What changed in this filing

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Item 1. Financial Statements

2021-07-27 compared with 2021-04-27 · 453 added, 287 removed, 1330 unchanged (36% of the section changed)

3 unchanged sentences

Three months ended

Six months ended

(Millions, except per share amounts)

22 unchanged sentences

Three months ended

Six months ended

Net income including noncontrolling interest

43 unchanged sentences

944,033,056 shares issued

Shares outstanding - March 31, 2021:

Shares outstanding - June 30, 2021:

Shares outstanding - December 31, 2020:

2 unchanged sentences

Treasury stock, at cost:

Shares at March 31, 2021:

Shares at June 30, 2021:

Shares at December 31, 2020:

6 unchanged sentences

Consolidated Statement of Cash Flows

Three months ended

Six months ended

Cash Flows from Operating Activities

64 unchanged sentences

Three months ended

March 31, 2020

Six months ended

June 30, 2020

(Millions, except per share amounts)

9 unchanged sentences

Three months ended

March 31, 2020

Six months ended

June 30, 2020

Net income including noncontrolling interest

9 unchanged sentences

Consolidated Statement of Cash Flows

Three months ended

March 31, 2020

Six months ended

June 30, 2020

Net income including noncontrolling interest

2 unchanged sentences

Earnings Per Share

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

Certain options outstanding under these stock-based compensation plans were not included in the computation of diluted earnings per share attributable to 3M common shareholders because they would have had an anti-dilutive effect ( 8.7 million and 19.2 million average

options for the three months ended March 31, 2021 and 2020, respectively).

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

7.5 million average options for the six months ended June 30, 2021;

20.9 million average options for the

three months ended June 30, 2020;

20.0 million average options for the six months ended June 30, 2020).

The computations for basic and diluted earnings per share follow:

1 unchanged sentence

Three months ended

Six months ended

(Amounts in millions, except per share amounts)

29 unchanged sentences

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

Deferred revenue (current portion) as of March 31, 2021 and December 31, 2020 was $ 482 million and $ 498 million, respectively.

Approximately $ 180 million of the December 31, 2020 balance was recognized as revenue during the three months ended March 31, 2021, while approximately $ 160 million of the December 31, 2019 balance was recognized as revenue during the three months ended March 31, 2020.

Deferred revenue (current portion) as of June 30, 2021 and December 31, 2020 was $ 475 million and $ 498 million, respectively.

Approximately $ 140 million and $ 320 million of the December 31, 2020 balance was recognized as revenue during the three and six months ended June 30,

2021, respectively, while approximately $ 110 million and $ 270 million of the December 31, 2019 balance was recognized as revenue during the three and six months ended June 30, 2020, respectively.

Operating Lease Revenue:

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 140 million and $ 142 million for the three months ended March 31, 2021 and 2020, respectively.

Net sales includes rental revenue from durable medical devices as part of operating lease arrangements (reported within the Medical Solutions Division), which was $ 145 million and $ 133 million during the three months ended June 30, 2021 and 2020, respectively, and $ 285 million and $ 275 million during the six months ended June 30, 2021 and 2020.

Disaggregated revenue information:

1 unchanged sentence

Three months ended

Six months ended

Net Sales (Millions)

27 unchanged sentences

Total Company

Three months ended March 31, 2021

Three months ended June 30, 2021

Net Sales (Millions)

6 unchanged sentences

Total Company

Three months ended March 31, 2020

Six months ended June 30, 2021

Net Sales (Millions)

6 unchanged sentences

Total Company

Americas included United States net sales of $ 3.6 billion and $ 3.4 billion for the three months ended March 31, 2021 and 2020, respectively.

Three months ended June 30, 2020

Net Sales (Millions)

Europe, Middle East and Africa

Other Unallocated

Safety and Industrial

Transportation and Electronics

Corporate and Unallocated

Elimination of Dual Credit

Total Company

Six months ended June 30, 2020

Net Sales (Millions)

Europe, Middle East and Africa

Other Unallocated

Safety and Industrial

Transportation and Electronics

Corporate and Unallocated

Elimination of Dual Credit

Total Company

Americas included United States net sales to customers of $ 3.8 billion and $ 3.1 billion for the three months ended June 30, 2021 and 2020, respectively, and $ 7.4 billion and $ 6.6 billion for the six months ended June 30, 2021 and 2020, respectively.

Acquisitions and Divestitures

4 unchanged sentences

2021 acquisitions:

There were no acquisitions that closed during the three months ended March 31, 2021.

There were no acquisitions that closed during the six months ended June 30, 2021.

2020 acquisitions:

3 unchanged sentences

2021 divestitures:

There were no divestitures that closed during the three months ended March 31, 2021.

There were no divestitures that closed during the six months ended June 30, 2021.

2020 divestitures:

1 unchanged sentence

Operating income and held for sale amounts:

The aggregate operating income of applicable businesses held for sale with respect to the first three months of 2020 was $ 25 million.

The aggregate operating income of applicable businesses held for sale with respect to the first six months of 2020 was $ 38 million.

Goodwill and Intangible Assets

There was no goodwill recorded from acquisitions during the first three months of 2021.

There was no goodwill recorded from acquisitions during the first six months of 2021.

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

The goodwill balance by business segment as of December 31, 2020 and March 31, 2021, follow:

The goodwill balance by business segment as of December 31, 2020 and June 30, 2021, follow:

Safety and Industrial

3 unchanged sentences

Translation and other

Balance as of March 31, 2021

Balance as of June 30, 2021

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

3 unchanged sentences

Acquired Intangible Assets

The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets, as of March 31, 2021 and December 31, 2020, follow:

The carrying amount and accumulated amortization of acquired finite-lived intangible assets, in addition to the balance of non-amortizable intangible assets, as of June 30, 2021, and December 31, 2020, follow:

Customer related intangible assets

14 unchanged sentences

As discussed in Note 13, 3M reflected an immaterial charge related to impairment of certain indefinite-lived assets in the first quarter of 2020.

Amortization expense for the three months ended March 31, 2021 and 2020 follows:

Amortization expense for the three and six months ended June 30, 2021 and 2020 follows:

Three months ended

Six months ended

Amortization expense

Expected amortization expense for acquired amortizable intangible assets recorded as of March 31, 2021:

Expected amortization expense for acquired amortizable intangible assets recorded as of June 30, 2021:

Amortization expense

The preceding expected amortization expense is an estimate.

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

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

accelerated amortization of intangible assets and other events.

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

Restructuring Actions and Exit Activities

Restructuring Actions

2020 and 2021 Restructuring Actions:

2 unchanged sentences

During the fourth quarter of 2020, management approved and committed to undertake associated restructuring actions impacting approximately 2,100 positions resulting in a pre-tax charge of $ 137 million.

In the first quarter of 2021, management approved and committed to undertake additional actions under this initiative resulting in a pre-tax charge of $ 14 million.

Remaining activities related to the restructuring actions approved and committed under this initiative are expected to be largely completed through 2021.

3M is planning further actions under this initiative throughout 2021.

This aggregate initiative, spanning 2020 and 2021, is expected to impact approximately 2,900 positions worldwide with an expected pre-tax charge of $ 250 to $ 300 million.

The related first quarter 2021 restructuring charges were recorded in the income statement as follows:

First Quarter 2021

In the first six months of 2021, management approved and committed to undertake additional actions under this initiative resulting in a pre-tax charge of $ 14 million and $ 43 million in the first and second quarter of 2021, respectively.

Remaining activities related to the restructuring actions approved and committed under this initiative are expected to be largely completed through the first quarter of 2022.

3M expects further actions under this initiative through 2021.

This aggregate initiative, begun in 2020 and continuing through 2021, is expected to impact approximately 2,900 positions worldwide with an expected pre-tax charge of $ 250 to $ 300 million over that period.

The related first six months of 2021 restructuring charges were recorded in the income statement as follows:

First Six Months of 2021

Cost of sales

3 unchanged sentences

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

First Quarter 2021

First Six Months of 2021

Employee-Related

7 unchanged sentences

Incremental expense incurred in the first quarter of 2021

Incremental expense incurred in the second quarter of 2021

Cash payments

Accrued restructuring action balances as of March 31, 2021

Accrued restructuring action balances as of June 30, 2021

Divestiture-Related Restructuring

6 unchanged sentences

Cash payments

Accrued divestiture-related restructuring action balances as of March 31, 2021

Accrued divestiture-related restructuring action balances as of June 30, 2021

Remaining activities related to this divestiture-related restructuring are expected to be largely completed through the third quarter of 2021.

7 unchanged sentences

Accrued restructuring action balances as of March 31, 2021

Remaining activities related to this restructuring are expected to be largely completed through the second quarter of 2021.

