3M (MMM) 10-K risk factor changes: FY2019 vs FY2018

[removed: *] [added: _*] Results are impacted by the effects of, and changes in, worldwide economic, political, [removed: and] [added: regulatory,] capital markets [removed: conditions.][added: and other external conditions._ The Company operates in more than 70 countries and derives approximately 60 percent of its revenues from outside the United States.]

The Company’s business is subject to global competition and geopolitical risks and [removed: may] [added: has been and will in the future] be adversely affected by factors in the United States and other countries that are beyond its control, such as slower economic growth, disruptions in financial markets, economic downturns in the form of either contained or widespread recessionary conditions, inflation, elevated unemployment levels, sluggish or uneven recovery, government actions impacting international trade agreements, imposing trade restrictions such as tariffs, and retaliatory counter measures, government deficit reduction and other austerity measures in specific countries or regions, or in the various industries in which the Company operates; social, political or labor conditions in specific countries or regions; natural and other [removed: disasters or climate change] [added: disasters, including public health crises, such as pandemics and epidemics,] affecting the operations of the Company or its customers and suppliers; or adverse changes in the availability and cost of capital, interest rates, tax rates, tax laws, or exchange control, ability to expatriate earnings and other regulations in the jurisdictions in which the Company operates.

[removed: *] [added: _*] Change in the Company’s credit ratings could increase cost of [removed: funding.][added: funding._ The Company’s credit ratings are important to 3M’s cost of capital.]

3M currently has an [removed: AA-] [added: A1] credit rating with a stable outlook from [removed: Standard & Poor’s] [added: Moody’s Investors Service] and has an [removed: A1] [added: AA-] credit rating with [removed: a stable outlook from Moody’s Investors Service.][added: Standard & Poor’s; Standard & Poor’s placed 3M on “CreditWatch Negative” in January 2020.]

[removed: Failure to maintain] strong investment grade ratings would adversely affect the Company’s cost of funding and could adversely affect liquidity and access to capital markets.

[added: _* The Company’s results are affected by competitive conditions and customer preferences._] Demand for the Company’s products, which impacts revenue and profit margins, is affected by (i) the development and timing of the introduction of competitive products; (ii) the Company’s response to downward pricing to stay competitive; (iii) changes in customer order patterns, such as changes in the levels of inventory maintained by customers and the timing of customer purchases which may be affected by announced price changes, changes in the Company’s incentive programs, or the customer’s ability to achieve incentive goals; (iv) changes in customers’ preferences for our products, including the success of products offered by our competitors, and changes in customer designs for their products that can affect the demand for some of the Company’s products; and (v) changes in the business environment related to disruptive technologies, such as artificial intelligence, block-chain, expanded analytics and other enhanced learnings from increasing volume of available data.

[removed: *] [added: _*] Foreign currency exchange rates and fluctuations in those rates may affect the Company’s ability to realize projected growth rates in its sales and [removed: earnings.][added: earnings._ Because the Company’s financial statements are denominated in U.S. dollars and approximately 60 percent of the Company’s revenues are derived from outside the United States, the Company’s results of operations and its ability to realize projected growth rates in sales and earnings could be adversely affected if the U.S. dollar strengthens significantly against foreign currencies.]

[removed: *] [added: _*] The Company’s growth objectives are largely dependent on the timing and market acceptance of its new product offerings, including its ability to continually renew its pipeline of new products and to bring those products to [removed: market.][added: market._ This ability is subject to difficulties or delays in product development, such as the inability to identify viable new products, obtain adequate intellectual property protection, or gain market acceptance of new products.]

[removed: *] [added: _*] The Company’s future results are subject to fluctuations in the costs and availability of purchased components, compounds, raw materials and energy, including oil and natural gas and their derivatives, due to shortages, increased demand, supply interruptions, currency exchange risks, natural disasters and other [removed: factors.][added: factors._ The Company depends on various components, compounds, raw materials, and energy (including oil and natural gas and their derivatives) supplied by others for the manufacturing of its products.]

[removed: It is possible that any of its supplier] [added: Supplier] relationships [added: have been and] could be interrupted [added: in the future] due to natural and other disasters and other events, or be [removed: terminated in the future.][added: terminated.]

[removed: *] [added: _*] Acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management actions and other evolving business strategies, and possible organizational restructuring could affect future [removed: results.][added: results._ The Company monitors its business portfolio and organizational structure and has made and may continue to make acquisitions, strategic alliances, divestitures and changes to its organizational structure.]

With respect to acquisitions, [added: including, for example, the recently completed acquisition of Acelity, Inc. and its KCI subsidiaries (a leading global medical technology company),] future results will be affected by the Company’s ability to integrate acquired businesses quickly and obtain the anticipated synergies.

[removed: *] [added: _*] The Company’s future results may be affected [removed: if] [added: by its operational execution, including scenarios where] the Company generates fewer productivity improvements than [removed: estimated.][added: estimated._ The Company’s financial results depend on the successful execution of its business operating plans.]

This is enabled by the ongoing multi-year phased implementation of an enterprise resource planning (ERP) [removed: system on a worldwide basis.][added: system.]

[removed: *] [added: _*] The Company employs information technology systems to support its business, including ongoing phased implementation of an ERP system as part of business transformation on a worldwide basis over the next several years.

Security breaches and other disruptions to the Company’s information technology infrastructure could interfere with the Company’s operations, compromise information belonging to the Company or its customers, suppliers, and employees, exposing the Company to liability which could adversely impact the Company’s business and [removed: reputation.][added: reputation._ In the ordinary course of business, the Company relies on centralized and local information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of businesses.]

Additionally, the Company collects and stores certain data, including proprietary business information, and [removed: may have] [added: has] access to confidential or personal information in certain of our businesses that is subject to privacy and security laws, regulations and customer-imposed controls.

Despite our cybersecurity measures (including employee and third-party training, monitoring of networks and systems, patching, maintenance, and backup of systems and data), the Company’s information technology networks and infrastructure [removed: may] [added: are] still [added: potentially] be vulnerable to damage, disruptions or shutdowns due to attacks by hackers, breaches, employee error or malfeasance, power outages, computer viruses, ransomware, telecommunication or utility failures, systems failures, service or cloud provider breaches, natural disasters or other catastrophic events.

[removed: *] [added: _*] The Company's defined benefit pension and postretirement plans are subject to financial market risks that could adversely impact our [removed: results.][added: results._ The performance of financial markets and discount rates impact the Company's funding obligations under its defined benefit plans.]

Significant changes in market interest rates, decreases in the fair value of plan assets and investment losses on plan [added: assets, and legislative or regulatory changes relating to defined benefit plan funding may increase the Company's funding obligations and adversely impact its results of operations and cash flows.]

[removed: *] [added: _*] The Company’s future results may be affected by various [added: asserted and unasserted] legal and regulatory proceedings and legal compliance risks, including those involving product liability, antitrust, intellectual property, environmental, the U.S. Foreign Corrupt Practices Act and other [removed: anti-bribery, anti-corruption,] [added: anti-bribery laws, U.S. trade sanctions compliance, regulations of the U.S. Food and Drug Administration (FDA) and similar foreign agencies, U.S. federal healthcare program-related laws and regulations including the False Claims Act, anti-kickback laws, the Sunshine Act,] or other [removed: matters.][added: matters._ The outcome of these legal proceedings may differ from the Company’s expectations because the outcomes of litigation, including regulatory matters, are often difficult to reliably predict.]

For a more detailed discussion of the legal proceedings involving the Company and the associated accounting estimates, see the discussion in Note [removed: 16] [added: 16,] “Commitments and [removed: Contingencies”] [added: Contingencies,”] within the Notes to Consolidated Financial Statements.

Natural occurrences and human activities are increasingly releasing greenhouse gases into the atmosphere, contributing to changes in the earth’s climate.

Climate change, as well as related environmental and social regulations, may negatively impact the Company or its customers and suppliers, in terms of availability and cost of natural resources, sources and supply of energy, product demand and manufacturing, and the health and well-being of individuals and communities in which we operate.

* _The Company faces liabilities related to certain fluorochemicals, which could adversely impact our results._

As previously reported, the Company has been voluntarily cooperating with various local, state, federal (primarily the U.S. Environmental Protection Agency (EPA)), and international agencies in their review of the environmental and health effects of a broad group of perfluoroalkyl and polyfluoroalkyl substances produced by the Company, collectively known as “PFAS.” The PFAS group contains several categories and classes of durable chemicals and materials with properties that include oil, water, temperature, chemical and fire resistance, as well as electrical insulating properties.

The strength of the carbon-fluorine bond also means that these compounds do not easily degrade.

These characteristics have made PFAS critical to the manufacture of electronic devices such as cell phones, tablets and semi-conductors.

They are also used to help prevent infections in products like surgical gowns and drapes.

Commercial aircraft and low-emissions vehicles also rely on PFAS technology.

PFAS compounds are manufactured by various companies, including 3M, and are used in everyday products.

As science and technology evolve and advance, and in response to evolving knowledge and the understanding that PFAS compounds had the potential to build up over time, 3M announced in 2000 that we would voluntarily phase out production of perfluorooctanoate (PFOA) and perfluorooctane sulfonate (PFOS) globally as a precautionary measure.

We phased out of materials used to produce certain repellants and surfactant products, with most of these activities in the U.S. completed by the end of 2002.

Phased out products included Aqueous Film Forming Foam (AFFF) and coatings for food packaging, for example.

3M currently is defending lawsuits concerning various PFAS-related products and chemistries, and is subject to unasserted and asserted claims and governmental regulatory proceedings and inquiries related to the production and use of PFAS in a variety of jurisdictions, as discussed in Note 16, “Commitments and Contingencies,” within the Notes to Consolidated Financial Statements.

