3M CO 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of 3M’s financial statements with a narrative from the perspective of management. 3M’s MD&A is presented in eight sections: • Overview • Results of Operations • Performance by Business Segment • Performance by Geographic Area • Critical Accounting Estimates • New Accounting Pronouncements • Financial Condition and Liquidity • Financial Instruments The term "N/M" used herein references "not meaningful" for certain percent changes. Forward-looking statements in Item 7 may involve risks and uncertainties that could cause results to differ materially from those projected (refer to the section entitled Cautionary Note Concerning Factors That May Affect Future Results in Item 1 and the risk factors provided in Item 1A for discussion of these risks and uncertainties). Overview 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. 19 Table of Contents • 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 22. To the extent these changes impacted 3M's disclosed disaggregated revenue information, data in Note 3 has also been updated. Certain additional information about results of operations and financial condition for 2023 and 2022, not otherwise impacted by reflection of the above for applicable prior periods presented, can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations sections in 3M's Annual Report on Form 10-K for the year ended December 31, 2023. 3M manages its continuing operations in three operating business segments: Safety and Industrial; Transportation and Electronics; and Consumer. 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 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. 3M is impacted by certain special items such as costs for significant litigation and the sales and income associated with manufactured PFAS products. See Certain amounts adjusted for special items - (non-GAAP measures) section below for additional discussion of these and other special items, including references therein to where further information is provided. Additional information regarding certain items impacting pre-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) 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 Year ended December 31, 2024 2023 Same period last year $ (15.17) $ 7.07 Net costs for significant litigation 21.00 3.20 Divestiture costs 0.02 0.01 Gain on business divestitures (0.05) (4.73) Divestiture-related restructuring actions — 0.05 Russia exit charges (benefits) (0.04) 0.19 Manufactured PFAS products 0.28 0.90 Total special items 21.21 (0.38) Same period last year, excluding special items $ 6.04 $ 6.69 Increase/(decrease) due to: Total organic growth/productivity and other 0.93 0.23 Restructuring and related charges 0.23 (0.59) Foreign exchange impacts (0.13) (0.10) Acquisitions/divestitures 0.02 (0.06) Other expense (income), net 0.22 (0.07) Income tax rate (0.04) (0.20) Shares of common stock outstanding 0.03 0.14 Current period, excluding special items 7.30 6.04 Net costs for significant litigation (1.32) (21.00) Divestiture costs (0.24) (0.02) Gain on business divestitures — 0.05 Russia exit (charges) benefits — 0.04 Manufactured PFAS products (0.20) (0.28) Pension risk transfer cost (1.11) — Solventum ownership benefit from change in value 2.83 — Total special items (0.04) (21.21) Current period $ 7.26 $ (15.17) The Company refers to various "adjusted" amounts or measures on an “adjusted" basis. These exclude special items. These non-GAAP measures are further described and reconciled to the most directly comparable GAAP financial measures in the Certain amounts adjusted for special items - (non-GAAP measures) section below. 20 Table of Contents A discussion related to the components of year-on-year changes in earnings (loss) from continuing operations per diluted share follows: Organic growth/productivity and other: • In 2024, the following components impacted earnings (loss) from continuing operations per diluted share year-on-year: ◦ Year-on-year increase of $0.77 per share as a result of benefits from organic growth (including from new product launches), productivity, strong spending discipline and restructuring (including a $30 million cumulative translation adjustment restructuring benefit as certain entities were substantially liquidated in the fourth quarter of 2024) partially offset by growth investments ◦ 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 $0.08 per share. The year-on-year impact of non-Solventum related transition services agreements is included in acquisitions/divestitures as further described below. • In 2023, the following components impacted earnings (loss) from continuing operations per diluted share year-on-year: ◦ Declines in disposable respirator demand year-on-year and the 2022 exit of operations in Russia negatively impacted earnings (loss) per share by $0.38. ◦ Remaining organic growth/productivity and other impacts resulted in a net year-on-year increase of $0.61 per share which was impacted by the following: ▪ Benefits from spending discipline, sourcing actions, restructuring, higher selling prices and ongoing productivity actions ▪ Lower sales volumes (particularly electronics/consumer retail); investments in growth, productivity, and sustainability; manufacturing/supply chain headwinds; inflation impacts; China; and Europe's geopolitical impacts • In 2024 and 2023, lower defined benefit pension and postretirement service cost decreased expense year-on-year. Restructuring and related charges: • 3M recorded restructuring pre-tax charges of $187 million, $415 million, and $16 million in 2024, 2023, and 2022 respectively, related to the 2023 to 2025 structural reorganization actions and 2020 through 2022 operational/marketing capability actions (refer to Note 6 for additional discussion). The 2024 pre-tax charge included a $30 million cumulative translation adjustment restructuring benefit as certain entities were substantially liquidated in the fourth quarter of 2024. That benefit is reflected in organic growth/productivity and other as described above. In addition, 3M recorded certain pre-tax adjustments, accelerated depreciation and other charges related to these actions of $44 million and $4 million in 2024 and 2023, respectively. 3M also recorded restructuring charges in 2023 and 2024 for PFAS exit actions and in 2022 for divestiture-related restructuring actions as further described in Note 6 which are part of the manufactured PFAS products and divestiture-related restructuring actions special items, respectively (see the Certain amounts adjusted for special items - (non-GAAP measures) section below). Foreign exchange impacts: • Foreign currency impacts (net of hedging) decreased operating income from continuing operations by approximately $101 million (or a decrease of pre-tax income by approximately $104 million) year-on-year for 2024. Foreign currency impacts (net of hedging) increased operating loss from continuing operations by approximately $116 million (or a increase of pre-tax loss by approximately $111 million) year-on-year for 2023. These estimates include: (a) the effects of year-on-year changes in exchange rates on translating current period functional currency profits into U.S. dollars and on current period non-functional currency denominated purchases or transfers of goods between 3M operations, and (b) year-on-year changes in transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate risks. 21 Table of Contents Acquisitions/divestitures: • Acquisition and divestiture impacts are primarily measured separately for the first 12 months post-transaction, except as noted below. Divestiture impact generally includes lost income from divested businesses. Further relevant information includes: ◦ Divestiture impact also includes the effect of new commercial agreements associated with the April 2024 separation of Solventum (discussed in Note 2). Divestiture impact further includes the year-on-year impact of transition services agreements over the duration of those agreements, other than those with Solventum (the impact of which are included in organic growth/productivity and other as described above). ◦ In 2023, 3M completed the sale of its dental local anesthetic business and in 2022 completed the split-off of the Food Safety business (discussed in Note 4). ◦ Deconsolidation/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. 