outstanding – basic

553.9 566.0 579.0

Dilution associated with stock-based compensation plans

Denominator for weighted average 3M common shares outstanding – diluted

553.9 567.6 585.3

Earnings (loss) per share attributable to 3M common shareholders — basic $ ( 12.63 ) $ 10.21 $ 10.23

Earnings (loss) per share attributable to 3M common shareholders — diluted $ ( 12.63 ) $ 10.18 $ 10.12

Marketable Securities

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

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

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

2 unchanged sentences

Certificates of deposit/time deposits 49 21

treasury securities — 75

municipal securities 4 4

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Total marketable securities $ 73 $ 261

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

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

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

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

(Millions) 2022

Due in one year or less $ 53

2 unchanged sentences

Total marketable securities $ 73

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Long-Term Debt and Short-Term Borrowings

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Description / 2023 Principal Amount 2023 2022

Medium-term note (repaid in 2022)

EUR Fixed — % 2022 — 567

Medium-term note (repaid in 2022)

USD Fixed — % 2022 — 599

Registered note ($ 500 million)

Registered note (repaid in 2023)

USD Fixed — % 2023 $ — $ 500

Medium-term note ($ 650 million)

Medium-term note (repaid in 2023)

USD Fixed — % 2023 — 650

Medium-term note (€ 600 million)

Medium-term note (repaid in 2023)

EUR Fixed — % 2023 — 639

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Long-term debt (excluding current portion) $ 13,088 $ 14,001

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

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Current portion of long-term debt 3.94 % $ 1,152 $ 1,938

Other borrowings — % — 16

dollar commercial paper 5.65 % 1,795 —

Total short-term borrowings and current portion of long-term debt $ 2,947 $ 1,938

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Credit Facilities:

3M has an amended and restated $ 3.0 billion five year revolving credit facility expiring in November 2024.

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.

In addition, 3M entered into a $ 1.25 billion 364 -day credit facility, which was renewed in November 2022 with an expiration date of November 2023.

The 364 -day credit agreement includes a provision under which 3M may convert any advances outstanding on the maturity date into term loans having a maturity date one year later.

These credit facilities were undrawn at December 31, 2022.

Under both the $ 3.0 billion and $ 1.25 billion credit agreements, 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 (as defined in the 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.

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.

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

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

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

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

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

Other Credit Facilities :

1 unchanged sentence

These instruments are utilized in connection with normal business activities.

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

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

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

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

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

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

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

Long-Term Debt Maturities and Extinguishments :

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

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

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

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

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

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

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

This included $ 400 million aggregate principal amount of 3.00 % notes and $ 600 million aggregate principal amount of 1.625 % notes, both of which were due to mature in 2021.

The Company recorded an early debt extinguishment pre-tax charge of approximately $ 10 million within interest expense.

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

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

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

In 2023, 3M repaid $ 500 million aggregate principal amount of fixed-rate registered notes that matured, $ 650 million aggregate principal amount of fixed-rate medium-term notes that matured and 600 million euros aggregate principal amount of fixed-rate medium-term notes that matured.

In 2022, 3M repaid 500 million euros aggregate principal amount of fixed-rate medium-term notes that matured and $ 600 million aggregate principal amount of fixed-rate medium-term notes that matured.

In 2021, 3M repaid 600 million euros aggregate principal amount of Eurobonds that matured and redeemed $ 450 million principal amount of 2.75 % notes due 2022 via a make-whole-call offer.

Floating Rate Notes :

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

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

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

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

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defined-benefit pension plan was closed to new participants effective January 1, 2009.

In December 2023, the Company committed to the future freeze of U.S.

defined benefit pension benefits for non-union U.S.

employees, effective December 31, 2028 .

The Company also provides certain postretirement health care and life insurance benefits for its U.S.

6 unchanged sentences

There are no plan assets in the non-qualified plan due to its nature.

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

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

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

These plans are offered to substantially all regular U.S.

For eligible employees hired prior to January 1, 2009, employee 401(k) contributions of up to 5 % of eligible compensation matched in cash at rates of 45 % or 60 %, depending on the plan in which the employee participates.

For eligible employees hired prior to January 1, 2009, employee 401(k) contributions of up to 5 % of eligible compensation are matched in cash at rates of 45 % or 60 %, depending on the plan in which the employee participates.

Employees hired on or after January 1, 2009, receive a cash match of 100 % for employee 401(k) contributions of up to 5 % of eligible compensation and receive an employer retirement income account cash contribution of 3 % of the participant’s total eligible compensation.

All contributions are invested in a number of investment funds pursuant to the employees’ elections.

All contributions are invested in a number of investment funds pursuant to employees’ elections.

Employer contributions to the U.S.

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Employer contributions to the international defined contribution plans were $ 108 million, $ 108 million and $ 117 million for 2023, 2022 and 2021, respectively.

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

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

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

The following tables include a reconciliation of the beginning and ending balances of the benefit obligation and the fair value of plan assets as well as a summary of the related amounts recognized in the Company’s consolidated balance sheet as of December 31 of the respective years.

27 unchanged sentences

Funded status at end of year $ ( 1,150 ) $ ( 857 ) $ 770 $ 819 $ ( 917 ) $ ( 780 )

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

13 unchanged sentences

Ending balance $ 4,792 $ 4,560 $ 328 $ 171 $ 288 $ 166

The balance of amounts recognized for international plans in accumulated other comprehensive income as of December 31 in the preceding table are presented based on the foreign currency exchange rate on that date.

The pension accumulated benefit obligation represents the actuarial present value of benefits based on employee service and compensation as of the measurement date and does not include an assumption about future compensation levels.

10 unchanged sentences

Fair value of plan assets 12,348 12,648 793 442

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Components of Net Periodic Cost and Other Amounts Recognized in Other Comprehensive Income:

33 unchanged sentences

Compensation rate increase 3.77 % 3.37 % 3.21 % 2.88 % 2.86 % 2.86 % N/A N/A N/A

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Weighted-Average Assumptions Used to Determine Net Cost for Years Ended December 31 :

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Using this methodology, the Company determined a discount rate of 4.98 % for the U.S.

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

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

pension plans and 5.06 % for the postretirement benefit plans as of December 31, 2023, which is a decrease of 0.20 percentage points and a decrease 0.19 percentage points, respectively, from the rates used as of December 31, 2022.

A decrease in the discount rate increases the Projected Benefit Obligation (PBO), the decrease in the discount rate as of December 31, 2023 resulted in an approximately $ 0.2 billion increase in benefit obligation for the U.S.

pension and postretirement plans.

18 unchanged sentences

accumulated postretirement benefit obligations.

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

The Society of Actuaries did not release an update to the Scale MP-2021 in 2022 or 2023.

For the December 31, 2023 annual valuation, the Company updated the plans' mortality assumption to use the Pri-2012 Mortality Table with White Collar Adjustment.

The December 31, 2023 update resulted in an approximate $ 450 million increase to the U.S.

pension PBO and U.S.

accumulated postretirement benefit obligations.

During 2023, the Company contributed $ 143 million to its U.S.

7 unchanged sentences

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

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Future Pension and Postretirement Benefit Payments :

33 unchanged sentences

pension plan.

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

pension plans by asset class are as follows:

Fair Value Measurements Using Inputs Considered as Fair Value at December 31,

pension and postretirement benefit plans by asset class are as follows:

Fair Value Measurements Using Inputs Considered as Investments Measured at Net Asset Value* Fair Value at December 31,

Level 1 Level 2 Level 3

Asset Class (Millions) 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022

equities $ 501 $ 1,875 $ — $ — $ — $ — $ 501 $ 1,875

Pension Plans

Equities $ 1,246 $ 871 $ — $ — $ — $ — $ 174 $ 271 $ 1,420 $ 1,142

Index and long/short equity funds* 271 404

Total Equities 871 3,340 — — — — 1,142 3,744

government securities 1,344 1,417 29 716 — — 1,373 2,133

government securities — — 70 89 — — 70 89

Preferred and convertible securities — — 44 54 — — 44 54

corporate bonds — 11 4,789 4,620 — — 4,789 4,631

corporate bonds — — 871 883 — — 871 883

Derivative instruments 10 11 — 6 — — 10 17

Other* 91 132

Total Fixed Income 1,354 1,439 5,803 6,368 — — 7,248 7,939

Fixed income 1,153 1,354 6,428 5,803 — — 16 91 7,597 7,248

Private equity — — — — — — 1,622 1,700 1,622 1,700

Growth equity — 58 — — — — — 58

Partnership investments* 1,700 2,003

Total Private Equity — 58 — — — — 1,700 2,061

Absolute return 1 1 83 85 — — 1,314 1,794 1,398 1,880

Fixed income and other 1 1 85 166 — — 86 167

Hedge fund/fund of funds* 1,297 1,943

Partnership investments* 497 617

Total Absolute Return 1 1 85 166 — — 1,880 2,727

Cash and cash equivalents 7 8 — 21 — — 741 789 748 818

Cash and cash equivalents 8 11 22 9 — — 30 20

Repurchase agreements and derivative margin activity — — ( 1 ) — — — ( 1 ) —

Cash and cash equivalents, valued at net asset value* 789 678

Total Cash and Cash Equivalents 8 11 21 9 — — 818 698

Total $ 2,407 $ 2,234 $ 6,511 $ 5,909 $ — $ — $ 3,867 $ 4,645 $ 12,785 $ 12,788

1 unchanged sentence

Fair value of plan assets $ 12,348 $ 12,648

* In accordance with ASC 820-10, certain investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.

The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities then divided by the number of units outstanding and is determined by the investment manager or custodian of the fund.

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

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

Fair Value Measurements Using Inputs Considered as Fair Value at December 31,

Level 1 Level 2 Level 3

Asset Class (Millions) 2022 2021 2022 2021 2022 2021 2022 2021

equities $ 145 $ 292 $ — $ — $ — $ — $ 145 $ 292

Postretirement Benefit Plans

Equities $ 118 $ 168 $ — $ — $ — $ — $ 11 $ 16 $ 129 $ 184

Index and long/short equity funds* 16 28

Total Equities 168 372 — — — — 184 400

government securities 96 109 73 180 — — 169 289

government securities — — 5 7 — — 5 7

corporate bonds — 1 322 291 — — 322 292

corporate bonds — — 61 59 — — 61 59

Total Fixed Income 96 110 461 537 — — 562 654

Fixed income 92 96 503 461 — — 1 5 596 562

Private equity — — — — — — 108 99 108 99

Growth equity — 3 — — — — — 3

Partnership investments* 99 107

Total Private Equity — 3 — — — — 99 110

Absolute return — — 5 5 — — 87 105 92 110

Fixed income and other — — 5 9 — — 5 9

Hedge fund/fund of funds* 76 102

Partnership investments* 29 32

Total Absolute Return — — 5 9 — — 110 143

Cash and cash equivalents 35 21 — 1 — — 49 46 84 68

Cash and cash equivalents 21 20 1 — — — 22 20

Cash and cash equivalents, valued at net asset value* 46 36

Total Cash and Cash Equivalents 21 20 1 — — — 68 56

Total $ 245 $ 285 $ 508 $ 467 $ — $ — $ 256 $ 271 $ 1,009 $ 1,023

1 unchanged sentence

Fair value of plan assets $ 980 $ 1,017

*In accordance with ASC 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.

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Publicly traded equities are valued at the closing price reported in the active market in which the individual securities are traded.

Fixed income includes derivative instruments such as credit default swaps, interest rate swaps and futures contracts.

Corporate debt includes bonds and notes, asset backed securities, collateralized mortgage obligations and private placements.

Swaps and derivative instruments are valued by the custodian using closing market swap curves and market derived inputs.

Fixed income includes U.S.

government and government agencies, corporate bonds and notes, asset backed securities, collateralized mortgage obligations, private placements and derivative investments.

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

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

The private equity portfolio is a diversified mix of derivative instruments, growth equity and partnership interests.

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

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Derivative instruments such as credit default swaps, interest rate swaps are valued by the custodian using closing market swap curves and market derived inputs.

Futures are valued at the closing price reported in active market in which the derivative is traded.

The private equity portfolio consists of partnership interests valued at NAV as described above.

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

Corporate debt instruments are valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risk ratings.

The hedge funds are valued at NAV as described above.

The private fund vehicles consist primarily of corporate debt instruments that are valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that utilizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risk ratings.

Other items to reconcile to fair value of plan assets include, interest receivables, amounts due for securities sold, amounts payable for securities purchased and interest payable.

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The asset allocations are reviewed periodically and rebalanced when necessary.

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

Fair Value Measurements Using Inputs Considered as Fair Value at December 31,

Fair Value Measurements Using Inputs Considered as Investments Measured at Net Asset Value* Fair Value at December 31,

Level 1 Level 2 Level 3

Asset Class (Millions) 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022

Growth equities $ 59 $ 315 $ 99 $ 181 $ — $ — $ 158 $ 496

Value equities 164 328 11 15 — — 175 343

Core equities 65 107 142 547 2 5 209 659

Equities, valued at net asset value* 1 2

Total Equities 288 750 252 743 2 5 543 1,500

Domestic government 73 73 1,060 1,039 3 4 1,136 1,116

Foreign government 29 22 327 458 — — 356 480

Corporate debt securities 32 32 2,155 2,389 1 10 2,188 2,431

Fixed income securities, valued at net asset value* 623 893

Total Fixed Income 134 127 3,542 3,886 4 14 4,303 4,920

Equities $ 226 $ 288 $ 513 $ 252 $ 1 $ 2 $ 45 $ 1 $ 785 $ 543

Fixed income 148 134 3,501 3,542 2 4 719 623 4,370 4,303

Private equity — 2 58 50 2 2 361 384 421 438

Real estate 2 2 50 58 2 5 54 65

Real estate, valued at net asset value* 119 163

Partnership investments* 265 226

Total Private Equity 2 2 50 58 2 5 438 454

Absolute return 10 8 1 1 583 439 189 259 783 707

Derivatives — — 1 20 — — 1 20

Insurance — — — — 438 504 438 504

Other 8 7 — — 1 6 9 13

Other, valued at net asset value* — —

Hedge funds* 259 535

Total Absolute Return 8 7 1 20 439 510 707 1,072

Cash and cash equivalents 106 122 76 51 — — 1 2 183 175

Cash and cash equivalents 122 145 51 46 — — 173 191

Cash and cash equivalents, valued at net asset value* 2 1

Total Cash and Cash Equivalents 122 145 51 46 — — 175 192

Total $ 490 $ 554 $ 4,149 $ 3,896 $ 588 $ 447 $ 1,315 $ 1,269 $ 6,542 $ 6,166

6 unchanged sentences

Publicly traded equities are valued at the closing price reported in the active market in which the individual securities are traded.

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

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

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

Fixed Income investments include domestic and foreign government, and corporate debt securities.

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

Private equity funds consist of partnership interests in a variety of funds which are valued at NAV as described above.

Real estate consists of property funds and REITS (Real Estate Investment Trusts).

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

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

REITS are valued at NAV with published prices provided by the custodians.

Absolute return consists primarily of private partnership interests in hedge funds, insurance contracts and derivative instruments.

Partnerships and hedge funds are valued at NAV as described above.

Insurance consists of insurance contracts, which are valued using cash surrender values which is the amount the plan would receive if the contract was cashed out at year end.

Derivative instruments consist of various swaps and bond futures that are used to help manage risks.

Derivative instruments consist of various swaps and bond futures that are used to help manage risks and are valued by the custodian using closing market swap curves and market derived input

Other items to reconcile to fair value of plan assets include the net of interest receivables, amounts due for securities sold, amounts payable for securities purchased and interest payable.

The balances of and changes in the fair values of the international pension plans’ level 3 assets consist primarily of insurance contracts under the absolute return asset class.

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

In 2023 the aggregate of net purchases and net unrealized gains and losses increased this balance by $ 138 million and the change in currency exchange rates increased this balance by $ 6 million for a net increase of $ 144 million.

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

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

Supplier Finance Program Obligations

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

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

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

3M's outstanding balances of confirmed invoices in the programs as of December 31, 2023 and December 31, 2022 were approximately $ 270 million and $ 260 million, respectively.

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

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

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

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• Derivatives and/or hedging instruments associated with the Company’s long-term debt are also described in Note 13.

