What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-26 compared with 2024-04-30 · 306 added, 193 removed, 394 unchanged (56% of the section changed)

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• Cautionary Note Concerning Factors That May Affect Future Results

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

Forward-looking statements in Part I, Item 2 may involve risks and uncertainties that could cause results to differ materially from those projected (refer to the section entitled Cautionary Note Concerning Factors That May Affect Future Results in Part I, Item 2 and the risk factors provided in Part II, Item 1A for discussion of these risks and uncertainties).

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

Effective in the first quarter of 2024, 3M made certain changes within its business segments.

The changes are described in Note 17.

While they impacted the composition and names of certain divisions within 3M's business segments, they did not change the overall composition of segments or the measure of segment operating performance used by 3M’s chief operating decision maker (CODM).

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

3M manages its operations in four operating business segments:

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

Certain changes are reflective in this document for all applicable periods presented.

These include:

• As discussed in Note 2, on April 1, 2024, 3M completed the previously announced separation of its Health Care business (the Separation) through a pro rata distribution of 80.1% of the outstanding shares of Solventum Corporation (Solventum) to 3M stockholders.

As a result of the Separation, Solventum became an independent public company and 3M no longer consolidates Solventum into 3M’s financial results.

In connection with the Separation, the historical net income of Solventum and applicable assets and liabilities included in the Separation are reported in 3M's consolidated financial statements as discontinued operations.

• 3M made certain changes to the composition of segment information reviewed by 3M's chief operating decision maker (CODM) effective in the second quarter of 2024 largely as a result of the separation of Solventum and changes within its business segments effective in the first quarter of 2024 as further described in Note 19.

To the extent these changes impacted 3M's disclosed disaggregated revenue information, data in Note 3 has also been updated.

3M manages its continuing operations in three operating business segments:

Safety and Industrial;

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and Consumer.

As discussed in Note 3, on April 1, 2024, 3M completed the previously announced separation of its Health Care business (the Separation) through a pro rata distribution of 80.1% of the outstanding shares of Solventum Corporation (Solventum) to 3M stockholders.

As a result of the Separation, Solventum became an independent public company and 3M will no longer consolidate Solventum into 3M’s financial results.

In connection with the Separation, the historical net income of Solventum and applicable assets and liabilities included in the Separation will be reported in 3M's consolidated financial statements as discontinued operations beginning in the second quarter of 2024.

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

References are made to organic sales change (which include both organic volume impacts and selling price impacts), which is defined as the change in net sales, absent the separate impacts on sales from foreign currency translation and acquisitions, net of divestitures.

Acquisition and divestiture sales change impacts, if any, are measured separately for the first twelve months post-transaction.

Acquisition and divestiture sales change impacts, if any, are measured separately for the first twelve months post-transaction and, beginning April 2024, include the impact of commercial agreements associated with the separation of Solventum.

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

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Additional information regarding certain items impacting pre-2024 periods that may also be relevant in 2024 can be found in the Overview section of Part II, Item 7 as well as in further sections of 3M’s 2023 Annual Report on Form 10-K.

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

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

Earnings (loss) per diluted share Three months ended

March 31, 2024

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

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

Earnings (loss) from continuing operations per diluted share Three months ended

June 30, 2024 Six months ended

June 30, 2024

Same period last year $ (12.94) $ (11.76)

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Divestiture costs — 0.01

Russia exit charges (benefits)

(0.04) (0.04)

Manufactured PFAS products (0.06) (0.07)

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Foreign exchange impacts (0.04) (0.10)

Acquisitions 0.03 0.05

Other expense (income), net 0.13 0.20

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Divestiture costs (0.23) (0.24)

Manufactured PFAS products —

Pension risk transfer cost (1.09) (1.09)

Solventum ownership benefit from change in value

Total special items 0.24 (0.20)

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

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

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

Total organic growth/productivity and other:

• For the first quarter of 2024, the following components impacted earnings per diluted share year-on-year:

◦ Timing of stock-based compensation grants to be incurred in the second quarter of 2024 versus the first quarter of 2023 due to Solventum spin (further discussed in "Results of Operations" section) resulted in a net year-on-year benefit of $0.15 per share.

• For the second quarter of 2024, the following components impacted operating margins and earnings (loss) from continuing operations per diluted share year-on-year:

◦ Income from transition service agreements with Solventum (refer to Note 2 for additional discussion) resulted in a net year-on-year increase of $0.05 per share

◦ Remaining organic growth/productivity and other impacts resulted in a net year-on-year increase of $0.31 per share which was impacted by the following:

▪ Benefits from volume growth, productivity, spending discipline and restructuring

• For the first six months of 2024, the following components impacted operating margins and earnings (loss) from continuing operations per diluted share year-on-year:

◦ Nonrecurring items including gain on property sales resulted in a net year-on-year increase of $0.08 per share.

◦ Income from transition services agreements with Solventum (refer to Note 2 for additional discussion) resulted in a net year-on-year increase of $0.05 per share

◦ Remaining organic growth/productivity and other impacts resulted in a net year-on-year increase of $0.65 per share which was impacted by the following:

▪ Benefits from productivity, sourcing actions, restructuring and spending discipline

▪ Benefits from productivity, volume growth, sourcing actions, spending discipline and restructuring

▪ Investments in growth, productivity, and sustainability

Restructuring and related charges:

• 3M recorded restructuring pre-tax charges of $104 million in the first quarter of 2024 compared to $52 million in the same period last year (refer to Note 5 for additional discussion).

In addition, 3M recorded adjustments to previous accruals and certain related accelerated depreciation.

• 3M recorded restructuring pre-tax charges of $35 million and $138 million in the second quarter and first six months of 2024, respectively, compared to $202 million and $252 million in the same periods last year, respectively, (refer to Note 6 for additional discussion).

In addition, 3M recorded certain related accelerated depreciation.

Foreign exchange impacts:

• Foreign currency impacts (net of hedging) decreased operating income by approximately $63 million (or decreased pre-tax income by approximately $65 million) year-on-year for 2024.

• Foreign currency impacts (net of hedging) decreased operating income from continuing operations by approximately $24 million (or a decrease of pre-tax income from continuing operations by approximately $31 million) year-on-year for the second quarter of 2024 and decreased operating income from continuing operations by approximately $73 million (or a decrease of pre-tax income from continuing operations by approximately $82 million) year-on-year for the first six months of 2024.

These estimates include:

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Acquisitions/divestitures:

• Impacts primarily relate to reconsolidation of Aearo entities.