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 year-on-year for both 2024 and 2023. • Lower income related to non-service cost components of pension and postretirement expense increased expense year-on-year for both 2024 and 2023. Income tax rate : • Certain items above reflect specific income tax rates associated therewith. Overall, the effective tax rates for 2024, 2023, and 2022 were 16.7 percent on a pre-tax income, 25.4 percent on pre-tax loss and 4.5 percent on pre-tax income, respectively. The primary factors that impacted 2024 were the effective tax rate benefit on the change in value of 3M's retained ownership interest in Solventum offset by the effective tax rate on the PWS Settlement and the CAE Settlement (as discussed in Note 19), including 3M’s related decision in the fourth quarter of 2024 to defer certain deductions and accelerate income for tax purposes. The primary factors that impacted the 2023 rate were the charges related to the PWS Settlement and the CAE Settlement (as discussed in Note 19).The 2022 rate was impacted by the tax efficient structure associated with the 2022 gain on split-off of the Food Safety business (see Note 4). • On an adjusted basis (as discussed below ) , the effective tax rates for 2024, 2023, and 2022 were 19.6 percent, 19.2 percent, and 16.6 percent, respectively. Shares of common stock outstanding: • Shares outstanding impacted earnings (loss) from continuing operations per share year-on-year. Certain amounts adjusted for special items - (non-GAAP measures): In addition to reporting financial results in accordance with U.S. GAAP, 3M also provides certain non-GAAP measures. These measures are not in accordance with, nor are they a substitute for GAAP measures, and may not be comparable to similarly titled measures used by other companies. Certain measures adjust for the impacts of special items. Special items for the periods presented include the items described 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. GAAP. These measures and reasons 3M believes they are useful to investors (and, as applicable, used by 3M) include: GAAP amounts for which a measure adjusted for special items is also provided: Reasons 3M believes the measure is useful • Net sales (and sales change) Considered, in addition to segment operating performance, in evaluating and managing operations; useful in understanding underlying business performance, provides additional transparency to special items • Operating income (loss), segment operating income (loss) and operating income (loss) margin • Income (loss) from continuing operations before taxes • Provision for income taxes and effective tax rate • Net income (loss) from continuing operations • Earnings (loss) per share from continuing operations 22 Table of Contents Special items for the periods presented include: Net costs for significant litigation: • These relate to 3M's respirator mask/asbestos (which include Aearo and non-Aearo items), PFAS-related other environmental, and Combat Arms Earplugs matters (as discussed in Note 19). 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), foreign tax credits and tax costs of repatriation. 3M does not consider the elements of the net costs associated with these matters to be normal, operating expenses related to the Company’s ongoing operations, revenue generating activities, business strategy, industry, and regulatory environment. Net costs related to respirator mask/asbestos are reflected as special items in the Safety and Industrial business segment while those impacting operating income (loss) associated with PFAS-related other environmental and Combat Arms Earplugs matters are reflected as corporate special items in Corporate and Unallocated. In addition, during the voluntary chapter 11 bankruptcy period (which began in July 2022 and ended in June 2023), costs associated with the Aearo portion of respirator mask/asbestos matters were reflected in corporate special items in Corporate and Unallocated. Prior to the bankruptcy, costs associated with Combat Arms Earplugs matters were reflected as part of special items in the Safety and Industrial business segment. Gain/loss on business divestitures: • In 2023, 3M recorded a gain related to the sale of its dental local anesthetic business partially offset by a loss associated with a previously contingent indemnification obligation from a 2020 divestiture. In 2022, 3M recorded a gain related to the split-off and combination of its Food Safety business with Neogen Corporation. Refer to Note 4 for further details. Divestiture costs: • 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 updating 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. Divestiture-related restructuring actions: • In 2022, following the split-off of the Food Safety business, management approved and committed to undertake certain restructuring actions addressing corporate functional costs across 3M in relation to the magnitude of amounts previously allocated to the divested businesses. Refer to Note 6 for further details. 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 $890 million, $1,267 million, and $970 million for 2024, 2023, and 2022 respectively. Estimated income does not contemplate impacts on non-operating items such as net interest income/expense and the non-service cost components portion of defined benefit plan net periodic benefit costs. Russia exit charges/benefits: • In the second quarter of 2023, 3M recorded a gain on final disposal of net assets in Russia. Previously, in the third quarter of 2022, 3M recorded a charge primarily related to impairment of these assets in connection with management's committed exit and disposal plan. Pension risk transfer charge: • In 2024, primarily in the second quarter, 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 15). 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. 23 Table of Contents Year ended December 31, 2022 (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 GAAP amounts $ 1,135 9.8 % Adjustments for special items: Net costs for significant litigation 1,414 Total special items 1,414 Adjusted amounts (non-GAAP measures) $ 2,549 22.0 % Transportation and Electronics GAAP amounts $ 8,902 $ 973 10.9 % Adjustments for special items: Manufactured PFAS products (1,351) 631 Total special items (1,351) 631 Adjusted amounts (non-GAAP measures) $ 7,551 $ 1,604 21.2 % Total Company GAAP amounts $ 26,161 $ 4,369 16.7 % $ 4,204 $ 188 4.5 % $ 4,013 $ 7.07 Adjustments for special items: Net costs for significant litigation — 2,291 2,291 476 1,815 3.20 Manufactured PFAS products (1,351) 631 631 121 510 0.90 Gain on business divestitures — (2,724) (2,724) (39) (2,685) (4.73) Russia exit charges (benefits) — 101 101 (2) 103 0.19 Divestiture-related restructuring actions — 41 41 9 32 0.05 Divestiture costs — 8 8 — 8 0.01 Total special items (1,351) 348 348 565 (217) (0.38) Adjusted amounts (non-GAAP measures) $ 24,810 $ 4,717 19.0 % $ 4,552 $ 753 16.6 % $ 3,796 $ 6.69 Year ended December 31, 2023 (Dollars in millions, except per share amounts) Net sales Sales change Operating income (loss) Operating income (loss) margin Income (loss) 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 GAAP amounts $ 2,324 21.2 % Adjustments for special items: Net costs for significant litigation 84 Total special items 84 Adjusted amounts (non-GAAP measures) $ 2,408 22.0 % Transportation and Electronics GAAP amounts $ 8,501 (4.5) % $ 1,312 15.4 % Adjustments for special items: Manufactured PFAS products (1,289) 205 Total special items (1,289) 205 Adjusted amounts (non-GAAP measures) $ 7,212 (4.5) % $ 1,517 21.0 % Total Company GAAP amounts $ 24,610 (5.9) % $ (10,689) (43.4) % $ (11,271) $ (2,867) 25.4 % $ (8,402) $ (15.17) N/M Adjustments for special items: Net costs for significant litigation 1 — 14,869 15,245 3,615 11,630 21.00 Manufactured PFAS products (1,289) 205 205 50 155 0.28 Gain on business divestitures — (36) (36) (11) (25) (0.05) Russia exit charges (benefits) — (18) (18) 3 (21) (0.04) Divestiture costs — 13 13 4 9 0.02 Total special items (1,289) 15,033 15,409 3,661 11,748 21.21 Adjusted amounts (non-GAAP measures) $ 23,321 (6.0) % $ 4,344 18.6 % $ 4,138 $ 794 19.2 % $ 3,346 $ 6.04 (10)% 1 For the per share amount, this includes adjusting-out the impact of this item causing weighted average shares outstanding to be the same for both basic and diluted loss per share in periods of resulting net losses. 