3M CO

3M is a diversified global manufacturer, technology innovator and marketer of a wide variety of products and services. Certain changes are reflective in this document for all applicable periods presented. These include:

•As discussed in Note 2, on April 1, 2024, 3M completed the previously announced separation of its Health Care business (the Separation) through a pro rata distribution of 80.1% of the outstanding shares of Solventum Corporation (Solventum) to 3M stockholders. As a result of the Separation, Solventum became an independent public company and 3M no longer consolidates Solventum into 3M’s financial results. In connection with the Separation, the historical net income of Solventum and applicable assets and liabilities included in the Separation are reported in 3M's consolidated financial statements as discontinued operations.

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

The Company refers to various "adjusted" amounts or measures on an “adjusted" basis. These exclude special items. These non-GAAP measures are further described and reconciled to the most directly comparable GAAP financial measures in the Certain amounts adjusted for special items - (non-GAAP measures) section below.

A discussion related to the components of year-on-year changes in 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.

•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:

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.

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.

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.

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

Sales by geographic area: Percent change information compares the years ended December 31, 2024 and 2023, unless otherwise indicated. Additional discussion of business segment results is provided in the Performance by Business Segment section.

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.

Pension and postretirement defined benefit plans: 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.