◦ In the third quarter of 2022, 3M deconsolidated the Aearo Entities and, in the second quarter of 2023, reconsolidated those entities (discussed in Note 16).

• Impacts relate to:

◦ Divestiture impacts include the effect of new commercial agreements associated with the April 2024 separation of Solventum.

◦ Reconsolidation of Aearo entities - in the third quarter of 2022, 3M deconsolidated the Aearo Entities and, in the second quarter of 2023, reconsolidated those entities (discussed in Note 17).

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

Other expense (income), net:

• Interest expense (net of interest income) included in other expense (income), net as presented above decreased for the first quarter of 2024 compared to the same period year-on-year.

• Lower income related to non-service cost components of pension and postretirement expense increased expense year-on-year for the first quarter of 2024.

• Interest expense (net of interest income) included in other expense (income), net as presented above decreased for the second quarter and first six months of 2024 compared to the same period year-on-year.

• Lower income related to non-service cost components of pension and postretirement expense increased expense year-on-year for the second quarter and first six months of 2024.

Income tax rate:

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

Overall, the effective tax rate for the first quarter of 2024 was 24.7 percent, an increase from 17.7 percent in the prior year.

The primary factors that increased the Company's effective tax rate for first quarter 2024 were nonrecurring deferred tax benefits in 2023 as compared to 2024's decreased tax benefits related to significant litigation and stock-based compensation, as well as tax costs of entity structuring associated with the separation of Solventum.

• On an adjusted basis (as discussed below), the effective tax rate for the first quarter of 2024 was 20.5 percent, an increase of 2.8 percentage points compared to the same period year-on-year.

The primary factors were nonrecurring deferred tax benefits in 2023 and decreased tax benefits from stock-based compensation in 2024.

Overall, the effective tax rate for the second quarter of 2024 was 14.4 percent on a pre-tax income, compared to 24.0 percent on pre-tax loss in the prior year.

The effective tax rate for the first six months of 2024 was 18.1 percent, compared to 24.6 percent in the prior year.

The primary factors that impacted the comparison of these rates year-over -year were the second quarter 2023 charge related to the settlement agreement with public water systems in the United States regarding PFAS (see Note 17) and the tax rate associated with second quarter 2024 benefit related to the change in value of the retained ownership interest in Solventum.

• On an adjusted basis (as discussed below), the effective tax rate for the second quarter and first six months of 2024 was 19.1% and 19.9%, respectively, a decrease of 0.4 percentage points and an increase of 1.2 percentage points, respectively, compared to the same period year-on-year.

Shares of common stock outstanding:

• Higher shares outstanding decreased earnings per share year-on-year for the first quarter of 2024.

• Shares outstanding did not significantly impact earnings (loss) from continuing operations per share year-on-year for the second quarter and first six months of 2024.

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

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Certain measures adjust for the impacts of special items.

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

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

Special items for the periods presented include the items described in the section entitled “Description of special items”.

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

The reconciliations below, therefore, also include impacted segments as applicable.

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

The document also contains additional measures which are not defined under U.S.

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

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

• Income (loss) before taxes

• Income (loss) from continuing operations before taxes

• Provision for income taxes and effective tax rate

• Net income (loss)

• Earnings (loss) per share

• Net income (loss) from continuing operations

• Earnings (loss) per share from continuing operations

Special items for the periods presented include:

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

Associated tax impacts of significant litigation include impacts on Foreign Derived Intangible Income (FDII), Global Intangible Low Taxed Income (GILTI), and foreign tax credits.

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

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Divestiture costs:

• These include costs related to separating and divesting substantially an entire business segment of 3M following public announcement of its intended divestiture, including net tax costs of entity structuring associated with the separation of Solventum.

These also include interest expense on debt issued by Solventum for the period outstanding prior to the April 1, 2024 completion of the separation of Solventum from 3M.

• These include certain limited costs that were not eligible to be included within discontinued operations related to separating and divesting substantially an entire business segment of 3M following public announcement of its intended divestiture.

As a result of completion of the April 2024 separation of Solventum, this includes the tax cost of update to 3M’s previous indefinite reinvestment plans on past unrepatriated earnings through the period of the Separation’s close and to tax positions retained by 3M.

Manufactured PFAS products:

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

Along with other costs in arriving at this associated income, these amounts include estimates of costs of sales of $230 million and $276 million for the three months ended March 31, 2024 and 2023, respectively.

Along with other costs in arriving at this associated income, these amounts include estimates of costs of sales of $186 million and $233 million for the three months ended June 30, 2024 and 2023, respectively, and $416 million and $509 million for the six months ended June 30, 2024 and 2023, respectively.

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

Three months ended March 31, 2023

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

Russia exit charges/benefits:

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

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

Pension risk transfer charge:

• In the second quarter of 2024, 3M recorded a non-cash pension settlement charge reflected in other expense (income), net as a result of transferring a portion of its U.S.

pension payment obligations and related plan assets to an insurance company (as discussed in Note 13).

Solventum ownership - change in value:

• This amount relates to the change in value of 3M's retained ownership interest in Solventum common stock reflected in other expense (income), net.

Three months ended June 30, 2023

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

Safety and Industrial

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Net costs for significant litigation 3

— 10,437 10,449 2,457 7,992 14.43

Manufactured PFAS products (332) (41) (41) (10) (31) (0.06)

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

Divestiture costs — 1 1 — 1 —

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Adjusted amounts (non-GAAP measures) $ 5,951 $ 1,021 17.2 % $ 961 $ 189 19.5 % $ 770 $ 1.39

Three months ended March 31, 2024

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

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

Three months ended June 30, 2024

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

Safety and Industrial

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Divestiture costs — 14 14 (113) 127 0.23

Solventum ownership - change in value

— — (1,113) — (1,113) (2.00)

Pension risk transfer charge

— — 795 188 607 1.09

Total special items (236) 31 (85) 49 (134) (0.24)

Adjusted amounts (non-GAAP measures) $ 6,019 1.1 % $ 1,303 21.6 % $ 1,325 $ 252 19.1 % $ 1,070 $ 1.93 39 %

Three months ended March 31, 2024

Three months ended June 30, 2024

Sales Change Organic sales Acquisitions Divestitures Translation Total sales change

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Adjusted Transportation and Electronics (non-GAAP measures) 3.3 % 1.1 % — % (1.8) % 2.6 %

Six months ended June 30, 2023

Safety and Industrial

GAAP amounts $ 1,135 20.5 %

Adjustments for special items:

Net costs for significant litigation 41

Total special items 41

Adjusted amounts (non-GAAP measures) $ 1,176 21.2 %

Transportation and Electronics

GAAP amounts $ 4,241 $ 704 16.6 %

Adjustments for special items:

Manufactured PFAS products (677) (51)

Total special items (677) (51)

Adjusted amounts (non-GAAP measures) $ 3,564 $ 653 18.3 %

Total Company

GAAP amounts $ 12,338 $ (8,492) (68.8) % $ (8,620) $ (2,116) 24.6 % $ (6,509) $ (11.76)

Adjustments for special items:

Net costs for significant litigation 3

— 10,480 10,492 2,464 8,028 14.51

Manufactured PFAS products (677) (51) (51) (13) (38) (0.07)

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

Divestiture costs — 4 4 — 4 0.01

Total special items (677) 10,415 10,427 2,454 7,973 14.41

Adjusted amounts (non-GAAP measures) $ 11,661 $ 1,923 16.5 % $ 1,807 $ 338 18.7 % $ 1,464 $ 2.65

Six months ended June 30, 2024

Safety and Industrial

GAAP amounts $ 1,269 23.1 %

Adjustments for special items:

Net costs for significant litigation 18

Total special items 18

Adjusted amounts (non-GAAP measures) $ 1,287 23.4 %

Transportation and Electronics

GAAP amounts $ 4,247 0.2 % $ 909 21.4 %

Adjustments for special items:

Manufactured PFAS products (517) (4)

Total special items (517) (4)

Adjusted amounts (non-GAAP measures) $ 3,730 4.7 % $ 905 24.3 %

Total Company

GAAP amounts $ 12,271 (0.5) % $ 2,421 19.7 % $ 2,339 $ 423 18.1 % $ 1,909 $ 3.44 129 %

Adjustments for special items:

Net costs for significant litigation — 89 495 6 489 0.88

Manufactured PFAS products (517) (4) (4) (2) (2) —

Divestiture costs — 20 20 (111) 131 0.24

Solventum ownership - change in value — — (1,113) — (1,113) (2.01)

Pension risk transfer charge — — 795 188 607 1.09

Total special items (517) 105 193 81 112 0.20

Adjusted amounts (non-GAAP measures) $ 11,754 0.8 % $ 2,526 21.5 % $ 2,532 $ 504 19.9 % $ 2,021 $ 3.64 38 %

Six months ended June 30, 2024

Sales Change Organic sales Acquisitions Divestitures Translation Total sales change

Total Company (0.3) % 0.4 % 0.4 % (1.0) % (0.5) %

Remove manufactured PFAS products special item impact 1.3 — — — 1.3

Adjusted total Company (non-GAAP measures) 1.0 % 0.4 % 0.4 % (1.0) % 0.8 %

Transportation and Electronics 0.6 % 1.2 % — % (1.6) % 0.2 %

Remove manufactured PFAS products special item impact 4.3 0.2 — — 4.5

Adjusted Transportation and Electronics (non-GAAP measures) 4.9 % 1.4 % — % (1.6) % 4.7 %

Sales and operating income (loss) by business segment:

The following tables contain sales and operating income (loss) results by business segment for the three months ended March 31, 2024 and 2023.

Refer to the section entitled Performance by Business Segment later in MD&A for additional discussion concerning 2024 versus 2023 results, including Corporate and Unallocated.

The following tables contain sales and operating income (loss) results by business segment for the three and six months ended June 30, 2024 and 2023.

Refer to the section entitled Performance by Business Segment later in MD&A for additional discussion concerning 2024 versus 2023 results, including Corporate and Unallocated and Other.

Corporate and Unallocated and Other are not reportable business segments as they do not meet the segment reporting criteria.

Refer to Note 19 for additional information on business segments.

Three months ended March 31,

Three months ended June 30,

2024 2023 % change

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Income (Loss)

Business Segments

Safety and Industrial $ 2,759 $ 612 $ 2,765 $ 534 (0.2) % 14.4 %

Transportation and Electronics 2,143 428 2,191 410 (2.2) 4.6

Health Care 2,017 354 2,010 360 0.3 (1.6)

Consumer 1,263 219 1,293 235 (2.4) (6.7)

Corporate and Unallocated 86 (24) 22 (10,547)

Total Company $ 8,003 $ 1,501 $ 8,031 $ 1,241 (0.3) % 20.9 %

Three months ended March 31, 2024

Other 4 37 12 10

Total Company $ 6,255 $ 1,272 $ 6,283 $ (9,358) (0.5) % N/M

Six months ended June 30,

2024 2023 % change

(Dollars in millions) Net Sales Operating Income (Loss) Net Sales Operating Income (Loss) Net Sales Operating Income (Loss)

Safety and Industrial $ 5,491 $ 1,269 $ 5,544 $ 1,135 (0.9) % 11.7 %

Transportation and Electronics 4,247 909 4,241 704 0.2 29.2

Consumer 2,403 435 2,485 414 (3.3) 5.2

Corporate and Unallocated 112 (164) 45 (10,764)

Other 18 (28) 23 19

Total Company $ 12,271 $ 2,421 $ 12,338 $ (8,492) (0.5) % N/M

Three months ended June 30, 2024

Worldwide Sales Change

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Transportation and Electronics (1.3) 1.0 — (1.9) (2.2)

Health Care 1.0 — (0.3) (0.4) 0.3

Consumer (1.4) — — (1.0) (2.4)

Total Company — 0.4 (0.1) (0.6) (0.3)

Six months ended June 30, 2024

Worldwide Sales Change

By Business Segment Organic sales Acquisitions Divestitures Translation Total sales change

Safety and Industrial (0.2) % — % — % (0.7) % (0.9) %

Transportation and Electronics 0.6 1.2 — (1.6) 0.2

Consumer (2.6) — — (0.7) (3.3)

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

Sales by geographic area:

Percent change information compares the three months ended March 31, 2024 with the same prior year period, unless otherwise indicated.

Percent change information compares the three and six months ended June 30, 2024 with the same prior year period, unless otherwise indicated.