24 Table of Contents Year ended December 31, 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 GAAP amounts $ 2,491 22.7 % Adjustments for special items: Net costs for significant litigation 36 Total special items 36 Adjusted amounts (non-GAAP measures) $ 2,527 23.1 % Transportation and Electronics GAAP amounts $ 8,380 (1.4) % $ 1,578 18.8 % Adjustments for special items: Manufactured PFAS products (945) 144 Total special items (945) 144 Adjusted amounts (non-GAAP measures) $ 7,435 3.1 % $ 1,722 23.2 % Total Company GAAP amounts $ 24,575 (0.1) % $ 4,822 19.6 % $ 4,819 $ 804 16.7 % $ 4,009 $ 7.26 148 % Adjustments for special items: Net costs for significant litigation — 81 800 68 732 1.32 Manufactured PFAS products (945) 144 144 34 110 0.20 Divestiture costs — 20 20 (111) 131 0.24 Solventum ownership - change in value — — (1,564) — (1,564) (2.83) Pension risk transfer charge — — 808 191 617 1.11 Total special items (945) 245 208 182 26 0.04 Adjusted amounts (non-GAAP measures) $ 23,630 1.3 % $ 5,067 21.4 % $ 5,027 $ 986 19.6 % $ 4,035 $ 7.30 21 % Year ended December 31, 2023 Sales Change Organic sales Acquisitions Divestitures Translation Total sales change Total Company (4.3) % 0.3 % (1.2) % (0.7) % (5.9) % Remove manufactured PFAS products special item impact (0.1) — (0.1) 0.1 (0.1) Adjusted total Company (non-GAAP measures) (4.4) % 0.3 % (1.3) % (0.6) % (6.0) % Transportation and Electronics (3.5) % 0.7 % (0.7) % (1.0) % (4.5) % Remove manufactured PFAS products special item impact — 0.2 (0.2) — — Adjusted Transportation and Electronics (non-GAAP measures) (3.5) % 0.9 % (0.9) % (1.0) % (4.5) % Year ended December 31, 2024 Sales Change Organic sales Acquisitions Divestitures Translation Total sales change Total Company (0.2) % 0.2 % 0.6 % (0.7) % (0.1) % Remove manufactured PFAS products special item impact 1.4 — 0.1 (0.1) 1.4 Adjusted total Company (non-GAAP measures) 1.2 % 0.2 % 0.7 % (0.8) % 1.3 % Transportation and Electronics (1.0) % 0.6 % — % (1.0) % (1.4) % Remove manufactured PFAS products special item impact 4.4 0.1 — — 4.5 Adjusted Transportation and Electronics (non-GAAP measures) 3.4 % 0.7 % — % (1.0) % 3.1 % 25 Table of Contents Sales and operating income (loss) by business segment: The following tables contain sales and operating income (loss) results by business segment for the years ended December 31, 2024, 2023 and 2022. Refer to the section entitled Performance by Business Segment later in MD&A for additional discussion concerning 2024 versus 2023 results for 3M's reportable business segments, as well as discussion of 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 22 for additional information on business segments. 2024 2023 2022 (Dollars in millions) Net Sales % of Total Operating Income (Loss) Net Sales % of Total Operating Income (Loss) Net Sales % of Total Operating Income (Loss) Safety and Industrial $ 10,961 44.6 % $ 2,491 $ 10,956 44.5 % $ 2,324 $ 11,604 44.4 % $ 1,135 Transportation and Electronics 8,380 34.1 1,578 8,501 34.5 1,312 8,902 34.0 973 Consumer 4,931 20.1 932 5,026 20.4 904 5,292 20.2 978 Total reportable business segments 24,272 98.8 5,001 24,483 99.4 4,540 25,798 98.6 3,086 Corporate and Unallocated 271 1.1 (173) 90 0.4 (15,284) 82 0.3 1,213 Other 32 0.1 (6) 37 0.2 55 281 1.1 70 Total Company $ 24,575 100.0 % $ 4,822 $ 24,610 100.0 % $ (10,689) $ 26,161 100.0 % $ 4,369 Operating Income (Loss) Change by Business Segment Safety and Industrial Transportation and Electronics Consumer Total Company 2024 vs 2023 % Change 7.2% 20.2% 3.1% N/M 2023 vs 2022 % Change 104.7% 34.9% (7.6)% N/M Year ended December 31, 2023 Sales Change By Business Segment Organic sales Acquisitions Divestitures Translation Total sales change Safety and Industrial (5.1) % — % — % (0.5) % (5.6) % Transportation and Electronics (3.5) 0.7 (0.7) (1.0) (4.5) Consumer (4.7) — (0.1) (0.2) (5.0) Total Company (4.3) 0.3 (1.2) (0.7) (5.9) Year ended December 31, 2024 Sales Change By Business Segment Organic sales Acquisitions Divestitures Translation Total sales change Safety and Industrial 0.7 % — % — % (0.7) % — % Transportation and Electronics (1.0) 0.6 — (1.0) (1.4) Consumer (1.2) — — (0.7) (1.9) Total Company (0.2) 0.2 0.6 (0.7) (0.1) 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. 26 Table of Contents Sales by geographic area: Percent change information compares the years ended December 31, 2024 and 2023, unless otherwise indicated. Additional discussion of business segment results is provided in the Performance by Business Segment section. Year ended December 31, 2024 Americas Asia Pacific Europe, Middle East & Africa Worldwide Net sales (millions) $ 13,405 $ 6,994 $ 4,176 $ 24,575 % of worldwide sales 54.5 % 28.5 % 17.0 % 100.0 % Components of net sales change: Organic sales 0.1 1.2 (3.1) (0.2) Acquisitions 0.3 — — 0.2 Divestitures 1.0 0.1 0.2 0.6 Translation (0.4) (2.3) 0.6 (0.7) Total sales change 1.0 % (1.0) % (2.3) % (0.1) % Year ended December 31, 2023 Americas Asia Pacific Europe, Middle East & Africa Worldwide Net sales (millions) $ 13,268 $ 7,068 $ 4,274 $ 24,610 % of worldwide sales 53.9 % 28.7 % 17.4 % 100.0 % Components of net sales change: Organic sales (0.2) (12.4) (1.3) (4.3) Acquisitions 0.5 — 0.1 0.3 Divestitures (1.3) (1.0) (1.3) (1.2) Translation — (3.0) 1.6 (0.7) Total sales change (1.0) % (16.4) % (0.9) % (5.9) % Additional information beyond what is included in the preceding tables is as follows: • For 2024, in the Americas geographic area, U.S. total sales increased 2 percent which included flat organic sales. In the Asia Pacific geographic area, China/Hong Kong total sales increased 8 percent which included increased organic sales of 8 percent. • For 2023, in the Americas geographic area, U.S. total sales were flat which included flat organic sales. In the Asia Pacific geographic area, China/Hong Kong total sales decreased 17 percent which included decreased organic sales of 13 percent. As discussed in the risk factors provided in Item 1A, the Company’s results are impacted by the effects of, and changes in, worldwide economic, political, regulatory, international trade, geopolitical, and other external conditions. Managing currency risks: 3M utilizes a number of tools to manage the impact of changes in foreign currency exchange rates including natural hedges such as pricing, productivity, hard currency, hard currency-indexed billings, and localizing source of supply. 3M also uses certain derivative instruments (with a tenor up to five years) and non-derivative instruments to mitigate currency risk. As described in Note 17, these include instruments designated as cash flow hedges, net investment hedges or not designated in formal hedge relationships. 3M’s hedging approach is designed to mitigate a portion of foreign currency risk and reduce volatility, ultimately allowing time for 3M’s businesses to respond to changes in the marketplace. Financial condition: Refer to the section entitled Financial Condition and Liquidity later in MD&A for a discussion of items impacting cash flows. In February 2025, 3M’s Board of Directors replaced the Company’s November 2018 repurchase program with a new repurchase program. This new program authorizes the repurchase of up to $7.5 billion of 3M’s outstanding common stock, with no pre-established end date. In 2024, the Company purchased $1,801 million of its own stock, compared to $33 million of stock purchases in 2023. 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. In August and November 2024, 3M's Board of Directors declared a third-quarter and fourth-quarter 2024 dividend respectively of $0.70 per share. In February 2025, 3M's Board of Directors declared a first-quarter 2025 dividend of $0.73 per share, an increase of 4 percent. Raw materials: Refer to the section entitled Raw materials in Item 1 for discussion of 3M's sources and availability of raw materials in 2024. 