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

Supplemental Income Statement Information

1 unchanged sentence

Three months ended

Six months ended

Interest expense

5 unchanged sentences

Supplemental Equity and Comprehensive Income Information

Cash dividends declared and paid totaled $ 1.48 and $ 1.47 per share for the first quarter 2021 and 2020, respectively.

Cash dividends declared and paid totaled $ 1.48 and $ 1.47 per share for the first and second quarters 2021 and 2020, respectively, or $ 2.96 and $ 2.94 per share for the first six months of 2021 and 2020, respectively.

Consolidated Changes in Equity

Three months ended March 31, 2021

Three months ended June 30, 2021

3M Company Shareholders

Comprehensive

Balance at March 31, 2021

Other comprehensive income (loss), net of tax:

Cumulative translation adjustment

Defined benefit pension and post-retirement plans adjustment

Cash flow hedging instruments

Total other comprehensive income (loss), net of tax

Dividends declared

Stock-based compensation

Reacquired stock

Issuances pursuant to stock option and benefit plans

Balance at June 30, 2021

Six months ended June 30, 2021

3M Company Shareholders

Comprehensive

Balance at December 31, 2020

8 unchanged sentences

Issuances pursuant to stock option and benefit plans

Balance at June 30, 2021

Three months ended June 30, 2020

3M Company Shareholders

Comprehensive

Balance at March 31, 2020

Three months ended March 31, 2020

Other comprehensive income (loss), net of tax:

Cumulative translation adjustment

Defined benefit pension and post-retirement plans adjustment

Cash flow hedging instruments

Total other comprehensive income (loss), net of tax

Dividends declared

Purchase of subsidiary shares

Stock-based compensation

Reacquired stock

Issuances pursuant to stock option and benefit plans

Balance at June 30, 2020

Six months ended June 30, 2020

3M Company Shareholders

7 unchanged sentences

Dividends declared

Purchase of subsidiary shares

Stock-based compensation

1 unchanged sentence

Issuances pursuant to stock option and benefit plans

Balance at March 31, 2020

Balance at June 30, 2020

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

Three months ended March 31, 2021

Three months ended June 30, 2021

Defined Benefit

1 unchanged sentence

Comprehensive

Income (Loss)

Balance at March 31, 2021, net of tax:

Other comprehensive income (loss), before tax:

Amounts before reclassifications

Amounts reclassified out

Total other comprehensive income (loss), before tax

Total other comprehensive income (loss), net of tax

Balance at June 30, 2021, net of tax:

Six months ended June 30, 2021

Defined Benefit

Postretirement

Comprehensive

Income (Loss)

Balance at December 31, 2020, net of tax:

4 unchanged sentences

Total other comprehensive income (loss), net of tax

Balance at June 30, 2021, net of tax:

Three months ended June 30, 2020

Defined Benefit

Postretirement

Comprehensive

Income (Loss)

Balance at March 31, 2020, net of tax:

Three months ended March 31, 2020

Other comprehensive income (loss), before tax:

Amounts before reclassifications

Amounts reclassified out

Total other comprehensive income (loss), before tax

Total other comprehensive income (loss), net of tax

Balance at June 30, 2020, net of tax:

Six months ended June 30, 2020

Defined Benefit

1 unchanged sentence

Comprehensive

Income (Loss)

Balance at December 31, 2019, net of tax:

4 unchanged sentences

Total other comprehensive income (loss), net of tax

Balance at March 31, 2020, net of tax:

Balance at June 30, 2020, net of tax

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

5 unchanged sentences

Comprehensive Income Components

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Location on Income

20 unchanged sentences

state and foreign jurisdictions where the Company is subject to ongoing tax examinations and governmental assessments, which could be impacted by evolving political environments in those jurisdictions.

As of March 31, 2021, no taxing authority proposed significant adjustments to the Company’s tax positions for which the Company is not adequately reserved.

As of June 30, 2021, no taxing authority proposed significant adjustments to the Company’s tax positions for which the Company is not adequately reserved.

It is reasonably possible that the amount of unrecognized tax benefits could significantly change within the next 12 months.

At this time, the Company is not able to estimate the range by which these potential events could impact 3M’s unrecognized tax benefits in the next 12 months.

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of March 31, 2021 and December 31, 2020 are $ 1,094 million and $ 1,145 million, respectively.

As of March 31, 2021 and December 31, 2020, the Company had valuation allowances of $ 143 million and $ 135 million on its deferred tax assets, respectively.

The effective tax rate for the first quarter of 2021 was 16.4 percent, compared to 17.5 percent in the first quarter of 2020, a decrease of 1.1 percentage points.

The primary factor that decreased the Company’s effective tax rate was nonrepeating favorable adjustments in 2021 related to impacts of U.S.

international tax provisions.

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June 30, 2021 and December 31, 2020 are $ 1,090 million and $ 1,145 million, respectively.

As of June 30, 2021 and December 31, 2020, the Company had valuation allowances of $ 150 million and $ 135 million on its deferred tax assets, respectively.

The effective tax rate for the second quarter and first six months of 2021 was 21.5 percent and 18.9 percent, respectively, largely consistent with 21.0 percent and 19.3 percent for the same periods, respectively, in prior year.

Marketable Securities

1 unchanged sentence

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

March 31, 2021

June 30, 2021

December 31, 2020

8 unchanged sentences

Total marketable securities

At March 31, 2021 and December 31, 2020, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material.

The balances at March 31, 2021 for marketable securities by contractual maturity are shown below.

At June 30, 2021 and December 31, 2020, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material.

The balances at June 30, 2021 for marketable securities by contractual maturity are shown below.

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

March 31, 2021

June 30, 2021

Due in one year or less

6 unchanged sentences

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

In the second quarter of 2021, 3M entered into interest rate swaps with a notional amount of $ 650 million.

These swaps converted $ 500 million and $ 150 million of 3M’s $ 1.0 billion and $ 650 million principal amount of fixed rate notes due 2049 and 2050, respectively, into floating rate debt for the portion of their terms through mid-2028 with an interest rate based on a three-month LIBOR index.

2020 issuances, maturities, and extinguishments of short- and long-term debt are described in Note 5 in 3M’s 2020 Annual Report on Form 10-K.

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

The Company had no commercial paper outstanding at June 30, 2021 and December 31, 2020.

Future Maturities of Long-term Debt

Maturities of long-term debt in the table below reflect the impact of put provisions associated with certain debt instruments and are net of the unaccreted debt issue costs such that total maturities equal the carrying value of long-term debt as of March 31, 2021.

The maturities of long-term debt for the periods subsequent to March 31, 2021 are as follows (in millions):

The maturities of long-term debt for the periods subsequent to June 30, 2021 are as follows (in millions):

Pension and Postretirement Benefit Plans

5 unchanged sentences

and research, development and related expenses.

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

Components of net periodic benefit cost and other supplemental information for the three months ended March 31, 2021 and 2020 follow:

The other components of net periodic benefit cost are reflected in other

expense (income), net.

Components of net periodic benefit cost and other supplemental information for the three and six months ended June 30, 2021 and 2020 follow:

Benefit Plan Information

Three months ended March 31,

Three months ended June 30,

Qualified and Non-qualified

14 unchanged sentences

Total net periodic benefit cost (benefit)

For the three months ended March 31, 2021 contributions totaling $ 46 million were made to the Company’s U.S.

Six months ended June 30,

Qualified and Non-qualified

Pension Benefits

Postretirement

United States

International

Net periodic benefit cost (benefit)

Operating expense

Non-operating expense

Interest cost

Expected return on plan assets

Amortization of transition asset

Amortization of prior service benefit

Amortization of net actuarial loss

Settlements, curtailments, special termination benefits and other

Total non-operating expense (benefit)

Total net periodic benefit cost (benefit)

For the six months ended June 30, 2021 contributions totaling $ 83 million were made to the Company’s U.S.

and international pension plans and $ 2 million to its postretirement plans.

26 unchanged sentences

Additional information regarding previously issued but terminated interest rate contracts, which have related balances within accumulated other comprehensive income being amortized over the underlying life of related debt, can be found in Note 14 in 3M’s 2020 Annual Report on Form 10-K.

As of March 31, 2021, the Company had a balance of $ 115 million associated with the after-tax net unrealized loss associated with cash flow hedging instruments recorded in accumulated other comprehensive income.

As of June 30, 2021, the Company had a balance of $ 126 million associated with the after-tax net unrealized loss associated with cash flow hedging instruments recorded in accumulated other comprehensive income.

This includes a remaining balance of $ 104 million (after-tax loss) related to the forward starting interest rate swap and treasury rate lock contracts, which will be amortized over the respective lives of the notes.