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

Three months ended March 31, 2024

Americas Asia

Pacific Europe,

& Africa Other

Unallocated Worldwide

Three months ended June 30, 2024

Americas Asia Pacific

Europe, Middle East & Africa

Net sales (millions) $ 3,480 $ 1,721 $ 1,054 $ 6,255

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Total sales change 2.5 % (3.1) % (5.2) % (0.5) %

Six months ended June 30, 2024

Americas Asia Pacific Europe, Middle East & Africa Worldwide

Net sales (millions) $ 6,630 $ 3,489 $ 2,152 $ 12,271

% of worldwide sales 54.0 % 28.5 % 17.5 % 100.0 %

Components of net sales change:

Organic sales (0.6) 1.1 (1.6) (0.3)

Acquisitions 0.7 0.1 — 0.4

Divestitures 0.8 — (0.1) 0.4

Translation 0.1 (4.0) 0.4 (1.0)

Total sales change 1.0 % (2.8) % (1.3) % (0.5) %

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

• For the first quarter of 2024, in the Americas geographic area, U.S.

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

• For the second quarter of 2024, in the Americas geographic area, U.S.

total sales increased 3 percent which included increased organic sales of 1 percent.

Total sales in Mexico increased 12 percent which included increased organic sales of 6 percent.

In Canada, total sales decreased 3 percent which included decreased organic sales of 4 percent.

In Brazil, total sales were flat which included decreased organic sales of 5 percent.

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

In Brazil, total sales decreased 3 percent which included increased organic sales of 2 percent.

In the Asia Pacific geographic area, China total sales increased 8 percent which included increased organic sales of 10 percent.

In Japan, total sales decreased 14 percent which included decreased organic sales of 4 percent.

• For the first six months of 2024, in the Americas geographic area, U.S.

total sales increased 1 percent which included flat organic sales.

Total sales in Mexico increased 12 percent which included increased organic sales of 4 percent.

In Canada, total sales increased 1 percent which included flat organic sales.

In Brazil, total sales decreased 2 percent which included decreased organic sales of 2 percent.

In the Asia Pacific geographic area, China total sales increased 8 percent which included increased organic sales of 10 percent.

In Japan, total sales decreased 13 percent which included decreased organic sales of 4 percent.

Financial condition:

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

In the first three months of 2024, the Company purchased $21 million of its own stock, compared to $29 million of stock purchases in the first three months of 2023.

As of March 31, 2024, approximately $4.2 billion remained available under the authorization.

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

In the first six months of 2024, the Company purchased $421 million of its own stock, compared to $29 million of stock purchases in the first six months of 2023.

As of June 30, 2024, approximately $3.8 billion remained available under the authorization.

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

In May 2024, 3M's Board of Directors declared a second-quarter 2024 dividend of $0.70 per share resetting 3M's dividend post-Solventum spin.

Results of Operations

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Three months ended

(Percent of net sales) 2024 2023 Change

June 30, Six months ended

(Percent of net sales) 2024 2023 Change 2024 2023 Change

Cost of sales 57.1 % 59.3 % (2.2) % 57.5 % 60.6 % (3.1) %

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Operating income (loss) margin 20.3 % (148.9) % 169.2 % 19.7 % (68.8) % 88.5 %

Stock compensation expense was $29 million and $135 million for the first quarter of 2024 and 2023, respectively, which impacts cost of sales;

Stock compensation expense was $154 million and $35 million for the second quarter of 2024 and 2023, respectively, and $180 million and $155 million for the six months ended 2024 and 2023, respectively, which impacts cost of sales;

selling, general and administrative expenses (SG&A);

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The Company’s annual stock option and restricted stock unit grant is typically made in February.

As discussed in Note 20 to the Consolidated Financial Statements in 3M's 2023 Annual Report on Form 10-K, because of certain accounting rules, grants to employees that are retiree-eligible are essentially fully reflected as compensation at time of grant.

As discussed in Note 18, because of certain accounting rules, grants to employees that are retiree-eligible are essentially fully reflected as compensation at time of grant.

This retiree-eligible population generally represents approximately 34 percent of the annual grant stock-based compensation expense;

therefore, higher stock-based compensation expense is typically recognized in the first quarter.

However, as previously disclosed, due to the spin-off separation of Solventum, the 2024 annual grant will be made after the April 1, 2024 separation.

For total year 2024, 3M previously expected defined benefit pension and postretirement service cost expense (which impacts cost of sales, SG&A, and R&D) to total approximately $250 million while non-service pension and postretirement net benefit costs was expected to be a benefit of approximately $30 million, for a total consolidated defined benefit pre-tax pension and postretirement expense of approximately $220 million, an increase of approximately $75 million compared to 2023.

In connection with the April 1, 2024 separation of Solventum (see Note 3), the historical net income of Solventum will be reported in 3M's consolidated financial statements as discontinued operations beginning in the second quarter of 2024.

Further, the remeasurement of U.S.

pension and postretirement pension plans discussed in Note 12 impacts 2024 expense.

Considering this remeasurement and also on the basis of treating Solventum as a discontinued operation, 3M preliminarily estimates full year 2024 continuing operations defined benefit pension and postretirement service cost expense to total approximately $200 million while continuing operations non-service pension and postretirement net benefit cost is anticipated to be a benefit of approximately $10 million, for a total estimated continuing operations consolidated defined benefit pre-tax pension and postretirement expense of approximately $190 million.

The year-on-year decrease in defined benefit pension and postretirement service cost expense for the first three months of 2024 was approximately $3 million.

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

However, due to the spin-off of Solventum (see Note 2), the 2024 annual grant was made in May, after the April 1, 2024 separation.

Defined benefit pension and postretirement service cost expense for continuing operations (which impacts cost of sales, SG&A, and R&D) for the first six months of 2024 was $48 million compared to $56 million in same period last year (as discussed in Note 13).

For total year 2024, considering the remeasurements of U.S.

pension and postretirement pension plans and second quarter 2024 $795 million pension settlement charge associated the pension risk transfer special item (all discussed in Note 13), 3M estimates full year 2024 continuing operations defined benefit pension and postretirement service cost expense to total approximately $195 million while continuing operations non-service pension and postretirement net benefit cost is anticipated to be a charge of approximately $810 million, for a total estimated continuing operations consolidated defined benefit pre-tax pension and postretirement expense of approximately $1,005 million.

These amounts reflect a decrease of $27 million and an increase of $918 million in the service and non-service cost components, respectively, compared to 2023 on similar basis as discussed below

For total year 2023 on a comparable continuing operations basis, the Company recognized defined benefit pension and postretirement service cost expense of $222 million and a benefit of $108 million related to all non-service pension and postretirement net benefit costs (after settlements, curtailments, special termination benefits and other) for a total continuing operations defined benefit pension and postretirement expense of $114 million.