27 Table of Contents Pension and postretirement defined benefit pla ns: On a worldwide basis, 3M’s pension and postretirement plans were 95 percent funded at year-end 2024. The primary U.S. qualified pension plan, which is approximately 63 percent of the worldwide pension obligation, was 94 percent funded and the international pension plans were 122 percent funded. The U.S. non-qualified pension plan is not funded due to tax considerations and other factors. Asset returns in 2024 for the primary U.S. qualified pension plan were 2.3 percent , as 3M strategically invests in both growth assets and fixed income matching assets to manage its funded status. For the primary U.S. qualified pension plan, the expected long-term rate of return on an annualized basis for 2025 is 8.00 percent . The primary U.S. qualified pension plan year-end 2024 discount rate was 5.65% , an increase of 67 basis points from the year-end 2023 discount rate of 4.98% . The increase in U.S. discount rates resulted in a decreased valuation of the projected benefit obligation (PBO). The primary U.S. qualified pension plan’s funded status remained at 94% as of December 31, 2024. Additional detail and discussion of international plan asset returns and discount rates is provided in Note 15 (Pension and Postretirement Benefit Plans). In 2025, the Company expects to contribute an amount in the range of $100 million to $200 million of cash to its U.S. and international retirement plans. Refer to “Critical Accounting Estimates” within MD&A and Note 15 (Pension and Postretirement Benefit Plans) for additional information concerning 3M’s pension and post-retirement plans. Results of Operations Net Sales: Refer to the preceding Overview section and the Performance by Business Segment section later in MD&A for additional discussion of sales change. Operating Expenses: (Percent of net sales) 2024 2023 2022 2024 vs 2023 Change 2023 vs 2022 Change Cost of sales 58.8 % 60.9 % 60.6 % (2.1) % 0.3 % Selling, general and administrative expenses (SG&A) 17.2 77.9 27.7 (60.7) 50.2 Research, development and related expenses (R&D) 4.4 4.7 4.4 (0.3) 0.3 Gain on business divestitures — (0.1) (10.4) 0.1 10.3 Goodwill impairment expense — — 1.0 — (1.0) Operating income (loss) margin 19.6 % (43.4) % 16.7 % 63.0 % (60.1) % Cost of Sales: Cost of sales, measured as a percent of sales, decreased in 2024 when compared to 2023 and increased in 2023 when compared to 2022. Decreases in 2024 were primarily due to ongoing manufacturing productivity, procurement and logistics savings net of inflation, along with lower year-on-year restructuring charges. Increases in 2023 were primarily due to investments in growth, productivity and sustainability; restructuring charges, and carryover impact of higher energy cost inflation partially offset by lower year-on-year net costs for significant litigation to address certain PFAS-related matters at 3M's Zwijndrecht, Belgium site, higher selling prices, spending discipline, sourcing actions and restructuring benefits. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below. Selling, General and Administrative Expenses: SG&A, measured as a percent of sales, decreased in 2024 when compared to 2023 and increased in 2023 when compared to 2022. Decreases in 2024 were primarily impacted by a $10.3 billion pre-tax charge related to the PWS Settlement and the $4.2 billion pre-tax charge related to the CAE Settlement in the second and third quarters of 2023 respectively (both discussed in Note 19). SG&A in 2024 was also impacted by lower year-on-year restructuring charges. SG&A in 2023 was also impacted by restructuring charges (see Note 6), and continued investment in key growth initiatives. These impacts were partially offset by 2022 net costs for significant litigation to address Combat Arms Earplugs litigation matters (for which a pre-tax charge of approximately $1.2 billion was reflected in 2022, discussed in Note 19), certain impairment costs related to exiting PFAS manufacturing, costs related to exiting Russia, divestiture-related restructuring charges (see Note 6), restructuring benefits and ongoing general 3M cost management. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below. Research, Development and Related Expenses: R&D, measured as a percent of sales, decreased in 2024 when compared to 2023 and increased in 2023 when compared to 2022. 3M continues to invest in a range of R&D activities from application development, product and manufacturing support, product development and technology development aimed at disruptive innovations. R&D was also impacted by restructuring charges. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below. Gain on Business Divestitures: In 2023, 3M recorded a pre-tax gain of $36 million related to the sale of assets associated with its dental local anesthetic business net of a previous contingent indemnification obligation from a 2020 divestiture. In 2022, 3M recorded a pre-tax gain of $2.7 billion related to the split-off and combination of its Food Safety business with Neogen Corporation. Refer to Note 4 for further details. Goodwill Impairment Expense: As a result of 3M's commitment to exit per- and polyfluoroalkyl substance (PFAS) manufacturing, 3M recorded a goodwill impairment charge related to the Advanced Materials reporting unit (within the Transportation and Electronics business) in 2022. 28 Table of Contents Other Expense (Income), Net: See Note 7 for a detailed breakout of this line item. Interest expense (net of interest income) increased year-on-year for both 2024 and 2023 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 quarters of 2023, respectively (discussed in Note 19), partially offset by additional interest income. The non-service pension and postretirement net benefit decreased $0.9 billion and $0.1 billion in 2024 and 2023, respectively. The lower year-on-year benefit in 2024 was largely due to the $0.8 billion 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. The lower year-on-year benefit in 2023 was primarily due to higher interest costs due to higher discount rates as of the year-end 2022, partially offset by a reduction in actuarial loss amortization, which was driven by the higher discount rates (see Note 15). See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below. Solventum ownership - change in value resulted in a year-on-year benefit of $1.6 billion in 2024 following Solventum's separation from 3M in April 2024 (discussed in Note 2). Provision (benefit) for Income Taxes: (Percent of pre-tax income/loss) 2024 2023 2022 Effective tax rate 16.7 % 25.4 % 4.5 % Factors that impacted the tax rates between years are further discussed in the Overview section above and in Note 11. Income from Unconsolidated Subsidiaries, Net of Taxes: (Millions) 2024 2023 2022 Income (loss) from unconsolidated subsidiaries, net of taxes $ 9 $ 18 $ 11 Income (loss) from unconsolidated subsidiaries, net of taxes, is attributable to the Company’s accounting under the equity method for ownership interests in certain entities. Net Income (Loss) Attributable to Noncontrolling Interest: (Millions) 2024 2023 2022 Net income (loss) attributable to noncontrolling interest $ 15 $ 16 $ 14 Net income (loss) attributable to noncontrolling interest represents the elimination of the income or loss attributable to non-3M ownership interests in 3M consolidated entities. The primary noncontrolling interest relates to 3M India Limited, of which 3M’s effective ownership is 75 percent. Certain Expenses Impacting Multiple Line Items within Results of Operations: Stock compensation expense is discussed in Note 21 and impacts cost of sales, SG&A, and R&D. As noted therein, higher stock-based compensation expense is recognized in the quarter in which 3M’s annual stock option and restricted stock unit grant is made because of accounting rules for grants to employees that are retiree-eligible. Typically, the annual grant is made in the first quarter. 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. Pre-tax defined benefit pension and postretirement service cost expense for continuing operations impacts cost of sales, SG&A, and R&D while the non-service cost component of pension and postretirement benefits for continuing operations impacts the other expense (income), net line item. As discussed in Note 15, in 2024 for continuing operations, the Company recognized pre-tax defined benefit pension and postretirement benefit service cost expense of $194 million and non-service pension and postretirement net benefit costs (including settlements, curtailments, special termination benefits and other) of $828 million for a total pre-tax continuing operations defined benefit pension and postretirement expense of $1,022 million. These 2024 amounts include the impacts of remeasurements of pension and postretirement pension plans during the year and $0.8 billion pension settlement charge associated the pension risk transfer special item (all discussed in Note 15). For 2023 on a comparable continuing operations basis, the Company recognized pre-tax defined benefit pension and postretirement service cost expense of $222 million and a benefit of $109 million related to non-service pension and postretirement net benefit costs (including settlements, curtailments, special termination benefits and other) for a total pre-tax continuing operations defined benefit pension and postretirement expense of $113 million. 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. 29 Table of Contents Performance by Business Segment The section entitled Business Segments in Item 1 provides an overview of 3M’s business segments. In addition, disclosures relating to 3M’s business segments are provided in Note 22. As discussed in Note 22, 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; Transportation and Electronics; and Consumer. 