Based on exchange rates as of March 31, 2021, 3M expects to reclassify approximately $ 19 million over the next 12 months, $ 22 million over the remainder of 2021, $ 2 million in 2022 and $ 91 million after 2022 of the after-tax net unrealized foreign exchange cash flow hedging losses to earnings (with the impact offset by earnings/losses from underlying hedged items).

Based on exchange rates as of June 30, 2021, 3M expects to reclassify approximately $ 30 million over the next 12 months, $ 24 million over the remainder of 2021, $ 10 million in 2022 and $ 92 after 2022 of the after-tax net unrealized cash flow hedging losses to earnings (with the impact offset by earnings/losses from underlying hedged items).

The location in the consolidated statements of income and comprehensive income and amounts of gains and losses related to derivative instruments designated as cash flow hedges are provided in the following table.

4 unchanged sentences

Other Comprehensive Income into Income

Three months ended March 31,

Three months ended June 30,

Foreign currency forward/option contracts

2 unchanged sentences

Interest expense

Six months ended June 30,

Foreign currency forward/option contracts

Cost of sales

Interest rate contracts

Interest expense

Fair Value Hedges:

6 unchanged sentences

Additional information regarding designated interest rate swaps can be found in Note 14 in 3M’s 2020 Annual Report on Form 10-K.

Refer to the section below titled Statement of Income Location and Impact of Cash Flow and Fair Value Derivative Instruments for details on the location within the consolidated statements of income for amounts of gains and losses related to derivative instruments designated as fair value hedges and similar information relative to the hedged items for the three months ended March 31, 2021 and 2020.

In the second quarter of 2021, 3M entered into interest rate swaps with a notional amount of $ 650 million.

The following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges:

5 unchanged sentences

Location on the Consolidated Balance Sheet

March 31, 2021

June 30, 2021

December 31, 2020

March 31, 2021

June 30, 2021

December 31, 2020

9 unchanged sentences

Additionally, variation can occur in connection with the extent of the Company’s desired foreign exchange risk coverage.

At March 31, 2021, the total notional amount of foreign exchange forward contracts designated in net investment hedges was approximately 50 million euros, along with a principal amount of long-term debt instruments designated in net investment hedges totaling 3.5 billion euros.

At June 30, 2021, the total notional amount of foreign exchange forward contracts designated in net investment hedges was approximately 50 million euros, along with a principal amount of long-term debt instruments designated in net investment hedges totaling 3.5 billion euros.

The maturity dates of these derivative and nonderivative instruments designated in net investment hedges range from 2021 to 2031.

7 unchanged sentences

Recognized in Income

Three months ended March 31,

Three months ended June 30,

Foreign currency denominated debt

2 unchanged sentences

Cost of sales

Six months ended June 30,

Six months ended June 30, 2021 (Millions)

Foreign currency denominated debt

Cost of sales

Foreign currency forward contracts

Cost of sales

Derivatives Not Designated as Hedging Instruments:

6 unchanged sentences

Gain (Loss) on Derivative Recognized in Income

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Foreign currency forward/option contracts

6 unchanged sentences

Location and Amount of Gain (Loss) Recognized in Income

Three months ended March 31, 2021

Three months ended March 31, 2020

Three months ended June 30, 2021

Six months ended June 30, 2021

Cost of sales

14 unchanged sentences

Derivatives designated as hedging instruments

Location and Amount of Gain (Loss) Recognized in Income

Three months ended June 30, 2020

Six months ended June 30, 2020

Cost of sales

Other expense

(income), net

Cost of sales

Other expense

(income), net

Total amounts of income and expense line items presented in the consolidated statement of income in which the effects of cash flow or fair value hedges are recorded

The effects of cash flow and fair value hedging:

Gain or (loss) on cash flow hedging relationships:

Foreign currency forward/option contracts:

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

Interest rate contracts:

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

Gain or (loss) on fair value hedging relationships:

Interest rate contracts:

Derivatives designated as hedging instruments

Location and Fair Value Amount of Derivative Instruments

The following tables summarize the fair value of 3M’s derivative instruments, excluding nonderivative instruments used as hedging instruments, and their location in the consolidated balance sheet.

Notional amounts below are presented at period end foreign exchange rates, except for certain interest rate swaps, which are presented using the inception date’s foreign exchange rate.

Notional amounts below are presented at period end foreign

exchange rates, except for certain interest rate swaps, which are presented using the inception date’s foreign exchange rate.

Additional information with respect to the fair value of derivative instruments is included in Note 13.

March 31, 2021 (Millions)

June 30, 2021 (Millions)

Derivatives designated as

8 unchanged sentences

Other current liabilities

Interest rate contracts

Other liabilities

Total derivatives designated as hedging instruments

31 unchanged sentences

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

As of March 31, 2021, 3M has International Swaps and Derivatives Association (ISDA) agreements with 17 applicable banks and financial institutions which contain netting provisions.

As of June 30, 2021, 3M has International Swaps and Derivatives Association (ISDA) agreements with 17 applicable banks and financial institutions which contain netting provisions.

In addition to a master agreement with 3M supported by a primary counterparty’s parent guarantee, 3M also has associated credit support agreements in place with 16 of its primary derivative counterparties which, among other things, provide the circumstances under which either party is required to post eligible collateral (when the market value of transactions covered by these agreements exceeds specified thresholds or if a counterparty’s credit rating has been downgraded to a predetermined rating).

7 unchanged sentences

Gross Amounts not Offset in the

Consolidated Balance Sheet that are Subject

Consolidated Balance Sheet that are

Subject to Master Netting Agreements

Gross Amount of

to Master Netting Agreements

Derivative Assets

Gross Amount of

Presented in the

Derivative Assets

Eligible Offsetting

Presented in the

Net Amount of

March 31, 2021 (Millions)

June 30, 2021 (Millions)

Balance Sheet

Derivative Liabilities

Derivative Assets

6 unchanged sentences

Gross Amounts not Offset in the

Consolidated Balance Sheet that are Subject

Gross Amount of

to Master Netting Agreements

Derivative Liabilities

Consolidated Balance Sheet that are

Subject to Master Netting Agreements

Gross Amount of

2 unchanged sentences

Net Amount of

March 31, 2021 (Millions)

June 30, 2021 (Millions)

Balance Sheet

6 unchanged sentences

Currency Effects

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by approximately $ 10 million for the three months ended March 31, 2021.

3M estimates that year-on-year foreign currency transaction effects, including hedging impacts, decreased pre-tax income by approximately $ 48 million and $ 58 million for the three and six months ended June 30, 2021, respectively.

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

9 unchanged sentences

Using Inputs Considered as

March 31, 2021

June 30, 2021

Available-for-sale:

28 unchanged sentences

Three months ended

Six months ended

Marketable securities — certain U.S.

14 unchanged sentences

For 3M, such measurements of fair value relate primarily to indefinite-lived and long-lived asset impairments, goodwill impairments, and adjustment in carrying value of equity securities for which the measurement alternative of cost less impairment plus or minus observable price changes is used.

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the three months ended March 31, 2021.

3M reflected an immaterial charge related to impairment of certain indefinite-lived assets and a net charge of $ 22 million related to adjustment to the carrying value of equity securities using the measurement alternative during the three months ended March 31, 2020.

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the three and six months ended June 30, 2021.

There were no material impairments of assets or adjustments to equity securities using the measurement alternative for the three months ended June 30, 2020.

Fair Value of Financial Instruments:

4 unchanged sentences

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

March 31, 2021

June 30, 2021

December 31, 2020

2 unchanged sentences

The carrying amount of long-term debt referenced above is impacted by certain fixed-to-floating interest rate swaps that are designated as fair value hedges and by the designation of certain fixed rate Eurobond securities issued by the Company as hedging instruments of the Company’s net investment in its European subsidiaries.

A number of 3M’s fixed-rate bonds were trading at a premium at March 31, 2021 and December 31, 2020 due to the lower interest rates and tighter credit spreads compared to issuance levels.

A number of 3M’s fixed-rate bonds were trading at a premium at June 30, 2021 and December 31, 2020 due to the lower interest rates and tighter credit spreads compared to issuance levels.

Commitments and Contingencies

12 unchanged sentences

Respirator Mask/Asbestos Litigation

As of March 31, 2021, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 2,179 individual claimants, compared to approximately 2,075 individual claimants with actions pending December 31, 2020.

As of June 30, 2021, the Company is a named defendant, with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately 2,929 individual claimants, compared to approximately 2,075 individual claimants with actions pending December 31, 2020.

The vast majority of the lawsuits and claims resolved by and currently pending against the Company allege use of some of the Company’s mask and respirator products and seek damages from the Company and other defendants for alleged personal injury from workplace exposures to asbestos, silica, coal mine dust or other occupational dusts found in products manufactured by other defendants or generally in the workplace.