An adverse outcome in any one or more of these matters could be material to our financial results.

For example, we recorded a pre-tax charge of $897 million, inclusive of legal fees and other related obligations, in the first quarter of 2018 with respect to the settlement of a matter brought by the State of Minnesota involving the presence of PFAS in the groundwater, surface

water, fish or other aquatic life, and sediments in the state.

Governmental inquiries or lawsuits involving PFAS could lead to our incurring liability for damages or other costs, civil or criminal proceedings, the imposition of fines and penalties, or other remedies, as well as restrictions on or added costs for our business operations going forward, including in the form of restrictions on discharges at our manufacturing facilities or otherwise.

Although the Company maintains general liability insurance, the amount of liability that may result from certain of these risks may not always be covered by, or could exceed, the applicable insurance coverage.

In addition, negative publicity related to product liability, environmental, health and safety matters involving the Company may negatively impact the Company’s reputation.

The Company realigned from five to four business segments, effective in April of 2019, to better serve its global customers and markets.

Successful execution of the realignment and the associated adjustments of our portfolio and business operating model, as well as other organizational changes, will be important to the Company’s future results.

Operational challenges, including those related to productivity improvements, could have a material adverse effect on the Company’s business, financial conditions and results of operations.

Failure to maintain

The Company operates in more than 70 countries and derives approximately 60 percent of its revenues from outside the United States.

The Company’s credit ratings are important to 3M’s cost of capital.

* The Company’s results are affected by competitive conditions and customer preferences.

Because the Company’s financial statements are denominated in U.S. dollars and approximately 60 percent of the Company’s revenues are derived from outside the United States, the Company’s results of operations and its ability to realize projected growth rates in sales and earnings could be adversely affected if the U.S. dollar strengthens significantly against foreign currencies.

This ability may be adversely affected by difficulties or delays in product development, such as the inability to identify viable new products, obtain adequate intellectual property protection, or gain market acceptance of new products.

The Company depends on various components, compounds, raw materials, and energy (including oil and natural gas and their derivatives) supplied by others for the manufacturing of its products.

The Company monitors its business portfolio and organizational structure and has made and may continue to make acquisitions, strategic alliances, divestitures and changes to its organizational structure.

In the ordinary course of business, the Company relies on centralized and local information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of businesses.

The performance of financial markets and discount rates impact the Company's funding obligations under its defined benefit plans.

assets, and relevant legislative or regulatory changes relating to defined benefit plan funding may increase the Company's funding obligations and adversely impact its results of operations and cash flows.

The outcome of these legal proceedings may differ from the Company’s expectations because the outcomes of litigation, including regulatory matters, are often difficult to reliably predict.

| | [removed: · |] [added: ●] | Overview |

| | [removed: · |] [added: ●] | Results of Operations |

| | [removed: · |] [added: ●] | Performance by Business Segment |

| | [removed: · |] [added: ●] | Performance by Geographic Area |

| | [removed: · |] [added: ●] | Critical Accounting Estimates |

| | [removed: · |] [added: ●] | New Accounting Pronouncements |

| | [removed: · |] [added: ●] | Financial Condition and Liquidity |

| | [removed: · |] [added: ●] | Financial Instruments |

[removed: As described in Note 18,] [added: In addition,] effective in the first quarter of [removed: 2018,] [added: 2019,] 3M [removed: improved the alignment of] [added: made business segment reporting changes to align] its businesses around markets and customers.

[removed: Segment] [added: Business segment] information presented herein reflects the impact of these changes for all periods presented.

3M manages its operations in [removed: five] [added: four] operating business segments: [removed: Industrial;] Safety and [removed: Graphics;] [added: Industrial; Transportation and Electronics;] Health Care; [removed: Electronics] and [removed: Energy; and] Consumer.

[removed: Earnings] [added: Earnings] per share (EPS) attributable to 3M common shareholders – [removed: diluted:][added: diluted:]

The following table provides the increase (decrease) in diluted earnings per share for [removed: the fourth quarter and year 2018] [added: 2019] compared to the same period last year, in addition to [removed: 2017] [added: 2018] compared to [removed: 2016.][added: 2017.]

| [removed: | | Three months ended |] [added: ​] | [added: ​] | [removed: Year] [added: Year] ended December [removed: 31,] [added: 31,] | | | | | [added: ​] |

| [removed: (Earnings] [added: (Earnings] per diluted [removed: share) | | December 31, 2018 |] [added: share)] | | [removed: 2018] [added: 2019] | | [added: ​] | [removed: 2017] [added: 2018] | | |

| Same period last year | [added: ​] | [removed: $] [added: $] | [removed: 0.85] [added: 8.89] | [added: ​] | $ | 7.93 | [removed: | $ | 8.16 |] [added: ​] |

| [removed: 2017 Enactment of] TCJA [removed: Impact] [added: enactment] | [added: ​] | [added: ​] | [removed: 1.25] [added: 0.29] | [added: ​] | [added: ​] | 1.24 | [removed: | | — |] [added: ​] |

| Increase/(decrease) in earnings per share - diluted, due to: | [removed: | | |] [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| 2017 divestiture of identity management business | [added: ​] | [added: ​] | [removed: —] [added: —] | [added: ​] | [added: ​] | (0.54) | [removed: | | 0.54 |] [added: ​] |

[removed: | Organic] [added: _Organic] growth/productivity and [removed: other | | | 0.18 | | | 0.92 | | | 0.47 | |][added: other:_]

[removed: | Acquisitions/other] [added: _Acquisitions/other] divestiture [removed: gains | | | (0.15) | | | (0.15) | | | — | |][added: gains:_]

| Foreign exchange impacts | [added: ​] | [added: ​] | [removed: (0.03)] [added: —] | [added: ​] | [added: ​] | (0.05) | [removed: | | (0.13) |] [added: ​] |

| Shares of common stock outstanding | [added: ​] | [added: ​] | [removed: 0.08] [added: 0.22] | [added: ​] | [added: ​] | 0.18 | [removed: | | 0.08 |] [added: ​] |

| 2018 divestiture of Communication Markets Division, net of related restructuring actions | [added: ​] | [added: ​] | [removed: 0.02] [added: (0.50)] | [added: ​] | [added: ​] | 0.50 | [removed: | | — |] [added: ​] |

| TCJA measurement period adjustment | [added: ​] | [added: ​] | [removed: 0.07] [added: —] | [added: ​] | [added: ​] | (0.29) | [removed: | | (1.24) |] [added: ​] |

| Current period | [added: ​] | [removed: $] [added: $] | [removed: 2.27] [added: 7.81] | [added: ​] | $ | 8.89 | [removed: | $ | 7.93 |] [added: ​] |

[removed: Year] [added: Year] 2018 [removed: and fourth quarter EPS:][added: EPS:]

For [removed: full] year [removed: 2018,] [added: ended December 31, 2019,] net income attributable to 3M was [removed: $5.349] [added: $4.570] billion, or [removed: $8.89] [added: $7.81] per diluted share basis, compared to [removed: $4.858] [added: $5.349] billion, or [removed: $7.93] [added: $8.89] per diluted share, for [removed: full] year [removed: 2017, an increase] [added: ended December 31, 2018, a decrease] of 12.1 percent on a per diluted [removed: share.][added: share basis.]

[removed: 2017] [added: _2017] divestiture of identity management [removed: business:][added: business__:_]

| | [removed: · |] [added: ●] | In May 2017, 3M completed the [removed: related sale or transfer of control, as applicable] [added: divestiture] of its identity management business and reflected a pre-tax gain of $457 million, which was reported within the Company’s [removed: Safety] [added: Transportation] and [removed: Graphics] [added: Electronics] business. [removed: The earnings per share impact reflects the specific income tax rate used for this divestiture.] |

[removed: Organic] [added: _Organic] growth/productivity and [removed: other:][added: other:_]

| | [removed: · |] [added: ●] | [removed: Fourth quarter and full year] 2018 year-on-year benefits include higher organic local-currency sales, selling price increases, and business transformation, which [removed: is having] [added: had] a positive impact on 3M’s productivity efforts. Higher raw material costs partially offset these year-on-year benefits. |

| | [removed: · |] [added: ●] | Lower year-on-year restructuring (other than activity related to the Communication Markets Division divestiture), portfolio and footprint actions increased pre-tax earnings by approximately [removed: $58 million and] $307 million in [removed: the fourth quarter and full year 2018, respectively. These] [added: 2018. 2017] charges included [removed: $24 million related to exit activities and $80 million in asset charges, accelerated depreciation and other costs taken in the first quarter of 2017,] $99 million in restructuring actions and [removed: $51 million in asset charges, accelerated depreciation and other costs taken in the second quarter of 2017, $35 million in asset charges, accelerated depreciation and other costs taken in the third quarter of 2017, in addition to $23 million related to exit activities and $41] [added: $207] million in asset charges, accelerated depreciation and other [removed: costs taken in the fourth quarter of 2017.] [added: costs.] |

[removed: Acquisitions/other] [added: _Acquisitions/other] divestiture [removed: gains:][added: gains:_]

| | [removed: · |] [added: ●] | In aggregate, acquisitions, year-on-year divestitures gains (other than the sale of the Communication Markets Division and identity management business), and lost operating income from divested businesses (other than lost income related to the divestiture of the Communication Markets Division) decreased earnings per diluted share by [removed: 12 cents year-on-year for the fourth quarter of 2018 and decreased earnings per diluted share by] 10 cents [removed: for full year] [added: in] 2018. |

| | [removed: · |] [added: ●] | Remaining stranded costs and lost operating income related to the divestiture of the Communication Markets Division decreased earnings per diluted share by [removed: 3 cents and] 5 cents year-on-year [removed: for the fourth quarter of 2018 and full year 2018, respectively.] [added: in 2018.] |

[removed: Foreign] [added: _Foreign] exchange [removed: impacts:][added: impacts:_]

| | [removed: · |] [added: ●] | Foreign currency impacts (net of hedging) decreased pre-tax earnings year-on-year by approximately [removed: $27 million and approximately] $42 million, or the equivalent of [removed: 3 cents and] 5 cents per diluted share, [removed: for the fourth quarter and full year 2018, respectively,] excluding the impact of foreign currency changes on tax rates. |

[removed: Legal-related charges][added: _Significant litigation-related charges_:]

[removed: Other expense:][added: Other Expense (Income), Net:]

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OVERVIEW

As more fully described in both the Performance by Business Segment section in MD&A and in Note 19, effective in the second quarter of 2019, the Company realigned its former five business segments into four and moved certain product lines to better align with their respective end customers.