30 Table of Contents Safety and Industrial Business (44.6% of consolidated sales): 2024 2023 Sales (millions) $ 10,961 $ 10,956 Sales change analysis: Organic sales 0.7 % (5.1) % Translation (0.7) (0.5) Total sales change — % (5.6) % Business segment operating income (millions) $ 2,491 $ 2,324 Percent change 7.2 % 104.7 % Percent of sales 22.7 % 21.2 % Adjusted business segment operating income (millions) (non-GAAP measure) $ 2,527 $ 2,408 Percent change 4.9 % (5.5) % Percent of sales 23.1 % 22.0 % The preceding table also displays business segment operating income (loss) information adjusted for special items. For Safety and Industrial these adjustments include net costs related to respirator mask/asbestos (Aearo-related and non-Aearo related). During the voluntary Aearo chapter 11 bankruptcy period (which began in July 2022 and ended in June 2023), net costs related to Aearo-respirator mask/asbestos matters were reflected as corporate special items in Corporate and Unallocated while those associated with non-Aearo respirator mask/asbestos matters continued to be reflected as special items in the Safety and Industrial business segment. Prior to the bankruptcy, costs associated with Combat Arms Earplugs matters were reflected in the Safety and Industrial business segment (rather than reflected in Corporate and Unallocated—see Note 22 for additional information). Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details. Year 2024 results: Sales in Safety and Industrial were flat in U.S. dollars. On an organic sales basis: • Sales increased in roofing granules, industrial adhesives and tapes and in electrical markets, were flat in automotive aftermarket and personal safety, and decreased in industrial specialties and abrasives. • Industrial end market demand was mixed as end user and channel remain cautious, including weaker EMEA industrial and manufacturing environment. Growth primarily driven by strength in bonding solutions for electronic devices, cable accessories, auto body repair and roofing granules driven by replacement demand for residential roofs. Business segment operating income margins increased year-on-year primarily driven by benefits from growth, productivity and spending discipline partially offset by translation, growth investments and dis-synergies 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. Year 2023 results: Sales in Safety and Industrial were down 5.6 percent in U.S. dollars. On an organic sales basis: • Sales increased in roofing granules and automotive aftermarket; decreased in personal safety, industrial specialties, industrial adhesives and tapes, abrasives and electrical markets. • Growth was held back by the disposable respirator sales decline within personal safety along with the exit of Russia (which, together, negatively impacted year-on-year organic growth by 5.2 percentage points); declines within industrial adhesives and tapes due to consumer electronics softness, industrial specialties was down as consumers pulled back on discretionary spending impacting e-commerce shipments (slowing down in packaging and shipping activity). Business segment operating income margins increased year-on-year primarily due to lower special item costs for significant litigation. 2022 was impacted by a pre-tax charge of approximately $1.2 billion related to steps toward resolving Combat Arms Earplugs litigation. Margins were also impacted by aggressive spending discipline, benefits from restructuring, pricing and productivity actions offset by the lower sales volume, higher restructuring costs, inflation impacts, investments in the business and China-related challenges. Adjusting for special item costs for significant litigation (non-GAAP measure), business segment operating income margins were consistent year-on-year. 31 Table of Contents Transportation and Electronics Business (34.1% of consolidated sales): 2024 2023 Sales (millions) $ 8,380 $ 8,501 Sales change analysis: Organic sales (1.0) % (3.5) % Acquisitions 0.6 0.7 Divestitures — (0.7) Translation (1.0) (1.0) Total sales change (1.4) % (4.5) % Business segment operating income (millions) $ 1,578 $ 1,312 Percent change 20.2 % 34.9 % Percent of sales 18.8 % 15.4 % Adjusted sales (millions) (non-GAAP measure) $ 7,435 $ 7,212 Sales change analysis: Organic sales 3.4 % (3.5) % Acquisitions 0.7 0.9 Divestitures — (0.9) Translation (1.0) (1.0) Total sales change 3.1 % (4.5) % Adjusted business segment operating income (millions) (non-GAAP measure) $ 1,722 $ 1,517 Percent change 13.6 % (5.4) % Percent of sales 23.2 % 21.0 % The preceding table also displays business segment sales (and sales change) and operating income (loss) information adjusted for special items. For Transportation and Electronics these adjustments include the sales and estimates of income regarding PFAS manufactured products that 3M plans to exit by the end of 2025. Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details. Year 2024 results: Sales in Transportation and Electronics were down 1.4 percent in U.S. dollars. Adjusting for special item PFAS manufactured products (non-GAAP measure), sales were up 3.1 percent in U.S. dollars. On an organic sales basis: • Sales increased in electronics, were flat in commercial branding and transportation, and decreased in advanced materials, and in automotive and aerospace. • Growth was negatively impacted by headwinds related to PFAS manufactured products and automotive OEM build rates, partially offset by new product launches and spec-wins that drove share gain. 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. 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 non-PFAS manufacturing growth and productivity, spending discipline, and restructuring partially offset by dis-synergies due to the spin of Solventum. Margins were also impacted by decreasing PFAS manufacturing. Adjusting for special item PFAS manufactured products (non-GAAP measure), business segment operating income margins increased year-on-year as displayed above. Year 2023 results: Sales in Transportation and Electronics were down 4.5 percent in U.S. dollars. Adjusting for special item PFAS manufactured products (non-GAAP measure), sales were down 4.5 percent in U.S. dollars. On an organic sales basis: • Sales increased in automotive and aerospace, were flat in commercial branding and transportation and decreased in electronics and advanced materials. • Growth continued to be held back by consumer electronics end-market weakness. 32 Table of Contents 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. For each of the 12-months post-deconsolidation and post-reconsolidation, impacts are each reflected separately as divestiture and acquisition, respectively. Business segment operating income margins increased year-on-year due to lower operating losses on PFAS manufactured products. In 2022, PFAS manufacturing products results included an $0.8 billion asset impairment charge. Margins were also impacted by lower sales volumes, inflation impacts, investments in the business, higher restructuring costs, manufacturing and supply chain headwinds and China-related challenges partially offset by benefits from aggressive spending discipline, pricing and productivity actions. Adjusting for special item PFAS manufacturing exit costs (non-GAAP measure), business segment operating income margins decreased year-on-year. Consumer Business (20.1% of consolidated sales): 2024 2023 Sales (millions) $ 4,931 $ 5,026 Sales change analysis: Organic sales (1.2) % (4.7) % Divestitures — (0.1) Translation (0.7) (0.2) Total sales change (1.9) % (5.0) % Business segment operating income (millions) $ 932 $ 904 Percent change 3.1 % (7.6) % Percent of sales 18.9 % 18.0 % Year 2024 results: Sales in Consumer were down 1.9 percent in U.S. dollars. On an organic sales basis: • Sales increased in home improvement, and decreased in home and auto care, packaging and expression and consumer safety and well-being. • Growth was negatively impacted by 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, portfolio initiatives, and spending discipline partially offset by organic decline and dis-synergies due to the spin of Solventum. Year 2023 results: Sales in Consumer were down 5.0 percent in U.S. dollars. On an organic sales basis: • Sales decreased in consumer safety and well-being, packaging and expression, home improvement and in home and auto care. • Growth was negatively impacted as consumers have shifted their spending patterns to more non-discretionary items. Business segment operating income margins decreased year-on-year from lower sales volumes, inflation impacts, investments, manufacturing and supply chain headwinds, and higher restructuring costs partially offset by benefits from aggressive spending discipline, pricing, productivity actions and restructuring. 