For 2025, 3M preliminarily expects a year-on-year non-service pension and postretirement expense tailwind of approximately $720 million, primarily as a result of the second quarter 2024 pension risk transfer charge special item (see Note 13 and section entitled “Description of special items”).

Adjusting for this 2024 special item, 3M expects a year-on-year headwind of approximately $70 million primarily due to amortization of prior service costs and impacts from previously deferred asset losses.

These estimates are based on assumptions from 3M's most recent remeasurements of applicable plans carrying over to the year-end 2024 measurement.

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

Cost of Sales:

Cost of sales, measured as a percent of sales, decreased in the first quarter of 2024 when compared to the same period last year.

Decreases in the first quarter of 2024 were primarily due to ongoing manufacturing productivity initiatives and timing of stock-based compensation grants.

Cost of sales, measured as a percent of sales, decreased in the second quarter and first six months of 2024 when compared to the same period last year.

Decreases were primarily due to ongoing manufacturing productivity initiatives and lower raw materials and energy costs, along with lower year-on-year restructuring charges.

In the second quarter of 2024, these decreases were partially offset by timing of stock-based compensation grants.

Selling, General and Administrative Expenses:

SG&A, measured as a percent of sales, increased slightly in the first three months of 2024 when compared to the same period last year.

SG&A in 2024 was primarily impacted by divestiture costs (related to the spin-off separation of Solventum), restructuring charges and timing of stock-based compensation grants.

SG&A, measured as a percent of sales, decreased in the second quarter and first six months of 2024 when compared to the same period last year.

Decreases were primarily impacted by a $10.3 billion pre-tax charge related to the PWS settlement in the second quarter of 2023 (discussed in Note 17).

SG&A in 2024 was impacted by lower year-on-year restructuring charges and the second quarter 2024 timing of stock-based compensation grants.

Research, Development and Related Expenses:

R&D, measured as a percent of sales, decreased in the first quarter of 2024 when compared to the same period last year.

R&D, measured as a percent of sales, slightly decreased in the second quarter and first six months of 2024 when compared to the same period last year.

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

R&D was also impacted by timing of stock-based compensation grants and restructuring charges.

Other Expense (Income), Net:

See Note 7 for a detailed breakout of this line item.

Interest expense (net of interest income) increased in the first quarter of 2024 driven by the addition of imputed interest associated with the obligations resulting from the PWS Settlement and the CAE Settlement (discussed in Note 16) and interest expense on debt issued by Solventum for the period outstanding prior to the April 1, 2024 completion of the separation of Solventum from 3M.

The non-service pension and postretirement net benefit decreased approximately $20 million in the first quarter of 2024 compared to the same period year-on-year.

Interest expense (net of interest income) increased in the second quarter and first six months of 2024 compared to the same period year-on-year primarily driven by the addition of imputed interest associated with the obligations resulting from the PWS Settlement and the CAE Settlement in the second and third quarter of 2023 respectively (discussed in Note 17).

The non-service pension and postretirement net benefit decreased approximately $821 million and $836 million in the second quarter and first six months of 2024, respectively, compared to the same period year-on-year, largely due to the $795 million second quarter 2024 pension settlement charge as a result of transferring a portion of U.S.

pension payment obligations and related plan assets to an insurance company (see Note 13).

Solventum ownership - change in value resulted in a year-on-year benefit of $1.1 billion for both second quarter and first six months of 2024 following Solventum's separation from 3M in April 2024 (discussed in Note 2).

Provision (benefit) for Income Taxes:

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(Percent of pre-tax income/loss) 2024 2023 2024 2023

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(Millions) 2024 2023 2024 2023

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(Millions) 2024 2023 2024 2023

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In addition, disclosures relating to 3M’s business segments are provided in Note 19.

Effective in the first quarter of 2024, 3M made certain changes within its business segments.

The changes are described in Note 17.

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

3M manages its operations in four business segments.

As discussed in Note 19, 3M made changes to the composition of segment information reviewed by 3M's chief operating decision maker (CODM) effective in the second quarter of 2024 largely as a result of the separation of Solventum and changes within its business segments effective in the first quarter of 2024.

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

3M manages its continuing operations in three business segments.

The reportable segments are Safety and Industrial;

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and Consumer.

Corporate and Unallocated:

In addition to these four business segments, 3M assigns certain costs to “Corporate and Unallocated,” which is presented separately in the preceding business segments table and in Note 17.

Corporate and Unallocated and Other:

Outside of 3M's operating segments, 3M has Corporate and Unallocated and Other which are not reportable business segments as they do not meet the segment reporting criteria.

Because Corporate and Unallocated and Other include a variety of miscellaneous items, they are subject to fluctuation on a quarterly and annual basis.

Corporate and Unallocated and Other are presented separately in the preceding business segments table and in Note 19.

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

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In addition, during the voluntary chapter 11 bankruptcy period (which began in July 2022 and ended in June 2023—see Note 17), 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 impacting operating income.

These 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 certain enterprise and governance activities resulting in unallocated corporate costs and other activity and net costs that 3M may choose not to allocate directly to its business segments.

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

Corporate and Unallocated net operating loss increased in the first three months of 2024, when compared to the same period last year.

The subsections below provide additional information.

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 for the periods presented also include divestiture costs and Russia exit costs/ benefits.

Divestiture costs include costs that were not eligible to be part of discontinued operations related to separating and divesting substantially an entire business segment of 3M following public announcement of its intended divestiture.

▪ Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details on the impact of special items and to Note 19 for additional information on the components of corporate special items.

Corporate special item net costs were similiar year-over-year primarily due to increased divestiture costs offset by lower net costs for significant litigation associated with Corporate and Unallocated.

Other Corporate Expense - Net:

Other corporate operating expenses, net, increased year-over-year in the first three months of 2024 primarily due to higher unallocated corporate costs relating to certain enterprise and governance activities.

Corporate special item net costs decreased year-over-year primarily due to lower net costs for significant litigation associated with Corporate and Unallocated.

◦ Other corporate expense-net includes certain enterprise and governance activities resulting in unallocated corporate costs and other activity and net costs that 3M may choose not to allocate directly to its business segments.

Other corporate expense-net also includes costs previously allocated to Solventum prior to the Separation that were not eligible to be part of discontinued operations, commercial activity with Solventum post-Separation, and certain operations of the former Health Care business segment retained by 3M.

▪ Other corporate operating expenses, net, decreased year-over-year in the second quarter and first six months of 2024 primarily due to lower pre-tax restructuring charges (see Note 6).