Earlier in the first quarter of 2019, the Company changed its business segment reporting in its continuing effort to improve the alignment of businesses around markets and customers.

​

As applicable, certain items in the table reflect specific income tax rates associated therewith.

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| Significant litigation-related charges | ​ | ​ | 1.28 | ​ | ​ | — | ​ |

| Same period last year, excluding significant litigation-related charges and TCJA enactment | ​ | $ | 10.46 | ​ | $ | 9.17 | ​ |

| Organic growth/productivity and other | ​ | ​ | (0.60) | ​ | ​ | 0.74 | ​ |

| 2019 restructuring actions | ​ | ​ | (0.41) | ​ | ​ | — | ​ |

| Acquisitions/divestitures | ​ | ​ | (0.07) | ​ | ​ | (0.15) | ​ |

| Income tax rate | ​ | ​ | — | ​ | ​ | 0.61 | ​ |

| Current period, excluding significant litigation-related charges, TCJA measurement period adjustment, and Venezuelan deconsolidation | ​ | $ | 9.10 | ​ | $ | 10.46 | ​ |

| Significant litigation-related charges | ​ | ​ | (1.01) | ​ | ​ | (1.28) | ​ |

| Loss on deconsolidation of Venezuelan subsidiary | ​ | ​ | (0.28) | ​ | ​ | — | ​ |

​

The Company refers to various “adjusted” amounts or measures on an “adjusted basis”.

These exclude the 2019 charge related to the deconsolidation of the Company’s Venezuelan subsidiary, the 2018 and 2019 significant litigation-related charges, and the 2017 enactment and 2018 measurement period adjustments to the provisional amounts recorded related to the 2017 enactment of the Tax Cuts and Jobs Act (TCJA).

These non-GAAP measures are further described and reconciled to the most directly comparable GAAP financial measures in the _Certain amounts adjusted for impacts of significant litigation-related charges, deconsolidation of the Company’s Venezuelan subsidiary, and enactment/measurement period adjustments related to the Tax Cuts and Jobs Act (TCJA) - (non-GAAP measures)_ section below.

On an adjusted basis, net income attributable to 3M was $5.322 billion, or $9.10 per diluted share for 2019 compared to $6.295 billion, or $10.46 per diluted share for 2018, a decrease of 13.0 percent on a per diluted share basis.

For 2019, while 3M experienced sales growth in its Consumer and Health Care segments, this was more than offset by declines in 3M’s Safety and Industrial and Transportation and Electronics segments.

These two businesses were impacted by softness in certain end markets (China, automotive and electronics) and channel inventory adjustments, particularly within Asia Pacific and the United States.

Earnings were also impacted by second quarter restructuring actions taken to address lower sales volumes, as well as inventory reductions to drive improved cash flow.

Further restructuring actions were taken in fourth quarter to realign 3M’s organizational structure and operating model to improve growth and operational efficiency.

Partially offsetting these impacts were benefits in the second half of 2019 from the second quarter restructuring actions.

| | ● | In 2018, 3M completed the sale of substantially all of its Communication Markets Division and reflected a pre-tax gain of $509 million as a result of this divestiture and was reported within the Company’s Safety and Industrial business. During 2018, management approved and committed to undertake certain restructuring actions as further described in Note 5, related to addressing corporate functional costs following the Communication Markets Division divestiture resulting in a 2018 pre-tax charge of $127 million, net of adjustments for reductions in cost estimates of $10 million. The aggregate net impact of the gain on sale and related restructuring actions increased earnings per diluted share by 50 cents per diluted share for the full year 2018. |

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​

| | ● | Negative organic local-currency sales growth as a result of softness in certain end markets and channel inventory adjustments, along with actions taken by 3M in response to lower sales volumes and high inventory levels, which resulted in lower manufacturing and inventory absorption, reduced earnings per diluted share. Partially offsetting these impacts were benefits from restructuring actions taken in the second quarter of 2019. |

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| | ● | Defined benefit pension and postretirement service cost expense decreased expense year-on-year, which benefited earnings per diluted share. |

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OVERVIEW

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

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| Same period last year, excluding 2017 Tax Cuts and Jobs Act (TCJA) | | $ | 2.10 | | $ | 9.17 | | $ | 8.16 | |

| Legal-related charges | | | — | | | (0.04) | | | — | |

| Legal - respirator mask actuarial reserve | | | — | | | — | | | (0.07) | |

| Other expense | | | 0.06 | | | (0.14) | | | (0.22) | |

| Income tax rate, excluding Tax Cuts and Jobs Act (TCJA) measurement period adjustment | | | 0.05 | | | 0.61 | | | 0.34 | |

| Current period, excluding MN Natural Resource Damages (NRD) resolution and TCJA measurement period adjustment | | $ | 2.31 | | $ | 10.46 | | $ | 9.17 | |

| MN NRD resolution | | | (0.11) | | | (1.28) | | | — | |

For the fourth quarter of 2018, net income attributable to 3M was $1.347 billion, or $2.27 per diluted share, compared to $523 million, or $0.85 per diluted share, in the fourth quarter of 2017, an increase of 167 percent on a per diluted share basis.

Adjusting for the impacts related to the resolution of the Minnesota natural resource damages (NRD) matter and accounting for the enactment of the Tax Cuts and Jobs Act (TCJA), as further described in the Operating income, operating income margin, income before taxes, net income, earnings per share, and effective tax rate adjusted for impacts of the Minnesota NRD resolution and the measurement period adjustment to the impact of the enactment of the Tax Cuts and Jobs Act (TCJA) - (non-GAAP measures) section below, net income attributable to 3M was $1.366 billion, or $2.31 diluted share for the fourth quarter of 2018, compared to $1.285 billion, or $2.10 per diluted share for the fourth quarter of 2017, an increase of 10.0 percent on a per diluted share basis.

Adjusting for the NRD matter and the TCJA as described further below, net income was $6.295 billion, or $10.46 per diluted share for the full year 2018, compared to $5.620 billion, or $9.17 per diluted share for full year 2017, an increase of 14.1 percent on a per diluted share basis.

These non-GAAP measures are further described and reconciled to the most directly comparable GAAP financial measures in the section that follows.

| | · | | In the second quarter of 2018, 3M reached agreements in principle on a number of respiratory mask/asbestos claims and an oral care product liability matter, the implications of which resulted in an increase in certain legal accruals. Refer to Note 16 for further details. |

| | · | | The effect of income taxes on items that had specific tax rates are reflected within their respective diluted earnings per share impacts in the table above for both the fourth quarter and full year 2018. Additionally, as discussed in the section below titled Operating income, operating income margin, income before taxes, net income, earnings per share, and effective tax rate adjusted for impacts of the Minnesota NRD resolution and the measurement period adjustment to the impact of the enactment of the Tax Cuts and Jobs Act (TCJA) - (non-GAAP measures), excluding the Minnesota NRD Resolution and measurement period adjustment related to TCJA, the effective income tax rate was 20.5 percent and 20.1 percent in the fourth quarter 2018 and full year 2018, respectively. Excluding the $762 million impact related to the enactment of the TCJA in the fourth quarter of 2017, the effective income tax rate for the fourth quarter 2017 and full year 2017 was 23.0 percent and 25.4 percent, respectively. |

| | · | | In May 2017, 3M completed the related sale or transfer of control, as applicable of its identity management business and reflected a pre-tax gain of $457 million. The earnings per share impact reflects the specific income tax rate used for this divestiture. |

| | · | | Organic growth/productivity in 2017 included benefits from higher organic local-currency sales, raw material cost decreases from sourcing cost reduction projects, and business transformation, which had a positive impact on 3M’s productivity efforts. These benefits were partially offset by higher defined benefit pension service cost expenses. During 2017, organic growth and productivity were the primary drivers for the year-on-year benefit. |

| | · | | Year-on-year incremental strategic investments decreased pre-tax earnings by approximately $413 million in 2017. These incremental strategic investments are comprised of 3M’s investments in growth initiatives and optimization of its portfolio and supply chain footprint. |

| | · | | Acquisitions and divestitures (other than the sale of the identity management business) had a neutral impact to earnings per diluted share for full year 2017. Acquisition impacts, which are measured for the first twelve months post-transaction, related primarily to the acquisition of Scott Safety (fourth quarter 2017). The net impact related to Scott Safety included income from operations, more than offset by the transaction and integration costs of the acquisition. Interest expense related to financing costs of Scott Safety are also included. The net impact related to Scott Safety was equivalent to a year-on-year decrease of 7 cents per diluted share. Full year 2017 had year-on-year operating income impacts from the following divestitures: Polyfoam and the remaining portion of the library system business (both in first quarter 2016), protective films business and cathode battery technology out-license business (both in fourth quarter 2016), prescription safety eyewear business (January 2017), tolling and automated license/number plate recognition business (second quarter of 2017), and electronic monitoring business (fourth quarter 2017). The incremental year-on-year pre-tax gain on divestiture impact, net of lost operating loss/(income) during 2017 was an increase of approximately 7 cents per diluted share. |

| | · | | Foreign currency impacts (net of hedging) decreased pre-tax earnings by approximately $111 million year-on-year in 2017, excluding the impact of foreign currency changes on tax rates. This is equivalent to a year-on-year decrease of 13 cents per diluted share for the full year 2017. |