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

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

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

12 unchanged sentences

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

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

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

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

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

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

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

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

This includes a remaining balance of $ 94 million (after-tax loss) related to the forward starting interest rate swap and treasury rate lock contracts, which will be amortized over the respective lives of the notes.

As of December 31, 2023, the Company had a balance of $ 54 million associated with the after-tax net unrealized loss associated with cash flow hedging instruments recorded in accumulated other comprehensive income (loss).

This includes a remaining balance of $ 87 million (after-tax loss) related to forward starting interest rate swap and treasury rate lock contracts terminated in 2019 concurrent with associated debt issuances, which is being amortized over the respective lives of the underlying notes.

Based on exchange rates as of December 31, 2023 of the total after-tax net unrealized balance as of December 31, 2023, 3M expects to reclassify approximately $ 26 million after-tax net unrealized gain over the next 12 months (with the impact offset by earnings/losses from underlying hedged items).

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

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

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

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

(Millions) 2023 2022 2021

Foreign currency forward/option contracts $ 81 $ 159 $ 108

Interest rate contracts — — ( 2 )

Total $ 159 $ 108 $ ( 113 )

Fair Value Hedges:

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The mark-to-market of these fair value hedges is recorded as gains or losses in interest expense and is offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense.

In November 2013, 3M issued a Eurobond which was due in 2021 for a face amount of 600 million euros.

Upon debt issuance, 3M completed a fixed-to-floating interest rate swap on a notional amount of 300 million euros as a fair value hedge of a portion of the fixed interest rate Eurobond obligation.

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

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

Upon debt issuance, the Company entered into two interest rate swaps as fair value hedges of a portion of the fixed interest rate medium-term note obligation.

The first converted a $ 450 million three-year fixed rate note that matured in August 2018 at which time the associated interest rate swap also matured, and the second converted $ 300 million of a five-year fixed rate note that matured in August 2020 at which time the associated interest rate swap also matured.

In the fourth quarter of 2017, the Company entered into an interest rate swap as a fair value hedge with a notional amount of $ 200 million that converted the company’s fixed-rate medium-term note that matured in August 2020 at which time the associated interest rate swap also matured.

In September 2018, the Company entered into an interest rate swap with a notional amount of $ 200 million that converted a portion of the Company’s $ 400 million aggregate principal amount of fixed rate medium-term notes due 2021 into a floating rate note with an interest rate based on a three-month LIBOR index as a hedge of its exposure to changes in fair value that are attributable to interest rate risk.

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

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

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

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

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

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

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

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

Location on the Consolidated Balance Sheet 2022 2021 2022 2021

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

Location on the Consolidated Balance Sheet (Millions)

December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Long-term debt $ 918 $ 903 $ ( 84 ) $ ( 98 )

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

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

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

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

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

(Millions) 2023 2022 2021

8 unchanged sentences

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

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

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

Location and Amount of Gain (Loss) Recognized in Income

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

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

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

Cost of sales Other expense (income), net

1 unchanged sentence

Information regarding cash flow and fair value hedging relationships:

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

Total amounts of income and expense line items presented in the consolidated statement of income (loss) in which the effects of derivatives are recorded $ 18,477 $ 19,232 $ 18,795 $ 560 $ 147 $ 165

Gain or (loss) on cash flow hedging relationships:

Foreign currency forward/option contracts:

Amount of gain or (loss) reclassified from accumulated other comprehensive income into income 107 ( 38 ) 80 — — —

Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) into income 152 107 ( 38 ) — — —

Interest rate contracts:

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Foreign currency forward/option contracts ( 9 ) ( 76 ) 5 21 45 ( 11 )

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

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

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For the periods presented, 3M has not received cash collateral from derivative counterparties.

Offsetting of Financial Assets under Master Netting Agreements with Derivative Counterparties

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

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

(Millions) 2022 2021 2022 2021 2022 2021 2022 2021

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

(Millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Derivatives subject to master netting agreements $ 84 $ 217 $ 30 $ 40 $ 54 $ 177

Derivatives not subject to master netting agreements — — — —

Total $ 217 $ 119 $ 177 $ 94

Offsetting of Financial Liabilities under Master Netting Agreements with Derivative Counterparties

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

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

(Millions) 2022 2021 2022 2021 2022 2021 2022 2021

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

(Millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Derivatives subject to master netting agreements $ 127 $ 142 $ 30 $ 40 $ 97 $ 102

Derivatives not subject to master netting agreements — — — —

Total $ 142 $ 33 $ 102 $ 8

Currency Effects:

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

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax loss by approximately $ 40 million in 2023, increased pre-tax income by approximately $ 127 million in 2022, and decreased pre-tax income by approximately $ 105 million in 2021.

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

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Marketable securities are discussed further in Note 12.

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

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Net investment hedges that use foreign currency denominated debt to hedge 3M’s net investment are not impacted by the fair value measurement standard under ASC 820, as the debt used as the hedging instrument is marked to a value with respect to changes in spot foreign currency exchange rates and not with respect to other factors that may impact fair value.

3M has determined that foreign currency forwards, currency swaps, foreign currency options, interest rate swaps and cross-currency swaps will be considered level 2 measurements.

3M has determined that foreign currency forward and option contracts and interest rate swaps will be considered level 2 measurements.

3M uses inputs other than quoted prices that are observable for the asset.

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Industry standard data providers are 3M’s primary source for forward and spot rate information for both interest rates and currency rates, with resulting valuations periodically validated through third-party or counterparty quotes and a net present value stream of cash flows model.

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

The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis at December 31, 2023 and 2022 .

Fair Value at Fair Value Measurements Using Inputs Considered as

5 unchanged sentences

Certificates of deposit/time deposits 49 21 — — 49 21 — —

treasury securities — 75 — 75 — — — —

municipal securities 24 27 — — — — 24 27

4 unchanged sentences

Interest rate contracts 88 102 — — 88 102 — —

The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis in the table above that used significant unobservable inputs (level 3).

Marketable securities — certain U.S.

municipal securities only

(Millions) 2022 2021 2020

Beginning balance $ 30 $ 34 $ 46

Total gains or losses:

Included in earnings — — —

Included in other comprehensive income — — —

Purchases and issuances — — 10

Sales and settlements ( 3 ) ( 4 ) ( 22 )

Transfers in and/or out of level 3 — — —

Ending balance $ 27 $ 30 $ 34

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

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The Company had no material activity with level 3 assets and liabilities during the periods presented.

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

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

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for 2022 and 2021.

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

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the periods presented except as described below.

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

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

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

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

As of December 31, 2022 the amounts of major assets and liabilities of this held-for-sale disposal group primarily included approximately $ 50 million within other current liabilities that largely represented a reserve against the balance of cumulative translation adjustment.

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

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

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

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

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

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

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

December 31, 2023 December 31, 2022

(Millions) Carrying Value Fair Value Carrying Value Fair Value

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

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Legal Proceedings:

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

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

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

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

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

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

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

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

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

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

Because litigation is subject to inherent uncertainties, and unfavorable rulings or developments could occur, there can be no certainty that the Company may not ultimately incur charges in excess of presently recorded liabilities.

Many of the matters described are at preliminary stages or seek an indeterminate amount of damages.

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

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

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

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

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

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

A future adverse ruling, settlement, unfavorable development, or increase in accruals for one or more of these matters could result in future charges that could have a material adverse effect on the Company’s results of operations or cash flows in the period in which they are recorded.

Based on experience and developments, the Company reexamines its estimates of probable liabilities and associated expenses and receivables each period, and whether it is able to estimate a liability previously determined to be not estimable and/or not probable.

Where appropriate, the Company makes additions to or adjustments of its estimated liabilities.

As a result, the current estimates of the potential impact on the Company’s consolidated financial position, results of operations and cash flows for the legal proceedings and claims pending against the Company could change in the future.

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

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

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

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

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

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As of December 31, 2023, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 4,042 individual claimants, compared to approximately 4,028 individual claimants with actions pending December 31, 2022.

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

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

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

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

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

Over the past twenty plus years, the Company has prevailed in fifteen of the sixteen cases tried to a jury (including the lawsuits in 2018 described below).

Over the past twenty plus years, the Company has prevailed in sixteen of the seventeen cases tried to a jury (including the lawsuits described below).

In 2018, 3M received a jury verdict in its favor in two lawsuits – one in California state court in February and the other in Massachusetts state court in December – both involving allegations that 3M respirators were defective and failed to protect the plaintiffs against asbestos fibers.

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

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

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

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The Washington Supreme Court declined to review the matter.

More recently, in November 2023, a jury in Hawaii delivered a complete defense verdict in favor of 3M, concluding that 3M’s 8710 respirator was not a cause of plaintiff’s mesothelioma.

The Company has demonstrated in these past trial proceedings that its respiratory protection products are effective as claimed when used in the intended manner and in the intended circumstances.

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Nonetheless, the Company’s litigation experience indicates that claims of persons alleging more serious injuries, including mesothelioma, other malignancies, and black lung disease, are costlier to resolve than the claims of unimpaired persons, and it therefore believes the average cost of resolving pending and future claims on a per-claim basis will continue to be higher than it experienced in prior periods when the vast majority of claims were asserted by medically unimpaired claimants.

Since the second half of 2020, the Company has experienced an increase in the number of cases filed that allege injuries from exposures to coal mine dust;

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

In the second half of 2020 and into 2021, the Company experienced an increase in the number of cases filed that allege injuries from exposures to coal mine dust;

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

The rate of coal mine dust-related case filings decelerated in 2022 and, in 2023, continued to stay significantly lower than in 2021.

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

The federal district court remanded the cases to state court.

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

accordingly, those cases will remain in federal court.

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

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

A bench trial for the unfair trade practices claims has been rescheduled for late February 2023.

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

An expert witness retained by the State has recently estimated that 3M sold over five million respirators into the state during the relevant time period, and the State alleges that each respirator sold constitutes a separate violation under the Act.

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In addition, the Company is not able to estimate a possible loss or range of loss given the lack of any meaningful discovery responses by the State of West Virginia as to key issues, and the assertions of claims against two other manufacturers where a defendant’s share of liability may turn on the law of joint and several liability and by the amount of fault, if any, a factfinder may allocate to each defendant if the case were ultimately tried.

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Respirator Mask/Asbestos Liabilities and Insurance Receivables

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

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

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

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

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

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

As a result of its review of its respirator mask/asbestos liabilities, of pending and expected lawsuits and of the cost of resolving claims of persons who claim more serious injuries, including mesothelioma, other malignancies, and black lung disease, the Company increased its accruals in 2023 for respirator mask/asbestos liabilities by $ 57 million.

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As of December 31, 2023, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 574 million.

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

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

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

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

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

As of December 31, 2023, the Company had an immaterial receivable for insurance recoveries related to the respirator mask/asbestos litigation.

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

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

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

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

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

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

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

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

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

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

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

However, following the June 2023 dismissal of the Aearo bankruptcy, the Company, through its Aearo subsidiary, had accruals of $ 62 million as of December 31, 2023 for product liabilities and defense costs related to current and future Aearo-related asbestos, silica-related and coal mine dust claims.

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

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Environmental Matters and Litigation:

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

These laws and regulations can form the basis of, under certain circumstances, claims for the investigation and remediation of contamination, for capital investment in pollution control equipment, for restoration of and/or compensation for damages to natural resources, and for personal injury and property damage claims.

The Company has incurred, and will continue to incur, costs and capital expenditures in complying with these laws and regulations, defending personal injury and property damage claims, and modifying its business operations in light of its environmental responsibilities.

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

The Company has incurred, and will continue to incur, costs and capital expenditures in complying with these laws and regulations, defending personal injury, natural resource, and property damage claims, and modifying its business operations in light of its environmental responsibilities.

In its effort to satisfy its environmental responsibilities and comply with environmental laws and regulations, the Company has established, and periodically updates, policies relating to environmental standards of performance for its operations worldwide.

Under certain environmental laws, including the United States Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and similar state laws, the Company may be jointly and severally liable, sometimes with other potentially responsible parties, for the costs of remediation of environmental contamination at current or former facilities and at off-site locations where hazardous substances have been released or disposed of.

Under certain environmental laws, including the United States Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") and similar state laws, the Company may be jointly and severally liable, sometimes with other potentially responsible parties, for the costs of investigation and remediation of environmental contamination at current or former facilities and at off-site locations where hazardous substances have been released or disposed of.

The Company has identified numerous locations, many of which are in the United States, at which it may have some liability for remediation of contamination.

Please refer to the section entitled “ Environmental Liabilities and Insurance Receivables” that follows for information on the amount of the accrual for such liabilities.

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Environmental Matters

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

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

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

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

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

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

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

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

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

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

Through its ongoing life cycle management and its raw material composition identification processes associated with the Company’s policies covering the use of all persistent and bio-accumulative materials, the Company continues to review, control or eliminate the presence of certain PFAS in purchased materials, as intended substances in products, or as byproducts in some of 3M’s current manufacturing processes, products, and waste streams.

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

3M announced in December 2022 it will take two actions with respect to PFAS:

exiting all PFAS manufacturing by the end of 2025;

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

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

3M is progressing toward exiting all PFAS manufacturing by the end of 2025.

3M is also working to discontinue the use of PFAS across its product portfolio by the end of 2025.

3M has already eliminated the PFAS use in certain product categories and has made progress across its product portfolio in a variety of applications.

With respect to PFAS-containing products not manufactured by 3M but manufactured by companies other than 3M in the Company's supply chains, the Company continues to evaluate the availability of third-party products that do not contain PFAS.

Depending on the availability and feasibility of such third-party products not containing PFAS, the Company continues to evaluate whether there may be some circumstances in which the use of PFAS-containing materials manufactured by third parties and used in certain applications in 3M’s product portfolios, such as lithium ion batteries and printed circuit boards widely used in commerce across a variety of industries, may continue beyond 2025.

In such instances, the Company intends to continue to evaluate the adoption of third-party products that do not contain PFAS to the extent such products are available and such adoption is feasible.

PFAS Regulatory and Legislative Activity

Regulatory and legislative activities concerning PFAS are accelerating in the United States, Europe and elsewhere, and before certain international bodies.

These activities include gathering of exposure and use information, risk assessment activities, consideration of regulatory approaches, and increasingly strict restrictions on various uses of PFAS in products and on PFAS in manufacturing emissions, in some cases moving towards non-detectable limits for certain PFAS compounds.

Regulations of PFAS in emissions and in environmental media such as soil and water (including drinking water) are increasingly being set at levels that continue to decrease.

Global regulations also appear to be increasingly focused on a broader group of PFAS, and may include those PFAS compounds used in current products.

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

These activities include gathering of exposure and use information, risk assessment activities, and increasingly stringent restrictions on various uses of PFAS in products and on PFAS in manufacturing emissions and environmental media, in some cases moving towards non-detectable limits for certain PFAS compounds.

Regulatory limits for PFAS in emissions and in environmental media such as soil and water (including drinking water) are being set at increasingly low levels.

Global regulations also appear to be increasingly focused on a broader group of PFAS, including PFAS compounds manufactured by 3M, used in current 3M products or generated as byproducts or degradation products from certain 3M production processes.

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

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

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

In the European Union, where 3M has PFAS manufacturing facilities in countries such as Germany and Belgium, recent regulatory activities have included both preliminary and on-going work on various restrictions of PFAS or certain PFAS compounds under the EU’s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) and the EU’s Persistent Organic Pollutants (POPs) Regulation.

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

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

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

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

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

The EU regulates PFAS in drinking water via a Drinking Water Directive, which includes a limit of 0.1 micrograms per liter (µg/l) (or 0.1 parts for billion (ppb)) for a sum of 20 PFAS in drinking water.

Member States have until January 2023 to implement the Directive in their countries.

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Dyneon has a recycling process for a critical emulsifier from which small amounts of PFOA are present after recycling, as an unintended and unavoidable byproduct of certain earlier process steps.

With respect to the applicability of the amendment of the EU POPs Regulation with PFOA applicable since 2021, Dyneon proactively consulted with the relevant German competent authority regarding process improvements underway.

The implementation of process improvements and analytical work is ongoing.