◦ This category principally reflects activity associated with:

▪ Operations of businesses of the former Health Care segment divested prior to the Separation and therefore not reflected as discontinued operations within 3M's financial statements, along with limited-duration supply agreements with those previous divestitures.

▪ Transition arrangement agreements (e.g.

fees charged by 3M, net of underlying costs) related to divested businesses, including those related to the Separation, as well as other applicable divestitures.

◦ Operating income categorized as "Other" increased year-over-year in the second quarter of 2024 and decreased year-over-year in the first six months of 2024 primarily due to the extent of transition arrangement income from divested businesses.

Operating Business Segments:

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Three months ended

June 30, Six months ended

2024 2023 2024 2023

Sales (millions) $ 2,759 $ 2,765 $ 5,491 $ 5,544

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Business segment operating income (millions)

$ 612 $ 534 $ 1,269 $ 1,135

Percent change 14.4 % 11.7 %

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

First quarter 2024 results:

Second quarter 2024 results:

Sales in Safety and Industrial were down 0.2 percent in U.S.

On an organic sales basis:

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

• Sales increased in industrial adhesives and tapes, personal safety, and automotive aftermarket, were flat in electrical markets and roofing granules, and decreased in industrial specialties and abrasives.

• Growth primarily came from industrial adhesives and tapes driven by strength in bonding solutions for consumer electronics devices partially offset by continued mixed industrial end market demand as end customers remained cautious.

Business segment operating income margins increased year-on-year driven by benefits from organic volume growth, productivity and lower restructuring charges partially offset by headwinds from stock-based compensation and cost inefficiencies due to the spin of Solventum.

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

First six months 2024 results:

Sales in Safety and Industrial were down 0.9 percent in U.S.

On an organic sales basis:

• Sales increased in roofing granules and industrial adhesives and tapes, were flat in personal safety, and decreased in industrial specialties, abrasives, electrical markets and automotive aftermarket.

• Growth was held back by disposable respirator sales decline within personal safety (which negatively impacted year-on-year first quarter organic growth by 0.8 percentage points) and industrial end market demand remained mixed.

This was partially offset by growth in roofing granules and industrial adhesives and tapes.

Business segment operating income margins increased year-on-year driven by benefits from productivity actions, restructuring, strong spending discipline, timing of stock-based compensation grants to be incurred in the second quarter of 2024 versus the first quarter of 2023 due to Solventum spin and lower special item costs for significant litigation which more than offset the decline in organic sales volume and higher restructuring costs.

Adjusting for special items (non-GAAP measure), business segment operating income margins increased year-on-year as displayed above.

This was partially offset by growth in industrial adhesives and tapes.

Business segment operating income margins increased year-on-year primarily driven by benefits from productivity actions, restructuring and strong spending discipline, partially offset by cost inefficiencies due to the spin of Solventum.

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

Transportation and Electronics Business:

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2024 2023 2024 2023

Sales (millions) $ 2,143 $ 2,191 $ 4,247 $ 4,241

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

First quarter 2024 results:

Sales in Transportation and Electronics were up 2.6 percent in U.S.

Second quarter 2024 results:

Sales in Transportation and Electronics were down 2.2 percent in U.S.

Adjusting for special item PFAS manufactured products (non-GAAP measure), sales were up 2.6 percent in U.S.

On an organic sales basis:

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

• Growth came from strong momentum in automotive electrification and share gains with spec-in wins and new product introductions in automotive and consumer electronics driving strong volume growth to support customer production ramp and product launches along with continued channel inventory normalization as electronics demand stabilizes.

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

• Growth was held back by headwinds related to PFAS manufactured products.

Acquisitions:

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

Business segment operating income margins increased year-on-year driven by benefits from strong leverage on organic sales volumes growth, productivity actions, restructuring, strong spending discipline, and timing of stock-based compensation grants to be incurred in the second quarter of 2024 versus the first quarter of 2023 due to Solventum spin partially offset by higher restructuring costs.

Business segment operating income margins increased year-on-year driven by benefits from organic volume growth, productivity, and lower restructuring charges partially offset by headwinds from stock-based compensation and cost inefficiencies due to the spin of Solventum.

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

Health Care Business:

Three months ended

Sales (millions) $ 2,017 $ 2,010

Sales change analysis:

Organic sales 1.0 %

Divestitures (0.3)

Translation (0.4)

Total sales change 0.3 %

Business segment operating income (millions) $ 354 $ 360

Percent change (1.6) %

Percent of sales 17.5 % 17.9 %

First quarter 2024 results:

Sales in Health Care were up 0.3 percent in U.S.

First six months 2024 results:

Sales in Transportation and Electronics were up 0.2 percent in U.S.

Adjusting for special item PFAS manufactured products (non-GAAP measure), sales were up 4.7 percent in U.S.

On an organic sales basis:

• Sales increased in purification and filtration, and was flat in medical surgical (MedSurg), dental solutions and health information systems.

Business segment operating income margins decreased year-on-year largely due to public company stand-up costs.

As discussed in Note 3, on April 1, 2024, 3M completed the previously announced separation of its Health Care business as a separate public company, Solventum.

3M retained equity ownership interest of approximately 19.9% in Solventum.

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

• Growth came from strength in electronics due to additional spec-in wins and strength in semiconductor.

This was partially offset by headwinds related to PFAS manufactured products.

Acquisitions/divestitures:

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

In the third quarter of 2022, 3M deconsolidated the Aearo Entities and, in the second quarter of 2023, reconsolidated those entities (discussed in Note 17).

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

Business segment operating income margins increased year-on-year driven by benefits from strong leverage on organic sales volume growth, productivity actions, restructuring and strong spending discipline partially offset by cost inefficiencies due to the spin of Solventum.

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

Consumer Business:

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2024 2023 2024 2023

Sales (millions) $ 1,263 $ 1,293 $ 2,403 $ 2,485

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Percent of sales 17.4 % 18.2 % 18.1 % 16.7 %

First quarter 2024 results:

Second quarter 2024 results:

Sales in Consumer were down 2.4 percent in U.S.

On an organic sales basis:

• Sales decreased in packaging and expression, home and auto care, home improvement and consumer safety and well-being.

• Sales increased in home improvement and consumer safety and well-being, and decreased in home and auto care and packaging and expression.

• Growth was negatively impacted by continued softness in consumer discretionary demand for hardline goods along with product portfolio and geographic prioritization.

Business segment operating income margins decreased year-on-year driven by headwinds from organic volume decline, stock-based compensation and cost inefficiencies due to the spin of Solventum partially offset by lower restructuring charges.