Legal – respirator mask actuarial reserve

| | · | | In the fourth quarter of 2017, as a result of the Company’s regular review of its respirator mask/asbestos liabilities, the Company increased its accruals. Refer to Note 16 for more details. |

| | · | | Other expense decreased earnings per share for 2017, largely due to the loss on extinguishment of debt, higher U.S. average balances, and higher interest rates. The early extinguishment of debt resulted in a charge of $96 million, which contributed to a year-on-year decrease of 11 cents per diluted share. Additionally, the portion of interest expense related to the financing costs of acquiring Scott Safety, which was equivalent to a year-on-year decrease of 2 cents per diluted share, is included in the acquisitions and divestitures impact described above. |

| | · | | The effect of income taxes on items that had specific tax rates are reflected within their respective diluted earnings per share impacts in the table above for full year 2017. As discussed in the section below, the Company recorded a net tax expense of $762 million related to the enactment of the TCJA, which was equivalent to a decrease of $1.24 per diluted share in 2017. The effective tax rate was 35.5 percent, an increase of 7.2 percentage points versus 2016. Excluding the impact of TCJA, the effective income tax rate was 25.4 percent in the full year 2017, a decrease of 2.9 percentage points versus 2016. Excluding the impact of TCJA, the fourth quarter and full year 2017 change in tax rate was driven largely by increasing benefits from our supply chain centers of expertise, favorable geographic mix and other items, as referenced in Note 10. |

As further discussed in Note 16, in February 2018, 3M reached an agreement with the State of Minnesota that resolved the previously disclosed Natural Resource Damages (NRD) lawsuit filed by the State against the Company related to certain PFCs present in the environment.

Under the terms of the settlement, 3M agreed to provide an $850 million grant to the State for a special “3M Water Quality and Sustainability Fund.” This Fund will enable projects that support water sustainability in the Twin Cities East Metro region, such as continued delivery of water to residents and enhancing groundwater recharge to support sustainable growth.

The projects will also result in habitat and recreation improvements, such as fishing piers, trails, and open space preservation.

3M recorded a charge of $897 million ($710 million after-tax), inclusive of legal fees and other related obligations, in the first quarter of 2018 associated with the resolution of this matter.

In the fourth quarter of 2018, 3M recorded a related $60 million tax expense resulting from the Company’s ongoing IRS examination under the Compliance Assurance Process (CAP) and new guidance released under the Tax Cuts and Jobs Act.

In the fourth quarter 2018, 3M finalized the tax impact related to TCJA with a reversal of previously recorded tax expense in the amount of $41 million.

During the fourth quarter of 2017, 3M recorded a net tax expense of $762 million related to the enactment of the Tax Cuts and Jobs Act (TCJA).

The expense was primarily related to the TCJA’s transition tax on previously unremitted earnings of non-U.S. subsidiaries and was net of remeasurement of 3M’s deferred tax assets and liabilities considering the TCJA’s newly enacted tax rates and certain other impacts.

This provisional amount was subject to adjustment during the measurement period of up to one year following the December 2017 enactment of the TCJA, as provided by SEC guidance.

Operating income, operating income margin, effective tax rate, net income, and earnings per share are all measures for which 3M provides the GAAP measure and an adjusted measure.

The Company believes that discussion of

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The dollar equivalent gross notional amount of the Company’s foreign exchange forward and option contracts designated as either cash flow hedges or net investment hedges was [removed: $3.4] [added: $3.0] billion at December 31, [removed: 2018.][added: 2019.]

The dollar equivalent gross notional amount of the Company’s foreign exchange forward and option contracts not designated as hedging instruments was [removed: $2.5] [added: $2.7] billion at December 31, [removed: 2018.][added: 2019.]

In addition, as of December 31, [removed: 2018,] [added: 2019,] the Company had 4.1 billion Euros in principal amount of foreign currency denominated debt designated as non-derivative hedging instruments in certain net investment hedges as discussed in Note 14 in the “Net Investment Hedges” section.

The dollar equivalent (based on inception date foreign currency exchange rates) gross notional amount of the Company’s interest rate swaps at December 31, [removed: 2018] [added: 2019] was [removed: $2.4] [added: $1.1] billion.

The Company may enter into other commodity price swaps to offset, in part, fluctuation and costs associated with the use of certain commodities and [added: precious metals.]

These instruments are not designated in hedged relationships and the extent to which they were outstanding at December 31, [removed: 2018] [added: 2019] was not material.

A Monte Carlo simulation technique was used to test the impact on after-tax earnings related to financial instruments (primarily debt), derivatives and underlying exposures outstanding at December 31, [removed: 2018.][added: 2019.]

The exposure to changes in currency rates model used 9 currencies, interest rates related to [removed: two] [added: three] currencies, and commodity prices related to five commodities.

| [added: ​] | [added: ​] | [removed: Adverse] [added: Adverse] impact on [removed: after-tax] [added: after-tax] | | | | | [added: ​] | [removed: Positive] [added: Positive] impact on [removed: after-tax] [added: after-tax] | | | | | |

| [added: ​] | [added: ​] | [removed: earnings] [added: earnings] | | | | | [added: ​] | [removed: earnings] [added: earnings] | | | | | |

| [removed: (Millions)] [added: (Millions)] | | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | |

| Foreign exchange rates | [added: ​] | [removed: $] [added: $] | [removed: (290)] [added: (133)] | [added: ​] | $ | [removed: (242)] [added: (290)] | [added: ​] | [removed: $] [added: $] | [removed: 305] [added: 137] | [added: ​] | $ | [removed: 253] [added: 305] | [added: ​] |

| Interest rates | [added: ​] | | [removed: (20)] [added: (11)] | [added: ​] | | [removed: (15)] [added: (20)] | [added: ​] | | [removed: 17] [added: 10] | [added: ​] | | [removed: 14] [added: 17] | [added: ​] |

| Commodity prices | [added: ​] | | [removed: (6)] [added: (2)] | [added: ​] | | [removed: (3)] [added: (6)] | [added: ​] | | [removed: 8] [added: 1] | [added: ​] | | [removed: 3] [added: 8] | [added: ​] |

A one percent price change would result in a pre-tax cost or savings of approximately [removed: $75] [added: $70] million per year.

The global energy exposure is such that a ten percent price change would result in a pre-tax cost or savings of approximately [removed: $42] [added: $40] million per year.

Changes in those factors could impact the Company’s results of operations and financial condition.

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

​

Changes in those factors could cause fluctuations in earnings and cash flows.

precious metals.

| | | | | | | | | | | | | | |

In addition to the possible adverse and positive impacts discussed in the preceding table related to foreign exchange rates, recent historical information is as follows.

3M estimates that year-on-year currency effects, including hedging impacts, decreased pre-tax income by $42 million and $111 million in 2018 and 2017, respectively.

This estimate includes the effect of translating profits from local currencies into U.S. dollars; the impact of currency fluctuations on the transfer of goods between 3M operations in the United States and abroad; and transaction gains and losses, including derivative instruments designed to reduce foreign currency exchange rate risks.

3M estimates that year-on-year derivative and other transaction gains and losses decreased pre-tax income by approximately $92 million and $152 million in 2018 and 2017, respectively.

[removed: Available Information][added: Available Information]

[removed: General][added: General]

3M is a diversified technology company with a global presence in the following businesses: [removed: Industrial;] Safety and [removed: Graphics;] [added: Industrial; Transportation and Electronics;] Health Care; [removed: Electronics] and [removed: Energy; and] Consumer.

At December 31, [removed: 2018,] [added: 2019,] the Company employed [removed: 93,516] [added: 96,163] people (full-time equivalents), with [removed: 37,412] [added: 39,662] employed in the United States and [removed: 56,104] [added: 56,501] employed internationally.

[removed: Business Segments][added: Business Segments]

[removed: As described in Notes 4 and 18, effective] [added: Earlier] in the first quarter of [removed: 2018,] [added: 2019,] the Company changed its business segment reporting [removed: as part of 3M’s] [added: in its] continuing effort to improve the alignment of [removed: its] businesses around markets and customers.

3M manages its operations in [removed: five] [added: four] business segments.

The reportable segments are [removed: Industrial,] Safety and [removed: Graphics,] [added: Industrial, Transportation and Electronics,] Health Care, [removed: Electronics] and [removed: Energy, and] Consumer.

3M’s [removed: five] [added: four] business segments bring together common or related 3M technologies, enhancing the development of innovative products and services and providing for efficient sharing of business resources.

[removed: Industrial products] [added: This segment’s industrial offerings] include tapes, a wide variety of coated, non-woven and bonded abrasives, adhesives, [removed: advanced ceramics,] sealants, specialty materials, [removed: purification (filtration products),] closure systems for personal hygiene products, [added: and] acoustic systems [removed: products, and components and products that are used in the manufacture, repair and maintenance of automotive, marine, aircraft and specialty vehicles.][added: products.]

3M [added: also] develops and produces advanced technical ceramics for demanding applications in the automotive, oil and gas, solar, industrial, electronics and defense industries.

Major [removed: industrial] products include vinyl, polyester, foil and specialty industrial tapes and adhesives; Scotch® Masking Tape, Scotch® Filament Tape and Scotch® Packaging Tape; packaging equipment; 3M™ VHB™ Bonding Tapes; conductive, low surface energy, sealants, hot melt, spray and structural adhesives; reclosable fasteners; label materials for durable goods; coated, nonwoven and microstructured surface finishing and grinding abrasives for the industrial [removed: market; a comprehensive line of filtration products for the separation, clarification and purification of fluids and gases; and fluoroelastomers for seals, tubes and gaskets in engines.][added: market.]