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

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

In the European Union, where 3M has PFAS manufacturing facilities in Germany and Belgium, recent regulatory activities have included various proposed and enacted restrictions of PFAS or certain PFAS compounds, including under the EU’s Registration, Evaluation, Authorization and Restriction of Chemicals ("REACH") and the EU’s Persistent Organic Pollutants ("POPs") Regulation.

PFOA, PFOS and PFHxS (and their related compounds) are listed under several Annexes of the POPs Regulation, resulting in a ban in manufacture, placing on the market and use as well as some waste management requirements of these substances in EU Member States.

These substances have also been listed in the Stockholm Convention, which has been ratified by more than 180 countries and aims for global elimination of certain listed substances (with narrow exceptions).

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

With respect to the applicability of the amendment of the EU POPs Regulation to include PFOA, which has been applicable since 2021, Dyneon, a 3M subsidiary that operates the Gendorf facility in Germany, proactively consulted with the relevant German competent authority regarding improvements necessary to meet applicable limits for a recycling process for a critical emulsifier for which small amounts of PFOA are present after recycling as an unintended contaminant.

In consultation with German regulatory authorities, to achieve the applicable limits for the use of the emulsifier until the exit of PFAS manufacturing, Dyneon has started to use a method containing a mix of recycled and virgin emulsifier.

In February 2023, the European Chemicals Agency published a proposal to restrict the manufacture, placing on the market and use of PFAS under REACH, subject to certain proposed exceptions.

In March 2023, the six-month consultation phase on the PFAS Restriction Proposal started and, in September 2023, the Company submitted comments on the proposal.

Depending on the timing, scope and obligations contained in any final restriction, PFAS manufacturers and manufacturers of PFAS-containing products including 3M could incur additional costs and potential exposures, including costs of having to discontinue or modify products, future compliance costs, possible litigation and/or enforcement actions.

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

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

Sampling and further assessment of results is ongoing.

The EU regulates PFAS in drinking water via a Drinking Water Directive, which includes a limit of 0.1 micrograms per liter (µg/l) (or 0.1 parts per billion (ppb)) for a sum of 20 PFAS in drinking water.

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

A majority of Member States have adopted the EU Directive.

Some Member States, including Germany, adopted more restrictive limits for certain PFAS substances.

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

3M Belgium, a subsidiary of the Company, has been working with the Public Flemish Waste Agency ("OVAM") for several years to investigate and remediate historical PFAS contamination at and near the 3M Belgium facility in Zwijndrecht, Antwerp, Belgium.

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

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

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

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

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

Certain additional parties reportedly joined the complaint .

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

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

As discussed in greater detail below, the Flemish Parliament, the Minister of the Environment, and regulatory authorities initiated investigations and demands for information related to the release of PFAS from the Zwijndrecht facility.

3M Belgium has cooperated with the authorities with respect to the investigations and information requests and is working with the authorities on an ongoing basis.

Safety measures – wastewater discharge:

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

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

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

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

3M Belgium received a new two-year permit in May 2022 which contains strict new limits for 24 different PFAS, effective July 1, 2022.

3M Belgium believes that the recently installed additional control systems will enable it to meet these limits.

Subsequently, the environmental enforcement agency has recently informed 3M Belgium that the agency believes that 3M Belgium must apply for discharge limits for certain additional “short-chain” PFAS pursuant to the special condition.

Although disagreeing with the agency’s position, 3M Belgium is in the process of developing the application to amend the permit to add the additional PFAS.

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

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

3M Belgium received a new two-year permit in May 2022 which contained strict limits for 24 different PFAS, effective July 1, 2022.

3M Belgium installed additional control systems that it believes allows the system to meet those limits.

During 2022, 3M Belgium identified certain short chain PFAS compounds in the wastewater from the Zwijndrecht facility and shared the results with the Inspectorate.

The compounds at issue do not have specific discharge limits in the applicable wastewater discharge permit, however according to Belgian authorities a special condition in the permit prohibits detectable discharge of PFAS compounds that do not have a specific discharge limit in the permit.

3M Belgium disagrees with the Inspectorate’s interpretation of the special condition and the time period during which a permit application needs to be submitted if such compounds are detected.

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

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

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

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

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

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

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

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

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

3M Belgium will continue its efforts to comply with the special condition and to minimize discharge of all PFAS, including the PFAS identified in the infraction report, but an inability to meet discharge limits for short chain PFAS could have a significant adverse impact on 3M Belgium’s normal operations and the Company's businesses that receive products and other materials from the facility, some of which may not be available in similar quantities from other 3M facilities, which could in turn impact these businesses’ ability to fulfill supply obligations to their customers.

Groundwater treatment continues, and 3M Belgium will continue its efforts to comply with the special condition and to minimize discharge of all PFAS, including the PFAS identified in the infraction report.

In February 2023, 3M Belgium applied for a modification of the water discharge permit to add parameters for certain short chain PFAS.

In September 2023, the permitting authority rejected the application to add the additional short chain PFAS to 3M Belgium's discharge permit.

3M Belgium has appealed this decision and is evaluating the potential impact of this action and potential next steps.

3M Belgium cannot at this time predict the outcome of any potential appeal on discharge limits for short chain PFAS and is therefore unable to assess whether the current Zwijndrecht wastewater treatment system, or currently conceived additional treatment technology, will meet any discharge limits imposed with respect to manufacturing at the Zwijndrecht facility.

Safety measure – emissions:

As previously disclosed, in October 2021, the Flemish environmental enforcement agency issued a new safety measure that prohibits all emissions of all forms of PFAS from the facility unless and until specifically approved on a process-by-process basis.

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

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

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

3M Belgium established a regular cadence of meetings with the relevant authorities to review restart of specific PFAS-related production processes.

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

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

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

As of July 2022, the authorities have approved the restart of key production processes and 3M Belgium continues to conduct required monitoring and reporting activities.

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

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

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

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

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

Notice of default – environmental law compliance.

Also in September 2021, the Flemish Region issued a notice of default alleging violations of environmental laws and seeking PFAS-related information, indemnity and a remediation plan for soil and water impacts due to PFAS originating from the Zwijndrecht facility.

In September 2021, 3M responded to the notice of default and announced a plan to invest up to 125 million euros in the next three years in actions related to the Zwijndrecht community, including support for local commercial farmers impacted by restrictions on sale of agricultural products, and enhancements to site discharge control technologies.

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

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

An accredited third-party soil remediation expert has progressed towards a remedial action plan based on a descriptive soil investigation that would help inform 3M Belgium’s remedial actions onsite and in certain surrounding areas.

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

3M Belgium cannot exclude the possibility of future government executive decisions expanding its remedial obligations under the Soil Decree, including through a proposed executive decision that may be finalized in 2023 following an anticipated advisory opinion from the Belgian administrative court.

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

A response is planned to a notice received in January 2023 from the Flemish government regarding the remediation action plans under the Flemish Soil Decree.

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

Pursuant to the agreement, 3M Belgium, among other things, committed an aggregate of 571 million euros, which includes the previous commitments described above.

As previously disclosed, in October 2021, the Flemish environmental enforcement agency issued a safety measure prohibiting, with limited exceptions, all emissions of all forms of PFAS from the facility unless specifically approved on a process-by-process basis.

3M Belgium appealed the safety measure to the Belgian Council of State, while also complying with the safety measure by idling the affected production at the facility.

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

In mid-2022 Flemish authorities approved the restart of key production processes.

3M Belgium continued to conduct required monitoring and reporting activities.

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

Those production lines were determined to require approval under the provisions of the safety measure.

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

In July 2023, the Environmental Inspectorate issued an infraction report stating the actions taken by 3M Belgium to address the September 2022 infraction report were insufficient to reduce dust formation from the facility.

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

Also in the third quarter of 2023, Flemish authorities responsible for maintaining oversight of 3M Belgium's operations at the Zwijndrecht facility requested analyses of the projected cumulative impacts of continued PFAS-related manufacturing (rather than the analysis previously accepted on a process-by-process basis).

In September 2023, the authorities expressed concerns based upon new information from the process identified in the September 2022 infraction report and stated their intention to investigate compliance with the safety measure further.

As previously disclosed in the Company’s Form 8-K, on September 22, 2023, 3M Belgium idled all PFAS manufacturing processes at the Zwijndrecht facility in response to the actions by the Flemish authorities.

Subsequently, in September 2023, the Environmental Inspectorate issued an infraction report to 3M Belgium and instructed that all PFAS-related manufacturing processes at the Zwijndrecht facility be suspended until specifically approved due to emissions of certain PFAS molecules from the Zwijndrecht facility.

Based on the Inspectorate’s actions 3M Belgium submitted a plan to accelerate the phase out of its PFAS-related production processes at the Zwijndrecht site.

In December 2023, Flemish authorities gave 3M Belgium approval to complete a PFAS-related production process for existing raw materials.

In January 2024, 3M Belgium also received guidance from the relevant Flemish authorities on steps necessary to process existing quantities of intermediate and byproduct materials at the facility.

A review by 3M Belgium of the underlying facts related to the manufacturing processes cited by the Environmental Inspectorate is also underway.

In this same time period, the Flemish Minister of the Environment made public statements to the effect that the government will review the integrated environmental permit for the Zwijndrecht manufacturing site, which is essential for the Zwijndrecht site’s overall manufacturing and processing operations.

3M Belgium has made Flemish government aware of ongoing discussions with the Flemish regulatory authorities of plans to accelerate the phase out of PFAS-related production processes at the Zwijndrecht site, and 3M Belgium has not received notice of any official action to review the integrated environmental permit for the facility.

A negative development in the discussions with the Flemish authorities regarding completion of PFAS manufacturing at the Zwijndrecht facility or a negative action relating to the facility's integrated environmental permit, could have a significant adverse impact on 3M Belgium’s normal operations and the Company's businesses that receive products and other materials from the Zwijndrecht facility, some of which may not be available or in similar quantities from other 3M facilities.

Soil remediation and environmental law compliance

Flemish government actions and Remediation Agreement.

As previously disclosed, in September 2021, the Flemish Region issued a notice of default alleging violations of environmental laws and seeking PFAS-related information, indemnity and a remediation plan for soil and water impacts due to PFAS originating from the Zwijndrecht facility.

In September 2021, 3M responded to the notice of default and announced a plan to invest up to € 125 million over three years in actions related to the Zwijndrecht community, including support for local commercial farmers impacted by restrictions on sale of agricultural products, and enhancements to site discharge control technologies.

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

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

In July 2022, 3M Belgium and the Flemish Government announced an agreement (the “Remediation Agreement”) in connection with the Zwijndrecht facility.

Pursuant to the Remediation Agreement, 3M Belgium, among other things, committed an aggregate of € 571 million, which includes the previous commitments described above.

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

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

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

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

Civil litigation - As of December 31, 2022, a total of nine actions against 3M Belgium are pending in Belgian civil courts.

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

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

One of the actions has been rescheduled for judicial hearings in April 2023 and another is scheduled in February 2023;

the other actions are in early stages.

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

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Soil remediation .

Consistent with Flemish environmental law, descriptive soil investigations (“DSI”) have been carried out to assess areas of potential PFAS contamination that may require remediation.

An accredited third-party soil remediation expert has conducted several DSIs, one of which evaluated an area close to the Zwijndrecht site.

That DSI was approved by Flemish authorities.

The third-party soil remediation expert developed a remedial action plan (“RAP”) based on the DSI for that area which was approved by the Flemish authorities.

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

At the end of March 2023, 3M Belgium submitted a revised DSI, along with a document identifying proposed precautionary measures that were subsequently approved by OVAM.

3M Belgium also appealed the rejection of the DSI.

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

3M Belgium submitted two additional DSIs in May 2023 for areas around the Zwijndrecht plant, both of which were rejected by OVAM.

3M Belgium appealed the rejection of the May 2023 DSIs and also submitted a remedial master plan for approval.

Although 3M Belgium proposed altering the October 1, 2023 deadline for the submission of certain additional DSIs and RAPs, the Flemish government informed 3M Belgium in late September 2023 that the plans were to be submitted by October 1, 2023.

3M Belgium was unable to meet the October 1, 2023 deadline, given the complexity of the issues involved and the short notice received from the Flemish government that the deadline for submission would not be extended.

3M Belgium informed the authorities that it could not meet the October 1, 2023 deadline and a new deadline was set for December 23, 2023.

3M Belgium submitted a consolidated DSI in December 2023 as required.

In November, OVAM issued an administrative measure setting a RAPs submission deadline for areas adjacent to the area covered by the approved RAP for the Zwijndrecht community.

3M filed an appeal regarding one area covered by the administrative measure.

3M Belgium representatives continue to have discussions with the relevant authorities regarding further soil remedial actions in connection with the Flemish Soil Decree.

Changes to Flemish Soil Decree .

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

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

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

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

In September 2023, the Flemish government submitted its response to the petition.

3M Belgium filed its final submission responding to the Flemish government’s arguments in November 2023.

Various parties purporting to have an interest in the proceeding, including the government of the Netherlands, have intervened and will have the opportunity to submit arguments supporting the Site Decision.

In July 2023, the Flemish government approved a decree modifying the Flemish Soil Decree to establish a temporary action framework setting soil and groundwater values for evaluation of remediation of PFAS.

While the full impact of the temporary action framework remains to be determined, its use of the values in the EU Drinking Water Directive for remediation of groundwater, regardless of whether the groundwater would be used for drinking water, may create a presently undetermined amount of additional financial and remedial obligations for 3M Belgium.

In December 2023, 3M Belgium submitted a petition for annulment of the temporary action framework to the Belgian Council of State.

Various additional proposed amendments to the Flemish Soil Decree are pending, including a proposal to allow OVAM to require financial security for remediation work and a proposal to impose a percentage of the cost of remediating river sediment on various parties while requiring financial assurance for such work.

Pending or potential litigation and investigations

As of December 31, 2023, a total of seventeen actions against 3M Belgium are pending in Belgian civil courts.

3M Belgium has also received pre-litigation notices from individuals and entities in Belgium indicating potential claims.

The pending cases include claims by individuals, municipalities, and other entities for alleged soil and wastewater or rainwater contamination with PFAS, nuisance, tort liability, personal injury and for an environmental injunction.

In December 2023, 3M Belgium, 3M Company and several additional 3M entities were named in a lawsuit naming approximately 1,400 individuals as plaintiffs.

The suit involves claims for defective products, liability for unlawful acts, and alleges liability of 3M entities as directors and/or shareholders of 3M Belgium, among other claims.

An introductory hearing in the case is set for April 2024.

While most of the actions are in early stages, one of the actions resulted in an award of provisional damages of 500 euros to each of four family members who live near the Zwijndrecht site, and denied other damages.

Approximately 1,400 individuals have petitioned to intervene in a second "pilot case" alleging primarily nuisance claims.

The Belgian court has not yet determined that the interventions will be permitted.

An introductory hearing in the case is expected to be set for the second quarter of 2024.

The Netherlands .

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

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

3M Belgium has met, and intends to continue to meet, with representatives of the Dutch government to discuss the notice.

3M Belgium has also met with representatives of various private parties.

Investigations .

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

Certain additional parties reportedly joined the complaint.

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

3M Belgium has been cooperating with the investigation.

United States:

Federal Activity

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

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

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

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

In the United States, the EPA's “PFAS Strategic Roadmap:

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

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

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

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

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

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

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

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

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

The proposed standards were sent to the Office of Management and Budget ("OMB") for review in December 2023.

If the proposed drinking water standards are finalized, 3M could incur additional costs and potential exposures, including future compliance costs, possible litigation and/or enforcement actions.

Various federal agencies in the United States also have been researching and publishing information about the potential health effects of PFAS.

In May 2021, the U.S.

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

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

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

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

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

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

EPA has also issued final human health toxicity assessments for certain PFAS, including PFBS and HFPO-DA.

Those assessments identify the levels at which the EPA has determined exposures over various periods of time are unlikely to lead to adverse health effects.

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

EPA had previously added PFBS to both lists in 2014.

Regional Screening Levels are used to identify contaminated media that may require further investigation, while Regional Removal Management Levels are used by EPA to support certain actions under CERCLA.

EPA began the process of establishing a national primary drinking water regulation for PFOA and PFOS in November 2021 by referring its proposed approach to developing a Maximum Contaminant Level Goal (MCLG) to the Science Advisory Board (SAB) and soliciting public comment.