First six months 2024 results:

Sales in Consumer were down 3.3 percent in U.S.

On an organic sales basis:

• Sales increased in home improvement and consumer safety and well-being, and decreased in home and auto care and packaging and expression.

• Growth was negatively impacted by continued softness in consumer discretionary spending along with product portfolio and geographic prioritization.

Business segment operating income margins increased year-on-year driven by benefits from productivity actions, restructuring, portfolio initiatives, strong spending discipline and timing of stock-based compensation grants to be incurred in the second quarter of 2024 versus the first quarter of 2023 due to Solventum spin partially offset by decline in organic sales volume and higher restructuring costs.

Business segment operating income margins increased year-on-year from benefits from productivity actions, restructuring, portfolio initiatives, strong spending discipline partially offset by decline in organic sales volume and cost inefficiencies due to the spin of Solventum.

Financial Condition and Liquidity

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operations, access to capital markets and repatriation of the earnings of its foreign affiliates that are not considered to be permanently reinvested.

For those international earnings still considered to be reinvested indefinitely, the Company currently has no plans or intentions to repatriate these funds for U.S.

See Note 10 in 3M's 2023 Annual Report on Form 10-K for further information on earnings considered to be reinvested indefinitely.

For those international earnings considered to be reinvested indefinitely, the Company currently has no plans or intentions to repatriate these funds for U.S.

See Note 9 for further information on earnings considered to be reinvested indefinitely.

3M maintains a strong liquidity profile.

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

The Company had no commercial paper outstanding at March 31, 2024, compared to $1.8 billion commercial paper outstanding as of December 31, 2023.

The Company had no commercial paper outstanding at June 30, 2024, compared to $1.8 billion commercial paper outstanding as of December 31, 2023.

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

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

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

The Company’s total debt at March 31, 2024 increased when compared to December 31, 2023 as a result of Solventum's issuance of $8.4 billion in aggregate principal amount of debt.

This was partially offset by $2.9 billion in debt maturities, consisting of $1.1 billion of medium-term notes and $1.8 billion repayment of commercial paper borrowings.

As discussed in Note 11, obligations associated with Solventum's borrowings became the sole responsibility of Solventum after the April 1, 2024 Separation.

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

The Company’s total debt associated with continuing operations at June 30, 2024 decreased when compared to December 31, 2023 as a result of $2.9 billion in debt maturities, consisting of $1.1 billion of medium-term notes and $1.8 billion repayment of commercial paper borrowings.

Amounts borrowed by Solventum during the first quarter of 2024 were a liability associated with discontinued operations and, as transferred obligations, became the sole responsibility of Solventum after the April 1, 2024 Separation, as discussed in Note 12.

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

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3M also has a medium-term notes program (Series F) program, originally established in 2016, up to an aggregate principal amount of $18 billion.

As of March 31, 2024, the total amount of debt issued under the (Series F) program is approximately $17.6 billion (utilizing the foreign exchange rates applicable at the time of issuance for the euro denominated debt).

As of June 30, 2024, the total amount of debt issued under the (Series F) program is approximately $17.6 billion (utilizing the foreign exchange rates applicable at the time of issuance for the euro denominated debt).

The Company has not issued any debt under the (Series F) program since February 2019 and does not intend to issue any additional debt under this program in the future.

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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 March 31, 2024.

The credit facility was undrawn at June 30, 2024.

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 March 31, 2024, this ratio was approximately 15 to 1.

At June 30, 2024, this ratio was approximately 16 to 1.

Debt covenants do not restrict the payment of dividends.

In the first quarter of 2024, as discussed in Note 11, Solventum entered into a revolving credit facility of $2 billion which was undrawn as of March 31, 2024.

This credit facility became the sole responsibility of Solventum after the April 1, 2024 Separation.

The Company also had $368 million in stand-alone letters of credit and bank guarantees issued and outstanding at March 31, 2024.

The Company also had $329 million in stand-alone letters of credit and bank guarantees issued and outstanding at June 30, 2024.

These instruments are utilized in connection with normal business activities.

Cash, cash equivalents and marketable securities:

At March 31, 2024, 3M had $11.0 billion of cash, cash equivalents and marketable securities, of which approximately $5.2 billion was held by the Company’s foreign subsidiaries and approximately $5.8 billion was held in the United States.

These balances are invested in bank instruments and other high-quality fixed income securities.

At June 30, 2024, 3M had $10.4 billion of cash, cash equivalents and marketable securities, of which approximately $4.8 billion was held by the Company’s foreign subsidiaries and approximately $5.6 billion was held in the United States.

These balances are invested in bank instruments and other high quality securities.

At December 31, 2023, 3M had $5.8 billion of cash, cash equivalents and marketable securities, of which approximately $3.1 billion was held by the Company’s foreign subsidiaries and $2.7 billion was held by the United States.

The increase from December 31, 2023 was driven by proceeds from Solventum's issuance of $8.4 billion in aggregate principal amount of debt prior to the Separation as discussed in Note 11.

The increase from December 31, 2023 was driven by proceeds from Solventum's issuance of debt prior to the Separation as discussed in Note 12, of which approximately $7.7 billion of proceeds was retained by 3M in the Separation, partially offset by debt maturities.

As discussed in the "Material Cash Requirements from Known Contractual and Other Obligations" section further below, 3M expects to pay approximately $3.7 billion in July 2024 related to the PWS Settlement and CAE Settlement, reducing cash, cash equivalents and marketable securities ($0.7 billion was paid in the first half of 2024 - discussed in Note 17).

Net Debt (non-GAAP measure):

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GAAP and may not be computed the same as similarly titled measures used by other companies.

The Company defines net debt as total debt less the total of cash, cash equivalents and current and long-term marketable securities.

The Company defines net debt as total debt less the total of cash, cash equivalents and current and long-term marketable securities all on a continuing operations basis.

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

The table below provides net debt as of March 31, 2024 and December 31, 2023.

Note, as discussed above, that obligations associated with Solventum's first quarter 2024 $8.4 billion aggregate principal amount of borrowings remained with Solventum after the April 1, 2024 Separation while, as discussed in Note 3, 3M expects to retain approximately $7.7 billion of proceeds from these borrowing after completion of accounting for the Separation.

(Millions) March 31, 2024 December 31, 2023 Change

The table below provides net debt as of June 30, 2024 and December 31, 2023.