33 Table of Contents Corporate and Unallocated and Other: Outside of 3M's reportable 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 22. • 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), 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 for the periods presented also include divestiture costs, gain on business divestitures, divestiture-related restructuring actions and Russia exit charges/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 for additional information on the components of corporate special items. Corporate special item net costs decreased year-over-year in 2024, primarily due to lower net costs for significant litigation associated with Corporate and Unallocated. Corporate special item net costs increased year-over-year in 2023, primarily due to increased net costs for significant litigation as a result of pre-tax charges of $10.3 billion and $4.2 billion in the second and third quarters of 2023 related to the PWS Settlement and the CAE Settlement, respectively (both discussed in Note 19), and lower gains on business divestitures. ◦ 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 2024 primarily due to the extent of non-discontinued operations-eligible former Solventum-allocated costs included in Corporate and Unallocated prior to Solventum's April 2024 Separation. Other corporate operating expenses, net, increased year-over-year in 2023 primarily due to higher restructuring charges (see Note 6). • Other: ◦ 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" decreased year-over-year in 2024 primarily due to the extent of transition arrangement income from divested businesses (and associated costs) largely related to Solventum, which separated in April 2024. Operating income categorized as "Other" decreased year-over-year in 2023 as a result of divestiture of the Food Safety Division and dental local anesthetic businesses (both formerly part of the "Other" category) and the extent of transition arrangement income from divested businesses other than Solventum. 34 Table of Contents Performance by Geographic Area While 3M manages its businesses globally and believes its business segment results are the most relevant measure of performance, the Company also utilizes geographic area data as a secondary performance measure. Export sales are generally reported within the geographic area where the final sales to 3M customers are made. A portion of the products or components sold by 3M’s operations to its customers are exported by these customers to different geographic areas. As customers move their operations from one geographic area to another, 3M’s results will follow. Thus, net sales in a particular geographic area are not indicative of end-user consumption in that geographic area. Financial information related to 3M operations in various geographic areas is provided in Note 3 and Note 22. Refer to the Overview section for a summary of net sales by geographic area and business segment. Geographic Area Supplemental Information Employees as of December 31, Capital Spending - Continuing Operations for years ended December 31, Property, Plant and Equipment -net - Continuing Operations as of December 31, (Millions, except Employees) 2024 2023 2024 2023 2022 2024 2023 Americas 36,000 50,000 $ 829 $ 1,077 $ 1,155 $ 5,284 $ 5,370 Asia Pacific 13,500 17,000 128 169 164 1,053 1,176 Europe, Middle East and Africa 12,000 18,000 147 142 158 1,051 1,144 Total Company 61,500 85,000 $ 1,104 $ 1,388 $ 1,477 $ 7,388 $ 7,690 Employment: Employment decreased in 2024 when compared to 2023. The above table includes the impact of acquisitions, net of divestitures, and other actions. Further, the 2023 employment amount includes the former Solventum health care business, the Separation of which was not completed until April 2024 and which at that time comprised approximately 17,000 employees. Capital Spending/Property, Plant and Equipment - Net: Amounts relative to these items in the above table relate to 3M's continuing operations and do not include amounts associated with discontinued operations (refer to Note 2 for the amount attributed to discontinued operations). Investments in property, plant and equipment enable growth across many diverse markets, helping to meet product demand and increasing manufacturing efficiency. 3M is increasing its investment in manufacturing and sourcing capability in order to more closely align its product capability with its sales in major geographic areas in order to best serve its customers throughout the world with proprietary, automated, efficient, safe and sustainable processes. Capital spending is discussed in more detail later in MD&A in the section entitled Cash Flows from Investing Activities . Critical Accounting Estimates Information regarding significant accounting policies is included in Note 1 to the consolidated financial statements. As stated in Note 1, the preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions. Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from these estimates. The Company considers the items below to be critical accounting estimates. Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company. Senior management has discussed the development, selection and disclosure of its critical accounting estimates with the Audit Committee of 3M’s Board of Directors. Legal Proceedings: Assessments of lawsuits and claims can involve a series of complex judgments about future events, the outcomes of which are inherently uncertain, and can rely heavily on estimates and assumptions. The Company accrues an estimated liability for legal proceeding claims that are both probable and reasonably estimable in accordance with Accounting Standard Codification (ASC) 450, Contingencies . Please refer to the section entitled Process for Disclosure and Recording of Liabilities Related to Legal Proceedings (contained in Legal Proceedings in Note 19) for additional information about such estimates. Pension and Postretirement Obligations: The Company applies certain estimates for the discount rates and expected return on plan assets in determining its defined benefit pension and postretirement obligations and related net periodic benefit costs. The below further describes these estimates. Note 15 provides the weighted averages of these assumptions as of applicable dates and for respective periods and additional information on how the rates were determined. 35 Table of Contents Discount rate The defined benefit pension and postretirement obligation represents the present value of the benefits that employees are entitled to in the future for services already rendered as of the measurement date. The annual measurement date is December 31. The Company measures the present value of these future benefits by projecting benefit payment cash flows for each future period and discounting these cash flows back to the measurement date, using the yields of a portfolio of high quality, fixed-income debt instruments that would produce cash flows sufficient in timing and amount to settle projected future benefits. Service cost and interest cost are measured separately using the spot yield curve approach applied to each corresponding obligation. Service costs are determined based on duration-specific spot rates applied to the service cost cash flows. The interest cost calculation is determined by applying duration-specific spot rates to the year-by-year projected benefit payments. The spot yield curve approach does not affect the measurement of the total benefit obligations as the change in service and interest costs offset the actuarial gains and losses recorded in other comprehensive income. Changes in expected benefit payment and service cost cash flows, as well as ongoing changes in market activity and yields, cause these rates to be subject to uncertainty. Using this methodology, the Company determined discount rates for its plans as follow: Weighted Average U.S. Pension International Pension Postretirement Benefits December 31, 2024 Liability: Benefit obligation 5.64 % 4.44 % 5.68 % 2024 Net Periodic Benefit Cost Components: Service cost 5.35 % 3.77 % 5.30 % Interest cost 5.21 % 4.06 % 5.23 % Expected return on plan assets The expected return on plan assets for the primary U.S. qualified pension plan is based on strategic asset allocation of the plan, long-term capital market return expectations, and expected performance from active investment management. For the primary U.S. qualified pension plan, the expected long-term rate of return on an annualized basis for 2025 is 8.00%, an increase