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

In August 2022, the Science Advisory Board published its final report analyzing EPA’s proposed approach to developing a MCLG.

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

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

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

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

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

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

3M submitted comments on EPA’s proposal in November 2022.

If CERCLA or RCRA designations are finalized and become enforceable, 3M may be required to undertake additional investigative or remediation activities where 3M conducts operations or where 3M has disposed of waste.

EPA sent the final rule to OMB in December 2023.

In addition, EPA published an Advanced Notice of Proposed Rulemaking considering CERCLA hazardous substance designations for additional PFAS, including PFBS, PFHxS, PFNA, HFPO-DA, PFBA, perfluorohexanoic acid ("PFHxA"), PFDA and their precursor compounds as well as the precursor compounds of PFOS and PFOA, for public comment in April 2023 and the Company submitted comments to the proposal in August 2023.

On January 31, 2024, EPA released pre-publication versions of two proposed rules under the Resource Conservation and Recovery Act (“RCRA”).

One of the proposed rules would list nine PFAS (PFOA, PFOS, PFBS, Gen-X, PFHxA, PFHxS, PFNA, PFDA, and PFBA) and their salts and structural isomers as hazardous constituents under RCRA.

The other proposed rule would expand the definition of hazardous waste subject to corrective action under RCRA.

Both proposals are due to be published in the Federal Register, which will start the notice and comment period.

If CERCLA or RCRA designations are finalized and become enforceable, 3M may be required to undertake additional investigative or remediation activities, including where 3M conducts operations or where 3M has disposed of waste.

3M may also face additional litigation from other entities that have liability under these laws for contribution to clean-up costs other entities might have.

EPA has also taken several actions to increase reporting and restrictions regarding PFAS under the Toxic Substances Control Act (TSCA) and the Toxics Release Inventory (TRI), which is a part of the Emergency Planning and Community Right-to-Know Act.

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

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

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

3M has submitted its initial response.

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

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

1 unchanged sentence

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

EPA has also taken several actions to increase reporting and restrictions regarding PFAS under the Toxic Substances Control Act ("TSCA") and the Toxics Release Inventory ("TRI"), which is a part of the Emergency Planning and Community Right-to-Know Act.

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

In October 2023, EPA finalized a rule that will require TRI reporting of de minimis uses of certain PFAS.

In October 2023, EPA published a final rule imposing reporting and recordkeeping requirements under TSCA for manufacturers or importers, including 3M, of certain PFAS in any year since January 2011 to report certain data to EPA regarding each PFAS produced, including the following:

chemical identity, total volumes, uses, byproducts, information about environmental and health effects, number of individuals exposed during manufacture, and the manner or method of disposal.

This is a one-time reporting requirement covering in scope activities over a 12-year look-back period from 2011-2022.

For most companies, including 3M, the reporting deadline is May 8, 2025.

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

3M submitted an initial response in early 2023.

In July 2023, 3M submitted an amended response requesting an exemption from the requirements of the order, subject to 3M’s obligation to reimburse participating manufacturers for a fair share of the testing costs ultimately incurred under the order, which request was conditionally approved by EPA in July 2023.

In August 2023, EPA issued a TSCA test order to 3M and other manufacturers requiring them to conduct certain health and safety testing related HFPO-DAF, a PFAS.

In September 2023, 3M submitted a response to EPA requesting an exemption from the requirements of the order, subject to 3M’s obligation to reimburse the participating manufacturers for a fair and equitable share of the testing costs ultimately incurred under the order.

EPA granted that exemption in October 2023.

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

This issue has been self-disclosed to EPA.

United States:

State Activity

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

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

The Minnesota Pollution Control Agency (MPCA) published the final version of its PFAS Monitoring Plan in March 2022.

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

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

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

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

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

Additionally, in 2021 and 2022, California finalized its listing of PFOS (and its salts and transformation and degradation precursors) and PFOA as carcinogens, and PFNA as a reproductive toxicant under its Proposition 65 law.

Several state legislatures and state agencies have been evaluating or have taken various regulatory actions related to PFAS in the environment, including proposing or finalizing cleanup standards for PFAS in soil and water, groundwater standards, surface water standards, and/or drinking water standards for PFOS, PFOA, and other PFAS.

3M has submitted various responsive comments to these proposals.

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

Additionally, in 2021 and 2022, California finalized its listing of PFOS (and its salts and transformation and degradation precursors) and PFOA as carcinogens and reproductive toxicants, and PFNA as a reproductive toxicant under its Proposition 65 law.

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

In the Summer of 2021, the State of Maine passed its Act To Stop Perfluoroalkyl and Polyfluoroalkyl Substances Pollution, which bans intentionally added PFAS in products effective January 1, 2030 and requires broad reporting of products containing intentionally-added PFAS effective January 1, 2023.

In December 2022, 3M submitted to the Maine Department of Environmental Protection a list of products containing intentionally added PFAS that have been sold in the U.S.

in the past two years in compliance with the law.

In October 2020, 3M and several other parties filed notices of appeal in the appellate division of the Superior Court of New Jersey to challenge the validity of the New Jersey PFOS and PFOA regulations.

In January 2021, the appellate division of the court denied the group’s motion to stay the regulations.

The court heard oral argument in November 2022.

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

An oral argument on the merits was held in December 2021.

In June 2022, the court issued a decision denying and dismissing the Company’s lawsuit on standing grounds.

The Company has filed a notice of appeal in July 2022 and decided in January 2023 not to pursue the appeal

In April 2021, 3M also filed a lawsuit against the Michigan Department of Environment, Great Lakes, and Energy (EGLE) to invalidate the drinking water standards EGLE promulgated under an accelerated timeline.

In April 2021, 3M filed a lawsuit against the Michigan Department of Environment, Great Lakes, and Energy ("EGLE") to invalidate the drinking water standards EGLE promulgated under an accelerated timeline.

In November 2022, the court granted 3M’s motion for summary judgment on the merits and invalidated EGLE’s rule based on its failure to properly consider relevant costs.

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EGLE appealed the decision in December 2022.

Between 2018 and 2022, seven states have enacted laws requiring written notification of firefighting personal protective equipment (PPE) that contains PFAS, with most such laws providing for potential civil penalties for non-compliance.

In August 2023, the Michigan Court of Appeals upheld the lower court’s decision that EGLE’s rule was invalid.

EGLE has appealed this ruling to the Michigan Supreme Court.

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

In 2021, the State of Maine passed its Act To Stop Perfluoroalkyl and Polyfluoroalkyl Substances Pollution, which bans intentionally added PFAS in products effective January 1, 2030, and requires broad reporting of products containing intentionally-added PFAS effective January 1, 2023.

In December 2022, 3M submitted to the Maine Department of Environmental Protection ("DEP") a list of products containing intentionally added PFAS that have been sold in the U.S.

in the past two years in compliance with the law.

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

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

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

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

In September 2023, MPCA opened a rulemaking to establish a program to collect the information required by the statute.

MPCA also issued a request for comments, with comments due in November 2023.

Certain states, including Colorado, California, Connecticut, Hawaii, Maryland, Nevada, New York, Oregon, Rhode Island, Vermont, and Washington have enacted restrictions on PFAS in certain categories of products, including textiles, children’s products, cosmetics, and food packaging products.

Between 2018 and 2022, seven states have enacted laws requiring written notification of firefighting personal protective equipment that contains PFAS, with most such laws providing for potential civil penalties for non-compliance.

In November 2022, the Company identified it likely did not provide required notifications for some of its products, including its Scott Safety Self-Contained Breathing Apparatuses.

The Company began providing written notices with those products starting November 2022.

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

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

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

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The Company cannot predict what additional regulatory actions in the United States, Europe and elsewhere arising from the foregoing or other proceedings and activities, if any, may be taken regarding such compounds or the consequences of any such actions to the Company, including to its manufacturing operations and its products.

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As previously reported, 3M has resolved numerous claims relating to alleged PFAS contamination of properties and water supplies by 3M’s Decatur, Alabama manufacturing facility.

In April 2019, 3M settled a lawsuit brought by the West Morgan-East Lawrence Water & Sewer Authority for $ 35 million, which will fund a new water filtration system, with 3M indemnifying the Water Authority from liability resulting from the resolution of certain lawsuits against the Water Authority alleging liability or damages related to 3M PFAS.

In October 2021, 3M settled a class action brought by plaintiffs who were supplied drinking water by the Water Authority (the “Lindsey” case) for an immaterial amount.

The court issued a final order approving the class settlement and dismissing the action in March 2022.

In October 2021, 3M also reached agreements in principle to resolve litigation with the Tennessee Riverkeeper organization, the St.

John plaintiff class, plaintiffs in the Stover, Owens, and Chandler matters.

A court granted final approval of the St.

John class settlement in April 2022, and plaintiffs in the Stover, Owens, and Chandler matters filed dismissals thereafter.

In June 2022, the court dismissed the Tennessee Riverkeeper case with prejudice.

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

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3M will continue to address PFAS at certain other closed municipal sites at which the Company historically disposed waste and continue environmental characterization in the area.

This work will complement the Interim Consent Order that 3M entered with ADEM in 2020 and includes sampling of environmental media, such as ground water, regarding the potential presence of PFAS at the 3M Decatur facility and legacy disposal sites, as well as supporting the execution of appropriate remedial actions.

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

In August 2022, 3M reached an agreement to settle personal injury claims brought by 37 individual plaintiffs in the King matter.

3M continues to negotiate with individual property owners regarding claims relating to former 3M disposal sites and has resolved several such claims for an immaterial amount.

In September 2020, the City of Guin Water Works and Sewer Board (Guin WWSB) brought a lawsuit against 3M in Alabama state court alleging that PFAS contamination in the Guin water system stems from manufacturing operations at 3M’s Guin facility and disposal activity at a nearby landfill.

Guin WWSB dismissed its lawsuit without prejudice in order to work with 3M to further investigate the presence of chemicals in the area;

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

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

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

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

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

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

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

This work will complement an Interim Consent Order that 3M entered with the Alabama Department of Environmental Management (“ADEM") in 2020 and includes sampling of environmental media, such as ground water, regarding the potential presence of PFAS at the 3M Decatur facility and legacy disposal sites, as well as supporting the execution of appropriate remedial actions.

In August 2022, Colbert County, Alabama, which opted out of an earlier class settlement, filed a lawsuit against 3M and several co-defendants alleging that discharge from operations in Decatur, Alabama has contaminated the Tennessee River, from which the County draws its drinking water.

Defendants' joint motion to dismiss was denied in December 2022, and defendants' petition for mandamus with the Supreme Court of Alabama was denied in September 2023.

The case is in early stages of discovery but is currently stayed as to 3M pending final approval of the proposed public water supplier class action settlement described below.

In February 2023, the City of Muscle Shoals, Alabama filed a lawsuit against 3M and several co-defendants alleging that discharge from operations in Decatur, Alabama has contaminated the Tennessee River, from which the City draws its drinking water.

Defendants filed a joint motion to dismiss in March 2023.

This case has been stayed pending final approval of the proposed public water supplier class action settlement described below.

Also in February 2023, two individuals who opted out of an earlier class settlement filed suit in Alabama state court against 3M, alleging PFAS contamination of their property resulting from 3M’s operations in Decatur.

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

The case is in early stages of discovery.

In December 2023, several plaintiffs filed a personal injury action against 3M and other defendants, alleging exposure to PFAS from defendants' operations in Decatur.

State Attorneys General Litigation Related to PFAS

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

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

New Hampshire;

Vermont, Michigan;

North Carolina;

Massachusetts;

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

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

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

Currently in the AFFF MDL, state attorneys general lawsuits have been brought against 3M on behalf of the people of the states of Alaska, Arizona, Arkansas, California, Delaware, Florida, Illinois, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Washington, and Wisconsin, as well as on behalf of the people of the District of Columbia and the territories of Guam, Puerto Rico, and the Northern Mariana Islands.

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

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

DuPont De Nemours and Co.

(“DuPont”), and Chemours Co.

("Chemours") on behalf of the New Jersey Department of Environmental Protection ("NJDEP"), the NJDEP’s commissioner, and the New Jersey Spill Compensation Fund regarding alleged discharges at two DuPont facilities in Pennsville, New Jersey (Salem County) and Parlin, New Jersey (Middlesex County).

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

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In June 2020, the court consolidated the two actions, along with two others brought by the NJDEP relating to the DuPont facilities, for case management and pretrial purposes.

The parties are conducting discovery.

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

New Hampshire.

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

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

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

3M has appealed that decision and oral argument was held in October 2023.

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

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

This suit is proceeding in state court, where the parties are engaging in discovery and the court has set a trial-ready date in October 2024.

In October 2022, the Vermont Attorney General amended the complaint in the non-AFFF lawsuit, to add claims related to PFBS and GenX and to add a claim under Vermont’s Waste Management Act, which was recently amended to add manufacturers as liable parties for the release or threatened release of hazardous materials (which in Vermont includes certain PFAS compounds).

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

The case was removed to federal court in January 2024.

Prior to the filing of that Notice, the suit was proceeding in state court, and the court had set a trial-ready date in March 2025.

In October 2023, the State issued a letter to 3M and another entity requesting that an environmental investigation be conducted at the site of a facility in Rutland, Vermont that 3M owned from approximately 1955 until 1975.

3M responded to the State in November 2023.

In March 2022, the Illinois Attorney General filed a lawsuit in Illinois state court against 3M alleging contamination of the state's natural resources by PFAS compounds disposed of by, or discharged, or emitted from 3M's Cordova plant.

The complaint requests monetary damages, injunctive relief, civil penalties, a testing program, and a public outreach and information sharing program.

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

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

The case was removed to federal court and 3M moved to transfer it to the AFFF MDL, which was denied.

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

3M has appealed the remand.

In January 2023, the Illinois Attorney General filed a new lawsuit against 3M and other defendants in Illinois state court, alleging contamination of a number of drinking water systems and natural resource damages at several sites statewide, and seeking to recover monetary damages, injunctive relief for remediation, civil penalties and other relief.

The complaint states that the Attorney General is not seeking damages for AFFF by this lawsuit.

In November 2022, the California Attorney General filed a lawsuit in state court against 18 defendants, including the Company, alleging environmental contamination by PFAS chemicals and seeking injunctive relief, civil penalties, and damages for the costs of investigations, cleanup and remediation.

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

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

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

In addition, the Company is in discussions with several state attorneys general and agencies, responding to information and other requests relating to PFAS matters and exploring potential resolution of some of the matters raised.

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

Both cases have been removed to federal court and transferred to the AFFF MDL.

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

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

In July 2023, following 3M’s removal of the other lawsuit to federal court, a federal district court ordered that the “non-AFFF” lawsuit be remanded to state court.

3M is appealing the remand decision.

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

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

3M has also removed the “non-AFFF” case to federal court.

3M’s motion to transfer the “non-AFFF” case to the MDL was denied and the state’s motion to remand the case back to state court is pending.

In December 2023, Hawaii’s Attorney General filed a lawsuit in state court against 3M and other defendants alleging PFAS contamination of state natural resources.

The case was removed in January 2024 to federal court, where its transfer to the AFFF MDL is being sought.

In January 2024, Connecticut’s Attorney General filed two lawsuits in state court against 3M and other defendants that contain allegations related to PFAS contamination of state natural resources from AFFF and non-AFFF products, respectively.

In addition, the Company is in discussions with several state attorneys general and agencies, responding to information and other requests, including entering into tolling agreements, relating to PFAS matters and exploring potential resolution of some of the matters raised.

Aqueous Film Forming Foam (AFFF) Environmental Litigation

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

As of December 31, 2022, 3,350 lawsuits (including approximately 34 putative class actions and more than 200 public water systems) alleging injuries or damages by AFFF use have been filed against 3M (along with other defendants) in various state and federal courts.

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

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

As of December 31, 2023, approximately 6,775 lawsuits (including approximately 48 putative class actions and 678 public water system cases) alleging injuries or damages from PFAS contamination or exposure allegedly caused by AFFF use have been filed against 3M (along with other defendants) in various state and federal courts.

As further described below, a vast majority of these pending cases are in a federal MDL court in South Carolina.

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

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

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

AFFF MDL and Water System Cases

In December 2018, the U.S.