7 unchanged sentences

In August 2018, the trial court entered judgment and the Company appealed.

During March and April 2019, the Company agreed in principle to settle a substantial majority of the coal mine dust lawsuits in Kentucky and West Virginia for $ 340 million, including the jury verdict in April 2018 in the Kentucky case mentioned above.

During March and April 2019, the Company agreed in principle to settle a substantial majority of the then-pending coal mine dust lawsuits in Kentucky and West Virginia for $ 340 million, including the jury verdict in April 2018 in the Kentucky case mentioned above.

That settlement was completed in 2019, and the appeal has been dismissed.

1 unchanged sentence

The jury delivered a complete defense verdict in favor of 3M, concluding that the 8710 respirator was not defective in design or warnings and any conduct by 3M was not a cause of plaintiff’s mesothelioma.

The plaintiff has filed a notice of appeal.

The plaintiff’s appeal is pending.

The Company has demonstrated in these past trial proceedings that its respiratory protection products are effective as claimed when used in the intended manner and in the intended circumstances.

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Nonetheless, the Company’s litigation experience indicates that claims of persons alleging more serious injuries, including mesothelioma, other malignancies, and black lung disease, are costlier to resolve than the claims of unimpaired persons, and it therefore believes the average cost of resolving pending and future claims on a per-claim basis will continue to be higher than it experienced in prior periods when the vast majority of claims were asserted by medically unimpaired claimants.

In addition, during the second half of 2020 and as of March 31, 2021, the Company has experienced an increase in the number of cases filed that allege injuries from exposures to coal mine dust.

In addition, during the second half of 2020 and as of June 30, 2021, the Company has experienced an increase in the number of cases filed that allege injuries from exposures to coal mine dust.

As previously reported, the State of West Virginia, through its Attorney General, filed a complaint in 2003 against the Company and two other manufacturers of respiratory protection products in the Circuit Court of Lincoln County, West Virginia, and amended its complaint in 2005.

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that petition was denied in November 2020.

No liability has been recorded for this matter because the Company believes that liability is not probable and estimable at this time.

No liability has been recorded for this matter because the Company believes that liability is not probable and reasonably estimable at this time.

In addition, the Company is not able to estimate a possible loss or range of loss given the lack of any meaningful discovery responses by the State of West Virginia, the otherwise minimal activity in this case, and the assertions of claims against two other manufacturers where a defendant’s share of liability may turn on the law of joint and several liability and by the amount of fault, if any, a jury may allocate to each defendant if the case were ultimately tried.

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These developments include, but are not limited to, significant changes in (i) the key assumptions underlying the Company’s accrual, including, the number of future claims, the nature and mix of those claims, the average cost of defending and resolving claims, and in maintaining trial readiness (ii) trial and appellate outcomes, (iii) the law and procedure applicable to these claims, and (iv) the financial viability of other co-defendants and insurers.

As a result of its review of its respirator mask/asbestos liabilities, of pending and expected lawsuits and of the cost of resolving claims of persons who claim more serious injuries, including mesothelioma, other malignancies, and black lung disease, the Company increased its accruals in the first three months of 2021 for respirator mask/asbestos liabilities by $ 36 million.

In the first quarter of 2021, the Company made payments for legal defense costs and settlements of $ 19 million related to the respirator mask/asbestos litigation.

As a result of its review of its respirator mask/asbestos liabilities, of pending and expected lawsuits and of the cost of resolving claims of persons who claim more serious injuries, including mesothelioma, other malignancies, and black lung disease, the Company increased its accruals in the first six months of 2021 for respirator mask/asbestos liabilities by $ 53 million.

In the first six months of 2021, the Company made payments for legal defense costs and settlements of $ 44 million related to the respirator mask/asbestos litigation.

As previously disclosed, during the first quarter of 2019, the Company recorded a pre-tax charge of $ 313 million in conjunction with an increase in the accrual as a result of the March and April 2019 settlements-in-principle of the coal mine dust lawsuits mentioned above and the Company’s assessment of other then current and expected coal mine dust lawsuits (including the costs to resolve all then current and expected coal mine dust lawsuits in Kentucky and West Virginia at the time of the charge).

As of March 31, 2021, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 679 million.

As of June 30, 2021, the Company had an accrual for respirator mask/asbestos liabilities (excluding Aearo accruals) of $ 671 million.

This accrual represents the Company’s best estimate of probable loss and reflects an estimation period for future claims that may be filed against the Company approaching the year 2050.

The Company cannot estimate the amount or upper end of the range of amounts by which the liability may exceed the accrual the Company has established because of the (i) inherent difficulty in projecting the number of claims that have not yet been asserted or the time period in which future claims may be asserted, (ii) the complaints nearly always assert claims against multiple defendants where the damages alleged are typically not attributed to individual defendants so that a defendant’s share of liability may turn on the law of joint and several liability, which can vary by state, (iii) the multiple factors described above that the Company considers in estimating its liabilities, and (iv) the several possible developments described above that may occur that could affect the Company’s estimate of liabilities.

As of March 31, 2021, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $ 4 million.

As of June 30, 2021, the Company’s receivable for insurance recoveries related to the respirator mask/asbestos litigation was $ 4 million.

The Company continues to seek coverage under the policies of certain insolvent and other insurers.

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Aearo manufactured and sold various products, including personal protection equipment, such as eye, ear, head, face, fall and certain respiratory protection products.

As of March 31, 2021, Aearo and/or other companies that previously owned and operated Aearo’s respirator business (American Optical Corporation, Warner-Lambert LLC, AO Corp.

As of June 30, 2021, Aearo and/or other companies that previously owned and operated Aearo’s respirator business (American Optical Corporation, Warner-Lambert LLC, AO Corp.

and Cabot Corporation (“Cabot”)) are named defendants, with multiple co-defendants, including the Company, in numerous lawsuits in various courts in which plaintiffs allege use of mask and respirator products and seek damages from Aearo and other defendants for alleged personal injury from workplace exposures to asbestos, silica-related, coal mine dust, or other occupational dusts found in products manufactured by other defendants or generally in the workplace.

As of March 31, 2021, the Company, through its Aearo subsidiary, had accruals of $ 27 million for product liabilities and defense costs related to current and future Aearo-related asbestos, silica-related and coal mine dust claims.

As of June 30, 2021, the Company, through its Aearo subsidiary, had accruals of $ 30 million for product liabilities and defense costs related to current and future Aearo-related asbestos, silica-related and coal mine dust claims.

This accrual represents the Company’s best estimate of Aearo’s probable loss and reflects an estimation period for future claims that may be filed against Aearo approaching the year 2050.

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Through its ongoing life cycle management and its raw material composition identification processes associated with the Company’s policies covering the use of all persistent and bio-accumulative materials, the Company continues to review, control or eliminate the presence of certain PFAS in purchased materials or as byproducts in some of 3M’s current fluorochemical manufacturing processes, products, and waste streams.

PFAS Regulatory Activity

Regulatory activities concerning PFAS continue in the United States, Europe and elsewhere, and before certain international bodies.

These activities include gathering of exposure and use information, risk assessment, and consideration of regulatory approaches.

In the European Union, where 3M has manufacturing facilities in countries such as Germany and Belgium, recent regulatory activities have included preliminary work on various restrictions under the Regulation concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), including the restriction of PFAS in certain usages and a broader restriction of PFAS as a class.

As of December 2020, PFOA is subject to certain restrictions under EU’s Persistent Organic Pollutants (POPs) Recast Regulation.

With respect to the applicability of the newly enacted POPs to certain manufacturing processes that create PFOA as an unintended and unavoidable byproduct designed to be removed through an emulsifier recycling process, Dyneon, a 3M subsidiary that operates a facility at Gendorf, Germany, proactively consulted with the relevant German regulatory authority.

In response to the authority’s view that POPs may apply to those processes, Dyneon continues to communicate its position regarding POPs’ applicability, share technical process improvements that are in progress and discuss potential options if an agreement is not reached on the applicability of POPs.

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

In February 2014, the EPA initiated external peer review of its draft human health effects documents for PFOA and PFOS.

The peer review panel met in August 2014.

In May 2016, the EPA announced lifetime health advisory levels for PFOA and PFOS at 70 parts per trillion (ppt) (superseding the provisional levels established by the

EPA in 2009 of 400 ppt for PFOA and 200 ppt for PFOS).

Where PFOA and PFOS are found together, EPA recommends that the concentrations be added together, and the lifetime health advisory for PFOA and PFOS combined is also 70 ppt.

In the European Union, where 3M has manufacturing facilities in countries such as Germany and Belgium, recent regulatory activities have included both preliminary and on-going work on various restrictions under the Regulation concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), including the restriction of PFAS in certain usages and a broader restriction of PFAS as a class.