from the weighted average of 7.63% in 2024. Return on assets assumptions for international pension and other post-retirement benefit plans are calculated on a plan-by-plan basis using plan asset allocations and expected long-term rate of return assumptions. The weighted average expected return for the international pension plans is 5.00% for 2025 compared to 5.31% for 2024. Changes in asset allocation and market performance over time, among other factors, cause these estimates to be subject to uncertainty. In 2024 for continuing operations, the Company recognized pre-tax defined benefit pension and postretirement benefit service cost expense of $194 million and non-service pension and postretirement net benefit costs (including settlements, curtailments, special termination benefits and other) of $828 million for a total pre-tax continuing operations defined benefit pension and postretirement expense of $1,022 million, up from $113 million in 2023. The 2024 amounts include the impacts of remeasurements of pension and postretirement pension plans during the year and $0.8 billion pension settlement charge associated the pension risk transfer special item (all discussed in Note 15). Assessments of Goodwill: The Company makes certain estimates and judgments in impairment assessments of goodwill. As of December 31, 2024, 3M goodwill totaled approximately $6.3 billion. Goodwill is tested for impairment annually in the fourth quarter of each year and is tested between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. If future non-cash asset impairment charges are taken, 3M would expect that only a portion of the goodwill would 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. At 3M, reporting units correspond to a division. 3M did not combine any of its reporting units for impairment testing. An impairment loss would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit, and the loss would equal that difference. The estimated fair value of a reporting unit is determined based on a market approach using comparable company information such as EBITDA (earnings before interest, taxes, depreciation and amortization) multiples. 3M also performs a discounted cash flow analysis for certain reporting units if the market approach indicates additional review is warranted. A discounted cash flow analysis involves key assumptions including projected sales, EBITDA margins, capital expenditures, and discount rates. Changes in reporting unit earnings, comparable company information, and expected future cash flows, as well as underlying market and overall economic conditions, among other factors, make these estimates subject to uncertainty. 36 Table of Contents Based on the annual test in the fourth quarter of 2024 completed as of October 1, 2024, no goodwill impairment was indicated for any of the reporting units. As of October 1, 2024, 3M had 16 primary reporting units, with five reporting units accounting for approximately 85 percent of the goodwill. These five reporting units were comprised of the following divisions: Commercial Branding and Transportation, Display Materials and Systems, Electronics Materials Solutions, Industrial Adhesives and Tapes, and Personal Safety. 3M is a highly integrated enterprise, where businesses share technology and leverage common fundamental strengths and capabilities, thus many of 3M’s businesses could not easily be sold on a stand-alone basis. 3M’s focus on research and development has resulted in a portion of 3M’s value being comprised of internally developed businesses. 3M will continue to monitor its reporting units and asset groups in 2025 for any triggering events or other indicators of impairment. Uncertainty in Income Tax Positions: The extent of 3M’s operations involves dealing with uncertainties and judgments in the application of complex tax regulations in a multitude of jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. The Company follows guidance provided by ASC 740, Income Taxes , a subset of which relates to uncertainty in income taxes, to record these liabilities (refer to Note 11 for additional information). The Company adjusts these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the tax liabilities. If the Company’s estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. New Accounting Pronouncements Information regarding new accounting pronouncements is included in Note 1 to the Consolidated Financial Statements. Financial Condition and Liquidity The strength and stability of 3M’s business model and strong free cash flow capability, together with proven capital markets access, provide financial flexibility to deploy capital in accordance with the Company's stated priorities and meet needs associated with contractual commitments and other obligations. Investing in 3M’s business to drive organic growth and deliver strong returns on invested capital remains the first priority for capital deployment. This includes research and development, capital expenditures, and commercialization capability. The Company also continues to actively manage its portfolio through acquisitions and divestitures to maximize value for shareholders. 3M expects to continue returning cash to shareholders through dividends and share repurchases. To fund cash needs in the United States, the Company relies on ongoing cash flow from U.S. 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 considered to be reinvested indefinitely, the Company currently has no plans or intentions to repatriate these funds for U.S. operations. See Note 11 for further information on earnings considered to be reinvested indefinitely. As of December 31, 2024, 3M owned 19.9% of Solventum Corporation common stock which ownership interest's fair value was $2.3 billion. As previously disclosed, 3M intends to divest its ownership in Solventum within five years from its April 2024 spin-off. 3M maintains a strong liquidity profile. The Company’s primary short-term liquidity needs are met through cash on hand and U.S. commercial paper issuances. 3M believes it will have continuous access to the commercial paper market. 3M’s commercial paper program permits the Company to have a maximum of $5 billion outstanding with a maximum maturity of 397 days from date of issuance. The Company had no commercial paper outstanding at December 31, 2024, compared to $1.8 billion commercial paper outstanding as of December 31, 2023. Total debt: 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 , including scheduled maturities in the next 12 months as referenced in Note 14. 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 December 31, 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 14. For discussion of repayments of and proceeds from debt refer to the following Cash Flows from Financing Activities section. 37 Table of Contents Effective February 8, 2023, the Company renewed its “well-known seasoned issuer” (WKSI) shelf registration statement, which registers an indeterminate amount of debt or equity securities for future issuance and sale. 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 December 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). 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. Information with respect to long-term debt issuances and maturities for the periods presented is included in Note 14. 3M has a $4.25 billion five-year revolving credit facility that expires in May 2028. The revolving credit agreement includes a provision under which 3M may request an increase of up to $1.0 billion (at lender’s discretion), bringing the total facility up to $5.25 billion. The credit facility was undrawn at December 31, 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 December 31, 2024, 3M was in compliance with this requirement. Debt covenants do not restrict the payment of dividends. The Company also had $0.5 billion in stand-alone letters of credit, bank guarantees, and other similar instruments issued and outstanding at December 31, 2024. These instruments are utilized in connection with normal business activities. Cash, cash equivalents and marketable securities: At December 31, 2024, 3M had $7.7 billion of cash, cash equivalents and marketable securities, of which approximately $3.5 billion was held by the Company’s foreign subsidiaries and approximately $4.2 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 $8.4 billion in proceeds from debt (primarily related to Solventum's issuance of debt prior to the Separation as discussed in Note 14) partially offset by approximately $4.6 billion in payments associated with PFAS-related other environmental liabilities and the CAE legal settlement (both discussed in Note 19 - note also the "Material Cash Requirements from Known Contractual and Other Obligations" section further below) and debt maturities. Net Debt (non-GAAP measure): Net debt is not defined under U.S. 