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

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

Over the past four years, the parties in the MDL have conducted substantial discovery, including ongoing master discovery and several rounds of discovery involving potential water supplier bellwether cases.

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

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

Over the past five years, the parties in the MDL have conducted substantial discovery, including ongoing master discovery and several rounds of discovery involving potential water supplier bellwether cases.

In the MDL, there are cases filed by approximately 669 public water systems ("PWS").

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

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

The MDL cases focus on AFFF, but the MDL also contains a number of cases with allegations related to the broader category of PFAS products.

3M and other defendants also face cases filed by approximately 40 public water systems outside of the MDL.

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

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

The MDL court has repeatedly encouraged the parties in the MDL to negotiate to resolve cases, including these PWS cases.

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

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

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

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

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

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

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

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

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

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

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

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

The PWS Settlement, as amended to include payments to the cities of Stuart, Rome and Middlesex (as discussed below), calls for 3M to make payments from 2023 through 2036.

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

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

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

In August 2023, the Court granted preliminary approval of the settlement.

The deadline for eligible public water suppliers to opt out of the PWS Settlement was December 11, 2023.

Plaintiffs submitted their motion in support of final approval of the settlement in December 2023 and filed their response to objections to the settlement in January 2024.

The final approval hearing was held on February 2, 2024.

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

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

3M reached a settlement agreement to resolve the case.

3M also reached a settlement in a water provider lawsuit brought by Middlesex Water Company in New Jersey.

Under the terms of the PWS Settlement, 3M's payments due under the PWS Settlement factor in amounts related to the City of Rome and Middlesex settlements.

In December 2023, the parties selected an initial set of 25 plaintiffs for potential personal injury bellwether cases.

Initial discovery is ongoing in these cases.

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

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

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

Other AFFF Cases

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

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

Two of these cases have been removed to federal court and transferred to the AFFF MDL.

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

As of December 31, 2022, the Company is aware of approximately 50 other AFFF suits originally filed in various state courts in which the Company has been named a defendant.

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

The five cases that remain pending in state courts are stayed by agreement of the parties.

As of December 31, 2023, the Company is aware of approximately 68 other AFFF suits outside the AFFF MDL in which the Company has been named a defendant.

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

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

however, several cases are expected to remain pending in state courts, including a case in Illinois state court brought by an oil refinery worker alleging harm caused by PFAS and other chemicals.

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

The Company had discussions with certain potential pre-suit claimants and, as a result of such discussions, reached a negotiated resolution for an immaterial amount with the City of Bemidji in March 2021.

In December 2023, a putative class action was filed against 3M Canada, 3M Company, and other defendants in British Columbia civil court on behalf of Canadian individuals alleging personal injuries from exposure to AFFF imported into Canada for firefighting and other applications.

The lawsuit seeks compensatory damages, punitive damages, disgorgement of profits, and the recovery of health care cost incurred by provincial and territorial governments.

Other PFAS-related Product and Environmental Litigation

Numerous other PFAS-related suits naming 3M as a defendant have been filed outside the MDL in courts across the country in which 3M has been named a defendant.

The Company anticipates most of the cases that relate to AFFF will ultimately be removed to federal court and transferred to the MDL.

However, some of these cases are likely to remain in state or federal courts outside of the MDL.

3M manufactured and sold various products containing PFOA and PFOS, including Scotchgard, for several decades.

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f/k/a Allied-Signal Inc.

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

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

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

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

(Saint-Gobain), Honeywell International Inc.

DuPont De Nemours and Co.

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

Plaintiffs allege that PFOA discharged from fabric coating facilities operated by non-3M entities (that allegedly had used PFOA-containing materials from 3M, among others) contaminated the drinking water in the Village of Hoosick Falls, the Town of Hoosick and Petersburg, New York.

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

In the federal court individual cases, the parties selected 24 claimants in May 2021 for a discovery pool, which was further narrowed to eight claimants in July 2022 for expert discovery.

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

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

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

In New York, 3M has settled all cases that were pending or threatened against it in the U.S.

District Court for the Northern District of New York and New York state court, which alleged that PFOA discharged from fabric coating facilities operated by non-3M entities (that allegedly had used PFOA-containing materials from 3M, among others) contaminated the drinking water in the Village of Hoosick Falls, the Town of Hoosick, and Petersburgh, New York.

3M, Saint-Gobain and Honeywell previously settled a class action (Baker), with the federal court granting final approval in February 2022.

3M, Saint-Gobain and Honeywell collectively contributed a total amount of $ 65 million to resolve the plaintiffs' claims on behalf of themselves and the proposed classes.

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

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

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

Oral argument on a motion to dismiss that was filed by 3M and the other defendants was adjourned.

This matter is stayed pending approval of the PWS Settlement.

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

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

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

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

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

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

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

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

3M and Wolverine have agreed to settle the case with the plaintiffs, and 3M's share is not considered material, pending final court approval in March 2023.

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3M has filed answers in these cases, which are subject to the stay order issued pending approval of the PWS Settlement.

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

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

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

3M and Wolverine agreed to settle the case with the plaintiffs, and 3M's share was not considered material.

3M's final payment related to the settlement was made in June 2023.

In Alabama and Georgia, 3M, together with multiple co-defendants, is defending two state court cases brought by municipal water utilities, relating to 3M’s sale of PFAS-containing products to carpet manufacturers in Georgia.

The plaintiffs in these cases allege that the carpet manufacturers improperly discharged PFAS into the surface water and groundwater, contaminating drinking water supplies of cities located downstream along the Coosa River, including Rome, Georgia and Centre, Alabama.

These water utility cases have been proceeding through discovery.

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

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

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

This case has been removed to federal court, where the case is proceeding through discovery.

The plaintiffs in these two water utilities cases allege that the carpet manufacturers improperly discharged PFAS into the surface water and groundwater, contaminating drinking water supplies of cities located downstream along the Coosa River, including Centre, Alabama and Rome, Georgia.

In the Centre case, 3M has filed a notice of stay pending final approval of the PWS Settlement.

As discussed above, the parties in Rome reached a settlement.

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

Those cases have been removed to federal court, where they are currently stayed as to 3M pending final approval of the PWS Settlement.

3M, together with co-defendants, is also defending another putative class action in federal court in Georgia, in which plaintiffs seek relief on behalf of a class of individual ratepayers in Summerville, Georgia who allege their water supply was contaminated by PFAS discharged from a textile mill.

In May 2021, the City of Summerville filed a motion to intervene in the lawsuit, which was granted in March 2022.

This case is now proceeding through discovery.

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

However, the portion of the case relating to Summerville’s claims has been stayed as to 3M pending final approval of the PWS Settlement.

Another case originally filed in Georgia state court was brought by individuals asserting PFAS contamination by the Georgia carpet manufacturers and seeking economic damages and injunctive relief on behalf of a putative class of Rome and Floyd County water subscribers.

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

In July 2022, a putative class action was filed against 3M and other PFAS manufacturers by The Utilities Board of Tuskegee on behalf of all drinking water utilities within Alabama whose finished drinking water has contained a detectable concentration level of PFOA, PFOS, GenX, or PFBS that exceed the June 2022 health advisory levels issued by the U.S.

3M filed a motion to dismiss the complaint in October 2022.

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

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

The case is proceeding through discovery as to plaintiff and 3M.

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

That case has now been transferred to the AFFF MDL.

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

In North Carolina, the town of Pittsboro filed a lawsuit in January 2023 against 3M and other defendants in state court related to alleged PFAS contamination of its property and water supply.

The complaint references AFFF as a potential source of alleged contamination.

3M filed a motion to dismiss the complaint in October 2022, which was granted in part and denied in part in February 2023.

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

However, the case is currently stayed as to 3M pending final approval of the PWS Settlement.

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

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This case was removed to federal court, and in September 2022, the court dismissed all but plaintiffs’ negligence claim.

Plaintiffs have filed a third amended complaint and the parties are currently negotiating a scheduling order to be proposed to the court.

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

The Court denied 3M’s motion for summary judgment in October 2022 and has set a pre-trial conference for March 2023.

A trial date has been set for October 2023.

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

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

Fact discovery has closed in both the Hopatcong and Pequannock matters, and expert discovery is set to commence in February 2023 (Hopatcong) and March 2023 (Pequannock).

In November 2022, plaintiffs filed a third amended complaint seeking to replead certain previously dismissed claims and, in August 2023, the court once again dismissed all but plaintiffs' negligence claim.

In New Jersey, 3M has been named a defendant in a lawsuit brought by the Borough of Hopatcong and Pequannock Township as water providers seeking damages for PFAS remediation.

Those cases are stayed pending approval of the PWS Settlement.

3M, together with several co-defendants, is also defending 29 cases in New Jersey federal court brought by individuals with private drinking water wells near certain DuPont and Solvay facilities that were allegedly supplied with PFAS by 3M.

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

Plaintiffs in ten of these cases seek medical monitoring and property damages.

Plaintiffs in the 16 remaining individual cases in federal court allege personal injuries to themselves or their disabled adult children.

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

Nine of the remaining personal injury cases were filed in state court and removed to federal court.

Plaintiffs are currently seeking remand in four of these cases.

In three of these cases, Plaintiffs also assert claims against Clemente Property and the Covanta Waste Disposal Facility.

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

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

The court denied 3M’s motion to dismiss, and the case is proceeding through discovery.

In May 2022, Middlesex Water Company filed a third-party complaint against the Company in New Jersey state court in a putative class action of the state residents who are customers of the water company, seeking indemnity from the Company.

After Middlesex Water Company removed the case to federal court in July 2022, plaintiffs filed a motion to remand the case to state court.

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

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

The plaintiff voluntarily dismissed his complaint without prejudice and later re-filed in the MDL.

3M has agreed to settle with the plaintiffs in ten cases that sought property damages, subject in certain cases to court approval.

Plaintiffs in the 19 remaining individual cases allege personal injuries to themselves or to their disabled adult children.

3M and Middlesex Water Company are defending a putative class action filed in New Jersey federal court in November 2021 by individuals who received drinking water from Middlesex Water Company that was allegedly contaminated with PFOA.

In May 2022, Middlesex Water Company filed a third-party complaint against the Company in New Jersey state court in a putative class action brought by customers of the water company, seeking contribution and indemnity from the Company.

In November 2023, Middlesex Water Company dismissed its third-party complaint against the Company in connection with the settlement of Middlesex Water Company's separate action against 3M.

The parties in those two class actions are participating in the mediation process through February 2024.

Discovery in the action in federal court is stayed pending the outcome of mediation.

A trial date in the state court action has been set for September 2024.

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

In May 2023, 3M filed a motion to dismiss certain of the claims in that lawsuit and plaintiff subsequently amended his complaint to withdraw certain claims against 3M.

The case is now proceeding in discovery.

In South Carolina, a putative class action lawsuit was filed in South Carolina state court against 3M, DuPont and DuPont related entities in March 2022.

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The case has been removed to federal court.

Plaintiff recently filed a second amended complaint.

Plaintiff filed a second amended complaint in November 2022, and 3M and DuPont filed a joint motion to dismiss, which was largely denied in September 2023.

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

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This case was removed to federal court.

3M anticipates responding to the complaint in the first quarter of 2023.

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

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

3M filed a motion to dismiss the second amended complaint in March 2023.

The motion was granted in part and denied in part in December 2023.

The case is expected to proceed to discovery in 2024.

In Maine, a group of landowners filed a second amended complaint in October 2022 in federal district court, adding 3M and several other alleged chemical suppliers as defendants in a case previously filed against several paper mills, alleging PFAS contamination from waste generated by the paper mills.

The lawsuit seeks to recover for alleged property damage.

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

In October 2023, the court denied 3M's motion to dismiss the case.

In Wisconsin, in August 2023, 3M and other defendants were named as defendants in a putative class action brought in federal court by several residents of Oneida County alleging property damage resulting from PFAS contamination they attribute to the operations of a paper mill in Rhinelander, Wisconsin.

In December 2023, the JPML denied 3M’s request to transfer the case to the AFFF MDL.

In Pennsylvania, a group of plaintiffs filed a complaint against 3M and other defendants in state court in December 2023 alleging personal injury, property damage, and medical monitoring claims arising from alleged water contamination from natural gas fracking and mine water discharge, which plaintiffs claim contained PFAS supplied by 3M.

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

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

Defendants’ appeal is scheduled to be fully briefed by April 2023.

In November 2023, the Sixth Circuit issued an order vacating the class certification decision and remanding the case with instructions that the district court dismiss the case.

In January 2024, the Sixth Circuit denied a motion by plaintiffs for en banc rehearing of that order.

Other PFAS-related Matters

In July 2019, the Company received a written request from the Subcommittee on Environment of the Committee on Oversight and Reform, U.S.

House of Representatives, seeking certain documents and information relating to the Company’s manufacturing and distribution of PFAS products.

In September 2019, a 3M representative testified before and responded to questions from the Subcommittee on Environment with respect to PFAS and the Company’s environmental stewardship initiatives.

The Company continues to cooperate with the Subcommittee.

At its Greystone, Wisconsin plant where the Company conducts mining operations, the tap water available for consumption on the grounds was recently sampled and tested, and the level of certain PFAS exceeded the state's maximum contaminant level.

Wisconsin Department of Natural Resources (DNR) in October 2023 instructed the plant to notify potential drinking water users on the grounds of the plant and indicated that a notice of violation would be issued to the plant.

The Company made the required notifications on October 24, 2023.

On January 9, 2024, the Company received a Notice of Violation and Enforcement Conference from the Wisconsin DNR.

The Company plans to meet with the DNR to discuss the appropriate next steps.

At this time, the Company cannot predict the ultimate outcome or actions that may be taken by Wisconsin DNR.

The Company continues to make progress in its work, under the supervision of state regulators, to remediate historic disposal of PFAS-containing waste associated with manufacturing operations at its Decatur, Alabama;

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and Cordova, Illinois plants.

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

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

Effective May 2022, the Illinois EPA terminated the Cordova May 2000 Site Remediation Agreement.

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

In addition, the Company is treating its pumped groundwater at its Cordova wastewater treatment plant.

In Minnesota, the Company continues to work with the Minnesota Pollution Control Agency (MPCA) pursuant to the terms of the previously disclosed May 2007 Settlement Agreement and Consent Order to address the presence of certain PFAS compounds in the soil and groundwater at former disposal sites in Washington County, Minnesota (Oakdale and Woodbury) and at the Company’s manufacturing facility at Cottage Grove, Minnesota.

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

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

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

and (iv) sharing information with the MPCA about certain perfluorinated compounds.

In August 2009, the MPCA issued a decision adopting remedial options for the Company’s Cottage Grove manufacturing facility.

In the spring and summer of 2010, 3M began implementing the approved remedial options at the Cottage Grove and Woodbury sites, and in late 2010, 3M commenced the approved remedial option at the Oakdale site.

The Company has completed remediation work and continues with operational and maintenance activities at the Oakdale and Woodbury sites.

Remediation work has been substantially completed at the Cottage Grove site, with operational and maintenance activities ongoing.

In Alabama, as previously reported, the Company entered into a voluntary remedial action agreement with the Alabama Department of Environmental Management (ADEM) to remediate the presence of PFAS in the soil and groundwater at the Company’s manufacturing facility in Decatur, Alabama associated with the historic (1978-1998) incorporation of wastewater treatment plant sludge.

In addition, as previously reported, as part of its ongoing evaluation of regulatory compliance at its Cordova, Illinois facility, the Company discovered it had not fully characterized its PFAS discharge in its NPDES permit for the Cordova facility.

In November 2019, the Company disclosed this matter to the EPA, and in January 2020 disclosed this matter to the Illinois Environmental Protection Agency ("IEPA"), submitted an NPDES permit application for the PFAS in its discharge, put on-line and in operation wastewater treatment specifically designed to treat PFAS.

The Company continues to work with the EPA and IEPA to address these issues from the Cordova facility.

In November 2022, the Company entered into an SDWA Administrative Consent Order that requires the Company to continue to sample and survey private and public drinking water wells within the vicinity of the Cordova facility, provide treatment of private water wells within a three-mile radius of the Cordova facility, and to provide alternate treatment/supply for the Camanche, Iowa public drinking water system.