As of late 2020, PFOA is subject to broad restrictions under the EU’s Persistent Organic Pollutants (POPs) Regulation.

Dyneon, a 3M subsidiary that operates a facility at Gendorf, Germany, has a recycling process for a critical emulsifier from which small amounts of PFOA are present after recycling, as an unintended and unavoidable byproduct of certain earlier process steps.

The recycling process removes and concentrates the PFOA for incineration in accordance with applicable waste law.

With respect to the applicability of the recently enacted POPs, Dyneon proactively consulted with the relevant German regulatory authority regarding process improvements underway that are designed to ensure compliance with the PFOA limits in the recycled material.

The engagement is ongoing.

In addition, 3M has been working with the Public Flemish Waste Agency (OVAM) for several years to investigate and remediate historical PFOA contaminations at and near its Zwijndrecht facility in Antwerp, Belgium.

In connection with a ring road construction project (the Oosterweel Project) in Antwerp that has involved extensive soil work, an investigative

committee with judicial powers was formed in June 2021 by the Flemish Government to investigate PFOA found in the soil and groundwater near 3M’s Zwijndrecht facility.

The Company testified at a Flemish parliamentary committee hearing in June 2021 on PFOA-related matters and is cooperating with the authorities in this investigation.

Separately, the Company is aware that certain residents of Zwijndrecht have filed a criminal complaint with an Antwerp investigatory judge against 3M, alleging it had unlawfully abandoned waste in violation of its environmental care obligations.

3M has not been served with any such complaint.

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

In May 2016, the EPA announced lifetime health advisory levels for PFOA and PFOS at 70 parts per trillion (ppt) (superseding the provisional levels established by the EPA in 2009 of 400 ppt for PFOA and 200 ppt for PFOS).

Where PFOA and PFOS are found together, EPA’s lifetime health advisory for PFOA and PFOS combined is also 70 ppt.

Lifetime health advisories, which are non-enforceable and non-regulatory, provide information about concentrations of drinking water contaminants at which adverse health effects are not expected to occur over the specified exposure duration.

To collect exposure information under the Safe Drinking Water Act, the EPA published on May 2, 2012 a list of unregulated substances, including six PFAS chemicals, required to be monitored during the period 2013-2015 by public water system suppliers to determine the extent of their occurrence.

Agency for Toxic Substances and Disease Registry (ATSDR) within the Department of Health and Human Services released a draft Toxicological Profile for PFAS for public review and comment in June 2018.

In the draft report, ATSDR proposed draft minimal risk levels (MRLs) for PFOS, PFOA and several other PFAS.

An MRL is an estimate of the daily human exposure to a hazardous substance that is likely to be without appreciable risk of adverse non-cancer health effects over a specified duration of exposure.

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

In May 2021, ATSDR released a final toxicological profile for certain PFAS that preserved the draft MRLs.

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

As periodically required under the Safe Drinking Water Act (SDWA), the EPA published in May 2012 a list of unregulated substances, including six PFAS chemicals, required to be monitored during the period 2013-2015 by public water system suppliers to determine the extent of their occurrence.

Through January 2017, the EPA reported results for 4,920 public water supplies nationwide.

Based on the 2016 lifetime health advisory, 13 public water supplies exceed the level for PFOA and 46 exceed the level for PFOS (unchanged from the July 2016 EPA summary).

A technical advisory issued by EPA in September 2016 on laboratory analysis of drinking water samples stated that 65 public water supplies had exceeded the combined level for PFOA and PFOS.

Based on the 2016 lifetime health advisory, 13 public water supplies exceeded the level for PFOA and 46 exceeded the level for PFOS (unchanged from the July 2016 EPA summary).

These results are based on one or more samples collected during the period 2012-2015 and do not necessarily reflect current conditions of these public water supplies.

EPA reporting does not identify the sources of the PFOA and PFOS in the public water supplies.

The Company is continuing to make progress in its work, under the supervision of state regulators, to remediate historic disposal of PFAS-containing waste associated with manufacturing operations at its Decatur, Alabama;

Cottage Grove, Minnesota;

and Cordova, Illinois plants.

As previously reported, the Company entered into a voluntary remedial action agreement with the Alabama Department of Environmental Management (ADEM) to remediate the presence of PFAS in the soil and groundwater at the Company’s manufacturing facility in Decatur, Alabama associated with the historic (1978-1998) incorporation of wastewater treatment plant sludge.

With ADEM’s agreement, 3M substantially completed installation of a multilayer cap on the former sludge incorporation areas.

Further remediation activities, including certain on-site and off-site investigations and studies, will be conducted in accordance with the July 2020 Interim Consent Order described below in the “Other PFAS-related Matters” section.

The Company continues to work with the Minnesota Pollution Control Agency (MPCA) pursuant to the terms of the previously disclosed May 2007 Settlement Agreement and Consent Order to address the presence of certain PFAS in the soil and groundwater at former disposal sites in Washington County, Minnesota (Oakdale and Woodbury) and at the Company’s manufacturing facility at Cottage Grove, Minnesota.

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

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

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

and (iv) sharing information with the MPCA about certain perfluorinated compounds.

During 2008, the MPCA issued formal decisions adopting remedial options for the former disposal sites in Washington County, Minnesota (Oakdale and Woodbury).

In August 2009, the MPCA issued a formal decision adopting remedial options for the Company’s Cottage Grove manufacturing facility.

During the spring and summer of 2010, 3M began implementing the agreed upon remedial options at the Cottage Grove and Woodbury sites.

3M commenced the remedial option at the Oakdale site in late 2010.

At each location the remedial options were recommended by the Company and approved by the MPCA.

Remediation work has been completed at the Oakdale and Woodbury sites, and they are in an operational maintenance mode.

Remediation work has been substantially completed at the Cottage Grove site, with operational and maintenance activities ongoing.

In August 2014, the Illinois EPA approved a request by the Company to establish a groundwater management zone at its manufacturing facility in Cordova, Illinois, which includes ongoing pumping of impacted site groundwater, groundwater monitoring and routine reporting of results.

In May 2017, the MDH issued new HBVs for PFOA and PFOS.

The new HBVs are 35 ppt for PFOA and 27 ppt for PFOS.

In connection with its announcement the MDH stated that “Drinking water with PFOA and PFOS, even at the levels above the updated values, does not represent an immediate health risk.

These values are designed to reduce long-term health risks across the population and are based on multiple safety factors to protect the most vulnerable citizens, which makes them overprotective for most of the residents in our state.” In December 2017, the MDH issued a new HBV for perfluorobutane sulfonate (PFBS) of 2 parts per billion (ppb).

In February 2018, the MDH published reports finding no unusual rates of certain cancers or adverse birth outcomes (low birth rates or premature births) among residents of Washington and Dakota Counties in Minnesota.

In April 2019, the MDH issued a new HBV for PFOS of 15 ppt and a new HBV for PFHxS of 47 ppt.

In May 2018, the EPA announced a four-step PFAS action plan, which includes evaluating the need to set Safe Drinking Water Act maximum contaminant levels (MCLs) for PFOA and PFOS and beginning the steps necessary to designate PFOA and PFOS as

“hazardous substances” under CERCLA.

In November 2018, the EPA asked for public comment on draft toxicity assessments for two PFAS compounds, including PFBS.

In April 2021, EPA released an updated toxicity assessment for PFBS.

In February 2019, the EPA issued a PFAS Action Plan that outlines short- and long-term actions the EPA is taking to address PFAS – actions that include developing a national drinking water determination for PFOA and PFOS, strengthening enforcement authorities and evaluating cleanup approaches, nationwide drinking water monitoring for PFAS, expanding scientific knowledge for understanding and managing risk from PFAS, and developing consistent risk communication tools for communicating with other agencies and the public.

With respect to groundwater contaminated with PFOA and PFOS, the EPA issued interim recommendations in December 2019, providing guidance for screening levels and preliminary remediation goals for groundwater that is a current or potential drinking water source, to inform final clean-up levels of contaminated sites.

In February 2020, the EPA provided notice and requested public comment on certain preliminary determinations to regulate PFOA and PFOS under the Safe Drinking Water Act (SDWA).

In June 2020, 3M submitted comments on EPA’s preliminary determinations to regulate PFOA and PFOS under the SDWA.

In March 2021, EPA proposed including 29 PFAS in the fifth version of the unregulated contaminant monitoring rule.

If finalized, monitoring for these additional substances will occur between 2023 and 2025.