[removed: Major industrial] [added: This segment’s transportation-related businesses include components and] products [added: that are] used in the [removed: transportation industry include insulation components, including] [added: manufacture, repair and maintenance of automotive, marine, aircraft and specialty vehicles; fluoroelastomers for seals, tubes and gaskets in engines;] Thinsulate™ Acoustic Insulation and components for cabin noise reduction and catalytic converters; functional and decorative graphics; abrasion-resistant films; adhesives; sealants; masking tapes; fasteners and tapes for attaching nameplates, trim, moldings, interior panels and carpeting; coated, nonwoven and microstructured finishing and grinding abrasives; structural adhesives; and other specialty materials.

[removed: In addition, 3M provides] [added: Retail auto care product offerings include] paint finishing and detailing products, including a complete system of cleaners, dressings, polishes, waxes and other products.

[removed: As discussed in Note 3, in] [added: In] October 2017, 3M completed the acquisition of the underlying legal entities and associated assets of Scott Safety, a premier manufacturer of innovative products, including self-contained breathing apparatus systems, gas and flame detection instruments, and other safety devices that complement 3M’s personal safety portfolio.

This segment’s [removed: products] [added: safety market offerings] include personal protection products, such as certain disposable and reusable respirators, fall protection equipment, personal protective equipment, head and face protection, body protection, hearing protection and protective eyewear, plus reflective materials that are widely used on apparel, footwear and accessories, enhancing visibility in low-light situations.

[removed: Major] [added: Other businesses within this segment include major] commercial [removed: graphics] products [removed: include] [added: such as] films, inks, and related products used to produce graphics for vehicles, signs and interior [removed: surfaces.][added: surfaces; spill-control sorbents; nonwoven abrasive materials for floor maintenance and commercial cleaning; and floor matting.]

In transportation safety, 3M provides reflective sheeting used on highway signs, [removed: vehicle license plates,] construction work-zone devices, trucks and other vehicles, and also provides pavement marking systems.

[removed: As discussed in Note 3, in] [added: In] May 2017, 3M completed the [removed: related sale or transfer of control, as applicable,] [added: divestiture] of its identity management business.

Other segment products include [removed: spill-control sorbents; nonwoven abrasive materials for floor maintenance and commercial cleaning; floor matting; and] natural and color-coated mineral granules for asphalt shingles.

[added: _Health Care Business:_] Products and services provided to these and other markets include medical and surgical supplies, skin health and infection prevention products, oral care solutions (dental and orthodontic products), [added: separation and purification sciences,] health information systems, inhalation and transdermal drug delivery systems, and food safety products.

[removed: In addition,] 3M [added: also] markets a variety of surgical drapes, masks and preps, electrodes, stethoscopes, as well as sterilization assurance equipment and patient warming solutions designed to prevent hypothermia in surgical settings.

[removed: Other products include] [added: In our] drug delivery [removed: systems, such as] [added: systems business, our products include] metered-dose [removed: inhalers,] [added: inhalers and] transdermal skin patches and related components.

Oral care solutions include restoratives, adhesives, finishing and polishing products, crowns, impression materials, preventive sealants, professional tooth whiteners, prophylaxis and orthodontic appliances, as well as digital [added: workflow solutions to transform traditional impression and analog processes.]

In health information systems, 3M develops and markets computer software for hospital [removed: coding] [added: coding, recording,] and data [removed: classification,] [added: classification] and provides related consulting services.

[removed: As discussed in Note 3, in] [added: In] September 2017, 3M purchased all of the ownership interests of Elution Technologies, LLC, a Vermont-based manufacturer of test kits that help enable food and beverage companies ensure their products are free from certain potentially harmful allergens such as peanuts, soy or milk.

3M provides distinct products for five market segments, including products for: 1) [removed: LCD] computer monitors 2) [removed: LCD] televisions 3) handheld devices such as cellular phones and tablets 4) notebook PCs and 5) automotive displays.

This segment also provides [removed: desktop and notebook] computer screen filters that address display light control, privacy, and glare reduction needs.

This segment’s [removed: energy solutions include] electrical [removed: products, including] [added: offerings include] infrastructure [removed: protection,] [added: protection] and renewable [removed: energy.][added: energy solutions.]

[removed: As discussed in Note 3, in] [added: In] June 2018, 3M completed the sale of substantially all of its Communication Markets Division, with the remaining telecommunications systems services portion based in Germany sold in December 2018.

Major consumer products include Scotch® brand products, such as Scotch® Magic™ Tape, Scotch® Glue Stick and Scotch® Cushioned Mailer; Post-it® Products, such as Post-it® Flags, Post-it® Extreme Notes, Post-it® Note Pads, Post-it® Labeling & Cover-up Tape, and Post-it® Pop-up Notes and Dispensers; home improvement products, including [removed: ScotchBlueTM] [added: ScotchBlue™] painter tapes, surface-preparation and wood-finishing materials, Command™ Adhesive Products and Filtrete™ Filters for furnaces and air conditioners and [removed: FiltreteTM] [added: Filtrete™] Room Air Purifiers; home care products, including Scotch-Brite® Scour Pads, Scotch-Brite® Scrub Sponges, Scotch-Brite® Microfiber Cloth products, O-Cel-O™ Sponges; protective material products, such as Scotchgard™ Fabric Protectors; certain maintenance-free respirators; certain consumer retail personal safety products, including safety glasses, hearing protectors, and 3M Thinsulate™ Insulation, which is used in jackets, pants, gloves, hats and boots to keep people warm; Nexcare™ Adhesive Bandages; and ACE® branded (and related brands) elastic bandage, supports and thermometer product lines.

[removed: Distribution][added: Distribution]

3M products are sold through numerous distribution channels, including directly to users and through numerous [added: e-commerce and traditional] wholesalers, retailers, jobbers, distributors and dealers in a wide variety of trades in many countries around the world.

[removed: Research] [added: Research] and [removed: Patents][added: Patents]

Research, development and related expenses totaled [removed: $1.821] [added: $1.911] billion in [removed: 2018, $1.870] [added: 2019, $1.821] billion in [removed: 2017] [added: 2018] and [removed: $1.764] [added: $1.870] billion in [removed: 2016.][added: 2017.]

Research and development, covering basic scientific research and the application of scientific advances in the development of new and improved products and their uses, totaled $1.253 billion in [removed: 2018, $1.352] [added: 2019, $1.253] billion in [removed: 2017] [added: 2018] and [removed: $1.248] [added: $1.352] billion in [removed: 2016.][added: 2017.]

[removed: Raw Materials][added: Raw Materials]

In [removed: 2018,] [added: 2019,] the Company experienced raw material price inflation across [removed: most] [added: many] material markets [removed: worldwide.][added: in all geographies.]

3M has avoided disruption to its manufacturing operations through careful management of existing raw material inventories, strategic relationships with key suppliers, and development [removed: and] [added: as well as] qualification of additional supply sources.

[removed: Environmental] [added: Environmental] Law [removed: Compliance][added: Compliance]

As described in Notes 4 and 19, effective in the second quarter of 2019, the Company realigned its former five business segments into four to enable the Company to better serve global customers and markets.

In addition, certain product lines were moved to better align with their respective end customers.

These changes included the realignment of certain customer account activity in various countries (affecting dual credit reporting), creation of the Closure and Masking Systems and Medical Solutions divisions, and certain other actions that impacted segment reporting.

_Safety and Industrial Business:_ This segment includes businesses that serve the global industrial, electrical and safety markets.

This business segment consists of personal safety, industrial adhesives and tapes, abrasives, closure and masking systems, electrical markets, automotive aftermarket, and roofing granules.

This segment also includes the Communication Markets Division (which was substantially sold in 2018) and the refrigeration filtration product lines (within Other Safety and Industrial).

In August 2019, 3M completed the sale of its gas and flame detection business.

_Transportation and Electronics Business:_ This segment includes businesses that serve global transportation and electronic original equipment manufacturer (OEM) customers.

This business segment consists of electronics (display materials and systems, electronic materials solutions), automotive and aerospace, commercial solutions, advanced materials, and transportation safety.

*​*

This segment also includes a comprehensive line of filtration products for the separation, clarification and purification of fluids and gases.

In February 2019, 3M completed the acquisition of the technology business of M*Model.

M*Model’s technology business provides cloud-based, conversational artificial intelligence powered systems that expand 3M’s Health Information Systems business.

In October, 2019, 3M completed the acquisition of Acelity Inc. and its KCI subsidiaries.

Acelity is a leading global medical technology company focused on advanced wound care and specialty surgical applications marketed under the KCI brand that expand 3M’s presence in advanced and surgical wound care within 3M’s medical solutions division.

_Consumer Business:_ This business serves global consumers and consists of home improvement, stationery and office supplies, home care, and consumer health care.

This segment also includes, within the Construction and Home Improvement Division, certain retail auto care product lines.

In addition, 3M evaluates suppliers’ conformance with environmental and social compliance requirements.

The Company places consistent emphasis on environmental responsibility.