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

In May 2022, the Company received a notice of potential violation and opportunity to confer and a notice of intent to file a complaint from EPA alleging violations of the RCRA related to the use of emergency spill containment units associated with certain chemical processes at the Cordova facility.

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

In Alabama, as previously reported, the Company entered into a voluntary remedial action agreement with the ADEM to remediate the presence of PFAS in the soil and groundwater at the Company’s manufacturing facility in Decatur, Alabama associated with the historic (1978-1998) incorporation of wastewater treatment plant sludge.

With ADEM’s agreement, 3M substantially completed installation of a multilayer cap on the former sludge incorporation areas.

Further remediation activities, including certain on-site and off-site investigations and studies, will be conducted in accordance with the July 2020 Interim Consent Order described below.

The Company operates under a 2009 consent order issued under the federal Toxic Substances Control Act (TSCA) (the “2009 TSCA consent order”) for the manufacture and use of two perfluorinated materials (FBSA and FBSEE) at its Decatur, Alabama site that prohibits release of these materials into “the waters of the United States.” In March 2019, the Company halted the manufacture, processing, and use of these materials at the site upon learning that these materials may have been released from certain specified processes at the Decatur site into the Tennessee River.

The Company operates under a 2009 consent order issued under the federal TSCA (the “2009 TSCA consent order”) for the manufacture and use of two perfluorinated materials (FBSA and FBSEE) at the Decatur site that prohibits release of these materials into “the waters of the United States.” In March 2019, the Company halted the manufacture, processing, and use of these materials at the site upon learning that these materials may have been released from certain specified processes at the Decatur site into the Tennessee River.

In April 2019, the Company voluntarily disclosed the releases to the U.S.

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The Company continues to cooperate with the EPA and ADEM in their investigations and will work with the regulatory authorities to demonstrate compliance with the release restrictions.

The Company is authorized to discharge wastewater from its Decatur plant pursuant to a Clean Water Act National Pollutant Discharge Elimination System (NPDES) permit issued by ADEM.

The Company is authorized to discharge wastewater from its Decatur plant pursuant to an NPDES permit issued by ADEM.

The NPDES permit requires monthly and quarterly reporting on the quality and quantity of pollutants discharged to the Tennessee River.

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In September 2019, the Company disclosed the matter to the EPA and ADEM temporarily idled certain manufacturing processes at 3M Decatur and installed wastewater treatment controls.

The Company restarted idled processes in October 2019.

As a result of the Company’s discussions with ADEM to address these and other related matters in the state of Alabama, as previously reported, 3M and ADEM agreed to the terms of an interim Consent Order in July 2020 to cover all PFAS-related wastewater discharges and air emissions from the Company’s Decatur facility.

3M and ADEM also agreed to the terms of an interim Consent Order in July 2020 to cover all PFAS-related wastewater discharges and air emissions from the Company’s Decatur facility.

Under the interim Consent Order, the Company’s principal obligations include commitments related to (i) future ongoing site operations such as (a) providing notices or reports and performing various analytical and characterization studies and (b) future capital improvements;

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As offsite investigation activities continue, additional remediation amounts may become probable and reasonably estimable.

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As previously reported, in December 2019, the Company received a grand jury subpoena from the U.S.

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The Company is cooperating and providing responsive documents with respect to this and other inquiries regarding its manufacturing facilities.

In November 2019, the Company disclosed this matter to the EPA, and in January 2020 disclosed this matter to the Illinois Environmental Protection Agency (IEPA), submitted an NPDES permit application for the PFAS in its discharge, and in October 2019, put on-line and in operation wastewater treatment specifically designed to treat PFAS.

The Company continues to work with the EPA and IEPA to address these issues from the Cordova facility.

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

In May 2022, the Company received a notice of potential violation and opportunity to confer and a notice of intent to file a complaint from EPA alleging violations of the Resource Conservation and Recovery Act (RCRA) related to the use of emergency spill containment units associated with certain chemical processes at the Cordova facility.

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

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

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

In April 2022, the Company received a TSCA information request from EPA seeking information related to the operation of specific PFAS-related processes at the Cordova facility.

The Company has completed the production of documents and information and is cooperating with this inquiry.

As previously reported, the Company discovered it had not fully characterized its PFAS discharge in its NPDES permit for the Cottage Grove facility and, in March 2020, disclosed this matter to the MPCA and the EPA.

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

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

In Minnesota, the Company continues to work with the MPCA pursuant to the terms of a previously disclosed May 2007 Settlement Agreement and Consent Order (SACO) to address the presence of certain PFAS compounds in the soil and groundwater at former disposal sites in Washington County, Minnesota (Oakdale and Woodbury) and at the Company’s manufacturing facility at Cottage Grove, Minnesota.

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

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

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

and (iv) sharing information with the MPCA about certain perfluorinated compounds.

In January 2024, the Minnesota Department of Health issued updated, more stringent, HBVs for PFOA and PFOS.

3M is evaluating any potential impact of these developments on its obligations under the SACO.

In August 2009, the MPCA issued a decision adopting remedial options for the Company’s Cottage Grove manufacturing facility.

The Company has completed remediation work and continues with operational and maintenance activities at the Oakdale and Woodbury sites.

Remediation work has been substantially completed at the Cottage Grove site, with operational and maintenance activities ongoing.

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

Separately, as previously reported, in June 2020, the Company reported to EPA and MPCA that it had not fully complied with elements of the inspection, characterization and waste stream profile verification process of the Waste and Feedstream Analysis Plan (WAP/FAP) of its RCRA permit for its Cottage Grove incinerator.

The Company and MPCA resolved the issues associated with the foregoing disclosure in a May 2022 stipulation agreement, and permanently retired the Cottage Grove hazardous waste incinerator in December 2021.

In connection with the now closed incinerator, the Company in December 2022 received from EPA a draft Consent Agreement and Penalty Order (CAFO) under the Clean Air Act, with a proposed civil penalty to resolve issues raised in a Finding of Violation issued in 2019.

The Company is engaging with EPA in discussions towards resolving this matter.

In connection with the now closed incinerator, the Company in December 2022 received from EPA a draft Consent Agreement and Penalty Order under the Clean Air Act, with a proposed civil penalty to resolve issues raised in a Finding of Violation issued in 2019.

The Company and EPA resolved this matter in which the Company has agreed to pay an administrative civil penalty.

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

The Company is cooperating with these inquires and is producing documents and information in response to the requests.

The Company is cooperating with these inquiries and is producing documents and information in response to the requests.

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

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

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

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

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

In January 2024, MPCA issued a pre-publication notice of a draft Clean Water Act permit for 3M’s Cottage Grove facility, with significantly revised limits on PFAS, some of which are below the limit of quantification.

3M is engaging with the MPCA and cannot at this time predict the outcome of such discussions.

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

Department of Justice, state environmental agencies and state attorneys general) as it conducts these reviews and responds to information, inspection, and other requests from the agencies.

The Company is in negotiations with EPA, the U.S.

Department of Justice, and the Alabama, Illinois and Minnesota state environmental agencies to address claims arising under the CWA and the TSCA related to the Company’s plants in those states.

The Company cannot predict at this time the outcomes of resolving these compliance matters, what actions may be taken by the regulatory agencies or the potential consequences to the Company.

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Whether, and to what extent, the Company may be required to contribute to the costs at issue in the case remains to be determined.

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The Cottage Grove facility received an Alleged Violation Letter from the MPCA in November 2023 following an inspection, alleging violations relating to materials shipped in 2023 to a hazardous waste disposal facility.

The Cottage Grove facility had self-reported this information to the MPCA in September 2023.

In December 2023, the Company provided a written response to the MPCA detailing what the Company believes to be the completion of all of the corrective actions identified in the Alleged Violation Letter (also including waste spills and container management).

At this time, the Company cannot predict the ultimate outcome or actions that may be taken by MPCA.

In January 2024 the Company received an information request from U.S.

EPA regarding an October 2023 reported release of 1,2-propylenimine at the Cottage Grove facility.

The Company is working to produce documents and information sought by this request and cooperating with this inquiry.

For environmental matters and litigation described above, unless otherwise described below, no liability has been recorded as the Company believes liability in those matters is not probable and reasonably estimable and the Company is not able to estimate a possible loss or range of possible loss at this time.

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

During 2022, as a result of ongoing review and recent developments in ongoing environmental matters and litigation, the Company increased its accrual for PFAS-related other environmental liabilities by $ 659 million since December 31, 2021 and made related payments of $ 479 million.

As of December 31, 2022, the Company had recorded liabilities of $ 592 million for “other environmental liabilities.” The accruals represent the Company’s best estimate of the probable loss in connection with the environmental matters and PFAS-related matters and litigation described above.

During 2023, as a result of ongoing review and recent developments in ongoing environmental matters and litigation (including the proposed PWS Settlement), the Company increased its accrual for PFAS-related other environmental liabilities by $ 10.6 billion and made related payments of $ 209 million.

As of December 31, 2023, the Company had recorded liabilities of $ 11.0 billion for “other environmental liabilities.” These amounts are reflected in the consolidated balance sheet within other current liabilities ($ 3.0 billion) and other liabilities ($ 8.0 billion).

The accruals represent the Company’s estimate of the probable loss in connection with the environmental matters and PFAS-related matters and litigation described above.

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

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

As of December 31, 2022, the Company’s receivable for insurance recoveries related to the environmental matters and litigation was $ 8 million.

As of December 31, 2023, the Company’s receivable for insurance recoveries related to the environmental matters and litigation was not material.

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

(ii) the extent to which insurers may become insolvent in the future, (iii) the outcome of negotiations with insurers, and (iv) the scope of the insurers’ purported defenses and exclusions to avoid coverage.

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Product Liability Litigation

Aearo Technologies sold Dual-Ended Combat Arms – Version 2 earplugs starting in about 2003.

3M acquired Aearo Technologies in 2008 and sold these earplugs from 2008 through 2015, when the product was discontinued.

3M and Aearo Technologies believe the Combat Arms Earplugs were effective and safe when used properly, but nevertheless, as discussed below, face litigation from approximately 232,000 claimants.

As noted in the "Respirator Mask/Asbestos Litigation — Aearo Technologies" section above, in July 2022, the Aearo Entities voluntarily initiated chapter 11 proceedings under the U.S.

Bankruptcy Code seeking court supervision to establish a trust, funded by the Company, to efficiently and equitably satisfy all claims determined to be entitled to compensation associated with these matters and those described in the earlier section "Respirator Mask/Asbestos Litigation — Aearo Technologies".

3M entered into an agreement with the Aearo Entities to fund this trust and to support the Aearo Entities as they continue to operate during the chapter 11 proceedings.

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

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

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

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

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

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

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

In September 2022, the bankruptcy judge certified Aearo’s request to appeal the decision directly to the Seventh Circuit Court of Appeals and in October the Seventh Circuit accepted the appeal.

In December 2022, Aearo filed its opening brief with the Seventh Circuit appealing the bankruptcy court’s decision.

Also in December 2022, the parties to the Aearo bankruptcy agreed to extend the exclusivity period for Aearo to file a plan for reorganization to March 31, 2023.

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

As noted in the co-mediators' report issued on January 20, 2023, 3M continues to support Aearo Entities by engaging in confidential mediation discussions toward a resolution of the Combat Arms Earplugs litigation in the chapter 11 process.

In February 2023, the plaintiffs filed with the Bankruptcy Court a motion to dismiss the bankruptcy filings of Aearo Entities.

As of December 31, 2022 3M's consolidated balance sheet reflected amounts associated with the deconsolidated Aearo Entities as follows:

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

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

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

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

Preceding Combat Arms Earplugs matters:

Combat Arms Earplugs

In December 2018, a military veteran filed an individual lawsuit against 3M in the San Bernardino Superior Court in California alleging that he sustained personal injuries while serving in the military caused by 3M’s Dual-Ended Combat Arms Earplugs – Version 2.

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

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As of December 31, 2022, the Company is a named defendant in lawsuits (including 14 putative class actions) in various state and federal courts that purport to represent approximately 141,000 individual claimants making similar allegations.

The significant increase from year-end 2021 in the number of claimants is largely due to the number of claims moved from the administrative docket to the active docket as the result of the transition orders the multi-district litigation (MDL) judge began issuing at the end of 2021 (as more fully described below), in addition to claims filed directly on the active docket in 2022.

In April 2019, the U.S.

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

As previously disclosed, additional lawsuits were subsequently filed involving similar allegations.

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

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

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In December 2020, the court granted the plaintiffs’ motion to consolidate three plaintiffs for the first bellwether trial, which began in March 2021.

In April 2021, 3M received an adverse jury verdict in the first bellwether trial.

The jury awarded the three plaintiffs less than $ 1 million in compensatory damages and $ 6 million in punitive damages for a total of $ 7 million.

3M appealed the verdicts, challenging, among other rulings, the MDL court's denial of 3M’s motion to assert the government contractor defense.

The next two bellwether trials occurred in May and June of 2021.

In May 2021, 3M received a verdict in its favor in the second bellwether trial, in which a jury rejected claims that 3M knowingly sold earplugs with design defects.

In June 2021, 3M received an adverse verdict in the third bellwether trial.

The jury found 3M liable for strict liability failure to warn, but found 3M not liable for design defect or fraud.

The jury apportioned fault 62 percent to 3M and 38 percent to the plaintiff for a total damage award of approximately $ 1 million.

3M appealed the verdict.

In January 2023, the Eleventh Circuit Court of Appeals scheduled oral argument for the appeals of the first and third bellwether trials for the week of May 1, 2023.

In October 2021, 3M received an adverse verdict in the fourth bellwether trial, in which a jury awarded $ 8 million to the plaintiff.

3M received verdicts in its favor in the fifth and sixth bellwether trials.

3M received an adverse verdict in the seventh and eighth bellwether trials, in which the juries awarded the plaintiffs $ 13 million and $ 23 million, respectively.

A post-trial order reduced the award in the seventh bellwether trial to $ 8 million.

3M prevailed in the ninth and tenth bellwether cases but received adverse verdicts in the eleventh bellwether case in which the jury awarded each of the two plaintiffs $ 15 million in compensatory and $ 40 million in punitive damages.

A post-trial order reduced the compensatory and punitive damages award to one of the plaintiffs from $ 55 million to $ 22 million.

3M received adverse verdicts in the twelfth and thirteenth bellwether cases in which the jury awarded one plaintiff with $ 50 million and another with $ 8 million in compensatory damages.

3M prevailed in the fourteenth bellwether trial.

Plaintiff in the fourteenth bellwether trial has filed a notice of appeal.

In December 2022, the plaintiff voluntarily dismissed her Eleventh Circuit appeal of a jury verdict in favor of 3M and Aearo.

No other cases that resulted in a defense verdict are on appeal before the Eleventh Circuit at this time.

In April 2022, a jury returned a plaintiff’s verdict in the fifteenth bellwether trial, awarding $ 2.2 million in compensatory damages and declining to award punitive damages.

A post-trial order reduced the compensatory damages award to $ 1.2 million.

In May 2022, a jury returned a plaintiff’s verdict in the last scheduled federal bellwether trial.

The jury awarded $ 5 million in compensatory damages and $ 72 million in punitive damages.

These trials have not included several bellwether cases that plaintiffs' counsel dismissed with prejudice either during discovery or after being set for trial.

The Company's appeals to the Eleventh Circuit from the adverse verdicts are proceeding forward, with oral argument on the first two appeals scheduled for May 2023.

Other than the Company's funding commitment for its Aearo subsidiaries' chapter 11 proceedings as described above, no liability has been recorded for the Combat Arms earplugs litigation because the Company believes any such liability is not probable and reasonably estimable and the Company is not able to estimate a possible loss or range of possible loss at this time.

Following conclusion of the bellwether trial process and unsuccessful settlement discussions, and with another 2,000 cases being prepared for trial while the Company's appeals are still pending, the Aearo Entities and the Company adopted a change in strategy for managing these alleged litigation liabilities that led to the Aearo Entities initiating the chapter 11 proceedings as discussed above.

An administrative docket of approximately 90,700 unfiled and unverified claims has also been maintained at the MDL court.

The MDL court in August 2021 provided notice of an intent to issue forthcoming transition orders requiring all claims be moved off the administrative docket to the active docket on a rolling basis over 12 months.

The orders will provide that any case not moved to the active docket will be dismissed without prejudice, and the administrative docket will then be closed.