In February 2019, the EPA issued a PFAS Action Plan that outlines short- and long-term actions the EPA plans to take to address PFAS – actions that include developing a national drinking water determination for PFOA and PFOS, strengthening enforcement authorities and evaluating cleanup approaches, nationwide drinking water monitoring for PFAS, expanding scientific knowledge for understanding and managing risk from PFAS, and developing consistent risk communication tools for communicating with other agencies and the public.

With respect to PFOA and PFOS in groundwater, EPA issued interim recommendations in December 2019, providing guidance for screening levels and preliminary remediation goals for groundwater that is a current or potential drinking water source, to inform final clean-up levels of contaminated sites.

EPA has taken a number of actions to advance its PFAS Action Plan and regulatory agenda and to comply with mandatory actions required by Congress in the National Defense Authorization Act for Fiscal Year 2020.

EPA announced in its Spring 2020 Regulatory Agenda, released in June 2020, that it intended to publish a notice of proposed rulemaking to designate PFOA and PFOS as hazardous substances under CERCLA in August 2020.

In November 2020, EPA announced it was developing of a new analytical method to test for PFAS in wastewater and other environmental media.

In December 2020, EPA released two new guidance documents related to PFAS.

First, it issued a Draft Compliance Guide for Imported Articles Containing Surface Coatings Subject to the Long-Chain Perfluoroalkyl Carboxylate and Perfluoroalkyl Sulfonate Chemical Substances Significant New Use Rule.

Second, EPA released for public comment interim guidance on destroying and disposing of certain PFAS and PFAS-containing materials.

3M has submitted comments on both guidance documents.

In November 2020, EPA announced it was developing a new analytical method to test for PFAS in wastewater and other environmental media.

In December 2020, EPA released for public comment interim guidance on destroying and disposing of certain PFAS and PFAS-containing materials.

The Company submitted comments on that draft guidance document.

In March 2021, EPA published its intention to initiate a process to develop a national primary drinking water regulation for PFOA and PFOS;

the process will include further analyses, scientific review and opportunities for public comment.

EPA also announced in January 2021 that it will issue an advance notice of proposed rulemaking (ANPR) to solicit public comment on whether the agency should take additional regulatory steps to address PFAS contamination, including designating PFOA and PFOS and other PFAS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and seeking comment on whether PFOA and PFOS and other PFAS should be subject to regulation as hazardous waste under the Resource Conservation and Recovery Act (RCRA).

EPA indicated it will also issue an ANPR to collect information regarding manufacturers of PFAS and the presence and treatment of PFAS in discharges from these facilities.

In January 2021, the new federal Administration withdrew this EPA ANPR announcement.

EPA also separately issued an ANPR in March 2021 to collect information regarding manufacturers of PFAS and the presence and treatment of PFAS in discharges from these facilities.

Agency for Toxic Substances and Disease Registry (ATSDR) within the Department of Health and Human Services released a draft Toxicological Profile for PFAS for public review and comment in June 2018.

In the draft report, ATSDR proposed draft minimal risk levels (MRLs) for PFOS, PFOA and several other PFAS.

An MRL is an estimate of the daily human exposure to a hazardous substance that is likely to be without appreciable risk of adverse non-cancer health effects over a specified duration of exposure.

MRLs are not intended to define cleanup or action levels for ATSDR or other agencies.

In August 2018, 3M submitted comments on the ATSDR proposal, noting that there are major shortcomings with the current draft, especially with the MRLs, and that the ATSDR’s profile must reflect the best science and full weight of evidence known about these chemicals.

the process is expected to take several years and will include further analyses, scientific review and opportunities for public comment.

EPA also issued an Advance Notice of Proposed Rulemaking (ANPR) in March 2021 to collect information regarding manufacturers of PFAS and the presence and treatment of PFAS in discharges from these manufacturing facilities.

The Company responded to that ANPR in May 2021.

EPA has also taken several actions to increase reporting and restrictions regarding PFAS under the Toxic Substances Control Act (TSCA) and the Toxics Release Inventory (TRI), which is a part of the Emergency Planning and Community Right-to-Know Act.

EPA has added more than 170 PFAS to the list of substances that must be included in TRI reports as of July 2021.

In June 2021, EPA published a proposed rule under TSCA that, if adopted, would require certain persons that

manufacture (including import) or have manufactured PFAS in any year since 2011 to report information regarding PFAS uses, production volumes, disposal, exposures, and hazards.

The Company plans to submit comments on the proposed rule during the public comment period, which ends in August 2021.

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

Those states include the following:

Minnesota Department of Health in May 2017 stated that HBVs “are designed to reduce long-term health risks across the population and are based on multiple safety factors to protect the most vulnerable citizens, which makes them overprotective for most of the residents in our state.” As of 2021, the current HBVs are 35 ppt for PFOA, 15 ppt for PFOS, 47 ppt for PFHxS and 2 ppb for PFBS.

Vermont finalized drinking water standards for a combination of PFOA, PFOS and three other PFAS in March 2020.

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In October 2020, 3M and several other parties filed notices of appeal in the appellate division of the Superior Court of New Jersey to challenge the validity of the New Jersey PFOS and PFOA regulations.

In January 2021, the appellate division of the court denied the

group’s motion to stay the regulations, and the parties are proceeding to litigation on the merits.

In March 2021, 3M and several other parties filed a lawsuit against the New York State Department of Health, urging that drinking water levels set by the agency for PFOS and PFOA be vacated.

In January 2021, the appellate division of the court denied the group’s motion to stay the regulations, and the parties are proceeding to litigation on the merits.

In March 2021, 3M filed a lawsuit against the New York State Department of Health, on the grounds that drinking water levels set by the agency for PFOS and PFOA should be vacated because they are arbitrary and did not comply with statutorily required processes.

In April 2021, 3M also filed a lawsuit against the Michigan Department of Environment, Great Lakes, and Energy (EGLE) to invalidate the drinking water standards EGLE promulgated under an accelerated timeline.

EGLE has moved to dismiss that lawsuit.

The Company cannot predict what additional regulatory actions in the United States, Europe and elsewhere arising from the foregoing or other proceedings and activities, if any, may be taken regarding such compounds or the consequences of any such actions to the Company.

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Two additional putative class actions filed in the same court by certain residents in the vicinity of the Decatur plant seeking relief on similar grounds (the Chandler case and the Stover case, respectively) are stayed pending the resolution of class certification issues in the St.

The Company is in active discussions for negotiated resolutions with multiple parties regarding filed claims and pre-litigation disputes related to historical PFAS manufacturing operations in Alabama.

In October 2015, West Morgan-East Lawrence Water & Sewer Authority (Water Authority) filed an individual complaint against 3M Company, Dyneon, L.L.C, and Daikin America, Inc., in the U.S.

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The complaint seeks compensatory and punitive damages and injunctive relief based on allegations that the defendants’ chemicals, including PFOA and PFOS from their manufacturing processes in Decatur, have contaminated the water in the Tennessee River at the water intake, and that the chemicals cannot be removed by the water treatment processes utilized by the Water Authority.

In April 2019, 3M and the Water Authority settled the lawsuit for $ 35 million, which will fund a new water filtration system, with 3M indemnifying the Water Authority from liability resulting from the resolution of the currently pending and future lawsuits against the Water Authority alleging liability or damages related to 3M PFAS.

In April 2019, 3M and the Water Authority settled the lawsuit for $ 35 million, which will

fund a new water filtration system, with 3M indemnifying the Water Authority from liability resulting from the resolution of the currently pending and future lawsuits against the Water Authority alleging liability or damages related to 3M PFAS.

The putative class claims brought by the representative plaintiffs who were supplied drinking water by the Water Authority (the “Lindsey” case) remain.

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The complaint further alleges such practices may present an imminent and substantial endangerment to health and/or the environment and that Riverkeeper has suffered and will continue to suffer irreparable harm caused by defendants’ failure to abate the endangerment unless the court grants the requested relief, including declaratory and injunctive relief.

This case has been stayed, pending ongoing mediation between the parties in conjunction with the St.

This case has been stayed, pending ongoing mediation and discussions between the parties in conjunction with the St.

In August 2016, a group of over 200 plaintiffs filed a putative class action against West Morgan-East Lawrence Water and Sewer Authority (Water Authority), 3M, Dyneon, Daikin, BFI, and the City of Decatur in state court in Lawrence County, Alabama (the “Billings” case).

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There are now approximately 4,000 named plaintiffs.

Mediation in the Billings case is ongoing, but plaintiffs have moved to lift the stay, and that motion is set for hearing in May 2021.

Mediation in the Billings case is ongoing.

In January 2017, several hundred plaintiffs sued 3M, Dyneon and Daikin America in Lawrence and Morgan Counties, Alabama (the “Owens” case).

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They assert common law claims for negligence, nuisance, trespass, wantonness and battery, and they seek injunctive relief and punitive damages.