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| Name | | Age | | Present Position | | Year Elected to Present Position | | Other Positions Held During 2015-2019 |

| Denise R. Rutherford | ​ | 57 | ​ | Senior Vice President, Corporate Affairs | ​ | 2019 | ​ | Vice President, Research & Development and Commercialization, Industrial Business Group, 2017-2019 Managing Director, 3M Japan, 2016-2017 Vice President, Greater China Area and Managing Director, 3M China, 2015-2016 Vice President, Latin America, 2013-2015 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| Stephen M. Shafer | ​ | 44 | ​ | Senior Vice President, 3M Strategy & Business Development | ​ | 2019 | ​ | Senior Vice President, Business Development and Marketing-Sales, 2019 Vice President, Greater China Area and Managing Director, 3M China, 2016-2019 Vice President, Business Transformation, 2014-2016 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| Ty R. Silberhorn | ​ | 52 | ​ | Senior Vice President, Business Transformation and Information Technology | ​ | 2019 | ​ | Vice President and General Manager, Industrial Adhesives and Tapes Division, 2015-2019 ​ |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

​

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Industrial Business: The Industrial segment serves a broad range of markets, such as automotive original equipment manufacturer (OEM) and automotive aftermarket (auto body shops and retail), electronics and automotive electrification, appliance, paper and printing, packaging, food and beverage, and construction.

In the first quarter of 2016, 3M sold the assets of its pressurized polyurethane foam adhesives

business, and in October 2016 sold the assets of its adhesive-backed temporary protective films business.

Safety and Graphics Business: The Safety and Graphics segment serves a broad range of markets that increase the safety and productivity of people, facilities and systems.

Major product offerings include personal protection products, such as respiratory, hearing, eye and fall protection equipment; commercial solutions, including commercial graphics sheeting and systems, architectural design solutions for surfaces, and cleaning and protection products for commercial establishments; transportation safety solutions, such as retroreflective sign sheeting; and roofing granules for asphalt shingles.

In the first quarter of 2016, 3M completed the sale of its library systems business.

Health Care Business: The Health Care segment serves markets that include medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, health information systems, and food manufacturing and testing.

workflow solutions to transform traditional impression and analog processes.

Electronics and Energy Business: The Electronics and Energy segment serves customers in electronics and energy markets, including solutions that improve the dependability, cost-effectiveness, and performance of electronic devices; electrical products, including infrastructure protection; and power generation and distribution.

In December 2016, 3M sold the assets of its cathode battery technology out-licensing business.

Consumer Business: The Consumer segment serves markets that include consumer retail, online retail, office retail, office business to business, home improvement, drug and pharmacy retail, and other markets.

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| James L. Bauman | | 59 | | Executive Vice President, Industrial Business Group | | 2017 | | Executive Vice President, Electronics and Energy Business Group, 2015-2017 Senior Vice President, Business Transformation, Americas, 2015 Senior Vice President, Asia Pacific, 2012-2014 |

| Ashish K. Khandpur | | 51 | | Executive Vice President, Electronics & Energy Business Group | | 2017 | | Senior Vice President, Research and Development, and Chief Technology Officer, 2014-2017 Vice President and General Manager, Personal Safety Division, 2014 |

| Jon T. Lindekugel | | 54 | | Senior Vice President, Manufacturing and Supply Chain | | 2018 | | Senior Vice President, Supply Chain, 2017 Senior Vice President, Business Development and Marketing-Sales, 2015-2017 Senior Vice President, Business Development, 2014-2015 President, Health Information Systems Inc., 2008-2014 |

| Michael G. Vale | | 52 | | Executive Vice President, Health Care Business Group | | 2016 | | Executive Vice President, Consumer Business Group, 2012-2016 |

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[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: ☒ ANNUAL] [added: ☒ ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF [removed: THE][added: THE]

[removed: SECURITIES] [added: SECURITIES] EXCHANGE ACT OF [removed: 1934][added: 1934]

[removed: For] [added: For] the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2018][added: 2019]

[removed: Commission] [added: Commission] file [removed: number 1-3285][added: number 1-3285]

[removed: 3M COMPANY][added: 3M COMPANY]

| State of Incorporation: [removed: Delaware] [added: Delaware] | [added: ​] | I.R.S. Employer Identification No. [removed: 41-0417775] [added: 41-0417775] |

Principal executive offices: [removed: 3M Center, St. Paul, Minnesota 55144][added: 3M Center, St. Paul, Minnesota 55144]

Telephone number: [removed: (651) 733-1110][added: (651) 733-1110]

| [removed: Title] [added: Title] of each [removed: class] [added: class] | | [removed: Name] [added: Trading Symbol(s) | | Name] of each exchange on which [removed: registered] [added: registered] |

| Common Stock, Par Value $.01 Per Share [removed: 1.500% Notes due 2026 Floating Rate Notes due 2020 0.375% Notes due 2022 0.950% Notes due 2023 1.750% Notes due 2030 1.500% Notes due 2031] | [added: ​] | [removed: New York Stock Exchange, Inc. Chicago Stock Exchange, Inc. New York Stock Exchange, Inc. New York Stock Exchange, Inc. New York Stock Exchange, Inc. New York Stock Exchange, Inc. New York Stock Exchange, Inc.] [added: MMM | ​ |] New York Stock Exchange, Inc. |

Securities registered pursuant to section 12(g) of the Act: [removed: None][added: None]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T [added: (§ 232.405 of this chapter)] during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

[removed: Form 10-K.][added: FORM 10-K]

Indicate by check mark whether the [removed: Registrant] [added: registrant] is a large accelerated filer, an accelerated filer, a non-accelerated filer, [added: a] smaller reporting company, or an emerging growth company.

| Large accelerated filer ☒ | Accelerated filer ☐ | [added: ​] | Non-accelerated filer ☐ | Smaller reporting company ☐ | Emerging growth company ☐ |

The aggregate market value of voting stock held by nonaffiliates of the [removed: Registrant,] [added: registrant,] computed by reference to the closing price and shares outstanding, was approximately [removed: $115.3] [added: $91.3] billion as of January 31, [removed: 2019] [added: 2020] (approximately [removed: $115.4] [added: $99.7] billion as of June 30, [removed: 2018,] [added: 2019,] the last business day of the [removed: Registrant’s] [added: registrant’s] most recently completed second quarter).

Shares of common stock outstanding at January 31, [removed: 2019: 575.8] [added: 2020: 575.6] million

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Parts of the Company’s definitive proxy statement (to be filed pursuant to Regulation 14A within 120 days after Registrant’s fiscal year-end of December 31, [removed: 2018)] [added: 2019)] for its annual meeting to be held on May [removed: 14, 2019,] [added: 12, 2020,] are incorporated by reference in this Form 10-K in response to Part III, Items 10, 11, 12, 13 and 14.

[removed: For] [added: For] the Year Ended December 31, [removed: 2018][added: 2019]

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| [PART I](#PARTI_522757) | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| [ITEM 1](#Item1Business_249447) | [added: ​] | [Business](#Item1Business_249447) | [added: ​] | 4 |

| [ITEM 1A](#Item1ARiskFactors) | [added: ​] | [Risk Factors](#Item1ARiskFactors) | [added: ​] | 10 |

| [ITEM 1B](#Item1BUnresolvedStaffComments_707783) | [added: ​] | [Unresolved Staff Comments](#Item1BUnresolvedStaffComments_707783) | [added: ​] | [removed: 12] [added: 13] |

| [ITEM 2](#Item2Properties_583477) | [added: ​] | [Properties](#Item2Properties_583477) | [added: ​] | [removed: 12] [added: 13] |

| [ITEM 3](#Item3LegalProceedings_139319) | [added: ​] | [Legal Proceedings](#Item3LegalProceedings_139319) | [added: ​] | [removed: 12] [added: 13] |

| [ITEM 4](#Item4MineSafety_982610) | [added: ​] | [Mine Safety Disclosures](#Item4MineSafety_982610) | [added: ​] | [removed: 12] [added: 13] |

| [PART II](#PARTII_439646) | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| [ITEM 5](#Item5MarketforRegistrants_154980) | [added: ​] | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#Item5MarketforRegistrants_154980) | [added: ​] | [removed: 13] [added: 14] |

| [ITEM 6](#Item6SelectedFinancialData_957480) | [added: ​] | [Selected Financial Data](#Item6SelectedFinancialData_957480) | [added: ​] | [removed: 14] [added: 15] |

| [ITEM 7](#Item7Managements_989021) | [added: ​] | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#Item7Managements_989021) | [added: ​] | [removed: 15] [added: 16] |

| [added: ​] | [added: ​] | MD&A is designed to provide a reader of 3M’s financial statements with a narrative from the perspective of management. 3M’s MD&A is presented in eight sections: | [added: ​] | [added: ​] |

| [added: ​] | [added: ​] | [Overview](#Overview) | [added: ​] | [removed: 15] [added: 16] |

| [added: ​] | [added: ​] | [Results of Operations](#Results_of_Operations) | [added: ​] | [removed: 27] [added: 25] |

| [added: ​] | [added: ​] | [Performance by Business Segment](#Performance_by_Bus_Segment) | [added: ​] | [removed: 32] [added: 30] |

3M COMPANY

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| ​ | ​ | MMM | ​ | Chicago Stock Exchange, Inc. |

| 1.500% Notes due 2026 | ​ | MMM26 | ​ | New York Stock Exchange, Inc. |

| Floating Rate Notes due 2020 | ​ | ​ | ​ | New York Stock Exchange, Inc. |

| 0.375% Notes due 2022 | ​ | MMM22A | ​ | New York Stock Exchange, Inc. |

| 0.950% Notes due 2023 | ​ | MMM23 | ​ | New York Stock Exchange, Inc. |

| 1.750% Notes due 2030 | ​ | MMM30 | ​ | New York Stock Exchange, Inc. |

| 1.500% Notes due 2031 | ​ | MMM31 | ​ | New York Stock Exchange, Inc. |

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| ​ | ​ | [Note 17. Leases](#Note_Leases) | ​ | 124 |

| ​ | ​ | [Note 19. Business Segments and Geographic Information](#Note_Segments) | ​ | 130 |

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10-K 1 mmm-20181231x10k.htm 10-K

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this

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| | | [Note 18. Business Segments](#Note_Business_Segment) | | 124 |

| | | [Note 19. Geographic Areas](#Note_Geographic) | | 127 |

The Company operates [removed: 75] [added: 71] manufacturing facilities in 29 states.