The MDL court also ordered the parties to prepare for trial 2,000 cases in four waves of 500 cases over the next 14 months.

After the preparation of these cases is completed, the cases will be remanded to the federal district courts where the cases were originally filed.

In October 2022, the MDL court ordered that while the successor liability issue described below is on appeal, all wave discovery would be stayed, the transition of cases from the administrative docket to the active docket would stop, and that monthly settlement conferences involving all parties (except Aearo) would occur in the MDL.

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

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

and again in September 2022, a two-day mediation session.

The court also set the date for a single plaintiff trial for October 2022, which was postponed to February 2023, and then stayed.

In August 2022, subsequent to Aearo’s chapter 11 filing, the MDL court issued an order prohibiting 3M from attempting to relitigate issues in the bankruptcy court and from financially supporting any collateral dispute regarding the MDL court’s previous rulings.

3M has appealed the order to the Eleventh Circuit Court of Appeals and made a motion to stay the order pending appeal.

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

In January 2023, the Eleventh Circuit scheduled oral argument for this appeal for the week of May 1, 2023.

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

District Court for the Northern District of Florida, seeking to permanently enjoin 3M from transferring assets, issuing dividends or completing the announced spin-off of its Health Care business, to allegedly preserve assets for the Combat Arms claimants.

The Company has filed a motion to dismiss the lawsuit and an opposition to the injunction motion.

In December 2022, the court dismissed the lawsuit on jurisdictional grounds.

Also in December 2022, the MDL court granted plaintiffs’ motion for summary judgment that successor liability, claiming that 3M is fully and independently liable for injuries allegedly caused by the CAEv2 and certified the order for appeal to the Eleventh Circuit.

In January 2023, 3M sought the Eleventh Circuit’s acceptance of the appeal.

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

3M removed these actions to federal court, and the federal court remanded them to state court in March 2020.

On appeal, the U.S.

Court of Appeals for the Eighth Circuit ruled in October 2021 that the cases brought by non-military plaintiffs were properly remanded to state court, whereas the cases brought by military contractor plaintiffs who had received the Combat Arms Earplugs from the military should have remained in federal court.

In November 2021, the Eighth Circuit granted 3M's unopposed motion to vacate the remand orders in the remaining appeals of military service member cases.

The military service member cases are expected to be remanded to federal court and transferred to the MDL.

There are approximately 40 lawsuits involving approximately 1,000 plaintiffs pending in the state court.

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

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

As of December 31, 2022, the Company was a named defendant in approximately 5,258 lawsuits in the United States and one Canadian putative class action with a single named plaintiff, alleging that the Bair Hugger™ patient warming system caused a surgical site infection.

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

Aearo Technologies sold Dual-Ended Combat Arms – Version 2 Earplugs starting in about 1999.

3M acquired Aearo Technologies in 2008 and sold these earplugs from 2008 through 2015, when the product was discontinued.

3M and Aearo Technologies believe the Combat Arms Earplugs were effective and safe when used properly, but nevertheless, as discussed below, prior to the CAE Settlement (as defined below), the Aearo Entities and 3M faced litigation from a significant number of claimants (in the range of 260,000 to 285,000 individual claimants).

As noted in the Respirator Mask/Asbestos Litigation — Aearo Technologie s section above, in July 2022, the Aearo Entities voluntarily initiated chapter 11 proceedings under the U.S.

Bankruptcy Code seeking court supervision to establish a trust, funded by the Company, to efficiently and equitably satisfy all claims determined to be entitled to compensation associated with these matters and those described in the earlier section Respirator Mask/Asbestos Litigation — Aearo Technologies .

3M entered into an agreement with the Aearo Entities to fund this trust and to support the Aearo Entities in connection with the chapter 11 proceedings.

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

Under the terms of the agreement, the Company would provide additional funding if required by the Aearo Entities to resolve the matter as part of the chapter 11 proceeding.

Related to these actions, 3M reflected a pre-tax charge of $ 1.2 billion (within selling, general and administrative expenses), inclusive of fees and net of related existing accruals, in the second quarter of 2022.

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

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

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

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

In September 2022, the bankruptcy judge certified Aearo’s request to appeal the decision directly to the Seventh Circuit Court of Appeals and in October the Seventh Circuit accepted the appeal.

In December 2022, Aearo filed its opening brief with the Seventh Circuit appealing the bankruptcy court’s decision.

Oral argument took place in April 2023.

In February 2023, the plaintiffs filed with the Bankruptcy Court a motion to dismiss the bankruptcy filings of the Aearo Entities.

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

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

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

Court of Appeals for the Seventh Circuit.

Aearo appealed the decision and the Seventh Circuit accepted the direct appeal.

Aearo’s appeals of the Bankruptcy Court’s preliminary injunction and motion to dismiss rulings are stayed as a result of the CAE Settlement (as defined below).

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

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

Related to the dismissal of the bankruptcy, in May 2023, the federal and state MDL courts issued orders providing that mediation would resume.

In August 2023, 3M and the Aearo Entities entered into a settlement arrangement (as amended, the “CAE Settlement”) which is structured to promote participation by claimants and is intended to resolve, to the fullest extent possible, all litigation and alleged claims involving the Combat Arms Earplugs sold or manufactured by the Aearo Entities and/or 3M, as well as potential future claims.

Pursuant to the CAE Settlement, 3M will contribute a total amount of $ 6.0 billion between 2023 and 2029.

The actual amount, payment terms and dates are subject to satisfaction of certain participation thresholds claimants must meet, including that at least 98 % of individuals with actual or potential litigation claims involving the Combat Arms Earplugs (calculated as described in the CAE Settlement) must have enrolled in the CAE Settlement and provided 3M with a full release of claims involving the Combat Arms Earplugs.

The CAE Settlement was originally structured to include $ 5.0 billion in cash consideration and $ 1.0 billion in 3M common stock.

The Company in its sole discretion could have elected to settle the equity portion in cash.

In January 2024, 3M and the Aearo Entities amended the settlement to include, among other things, an irrevocable election by 3M to pay cash for the $ 1 billion in payments that could have been paid either in cash or in stock.

The CAE Settlement provides that 3M does not admit any liability or wrongdoing.

As a result of the CAE Settlement, 3M recorded a pre-tax charge of $ 4.2 billion in the third quarter of 2023.

The charge reflected the $ 5.3 billion pre-tax present value (discounted at an estimated 5.6 % interest rate at time consummation) of contributions under the CAE Settlement net of 3M’s then-existing accrual of $ 1.1 billion related to this matter.

Implementation of the CAE Settlement terms began in September 2023, when 3M paid $ 10 million to fund administrative expenses connected to the settlement and paid $ 147 million in exchange for releases from the 13 bellwether plaintiffs that obtained a verdict against 3M and the Aearo defendants.

The MDL court cases and Eleventh Circuit appeals for the 13 bellwether plaintiffs have all been dismissed consistent with the terms of the CAE Settlement.

3M paid $ 250 million in December 2023 related to the receipt of expedited releases, and made a payment of an additional $ 253 million on January 31, 2024 based on 100% participation level of "wave" case claimants.

During 2023, as a result of ongoing review and recent developments in ongoing litigation (including the CAE Settlement), the Company increased its existing accrual for Combat Arms Earplugs by $ 4.3 billion and made the related payments noted above.

As of December 31, 2023, the Company had an accrued liability of $ 5.0 billion related to Combat Arms Earplugs.

This amount is reflected within contingent liability claims and other within other current liabilities ($ 1.5 billion) and within other liabilities ($ 3.5 billion) on 3M’s consolidated balance sheet.

The accruals represent the Company’s estimate of the probable loss in connection with the CAE Settlement.

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

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

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

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

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

As of December 31, 2023, the Company was a named defendant in approximately 6,231 lawsuits in the United States and one Canadian putative class action with a single named plaintiff, alleging that they underwent various joint arthroplasty, cardiovascular, and other surgeries and later developed surgical site infections due to the use of the Bair Hugger patient warming system.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The MDL court denied plaintiffs' April 2023 motion to disqualify the judge and magistrate judge overseeing the MDL.

The parties, working with the mediator, agreed on the beginning of a bellwether process, selecting 34 cases, with the first federal court trials to potentially begin in 2024.

The MDL court recommended remand to the courts where filed of the bellwether cases not filed in Minnesota;

the Joint Panel on Multi-District Litigation will consider that recommendation during the first quarter of 2024.

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

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

One of the Missouri cases was tried in September and October of 2022;

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

Another Missouri case is scheduled for trial in 2024.

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

The other Missouri case is scheduled for trial in September 2024.

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

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

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it is scheduled for trial in November 2024.

A Texas case that we had removed to federal court was remanded in January 2024.

Finally, a putative class action has been filed in Ramsey County, Minnesota, seeking economic damages for the use of the Bair Hugger system in orthopedic surgeries and surgeries for medically obese people in Minnesota from May 2017 to the present.

The Ramsey County court denied a motion to dismiss in August 2023.

Three other state cases have been resolved in 2023, including a Missouri state court case that was voluntarily dismissed in June 2023 and a Texas state court case that was voluntarily dismissed in September 2023.

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

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The representative plaintiff seeks relief (including punitive damages) under Canadian law based on theories similar to those asserted in the MDL.

For product liability litigation matters described in this section for which a liability has been recorded, the Company is not able to estimate a possible loss or range of possible loss in excess of the established accruals at this time.

Securities and Shareholder Litigation

In July 2019, Heavy & General Laborers’ Locals 472 & 172 Welfare Fund filed a putative securities class action against 3M Company, its former Chairman and CEO, current Chairman and CEO, and former CFO in the U.S.

District Court for the District of New Jersey.

In August 2019, an individual plaintiff filed a similar putative securities class action in the same district.

Plaintiffs allege that defendants made false and misleading statements regarding 3M's exposure to liability associated with PFAS and bring claims for damages under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 against all defendants, and under Section 20(a) of the Securities and Exchange Act of 1934 against the individual defendants.

In October 2019, the court consolidated the securities class actions and appointed a group of lead plaintiffs.

In January 2020, the defendants filed a motion to transfer venue to the U.S.

District Court for the District of Minnesota.

In August 2020, the court denied the motion to transfer venue, and in September 2020, the defendants filed a petition for writ of mandamus to the U.S.

Court of Appeals for the Third Circuit.

In November 2020, the federal Court of Appeals granted 3M’s petition for a writ of mandamus and directed the New Jersey federal court to transfer the action to the Minnesota federal court.

The defendants filed a motion to dismiss the action in January 2021, and in September 2021, the Minnesota federal court granted 3M’s motion to dismiss the securities class action, which judgment is now final.

In October 2019, a stockholder derivative lawsuit was filed in the U.S.

District Court for the District of New Jersey against 3M and several of its current and former executives and directors.

In November and December 2019, two additional derivative lawsuits were filed in a Minnesota state court.

The derivative lawsuits rely on similar factual allegations as the putative securities class action discussed above.

The Minnesota state court cases were consolidated and stayed pending a decision on the motion to dismiss in the securities class action, and the Minnesota state plaintiffs have agreed to further stay their action pending a decision on the motion to dismiss the federal derivative lawsuit discussed below.

In October 2020, the derivative action pending in the U.S.

District Court for the District of New Jersey was dismissed, without prejudice, for failure to serve the complaint within the required time period.

In August 2020, a stockholder who had previously submitted a books and records demand filed an additional follow-on derivative lawsuit in the U.S.

District Court for the District of New Jersey against 3M and several of its current and former executives and directors.

This derivative lawsuit, having been transferred to Minnesota federal court, also relies on similar factual allegations as the putative securities class action discussed above.

In February 2021, an additional stockholder derivative lawsuit was filed in the District of Minnesota, making similar factual allegations as the putative securities class action discussed above.

The Minnesota federal court consolidated these federal derivative suits and stayed them pending and through any appeal of the securities class action dismissal.

The Minnesota federal plaintiffs then filed an amended complaint in February 2022.

The defendants moved to dismiss the consolidated federal derivative action in May 2022.

Plaintiffs filed their opposition to the motion to dismiss in August 2022 and the defendants filed their reply brief in October 2022.

Oral argument was held in January 2023.

For product liability litigation matters described in this section for which a liability has been recorded, the amount recorded is not material to the Company's results of operations or financial condition.

In addition, the Company is not able to estimate a possible loss or range of possible loss in excess of the recorded liability at this time.

Federal False Claims Act / Qui Tam Litigation:

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In 2011, following the completion of the government’s review and its decision declining to intervene in two qui tam actions described further below, the qui tam relator-plaintiffs’ pleadings were unsealed.

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The government inquiry followed two qui tam actions filed in 2008 by two former employees against Kinetic Concepts, Inc.

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The appellate court issued an opinion in August 2022 reversing the decision of the district court and remanding the case for further proceedings.

The district court held a status conference in January 2023 where no case deadlines were set;

the litigation remains in a pre-trial stage.

For the matters described in this section for which a liability has been recorded, the amount recorded is not material to the Company’s consolidated results of operations or financial condition.

Compliance Matter

The Company, through its internal processes, discovered certain travel activities and related funding and record keeping issues raising concerns, arising from marketing efforts by certain business groups based in China.

The Company initiated an internal investigation to determine whether the expenditures may have violated the U.S.

Foreign Corrupt Practices Act (FCPA) or other potentially applicable anti-corruption laws.

The Company has retained outside counsel and a forensic accounting firm to assist with the investigation.

In July 2019, the Company voluntarily disclosed this investigation to both the Department of Justice and Securities and Exchange Commission and is cooperating with both agencies.

The Company is in discussions related to potential resolution but cannot predict at this time the ultimate outcome or actions that may be taken by the Department of Justice or Securities and Exchange Commission.

The components of lease expense are as follows:

Following a mediation conducted in November 2023, the parties reached an agreement in principle to settle the case and resolve all the remaining claims, including dismissal of the action with prejudice, subject to finalization of settlement terms and agreement by the government.

For the KCI-related matters described in this section for which a liability has been recorded, the amount recorded is not material to the Company’s consolidated results of operations or financial condition.

The Company is not able to estimate a possible loss or range of possible loss in excess of the recorded liability at this time.

3M's lease arrangements include both operating and finance leases.

Amounts associated with finance leases (such as right-of-use assets, liabilities, costs, cash flow information, and maturities) were not material to the consolidated financial statements.

Finance lease right-of-use assets are included in property, plant, and equipment, net, and finance lease liabilities are included in other current liabilities and other liabilities on the consolidated balance sheets.

The following table summarizes the components of operating lease cost:

(Millions) 2023 2022 2021

Operating lease cost $ 284 $ 295 $ 319

Finance lease cost:

Amortization of assets 15 15 21

Interest on lease liabilities 2 2 1

Variable lease cost 122 135 127

Total net lease cost $ 447 $ 463 $ 471

Total operating lease cost

$ 406 $ 430 $ 446

Short-term lease cost and income related to sub-lease activity is immaterial for the Company.

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Supplemental balance sheet information related to leases is as follows:

Supplemental balance sheet, lease term and discount rate information related to operating leases is as follows:

(Millions unless noted) Location on face of Balance Sheet 2023 2022

Operating leases:

Operating lease right of use assets Operating lease right of use assets $ 829 $ 858

Current operating lease liabilities Operating lease liabilities - current 261 263

Noncurrent operating lease liabilities Operating lease liabilities 580 591

Total operating lease liabilities 841 854

Finance leases:

Property and equipment, at cost Property, plant and equipment 218 223

Accumulated amortization Property, plant and equipment (accumulated depreciation) ( 126 ) ( 117 )

Property and equipment, net 92 106

Current obligations of finance leases Other current liabilities 11 7

Finance leases, net of current obligations Other liabilities 75 93

Total finance lease liabilities $ 86 $ 100

Right of use assets

Operating lease right of use assets $ 759 $ 829

Current liability

Operating lease liabilities - current 225 261

Noncurrent liability

Operating lease liabilities 534 580

Weighted average remaining lease term (in years):

Operating leases 5.5 5.5

Finance leases 6.3 6.6

Weighted average discount rate:

Operating leases 2.2 % 1.8 %

Finance leases 3.1 % 3.3 %

Supplemental cash flow and other information related to leases is as follows:

Supplemental cash flow information related to operating lease is as follows:

(Millions) 2023 2022 2021

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 295 $ 317 $ 326

Operating cash flows from finance leases 2 2 1

Financing cash flows from finance leases 25 19 58

Right of use assets obtained in exchange for lease liabilities:

Operating leases 261 342 250

Finance leases 6 3 18

Sale leased-back activity in 2022, 2021 and 2020 was not material.