The plaintiffs contend that the defendants own and operate manufacturing and disposal facilities in Decatur that have released and continue to release PFOA, PFOS

and related chemicals into the groundwater and surface water of their sites, resulting in discharges into the Tennessee River.

The plaintiffs contend that the defendants own and operate manufacturing and disposal facilities in Decatur that have released and continue to release PFOA, PFOS and related chemicals into the groundwater and surface water of their sites, resulting in discharges into the Tennessee River.

The plaintiffs contend that, as a result of the alleged discharges, the water supplied by the Water Authority to the plaintiffs was, and is, contaminated with PFOA, PFOS and related chemicals at a level dangerous to humans.

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John case, and the case is progressing through discovery.

Discussions among the parties are ongoing.

In November 2017, a putative class action (the “King” case) was filed against 3M, Dyneon, Daikin America and the West Morgan-East Lawrence Water and Sewer Authority (Water Authority) in the U.S.

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Since then, the plaintiffs have added 37 new individual plaintiffs and voluntarily dismissed five plaintiffs (for a total of 55 plaintiffs).

The case is scheduled for trial in June 2022, but the plaintiffs have sought to extend the case deadlines.

The parties negotiated a revised schedule and proposed a July 2023 trial date, pending the court’s approval.

The case is scheduled for trial in July 2023.

Discovery in this case is proceeding.

In July 2019, 3M announced that it had initiated an investigation into the possible presence of PFAS in three closed municipal landfills in Decatur that accepted waste from 3M’s Decatur plant and other companies in the 1960s through the 1980s.

3M is working with local and state entities as it conducts its investigation and will report the results and recommended remedial action, if any, to those entities and the public.

3M is working with the City of Decatur and other local and state entities as it conducts its investigation and will report the results and recommended remedial action, if any, to those entities and the public.

3M is also defending or has received notice of potential lawsuits in state and federal court brought by individual property owners who claim damages related to historical PFAS disposal at former area landfills near their properties.

3M has resolved for an immaterial amount some of the claims brought by property owners.

3M continues to negotiate with property owners and has resolved for an immaterial amount some of the claims brought by them.

In September 2020, the City of Guin Water Works and Sewer Board (Guin WWSB) brought a lawsuit against 3M in Alabama state court alleging that PFAS contamination in the Guin water system stems from manufacturing operations at 3M’s Guin facility and disposal activity at a nearby landfill.

In this same month, Guin WWSB dismissed its lawsuit without prejudice and is working with 3M to further investigate the presence of chemicals in the area.

Discussions between the parties are ongoing.

In this same month, Guin WWSB dismissed its lawsuit without prejudice and has been working with 3M to further investigate the presence of chemicals in the area.

The parties have made progress in ongoing discussions for a negotiated resolution.

Litigation Related to Historical PFAS Manufacturing Operations in Minnesota

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In December 2020, 3M submitted preliminary comments on the co-trustees’ draft conceptual drinking water supply plan to address legal and technical aspects of the draft plan.

The Company and the State continue to discuss those aspects of the draft plan.

The State of New York, by its Attorney General, has filed four lawsuits (in June 2018, February 2019, July 2019, and November 2019) against 3M and other defendants seeking to recover the costs incurred in responding to PFAS contamination allegedly caused by Aqueous Film Forming Foam (AFFF) manufactured by 3M and others.

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In October 2020, the state amended its complaint to add a state commission as plaintiff and make a claim related to the state’s drinking water and groundwater trust fund statute.

Defendants have filed motions to dismiss related to these amendments, and the case remains in early stages of litigation.

In July 2021, the court granted defendants’ motions to dismiss these amendments;

the case remains in early stages of litigation.

In June 2019, the Vermont Attorney General filed two lawsuits alleging contamination of the state’s drinking water supplies and other natural resources by PFAS chemicals.

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In May 2020, the court denied the defendants’ motion to dismiss, but dismissed the state’s trespass claim as to property the state does not own.

The parties are now engaged in discovery.

The parties are now engaged in discovery, and the court has set a trial date in October 2022.

In January 2020, the Michigan Attorney General filed a lawsuit in state court against 3M, Dyneon, DuPont, Chemours and others seeking injunctive and equitable relief and damages for alleged injury to Michigan public natural resources and its residents related to PFAS, excluding AFFF.

The defendants filed motions to dismiss, and 3M’s motion was denied in August 2020.

3M removed the case to federal court in March 2021, and 3M and certain other defendants have filed a motion to transfer the case to the AFFF MDL.

The case was removed to federal court in March 2021 and subsequently transferred to the AFFF MDL.

The state has filed a motion to remand the case to state court.

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3M manufactured and marketed AFFF for use in firefighting at airports and military bases from approximately 1963 to 2002.

As of March 31, 2021, 1,076 lawsuits (including 26 putative class actions) alleging injuries or damages by AFFF use have been filed against 3M (along with other defendants) in various state and federal courts.

As of June 30, 2021, 1,274 lawsuits (including 26 putative class actions) alleging injuries or damages by AFFF use have been filed against

3M (along with other defendants) in various state and federal courts.

As further described below, a vast majority of these pending cases are in a federal Multi-District Litigation (MDL) court in South Carolina.

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The plaintiffs filed a notice of dismissal without prejudice in September 2020.

As of March 31, 2021, the Company is aware of six other AFFF suits originally filed in various state courts across the country in which the Company has been named a defendant.

As of June 30, 2021, the Company is aware of eight other AFFF suits originally filed in various state courts across the country in which the Company has been named a defendant.

The Company is assessing whether these cases may be removed to federal court and transferred to the AFFF MDL.

Separately, the Company is aware of pre-suit claims by other parties related to the use and disposal of

Separately, the Company is aware of pre-suit claims by other parties related to the use and disposal of AFFF.

The Company had discussions with certain potential claimants pre-suit and reached a negotiated resolution with the City of Bemidji in March 2021.

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In New York, 3M is defending 40 individual cases and one putative class action filed in the U.S.

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

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

(Saint-Gobain), Honeywell International Inc.

DuPont De Nemours and Co.

The plaintiffs allege that 3M manufactured and sold PFOA that was used for manufacturing purposes at Saint-Gobain’s and Honeywell’s facilities located in the Village of Hoosick Falls and the Town of Hoosick.

The plaintiffs claim that the drinking water around Hoosick Falls became contaminated with unsafe levels of PFOA due to the activities of the defendants and allege that they suffered bodily injury due to the ingestion and inhalation of PFOA.

The four state court cases also include Tonaga, Inc.

(Taconic) as a defendant and make similar allegations related to Taconic’s facility in neighboring Petersburg.

The plaintiffs seek unstated compensatory, consequential, and punitive damages, as well as attorneys’ fees and costs.

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

Plaintiffs allege that PFOA discharged from fabric coating facilities operated by non-3M entities (that allegedly had used PFOA-containing materials from 3M, among others) contaminated the drinking water in the Village of Hoosick Falls, the Town of Hoosick and Petersburg, New York.

They assert various tort claims for personal injury and property damage and in some cases request medical monitoring.

3M has answered the complaints in these individual cases, which are now proceeding through discovery.

In the putative class action, briefings on class certification have been completed and the parties are engaging in mediation efforts.

3M is also defending 12 individual cases in New York filed by Nassau County drinking water providers in the U.S.

In the federal court individual cases, the parties selected 24 claimants in May 2021 for a pool from which eight plaintiffs will be chosen for expert discovery and dispositive motions.

At the conclusion of these motions, the court will determine which case(s) will continue toward trial.

In the putative class action, class certification briefing is complete, and in July 2021, certain parties, including 3M, reached an agreement to resolve litigation among the settling parties, pending approval by the

district court.

Under the agreement, 3M, Saint-Gobain and Honeywell will collectively contribute to a fixed total amount of approximately $ 65 million to resolve the plaintiffs’ claims and those of the proposed classes.

3M’s contribution is not considered material.

3M is also defending 12 individual cases in New York filed by Nassau and Suffolk County drinking water providers in the U.S.

District Court for the Eastern District of New York.

The plaintiffs in these cases allege that 3M, DuPont, and additional unnamed defendants are responsible for the contamination of plaintiffs’ water supply sources with various PFAS compounds.

The plaintiffs in these cases allege that products manufactured by 3M, DuPont, and additional unnamed defendants contaminated plaintiffs’ water supply sources with various PFAS compounds.

DuPont’s motion to transfer these cases to the AFFF MDL was denied in March 2020.

3M has filed answers in the cases in which it has been served.

Preliminary discovery is ongoing.

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

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

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

In January 2021, 3M moved to dismiss certain claims in the complaint, and the case remains in early stages of litigation.

The court has set a trial date in January 2022.