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 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 December 31, 2024 and December 31, 2023. (Millions) December 31, 2024 December 31, 2023 Change Total debt $ 13,044 $ 16,035 $ (2,991) Less: Cash, cash equivalents and marketable securities 7,744 5,805 1,939 Net debt (non-GAAP measure) $ 5,300 $ 10,230 $ (4,930) Refer to the preceding Total Debt and Cash, Cash Equivalents and Marketable Securities sections for additional details. Balance Sheet: 3M’s strong balance sheet and liquidity provide the Company with significant flexibility to fund its numerous opportunities going forward. The Company will continue to invest in its operations to drive growth, including continual review of acquisition opportunities. The Company uses working capital measures that place emphasis and focus on certain working capital assets, such as accounts receivable and inventory activity. Working capital (non-GAAP measure): (Millions) December 31, 2024 December 31, 2023 Change Current assets $ 15,884 $ 16,379 $ (495) Less: Current liabilities 11,256 15,297 (4,041) Working capital (non-GAAP measure) $ 4,628 $ 1,082 $ 3,546 Various assets and liabilities, including cash and short-term debt, can fluctuate significantly from month to month depending on short-term liquidity needs. Working capital is not defined under U.S. generally accepted accounting principles and may not be computed the same as similarly titled measures used by other companies. The Company defines working capital as current assets minus current liabilities. 3M believes working capital is meaningful to investors as a measure of operational efficiency and short-term financial health. 38 Table of Contents Working capital increased $3.5 billion compared with December 31, 2023 primarily driven by lower balances of current liabilities principally of discontinued operations, short-term borrowings and current portions of long-term debt, and current liabilities relating to the PWS settlement (discussed in Note 19). Cash Flows: 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 2024, cash flows provided by operating activities decreased $4.9 billion compared to the same period last year, primarily driven by approximately $4.6 billion in payments associated with PFAS-related other environmental liabilities and the CAE legal settlement (both discussed in Note 19). The 2023 pre-tax charges of $10.5 billion related to the PWS Settlement and of $4.3 billion (inclusive of imputed interest) related to the CAE Settlement largely impacted the net income component within the Consolidated Statements of Cash Flows, 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 invested $1.2 billion on PP&E in 2024. The Company expects 2025 capital spending to be approximately $1.1 billion as 3M continues to invest in growth, productivity and sustainability. 3M invests in renewal and maintenance programs, which pertain to cost reduction, cycle time, maintaining and renewing current capacity, eliminating pollution, and compliance. Costs related to maintenance, ordinary repairs, and certain other items are expensed. 3M also invests in growth, which adds to capacity, driven by new products, both through expansion of current facilities and new facilities. Finally, 3M also invests in other initiatives, such as information technology (IT), laboratory facilities, and a continued focus on investments in sustainability. Purchases of marketable securities and investments and proceeds from maturities and sale of marketable securities and investments are primarily attributable to certificates of deposit/time deposits, commercial paper, and other securities, which are classified as available-for-sale. Refer to Note 13 for more details about 3M’s diversified marketable securities portfolio. Cash Flows from Financing Activities: 2024 Debt Activity : 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. 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 December 31, 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. commercial paper issuances. Refer to Note 14 for more detail regarding debt. 2023 Debt Activity : Debt cash flow activity included maturities of $1.8 billion of fixed-rate notes offset by net issuances of commercial paper of $1.8 billion (issuance and subsequent repayments/reissuances). The gross commercial paper issuances and repayments, in addition to repayments of the fixed-rate notes, are largely reflected in “Proceeds from debt (maturities greater than 90 days)” and "Repayment of debt (maturities greater than 90 days)". Repurchases of Common Stock : Repurchases of common stock are made to support the Company’s stock-based employee compensation plans and for other corporate purposes. In 2024, the Company purchased $1.8 billion of its own stock. For more information, refer to the table titled “Issuer Purchases of Equity Securities” in Part II, Item 5. The Company does not utilize derivative instruments linked to the Company’s stock. Dividends Paid to Shareholders: 3M has paid dividends since 1916. Cash dividends declared and paid totaled $1.51 per share for the first quarter of 2024; $0.70 per share for each of the second, third, and fourth quarters of 2024; and $1.50 per share for each quarter in 2023. In February 2025, 3M's Board of Directors declared a first-quarter 2025 dividend of $0.73 per share, an increase of 4 percent. 39 Table of Contents 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. Material Cash Requirements from Known Contractual and Other Obligations: 3M’s material cash requirements from known contractual and other obligations primarily relate to following, for which information on both a short-term and long-term basis is provided in the indicated notes to the consolidated financial statements: • Tax obligations—Refer to Note 11. • Debt—Refer to Note 14. Future cash payments for interest on long-term debt is approximately $5 billion. • Commitments and contingencies—Refer to Note 19. In addition to other matters discussed therein, Note 19 references that the Company expects to pay up to $12.5 billion in the aggregate from 2023 through 2036 pursuant to the terms of the PWS Settlement and expects to pay up to $6.0 billion in the aggregate from 2023 to 2029 pursuant to the terms of the CAE Settlement. Through December 31, 2024, 3M has paid an aggregate amount of $5.0 billion relating to these settlements. Note 8 provides further information regarding amounts due under these settlements. See the settlement agreements that are included in the exhibit list to this filing for additional information. • Operating and finance leases—Refer to Note 20. 3M purchases the majority of its materials and services as needed, with no unconditional commitments. In limited circumstances, in the normal course of business, 3M enters into unconditional purchase obligations with various vendors that may take the form of, for example, take or pay contracts in which 3M guarantees payment to ensure availability to 3M of certain materials or services or to ensure ongoing efforts on capital projects. The Company expects to receive underlying materials or services for these purchase obligations. To the extent the limited amount of these purchase obligations fluctuates, it largely trends with normal-course changes in regular operating activities. Additionally, contractual capital commitments represent a small part of the Company’s expected capital spending. Financial Instruments The Company enters into foreign exchange forward and option contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies and to offset, in part, the impacts of changes in value of various non-functional currency denominated items including certain intercompany financing balances. As circumstances warrant, the Company also uses foreign exchange contracts and foreign currency denominated debt as hedging instruments to hedge portions of the Company’s net investments in foreign operations. The Company manages interest rate risks using a mix of fixed and floating rate debt. To help manage borrowing costs, the Company may enter into interest rate swaps. Under these arrangements, the Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. The Company manages commodity price risks through negotiated supply contracts and price protection agreements. Refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”, for further discussion of foreign exchange rates risk, interest rates risk and commodity prices risk.