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Maturities of lease liabilities were as follows:

December 31, 2022

(Millions) Finance Leases Operating Leases

$ 286 $ 295 $ 317

Right of use assets obtained in exchange for operating lease liabilities:

Sale leased-back activity for the periods presented was not material.

Maturities of operating leases as of December 31, 2023 are as follows:

Total expected lease payments

Amounts representing interest ( 59 )

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As of December 31, 2023, the remaining shares available for grant under the LTIP Program are 27 million and there were approximately 8,600 participants with outstanding options, restricted stock, or restricted stock units.

The Company’s annual stock option and restricted stock unit grant is made in February to provide a strong and immediate link between the performance of individuals during the preceding year and the size of their annual stock compensation grants.

The Company’s annual stock option and restricted stock unit grant is typically made in February to provide a strong and immediate link between the performance of individuals during the preceding year and the size of their annual stock compensation grants.

The grant to eligible employees uses the closing stock price on the grant date.

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This retiree-eligible population represents 35 percent of the annual grant stock-based compensation expense;

therefore, higher stock-based compensation expense is recognized in the first quarter.

therefore, higher stock-based compensation expense is typically recognized in the first quarter.

Due to the intended spin-off of the Health Care business (see Note 3), the 2024 annual grant will be made after the completion of the spin.

In addition to the annual grants, the Company makes other minor grants of stock options, restricted stock units and other stock-based grants.

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These grants do not result in the issuance of common stock and are considered immaterial by the Company.

Stock-Based Compensation Expense:

Amounts recognized in the financial statements with respect to stock-based compensation programs, which include stock options, restricted stock, restricted stock units, performance shares and the General Employees’ Stock Purchase Plan (GESPP), are provided in the following table.

Capitalized stock-based compensation amounts were not material.

Stock-Based Compensation Expense

(Millions) 2023 2022 2021

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Stock-based compensation expenses (benefits), net of tax $ 229 $ 201 $ 174

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Stock Option Program:

The following table summarizes stock option activity during the year ended December 31:

2022 2021 2020

(Options in thousands) Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price

The following table summarizes stock option activity:

(Options in thousands) Number of Options Weighted Average Exercise Price Weighted Average

Remaining Contractual Life (months) Aggregate

Intrinsic Value

Under option —

January 1 34,560 $ 163.52 35,401 $ 156.23 33,675 $ 151.15

As of January 1, 2023

35,506 $ 166.97

Granted 1,667 116.87

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Forfeited ( 1,000 ) 166.62

December 31 35,506 166.97 34,560 163.52 35,401 156.23

As of December 31, 2023

34,683 167.38 51 $ —

Options exercisable

December 31 28,210 $ 167.42 26,956 $ 161.25 27,537 $ 149.67

As of December 31, 2023

29,754 $ 170.24 43 $ —

Stock options generally vest over a period from one to three years with the expiration date at ten years from date of grant.

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This expense is expected to be recognized over the remaining weighted-average vesting period of 18 months.

For options outstanding at December 31, 2022, the weighted-average remaining contractual life was 57 months and the aggregate intrinsic value was $ 28 million.

For options exercisable at December 31, 2022, the weighted-average remaining contractual life was 46 months and the aggregate intrinsic value was $ 28 million.

The total intrinsic values of stock options exercised during 2022, 2021 and 2020 was $ 116 million, $ 325 million and $ 206 million, respectively.

Cash received from options exercised during 2022, 2021 and 2020 was $ 205 million, $ 457 million and $ 256 million, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the exercise of employee stock options for 2022, 2021 and 2020 was $ 24 million, $ 69 million and $ 44 million, respectively.

The following table summarizes additional information relative to stock options exercised during the respective years:

(in millions) 2023 2022 2021

Cash received from options exercised $ 147 $ 205 $ 457

Intrinsic value of options exercised 29 116 325

Tax benefit realized related to options exercised 6 24 69

For the primary annual stock option grant, the weighted average fair value at the date of grant was calculated using the Black-Scholes option-pricing model and the assumptions that follow.

Stock Option Assumptions

2023 2022 2021

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Expected volatility is a statistical measure of the amount by which a stock price is expected to fluctuate during a period.

For the 2022 annual grant date, the Company estimated the expected volatility based upon the following three volatilities of 3M stock:

Expected volatility is based upon three volatilities of 3M stock:

the median of the term of the expected life rolling volatility;

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The expected term assumption is based on the weighted average of historical grants.

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Restricted Stock and Restricted Stock Units

The following table summarizes restricted stock and restricted stock unit activity during the year ended December 31:

2022 2021 2020

(Shares in thousands) Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value

Restricted Stock Units:

The following table summarizes restricted stock unit activity:

(Units in thousands) Number of Units Weighted Average Grant Date Fair Value

Nonvested balance —

As of January 1, 2023

Annual 1,102 160.24 822 176.82 733 157.29

Other — — — — 45 159.49

2,375 $ 164.07

Granted 2,372 114.71

Vested ( 705 ) 155.94

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As of December 31, 2023

2,375 164.07 1,987 175.96 1,722 189.78

Restricted stock units granted generally vest three years following the grant date assuming continued employment.

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This expense is expected to be recognized over the remaining weighted-average vesting period of 23 months.

The total fair value of restricted stock and restricted stock units that vested during December 31, 2022, 2021 and 2020 was $ 88 million, $ 83 million and $ 91 million, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the vesting of restricted stock and restricted stock units for 2022, 2021 and 2020 was $ 17 million, $ 16 million and $ 17 million, respectively.

The following table summarizes additional information relative to restricted stock units for the respective years:

(in millions, except per-unit amounts) 2023 2022 2021

Weighted-average grant-date fair value of restricted stock units (per unit) that were granted $ 114.71 $ 160.24 $ 176.82

Intrinsic value of restricted stock units that vested $ 81 $ 88 $ 83

Tax benefit realized related to restricted stock units that vested 16 17 16

Performance Shares:

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The 2023 performance criteria for these performance shares (organic sales growth, free cash flow growth, and earnings per share growth) were selected because the Company believes that they are important drivers of long-term stockholder value.

The number of shares of 3M common stock that could actually be delivered at the end of the three-year performance period may be anywhere from 0 % to 200 % of each performance share granted, depending on the performance of the Company during such performance period.

The number of shares of 3M common stock that could actually be distributed at the end of the three-year performance period may be anywhere from 0 % to 200 % of each performance share granted, depending on the performance of the Company during such performance period.

When granted, these performance shares are awarded at 100 % of the estimated number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.

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Weighted average performance shares whose performance period is complete are included in computation of diluted earnings per share.

The following table summarizes performance share activity during the year ended December 31:

2022 2021 2020

(Shares in thousands) Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value

The following table summarizes performance share activity:

(Shares in thousands) Number of Shares Weighted Average Grant Date Fair Value

Undistributed balance —

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As of December 31, 2023

391 157.98 481 175.12 423 188.61

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As of December 31, 2023, there was $ 3 million of compensation expense that has yet to be recognized related to performance shares.

This expense is expected to be recognized over the remaining weighted-average earnings period of 20 months.

The total fair value of performance shares that were distributed were $ 21 million, $ 22 million, and $ 35 million for 2022, 2021 and 2020, respectively.

The Company’s actual tax benefits realized for the tax deductions related to the distribution of performance shares were $ 4 million, $ 4 million, and $ 7 million per year for 2022, 2021 and 2020, respectively.

The following table summarizes additional information relative to performance shares for the respective years:

(in millions, except per-share amounts) 2023 2022 2021

Weighted average grant date fair value per performance share that were granted $ 110.21 $ 144.77 $ 176.79

Intrinsic value of performance shares that were distributed $ 19 $ 21 $ 22

Tax benefit realized related to performance shares that were distributed 5 4 4

General Employees’ Stock Purchase Plan (GESPP):

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The fair value of GESPP options was based on the 15 % purchase price discount.

The Company recognized compensation expense for GESPP options of $ 31 million in 2022, $ 32 million in 2021, and $ 31 million in 2020.

The Company recognized compensation expense for GESPP options of $ 21 million, $ 31 million, and $ 32 million in 2023, 2022 and 2021, respectively.

Business Segments and Geographic Information

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In July 2022, 3M announced its intention to spin off the Health Care business as a separate public company (see Note 3 for additional information).

Transactions among reportable segments are recorded at cost.

3M is an integrated enterprise characterized by substantial intersegment cooperation, cost allocations and inventory transfers.

Therefore, management does not represent that these segments, if operated independently, would report the operating income information shown.

3M discloses business segment operating income as its measure of segment profit/loss, reconciled to both total 3M operating income and income before taxes.

Business segment operating income excludes certain expenses and income that are not allocated to business segments (as described below in “Corporate and Unallocated”).

Effective in the first quarter of 2022, the measure of segment operating performance used by 3M’s chief operating decision maker (CODM) changed and, as a result, 3M’s disclosed measure of segment profit/loss (business segment operating income (loss) ) was updated.

The change to business segment operating income aligns with the update to how the CODM assesses performance and allocates resources for the Company’s business segments.

3M discloses business segment operating income (loss) as its measure of segment profit/loss, reconciled to both total 3M operating income (loss) and income before taxes.

Business segment operating income (loss) excludes certain expenses and income that are not allocated to business segments (as described below in “Corporate and Unallocated”).

Effective in the first quarter of 2023, the measure of segment operating performance and segment composition used by 3M’s chief operating decision maker (CODM) changed and, as a result, 3M’s disclosed measure of segment profit/loss (business segment operating income (loss)) was updated.

The change to business segment operating income (loss) aligns with the update to how the CODM assesses performance and allocates resources for the Company’s business segments.

The changes included the items described below.

The financial information presented herein reflects the impact of these business segment reporting changes for all periods presented.

Effective in the first quarter of 2022:

Eliminating inclusion of dual credit in measure of segment operating performance

3M business segment operating performance measures were updated to no longer include dual credit to business segments for certain sales and related operating income.

Management previously evaluated its business segments based on net sales and operating income performance, including dual credit reporting.

3M reflected additional (“dual”) credit to another business segment when the customer account activity (“sales district”) with respect to the particular product sold to the external customer was provided by a different business segment.

For example, privacy screen protection products are primarily sold by the Display Materials and Systems Division within the Transportation and Electronics business segment;

however, certain sales districts within the Consumer business segment provide the customer account activity for sales of the product to particular customers.

In this example, the non-primary selling segment (Consumer) previously would also have received credit for the associated net sales initiated through its sales district and the related approximate operating income.

The offset to the dual credit business segment reporting was reflected as a reconciling item entitled “Elimination of Dual Credit,” such that sales and operating income in total were unchanged.

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Reflecting certain litigation-related costs in the Safety and Industrial segment's operating performance measure

3M's business segment operating performance measure with respect to its Safety and Industrial business segment was updated relative to litigation-related costs for non-Aearo and Aearo respirator mask/asbestos litigation matters.

Previously, 3M included these costs, when significant, as a special item (as further described below) within Corporate and Unallocated.

3M changed to include all litigation-related costs associated with respirator mask/asbestos litigation matters (along with other Safety and Industrial matters already included therein, such as those related to Combat Arms Earplugs) within the Safety and Industrial business segment.

Note, however, that prospectively during the Aearo chapter 11 bankruptcy period (which began in July 2022 — see Note 16) net costs for significant litigation associated with Combat Arms Earplugs and Aearo-respirator mask/asbestos matters are reflected in Corporate and Unallocated.

Reflecting gains/losses from sale of property, plant and equipment (PPE) and other assets within Corporate and Unallocated Change

3M updated its business segment operating performance measure to reflect all gains/losses from sales of PPE and other assets within Corporate and Unallocated.

Previously, certain of these gains/losses were included in 3M’s business segments’ operating performance.

Movement of certain businesses between segments

The businesses associated with two groups of products (each with approximately $ 25 million in annual sales) were realigned with one moving from the Consumer business segment to the Health Care business segment and the other moving from the Health Care business segment to the Consumer business segment.

Also effective in the first quarter of 2023, the Consumer business segment re-aligned from four divisions to the following three divisions:

Home, Health and Auto Care;

Construction and Home Improvement Markets;

and Stationery and Office.

Business Segment Products

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Transportation and Electronics • Advanced ceramic solutions

• Attachment tapes, films, sound and temperature management for transportation vehicles

• Attachment/bonding, films, sound and temperature management for transportation vehicles

• Premium large format graphic films for advertising and fleet signage

• Light management films and electronics assembly solutions

• Packaging and interconnection solutions

• Chip packaging and interconnection solutions

• Semiconductor production materials

• Solutions for data centers

• Reflective signage for highway, and vehicle safety

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Some seasonality impacts this business segment related to back-to-school, generally in the third quarter of each year

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Business Segment Information

Net Sales 2022 2021 2020

Net Sales (Millions)

2023 2022 2021

Safety and Industrial $ 10,956 $ 11,604 $ 11,981

4 unchanged sentences

Total Company $ 32,681 $ 34,229 $ 35,355

Operating Performance 2022 2021 2020

Operating Performance (Millions)

2023 2022 2021

Safety and Industrial $ 2,324 $ 1,135 $ 2,460

2 unchanged sentences

Consumer 904 978 1,164

Total business segment operating income 5,020 7,545 7,070

Total business segment operating income (loss) 6,143 4,885 7,527

Corporate and Unallocated

4 unchanged sentences

Divestiture-related restructuring actions — ( 41 ) —

Russia exit charges ( 109 ) — —

Russia exit (charges) benefits 18 ( 109 ) —

Total corporate special items ( 15,227 ) 1,637 214

Other corporate expense - net ( 118 ) 38 ( 95 )

Other corporate (expense) income - net

( 44 ) 17 ( 372 )

Total Corporate and Unallocated ( 15,271 ) 1,654 ( 158 )

Total Company operating income 6,539 7,369 7,161

Total Company operating income (loss) ( 9,128 ) 6,539 7,369

Other expense/(income), net 560 147 165

Income before income taxes $ 6,392 $ 7,204 $ 6,795

Income (loss) before income taxes $ ( 9,688 ) $ 6,392 $ 7,204

Assets Depreciation & Amortization Capital Expenditures

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This depreciation also includes allocated depreciation associated with a number of the assets reflected in Corporate and Unallocated as described above.

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In 2023, information relative to the attribution of certain assets (limited elements of working capital in particular instances) to business segment assets reviewed by 3M’s CODM changed.

The impact of these changes is reflected in the above table for all periods presented.

Corporate and Unallocated:

Corporate and Unallocated operating income includes “corporate special items” and “other corporate expense-net”.

Corporate special items include net costs for significant litigation associated with Combat Arms Earplugs and Aearo-respirator mask/asbestos matters during the chapter 11 bankruptcy period (which began in July 2022) and with PFAS-related other environmental matters (see Note 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 2022 split-off of 3M's Food Safety business and with the acquirer of the former Drug Delivery business following its 2020 divestiture.

Other corporate expense-net includes items such as net costs related to limited unallocated corporate staff and centrally managed material resource centers of expertise costs, corporate philanthropic activity, gains/losses from sales of PPE and other assets, and other net costs that 3M may choose not to allocate directly to its business segments.

Other corporate expense-net also includes costs and income during the term of transition supply, manufacturing, and service arrangements with divested businesses.

Items classified as revenue from this activity are included in Corporate and Unallocated net sales.

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Total Company $ 9,159 $ 9,178

United States net property, plant and equipment (PP&E) was $ 5,662 million and $ 5,484 million at December 31, 2022 and 2021, respectively.

China/Hong Kong net property, plant and equipment (PP&E) was $ 518 million and $ 578 million at December 31, 2022 and 2021, respectively.

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United States net property, plant and equipment (PPE) was $ 5,766 million and $ 5,662 million at December 31, 2023 and 2022, respectively.

China/Hong Kong net PPE was $ 486 million and $ 518 million at December 31, 2023 and 2022, respectively.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data