In addition to the consolidated federal court putative class action, as of March 31, 2021, 3M is a defendant in approximately 277 private individual actions in Michigan state court based on similar allegations.

In June 2021, the court partially denied the defendants' motions to dismiss, by granting the motions to dismiss the negligence claim only insofar as the plaintiffs seek damages for personal injuries, as opposed to property damage.

The case remains in early stages of litigation.

The court has set a trial date in April 2022.

In addition to the consolidated federal court putative class action, as of June 30, 2021, 3M is a defendant in approximately 280 private individual actions in Michigan state court based on similar allegations.

These cases are coordinated for pre-trial purposes.

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The plaintiffs in this dismissed bellwether case have also appealed the dismissal to the state appellate court.

The remaining two bellwether trials are preliminarily scheduled for October 2021.

The Company has settled one of the two remaining bellwether cases for an immaterial amount.

The other bellwether case has a trial date scheduled for October 2021.

An additional eight cases have been identified as a pool from which future bellwether cases will be selected.

The parties have engaged in mediation efforts in both the putative class action and the state court mass action cases.

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In December 2019, the State of Michigan, the intervening townships, and Wolverine announced that they had tentatively resolved the State and townships’ claims against Wolverine in exchange for a $ 70 million payment and certain future remediation measures by Wolverine.

In February 2020, the court approved a Consent Decree that

memorializes Wolverine’s ongoing remediation obligations and the State’s and intervening townships’ covenants not to bring further lawsuits as to the remediated area.

In February 2020, the court approved a Consent Decree that memorializes Wolverine’s ongoing remediation obligations and the State’s and intervening townships’ covenants not to bring further lawsuits as to the remediated area.

3M has been formally designated as a “Contributing Party,” and as such, the State’s and townships’ covenants will also apply to 3M.

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A trial date is set for January 2022.

The parties have engaged in mediation and in April 2021 reached a preliminary settlement agreement, subject to court approval, under which 3M and Georgia-Pacific would pay an amount and be released from plaintiffs’ putative class action claims.

The parties have engaged in mediation and in April 2021 reached a preliminary settlement agreement, subject to court approval, under which 3M and Georgia-Pacific would jointly pay an amount and be released from plaintiffs’ putative class action claims.

3M’s portion is not considered material.

The final fairness hearing for the settlement is scheduled for September 2021.

Separately, as a result of discussions among Georgia-Pacific, 3M and municipalities near Parchment, Georgia-Pacific and 3M contributed to a fund in November 2020 to provide expanded municipal water service in the area.

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This case has been removed to federal court, where 3M has filed a motion to dismiss a series of amended complaints.

3M, together with co-defendants, is also defending two putative class actions in federal court, where the plaintiffs seek relief on behalf of classes of individual ratepayers in Summerville, Georgia who allege their water supply was contaminated by PFAS discharged from a textile mill.

3M, together with co-defendants, is also defending two putative class actions in federal court, where the plaintiffs seek relief on behalf of a class of individual ratepayers in Summerville, Georgia who allege their water supply was contaminated by PFAS discharged from a textile mill.

In May 2021, the City of Summerville filed a motion to intervene in the lawsuit, which remains pending.

3M has filed motions to dismiss these putative class actions and plaintiffs’ amended complaint.

In California, 3M and other defendants were named as defendants in an action brought in federal court by Golden State Water Company, alleging PFAS contamination of certain wells located in its water systems.

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In April 2021, the court denied 3M’s demurrer, and the case remains in early stages of litigation.

In May 2021, the Orange County plaintiffs filed a second amended complaint.

In June 2021, the case was removed to the U.S.

District Court for the Central District of California where the plaintiffs have moved to remand the case back to state court.

In July 2021, 3M filed a motion to transfer the action to the AFFF MDL.

The case otherwise remains in early stages of litigation.

In February 2021, the City of Corona and a local utility authority filed a lawsuit in California state court against 3M and other defendants, alleging PFAS contamination from 3M products generally as well as from 3M’s Corona facility and roofing granules products.

Plaintiffs filed an amended complaint in June 2021.

In July 2021, the case was removed to the U.S.

District Court for the Central District of California.

In Delaware, 3M, together with several co-defendants, is defending one putative class action brought by individuals alleging PFAS contamination of their water supply resulting from the operations of local metal plating facilities.

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In February 2021, the court raised the question whether subject matter jurisdiction under the Class Action Fairness Act was proper, issued an order requiring the parties to brief the issue and denied defendants’ motions to dismiss with leave to renew pending the court’s ruling on jurisdiction.

Briefing on the jurisdictional question is anticipated to be complete in May 2021.

Briefing on the jurisdictional question is complete, and an oral argument has been set for September 2021.

In New Jersey, 3M is a defendant in an action brought in federal court by Middlesex Water Company, alleging PFAS contamination of its water wells.

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3M has moved to dismiss the complaint, and the case is currently in discovery.

In addition, 3M, together with several co-defendants, is defending two federal court cases by multiple

individuals with private drinking water wells near DuPont and Solvay facilities that were allegedly supplied with PFAS by 3M.

Plaintiffs seek medical monitoring and damages.

3M has filed a motion to dismiss in the first of those actions and the motion was denied.

In January 2021, certain plaintiffs in that lawsuit severed their claims in order to be represented by different counsel in what is now a separate case, which remains in early stages of litigation.

The second case is in early stages of litigation.

3M and other defendants are also defending three federal court cases brought by individuals who live near the DuPont and Solvay facilities, alleging personal injury caused by PFAS exposure.

Those cases are in early stages of litigation.

In September 2020, a federal court case was filed against 3M on behalf of the Borough of Hopatcong, alleging general PFAS contamination of its public water supply.

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

In December 2020, 3M filed a motion to dismiss the Hopatcong matter.

In January 2021, another case of this nature was filed in federal court on behalf of Pequannock Township.

3M has filed a motion to dismiss this case.

In January 2021, 3M was named a defendant in another similar lawsuit brought by the Pequannock Township.

In March 2021, 3M filed a motion to dismiss the Pequannock matter.

3M, together with several co-defendants, is also defending twelve cases in New Jersey federal court brought by individuals with private drinking water wells near certain DuPont and Solvay facilities that were allegedly supplied with PFAS by 3M.

Plaintiffs in two of these cases seek medical monitoring and damages, while plaintiffs in the remaining cases seek damages for alleged personal injuries to themselves or their disabled adult children.

3M’s motion to dismiss the earliest filed case, which seeks medical monitoring, was largely denied in February 2021.

3M has filed answers in seven of these cases.

The cases remain in early stages of litigation and have been coordinated for discovery purposes.

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

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3M and other entities jointly filed a motion to dismiss in February 2019.

In September 2019, the court denied the defendants’ motion to dismiss.

September 2019, the court denied the defendants’ motion to dismiss.

In February 2020, the court denied 3M’s motion to transfer the case to the AFFF MDL.

In December 2020, the defendants filed their joint opposition to the class certification motion filed earlier by the plaintiff.

The plaintiffs filed a reply brief in support of class certification in March 2021.

In West Virginia, 3M and other entities were originally named as defendants in a state court action brought by Weirton Area Water Board that alleges PFAS contamination of local water supplies.

This case was been removed to federal court where the defendants filed various motions to dismiss the complaint based on pleading deficiencies and lack of personal jurisdiction.

In November 2020, the court granted some of the personal jurisdiction motions, denied other personal jurisdiction motions (including 3M’s) and ordered the remaining parties to engage in discovery on jurisdiction.

In December 2020, the court denied the defendants’ non-jurisdictional motion to dismiss.

In January 2021, the plaintiffs amended its complaint to include allegations related to AFFF, and the case was transferred to the AFFF MDL court, where it remains in early stages of litigation.

Briefing on plaintiff’s class certification motion is complete.

Other PFAS-related Matters

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The Company continues to cooperate with the Subcommittee.

The Company continues to make progress in its work, under the supervision of state regulators, to remediate historic disposal of PFAS-containing waste associated with manufacturing operations at its Decatur, Alabama;

Cottage Grove, Minnesota;

and Cordova, Illinois plants.

As previously reported, the Illinois EPA in August 2014 approved a request by the Company to establish a groundwater management zone at its manufacturing facility in Cordova, Illinois, which includes ongoing pumping of impacted site groundwater, groundwater monitoring and routine reporting of results.

In Minnesota, the Company continues to work with the Minnesota Pollution Control Agency (MPCA) pursuant to the terms of the previously disclosed May 2007 Settlement Agreement and Consent Order to address the presence of certain PFAS in the soil and groundwater at former disposal sites in Washington County, Minnesota (Oakdale and Woodbury) and at the Company’s manufacturing facility at Cottage Grove, Minnesota.