Internationally, the Company operates [removed: 107] [added: 100] manufacturing and converting facilities in [removed: 36] [added: 35] countries.

For the year [removed: 2018,] [added: 2019,] the information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Act is included in Exhibit 95 to this annual report.

[removed: PART II][added: PART II]

At January 31, [removed: 2019,] [added: 2020,] there were [removed: 76,596] [added: 73,905] shareholders of record.

Cash dividends declared and paid totaled [removed: $1.36] [added: $1.44] and [removed: $1.175] [added: $1.36] per share for each quarter in [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

[removed: (registered] [added: (registered] pursuant to Section 12 of the Exchange [removed: Act)][added: Act)]

| [added: ​] | | [added: ​] | | [added: ​] | [added: ​] | | [added: ​] | | [removed: Maximum] [added: Maximum] | | |

| [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [removed: Approximate] [added: Approximate] | | |

| [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [removed: Dollar] [added: Dollar] Value [removed: of] [added: of] | | |

| [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [removed: Total] [added: Total] Number [removed: of] [added: of] | [added: ​] | [removed: Shares] [added: Shares] that [removed: May] [added: May] | | |

| [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [removed: Shares Purchased] [added: Shares Purchased] | [added: ​] | [removed: Yet] [added: Yet] Be [removed: Purchased] [added: Purchased] | | |

| [added: ​] | [added: ​] | [removed: Total] [added: Total] Number [removed: of] [added: of] | [added: ​] | [removed: Average Price] [added: Average Price] | | [added: ​] | [removed: as] [added: as] Part of [removed: Publicly] [added: Publicly] | [added: ​] | [removed: under] [added: under] the [removed: Plans] [added: Plans] | | |

| [added: ​] | [added: ​] | [removed: Shares Purchased] [added: Shares Purchased] | [added: ​] | [removed: Paid per] [added: Paid per] | | [added: ​] | [removed: Announced Plans] [added: Announced Plans] | [added: ​] | [removed: or Programs] [added: or Programs] | | |

| [removed: Period] [added: Period] | [added: ​] | [removed: (1)] [added: (1)] | [added: ​] | [removed: Share] [added: Share] | | [added: ​] | [removed: or] [added: or] Programs [removed: (2)] [added: (2)] | [added: ​] | [removed: (Millions)] [added: (Millions)] | | |

| [removed: |] (1) | [removed: |] The total number of shares purchased includes: (i) shares purchased under the Board’s authorizations described above, and (ii) shares purchased in connection with the exercise of stock options. |

| [removed: |] (2) | [removed: |] The total number of shares purchased as part of publicly announced plans or programs includes shares purchased under the Board’s authorizations described above. |

Issuer Purchases of Equity Securities

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| January 1-31, 2019 | | 1,723,445 | ​ | $ | 192.18 | | 1,723,187 | ​ | $ | 9,065 | ​ |

| February 1-28, 2019 | | 1,052,365 | ​ | $ | 204.91 | | 1,048,301 | ​ | $ | 8,850 | ​ |

| March 1-31, 2019 | | 355,200 | ​ | $ | 204.83 | | 355,200 | ​ | $ | 8,777 | ​ |

| Total January 1-March 31, 2019 | | 3,131,010 | ​ | $ | 197.89 | | 3,126,688 | ​ | $ | 8,777 | ​ |

| April 1-30, 2019 | | — | ​ | $ | — | | — | ​ | $ | 8,777 | ​ |

| May 1-31, 2019 | | 1,172,572 | ​ | $ | 170.30 | | 1,172,572 | ​ | $ | 8,578 | ​ |

| June 1-30, 2019 | | 1,197,673 | ​ | $ | 169.25 | | 1,197,673 | ​ | $ | 8,375 | ​ |

| Total April 1-June 30, 2019 | | 2,370,245 | ​ | $ | 169.77 | | 2,370,245 | ​ | $ | 8,375 | ​ |

| July 1-31, 2019 | ​ | 240,464 | ​ | $ | 173.41 | ​ | 240,358 | ​ | $ | 8,333 | ​ |

| August 1-31, 2019 | ​ | 333,679 | ​ | $ | 161.29 | ​ | 332,239 | ​ | $ | 8,280 | ​ |

| September 1-30, 2019 | ​ | 276,127 | ​ | $ | 166.25 | ​ | 276,127 | ​ | $ | 8,234 | ​ |

| Total July 1-September 30, 2019 | ​ | 850,270 | ​ | $ | 166.33 | ​ | 848,724 | ​ | $ | 8,234 | ​ |

| October 1-31, 2019 | | 279,237 | ​ | $ | 161.31 | | 279,237 | ​ | $ | 8,189 | ​ |

| November 1-30, 2019 | | 322,500 | ​ | $ | 170.75 | | 322,500 | ​ | $ | 8,134 | ​ |

| December 1-31, 2019 | | 358,079 | ​ | $ | 171.49 | | 358,079 | ​ | $ | 8,072 | ​ |

| Total October 1-December 31, 2019 | | 959,816 | ​ | $ | 168.28 | | 959,816 | ​ | $ | 8,072 | ​ |

| Total January 1-December 31, 2019 | | 7,311,341 | ​ | $ | 181.22 | | 7,305,473 | ​ | $ | 8,072 | ​ |

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In February 2016, 3M’s Board of Directors authorized the repurchase of up to $10 billion of 3M’s outstanding common stock, with no pre-established end date.

| | | | | | | | | | | | |

| January 1-31, 2018 | | 714,575 | | $ | 245.98 | | 714,138 | | $ | 4,894 | |

| February 1-28, 2018 | | 1,420,634 | | $ | 233.78 | | 1,420,599 | | $ | 4,562 | |

| March 1-31, 2018 | | 1,791,496 | | $ | 228.82 | | 1,791,496 | | $ | 4,152 | |

| Total January 1-March 31, 2018 | | 3,926,705 | | $ | 233.74 | | 3,926,233 | | $ | 4,152 | |

| April 1-30, 2018 | | 2,135,968 | | $ | 213.63 | | 2,135,968 | | $ | 3,696 | |

| May 1-31, 2018 | | 3,283,170 | | $ | 201.64 | | 3,282,339 | | $ | 3,034 | |

| June 1-30, 2018 | | 2,358,619 | | $ | 200.31 | | 2,358,619 | | $ | 2,562 | |

| Total April 1-June 30, 2018 | | 7,777,757 | | $ | 204.53 | | 7,776,926 | | $ | 2,562 | |

| July 1-31, 2018 | | 1,851,663 | | $ | 201.17 | | 1,851,663 | | $ | 2,189 | |

| August 1-31, 2018 | | 1,813,661 | | $ | 205.37 | | 1,813,661 | | $ | 1,817 | |

| September 1-30, 2018 | | 1,476,649 | | $ | 211.62 | | 1,476,649 | | $ | 1,504 | |

| Total July 1-September 30, 2018 | | 5,141,973 | | $ | 205.65 | | 5,141,973 | | $ | 1,504 | |

| October 1-31, 2018 | | 2,346,310 | | $ | 198.16 | | 2,346,310 | | $ | 1,039 | |

| November 1-30, 2018 | | 1,847,238 | | $ | 199.51 | | 1,847,238 | | $ | 9,828 | |

| December 1-31, 2018 | | 2,249,175 | | $ | 192.10 | | 2,249,175 | | $ | 9,396 | |

| Total October 1-December 31, 2018 | | 6,442,723 | | $ | 196.43 | | 6,442,723 | | $ | 9,396 | |

| Total January 1-December 31, 2018 | | 23,289,158 | | $ | 207.46 | | 23,287,855 | | $ | 9,396 | |

| --- | --- | --- | --- |

| [removed: (Dollars] [added: (Dollars] in millions, except per share [removed: amounts)] [added: amounts)] | | [removed: 2018*] [added: 2019*] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | | |

| Years ended December 31: | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| Net sales | [added: ​] | [added: $ | 32,136 | ​ |] $ | 32,765 | [added: ​] | $ | 31,657 | [added: ​] | $ | 30,109 | [added: ​] | $ | 30,274 | [removed: | $ | 31,821 |] [added: ​] |

| Net income attributable to 3M | [added: ​] | | [added: 4,570 | ​ | |] 5,349 | [added: ​] | | 4,858 | [added: ​] | | 5,050 | [added: ​] | | 4,833 | [removed: | | 4,956 |] [added: ​] |

| Per share of 3M common stock: | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| Net income attributable to 3M — basic | [added: ​] | | [added: 7.92 | ​ | |] 9.09 | [added: ​] | | 8.13 | [added: ​] | | 8.35 | [added: ​] | | 7.72 | [removed: | | 7.63 |] [added: ​] |

| Net income attributable to 3M — diluted | [added: ​] | | [added: 7.81 | ​ | |] 8.89 | [added: ​] | | 7.93 | [added: ​] | | 8.16 | [added: ​] | | 7.58 | [removed: | | 7.49 |] [added: ​] |

| Cash dividends declared per 3M common share | [added: ​] | | [added: 5.76 | ​ | |] 5.44 | [added: ​] | | 4.70 | [added: ​] | | 4.44 | [added: ​] | | 3.075 | [removed: | | 3.59 |] [added: ​] |

| Cash dividends paid per 3M common share | [added: ​] | | [added: 5.76 | ​ | |] 5.44 | [added: ​] | | 4.70 | [added: ​] | | 4.44 | [added: ​] | | 4.10 | [removed: | | 3.42 |] [added: ​] |

| At December 31: | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| Total assets | [added: ​] | [added: $ | 44,659 | ​ |] $ | 36,500 | [added: ​] | $ | 37,987 | [added: ​] | $ | 32,906 | [added: ​] | $ | 32,883 | [removed: | $ | 31,374 |] [added: ​] |

| Long-term debt (excluding portion due within one year) and long-term [removed: capital] lease obligations | [added: ​] | | [added: 17,629 | ​ | |] 13,486 | [added: ​] | | 12,156 | [added: ​] | | 10,723 | [added: ​] | | 8,799 | [removed: | | 6,764 |] [added: ​] |

[removed: *] The Company adopted ASU No. 2014-09 and related standards (collectively, [removed: Accounting Standards Codification (ASC)] [added: ASC] 606, [removed: Revenue] [added: _Revenue] from Contracts with [removed: Customers),] [added: Customers_),] as described in Note [removed: 1,] [added: 2,] on January 1, 2018 using the modified retrospective method of adoption, the impact of which was not material to the Company’s consolidated results of operations and financial condition.

Cash dividends declared and paid totaled [removed: $1.36] [added: $1.44] and [removed: $1.175] [added: $1.36] per share for each quarter in [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

​

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

* The Company adopted ASU No. 2016-02 and related standards (collectively, Accounting Standards Codification (ASC) 842, _Leases)_, as described in Note 1, on January 1, 2019 using the modified retrospective method of adoption.

The adoption resulted in the recording of right of use assets and associated lease liabilities of $0.8 billion each as of January 1, 2019, $0.5 billion of which relates to long-term operating lease obligations.

| | | | | | | | | | | | | | | | | |

In December 2014, 3M declared dividends that were paid in the following first quarter.

[removed: Index] [added: Index] to [removed: Financial Statements][added: Financial Statements]

[removed: Management’s Responsibility for] [added: Management’s Responsibility for] Financial [removed: Reporting][added: Reporting]

[removed: Management’s Report on] [added: Management’s Report on] Internal Control Over Financial [removed: Reporting][added: Reporting]

Management conducted an assessment of the Company’s internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission in [removed: Internal] [added: _Internal] Control — Integrated Framework [removed: (2013).][added: (2013)_.]

Based on the assessment, management concluded that, as of December 31, [removed: 2018,] [added: 2019,] the Company’s internal control over financial reporting is effective.

The Company’s internal control over financial reporting as of December 31, [removed: 2018] [added: 2019] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2018.][added: 2019.]

[removed: Report of] [added: Report of] Independent Registered Public Accounting [removed: Firm][added: Firm]

[removed: Opinions] [added: Opinions] on the Financial Statements and Internal Control over Financial [removed: Reporting][added: Reporting]

We have audited the accompanying consolidated balance sheets of 3M Company and its subsidiaries (the “Company”) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: _Internal] Control - Integrated [removed: Framework] [added: Framework_] (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018] [added: 2019] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: _Internal] Control - Integrated [removed: Framework] [added: Framework_] (2013) issued by the COSO.

[removed: Basis] [added: Basis] for [removed: Opinions][added: Opinions]

[removed: Definition] [added: Definition] and Limitations of Internal Control over Financial [removed: Reporting][added: Reporting]

| We have served as the Company’s auditor since 1975. | [added: ​] |

[removed: 3M] [added: 3M] Company and [removed: Subsidiaries][added: Subsidiaries]

[removed: Consolidated] [added: Consolidated] Statement of [removed: Income][added: Income]

[removed: Years] [added: Years] ended December [removed: 31][added: 31]

| [removed: (Millions,] [added: (Millions,] except per share [removed: amounts)] [added: amounts)] | | [removed: 2018] | [added: 2019] | | [removed: 2017] | [added: 2018] | | [removed: 2016] | [added: 2017] | | [added: |]

| Net sales | [added: ​] | [removed: $] [added: ​] | [removed: 32,765] [added: $] | [added: 32,136] | [added: ​ |] $ | [removed: 31,657] [added: 32,765] | [added: ​] | $ | [removed: 30,109] [added: 31,657] | [added: ​] |

| Operating expenses | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​ |]

| Cost of sales | [added: ​] | [added: ​] | [removed: 16,682] | [added: 17,136] | [added: ​] | [removed: 16,055] | [added: 16,682] | [added: ​] | [removed: 15,118] | [added: 16,055] | [added: ​ |]

| Selling, general and administrative expenses | [added: ​] | [added: ​] | [removed: 7,602] | [added: 7,029] | [added: ​] | [removed: 6,626] | [added: 7,602] | [added: ​] | [removed: 6,311] | [added: 6,626] | [added: ​ |]

| Research, development and related expenses | [added: ​] | [added: ​] | [removed: 1,821] | [added: 1,911] | [added: ​] | [removed: 1,870] | [added: 1,821] | [added: ​] | [removed: 1,764] | [added: 1,870] | [added: ​ |]

| Gain on sale of businesses | [added: ​] | [added: ​] | [removed: (547)] [added: ​] | [added: (114)] | [added: ​] | [removed: (586)] [added: ​] | [added: (547)] | [added: ​] | [removed: (111)] [added: ​] | [added: (586)] | [added: ​ |]

| Total operating expenses | [added: ​] | [added: ​] | [removed: 25,558] | [added: 25,962] | [added: ​] | [removed: 23,965] | [added: 25,558] | [added: ​] | [removed: 23,082] | [added: 23,965] | [added: ​ |]

| Operating income | [added: ​] | [added: ​] | [removed: 7,207] | [added: 6,174] | [added: ​] | [removed: 7,692] | [added: 7,207] | [added: ​] | [removed: 7,027] | [added: 7,692] | [added: ​ |]

| Other expense (income), net | [added: ​] | [added: ​] | [removed: 207] | [added: 462] | [added: ​] | [removed: 144] | [added: 207] | [added: ​] | [removed: (26)] | [added: 144] | [added: ​ |]

| Income before income taxes | [added: ​] | [added: ​] | [removed: 7,000] | [added: 5,712] | [added: ​] | [removed: 7,548] | [added: 7,000] | [added: ​] | [removed: 7,053] | [added: 7,548] | [added: ​ |]

| Provision for income taxes | [added: ​] | [added: ​] | [removed: 1,637] | [added: 1,130] | [added: ​] | [removed: 2,679] | [added: 1,637] | [added: ​] | [removed: 1,995] | [added: 2,679] | [added: ​ |]

| Net income including noncontrolling interest | [added: ​] | [removed: $] [added: ​] | [removed: 5,363] [added: $] | [added: 4,582] | [added: ​ |] $ | [removed: 4,869] [added: 5,363] | [added: ​] | $ | [removed: 5,058] [added: 4,869] | [added: ​] |

| Less: Net income attributable to noncontrolling interest | [added: ​] | [added: ​] | [removed: 14] | [added: 12] | [added: ​] | [removed: 11] | [added: 14] | [added: ​] | [removed: 8] | [added: 11] | [added: ​ |]

| Net income attributable to 3M | [added: ​] | [removed: $] [added: ​] | [removed: 5,349] [added: $] | [added: 4,570] | [added: ​ |] $ | [removed: 4,858] [added: 5,349] | [added: ​] | $ | [removed: 5,050] [added: 4,858] | [added: ​] |

| Weighted average 3M common shares outstanding — basic | [added: ​] | [added: ​] | [removed: 588.5] | [added: 577.0] | [added: ​] | [removed: 597.5] | [added: 588.5] | [added: ​] | [removed: 604.7] | [added: 597.5] | [added: ​ |]

| Earnings per share attributable to 3M common shareholders — basic | [added: ​] | [removed: $] [added: ​] | [removed: 9.09] [added: $] | [added: 7.92] | [added: ​ |] $ | [removed: 8.13] [added: 9.09] | [added: ​] | $ | [removed: 8.35] [added: 8.13] | [added: ​] |

| Weighted average 3M common shares outstanding — diluted | [added: ​] | [added: ​] | [removed: 602.0] | [added: 585.1] | [added: ​] | [removed: 612.7] | [added: 602.0] | [added: ​] | [removed: 618.7] | [added: 612.7] | [added: ​ |]

| Earnings per share attributable to 3M common shareholders — diluted | [added: ​] | [removed: $] [added: ​] | [removed: 8.89] [added: $] | [added: 7.81] | [added: ​ |] $ | [removed: 7.93] [added: 8.89] | [added: ​] | $ | [removed: 8.16] [added: 7.93] | [added: ​] |

[removed: Consolidated] [added: Consolidated] Statement of Comprehensive [removed: Income][added: Income]

| [removed: (Millions) |] [added: (Millions)] | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | |

| Other comprehensive income (loss), net of tax: | [removed: |] [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

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Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019 excluded M*Modal and Acelity, which were acquired by the Company in February 2019 and October 2019, respectively.

The total assets and total net sales of M*Modal and Acelity collectively represent 2 percent and 2 percent, respectively, of the related consolidated financial statement amounts as of December 31, 2019.

Companies are allowed to exclude acquisitions from their assessment of internal control over financial reporting during the year of acquisition while integrating the acquired company under guidelines established by the Securities and Exchange Commission.

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_Change in Accounting Principle_

*​*

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

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*​*

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded M*Modal and Acelity Inc. from its assessment of internal control over financial reporting as of December 31, 2019 because they were acquired by the Company in purchase business combinations during 2019.

We have also excluded M*Modal and Acelity Inc. from our audit of internal control over financial reporting.

M*Modal and Acelity Inc. are wholly-owned subsidiaries whose total assets and total net sales excluded from management’s assessment and our audit of internal control over financial reporting collectively represent 2

percent and 2 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2019.

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Critical Audit Matters