(Millions) June 30, 2024 December 31, 2023 Change

Total debt $ 13,083 $ 16,035 $ (2,952)

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Working capital (non-GAAP measure):

(Millions) March 31, 2024 December 31, 2023 Change

(Millions) June 30, 2024 December 31, 2023 Change

Current assets $ 19,515 $ 16,379 $ 3,136

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Working capital increased $4.1 billion compared with December 31, 2023.

Balance changes in current assets increased working capital by $5.2 billion, driven largely by increases in cash and cash equivalents due to Solventum's issuance of $8.4 billion in aggregate principal amount of debt.

This was partially offset by $2.9 billion in debt maturities, consisting of $1.1 billion of medium-term notes and $1.8 billion repayment of commercial paper borrowings.

Balance changes in current liabilities increased working capital by $2.1 billion, primarily due to decreases in short-term borrowings and current portions of long-term debt.

Balance changes in current assets increased working capital by $3.1 billion, driven largely by increases in cash and cash equivalents due to proceeds retained by 3M in the Separation from Solventum's issuance of debt partially offset by debt maturities.

Balance changes in current liabilities increased working capital by $1.0 billion, primarily due to short-term borrowings and current portions of long-term debt partially offset by increases in current liabilities relating to other environment liabilities and the CAE Settlement (discussed in Note 17).

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

The Consolidated Statements of Cash Flows include the results of continuing and discontinued operations and, therefore, also include cash and cash equivalents associated with Solventum through its April 2024 separation from 3M that were presented in current assets of discontinued operations in the 3M Consolidated Balance Sheet.

Cash Flows from Operating Activities:

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

In the first three months of 2024, cash flows provided by operating activities decreased $508 million compared to the same period last year, primarily driven by an additional CAE payment of $253 million (discussed in Note 16) and balance changes in inventories decreasing operating cash flow $232 million (a decrease of operating cash flow by $141 million in 2024, compared to an increase in operating cash flow by $91 million in 2023).

In the first six months of 2024, cash flows provided by operating activities decreased $996 million compared to the same period last year, primarily driven by payments of $603 million related to the CAE Settlement (discussed in Note 17) and balance changes in inventories decreasing operating cash flow $371 million (a decrease of operating cash flow by $270 million in 2024, compared to an increase in operating cash flow by $101 million in 2023).

The second quarter pre-tax charge of approximately $10.3 billion in 2023 related to the PWS Settlement (discussed in Note 17 largely impacted the net income component above, with offsets in the other-net and deferred tax elements.

Cash Flows from Investing Activities:

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

3M spent $375 million on PP&E in the first quarter of 2024 and is evaluating its expected capital spending for the remainder of 2024.

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.

3M invested $644 million on PP&E in the first six months of 2024.

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

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Cash Flows from Financing Activities:

Total debt was approximately $21.4 billion at March 31, 2024 and $16.0 billion at December 31, 2023.

Solventum's issuance of $8.4 billion in aggregate principal amount of debt.

This was partially offset by $2.9 billion in debt maturities, consisting of $1.1 billion of medium-term notes and $1.8 billion repayment of commercial paper borrowings.The gross commercial paper issuances and repayments, in addition to repayments of the fixed-rate notes are largely reflected in “Proceeds from debt (maturities greater than 90 days)” and "Repayment of debt (maturities greater than 90 days)".

The Company had no commercial paper outstanding at March 31, 2024, compared to $1.8 billion commercial paper outstanding as of December 31, 2023.

Debt cash flow activity includes proceeds from Solventum's issuance of $8.4 billion in aggregate principal amount of debt in the first quarter of 2024 partially offset by $2.9 billion in debt maturities, consisting of $1.1 billion of medium-term notes and $1.8 billion repayment of commercial paper borrowings.

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

The Company had no commercial paper outstanding at June 30, 2024, compared to $1.8 billion commercial paper outstanding as of December 31, 2023.

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

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Repurchases of common stock are made to support the Company’s stock-based employee compensation plans and for other corporate purposes.

In the first three months of 2024, the Company purchased $21 million of its own stock.

In the first six months of 2024, the Company purchased $421 million of its own stock.

For more information, refer to the table titled “Issuer Purchases of Equity Securities” in Part II, Item 2.

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3M has paid dividends since 1916.

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

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

In May 2024, 3M's Board of Directors declared a second-quarter 2024 dividend of $0.70 per share resetting 3M's dividend post-Solventum spin.

Cash flows from financing activity in 2024 also include $0.6 billion of net cash transferred to Solventum associated with the close of the Separation (discussed in Note 2).

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

Free Cash Flow (non-GAAP measure):

Free cash flow and free cash flow conversion are not defined under U.S.

generally accepted accounting principles (GAAP).

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

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

The Company defines free cash flow as net cash provided by operating activities less purchases of property, plant and equipment.

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

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

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

Free cash flow and free cash flow conversion vary across quarters throughout the year.

Below find a recap of free cash flow and free cash flow conversion.

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

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

Three months ended March 31,

(Millions) 2024 2023

Major GAAP Cash Flow Categories

Net cash provided by (used in) operating activities $ 767 $ 1,275

Net cash provided by (used in) investing activities (393) (386)

Net cash provided by (used in) financing activities 4,621 (716)

Free Cash Flow (non-GAAP measure)

Net cash provided by (used in) operating activities $ 767 $ 1,275

Purchases of property, plant and equipment (375) (475)

Free cash flow 392 800

Net income (loss) attributable to 3M $ 928 $ 976

Free cash flow conversion 42% 82 %

Material Cash Requirements from Known Contractual and Other Obligations:

See the Financial Condition and Liquidity - Material Cash Requirements from Known Contractual and Other Obligations section of Item 7 of 3M's 2023 Annual Report on Form 10-K.

Amongst the items and amounts referenced therein, 3M expects to pay approximately $3.7 billion in July 2024 related to the PWS Settlement and CAE Settlement.

Cautionary Note Concerning Factors That May Affect Future Results

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• liabilities and the outcome of contingencies related to certain fluorochemicals known as "PFAS," including liabilities related to claims, lawsuits, and government regulatory proceedings concerning various PFAS-related products and chemistries, as well as risks related to the Company's plans to exit PFAS manufacturing and discontinue use of PFAS across its product portfolio,

• risks related to the class-action settlement (“PWS Settlement”) to resolve claims by public water systems in the United States regarding PFAS,

• risks related to the class-action settlement (“PWS Settlement”) to resolve claims by public water suppliers in the United States regarding PFAS,

• legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the Company's reports on Form 10-K, 10-Q, and 8-K,

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis