MMM3M

We note in your Form 10-K for the year ended December 31, 2022, your Form 10-Q for the six months ended June 30, 2023 and your related earnings releases included on Form 8-K that your adjusted operating income/loss reconciliation includes significant adjustments for "Net costs for significant litigation." Please provide us the specific litigation costs included in the non-GAAP measures each period, including the

Rest of the question

amounts related to settlements, accruals and legal fees and provide additional disclosure of these amounts in future filings. In addition, explain to us and disclose in future filings how each component of the elimination is consistent with the guidance in Question 100.01 of the SEC's Compliance and Disclosure Interpretations for Non-GAAP measures.

3M has provided the requested information to the Commission on a confidential basis under separate cover. As discussed further below, 3M believes it has complied with applicable law, regulation, and guidance from the

Commission, including Regulation G, Item 10(e) of Regulation S-K, and Compliance and Disclosure Interpretations on Non-GAAP Financial Measures (“C&DIs”) Questions 100.01 and 102.03, with respect to the way 3M discloses “net costs for significant litigation.” 3M further believes its presentation does not cause its disclosures to be misleading.

Rest of the answer

These costs, which currently relate exclusively to the Company’s respirator mask/asbestos, PFAS-related, and Combat Arms Earplugs dockets, are not normal operating expenses related to 3M’s ongoing operations, revenue generating activities, business strategy, industry, and regulatory environment. 3M management considers amounts adjusting for special items (of which this is a part), in addition to segment operating performance, in evaluating and managing ongoing operations, and believes that the measures are useful to investors in understanding underlying business performance when read in conjunction with GAAP results. In addition, 3M provides extensive disclosure regarding each of these matters in the Commitments and Contingencies note to its financial statements and believes information related to these charges is already included to the extent material. 3M will reference in future filings that it does not consider these costs to be normal, operating expenses. However, 3M does not believe additional quantification of the components is required and, further, believes such disclosure would have the potential to provide a competitive advantage to plaintiffs as 3M works to resolve the litigation in the best interest of shareholders.

As disclosed in the Company’s filings, the “net costs for significant litigation” are limited to costs relating to litigation and claims in three specific areas: respirator mask/asbestos, PFAS-related, and Combat Arms Earplugs (“CAE”). Costs of other legal matters are currently determined by 3M to be normal, recurring expenses necessary to operate the Company’s business and are not excluded when calculating 3M’s non-GAAP measures. Under 3M’s internal policy, in addition to periodic discussion with the Audit Committee, the three specific areas included in “net costs for significant litigation” involve net costs that are distinctive, volatile, and substantial in value. Additionally, these matters are specifically discussed within the Company’s Commitments and Contingencies note. Further, 3M concluded that expenses relating to these three areas of litigation do not constitute normal, recurring operating expenses otherwise necessary to operate the Company’s business. This conclusion was reached after considering the following, among other factors:

•The CAE and respirator mask/asbestos matters relate to products sold many years ago.

◦The CAE claims relate to products discontinued in 2015.

◦The respiratory mask/asbestos claims relate primarily to alleged usage of a particular product version dating back ten or more years and since discontinued.

•The PFAS matters include certain compounds that 3M announced in 2000 it was phasing out. The Company ceased manufacturing and using the vast majority of these compounds within approximately two years of this announcement and ceased all manufacturing and the last significant use of this chemistry by the end of 2008. Further, 3M announced in December 2022 it is exiting all PFAS manufacturing by the end of 2025.

•The three matters entail a potential significant magnitude of costs in terms of litigation support and/or potential liability. These notably were exponentially larger than past activity and/or could significantly impact reported results. For example, in a Form 8-K dated August 29, 2023, 3M disclosed a $6.0 billion settlement agreement intended to resolve all CAE litigation and claims, resulting in a Q3 pre-tax charge of approximately $4.2 billion. Note that aggregated sales of applicable CAE earplugs, through discontinuance in 2015, totaled less than $35 million. A further example of significant cost magnitude includes, as disclosed in 3M’s Q2 2023 Form 10-Q, the proposed settlement agreement the Company entered into that intends to resolve PFAS claims by a class of public water systems in the U.S. that provide drinking water to a vast majority of Americans. This resulted in a Q2 pre-tax charge of $10.3 billion.

•The three matters involve complex underlying circumstances that contribute to an extended litigation period and significant and varied legal fees over that timeframe. None of these constitute normal course business activity.

As a result of the above, 3M does not consider the components of net costs of significant litigation (specifically associated with these three matters) to be normal operating expenses related to the Company’s ongoing operations, revenue generating activities, business strategy, industry, and regulatory environment as described in C&DI Question 100.01. In addition, 3M considered C&DI Question 102.03, which states that although certain items may not be able to be described as non-recurring, infrequent or unusual, it still may be appropriate to adjust for certain items a registrant deems appropriate per Regulation G and the other requirements of Item 10(e) of Regulation S-K. 3M also believes, and correspondingly discloses, that providing certain amounts adjusting for special items (of which this is a part) is useful when read in conjunction with the corresponding GAAP amounts. Specifically, 3M management considers these measures, in addition to segment operating performance, in evaluating and managing ongoing operations. Further, 3M has disclosed that it believes such measures are useful to investors in understanding underlying business performance and provide additional transparency to the special items themselves. Splitting the “net costs of significant litigation” out of results provides investors additional useful information about the Company’s actual results of operations when read in conjunction with the Company's GAAP measures. Fully disclosing the costs of these unusual litigation items and including a note accompanying the non-GAAP disclosures ensures transparency. The adjustment helps investors better understand and evaluate period-over-period changes, both in underlying ongoing operations and the extent of “net costs of significant litigation.” In addition, the Company’s Commitments and Contingencies note includes extensive discussion of the underlying circumstances and developments associated with the three matters (respirator mask/asbestos, PFAS-related, and Combat Arms Earplugs) included in “net cost of significant litigation.”

The Company acknowledges the Staff’s comment regarding specific amounts associated with 3M’s “net costs of significant litigation.” The table below breaks out the components, consisting of changes in accrued liabilities; additional external legal fees; and insurance recoveries. Note that settlements are reflected in changes in accrued liabilities, as the value of the settlement, over or under any pre-existing accruals, is reflected in the changes taken in the period in which the settlement occurs.

(Millions) Years ended December 31, Six months ended June 30,

2022 2021 2020 2023 2022

Changes in accrued liabilities [***] [***] [***] [***] [***]

Additional external legal fees [***] [***] [***] [***] [***]

Insurance recoveries [***] [***] [***] [***] [***]

Total $ 2,291 $ 463 $ 353 $ 10,492 $ 1,966

In future filings, 3M will disclose that it 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. However, the Company respectfully does not believe additional quantification of the components of the associated costs set forth in the table above is necessary or required in its future filings. 3M believes information related to these charges is already included in applicable disclosures to the extent material. For the Staff’s reference, these include:

•Clear indication of the three specific matters that encompass “net costs for significant litigation,” description of the nature of the types of costs included, and reference to which business segments (or Corporate and Unallocated) are impacted. See “Certain amounts adjusted for special items – (non-GAAP measures)” lead-in and description of the “net costs for significant litigation” special item on page of 22 of the 2022 Form 10-K. Further, this discussion references Note 16 (Commitments and Contingencies) where additional information is provided.

•Extensive discussion of the underlying circumstances and developments associated with the matters included in “net costs for significant litigation” in 3M’s Commitments and Contingencies note. In addition, 3M regularly makes specific granular disclosure of applicable factors or settlements that impact changes in related accruals and continues to provide the accrued liability balances associated with each of these three matters. For example:

◦Amount of increase in respirator mask/asbestos accruals along with period-end balance of accrued liability (page 30 of 2023 Q2 Form 10-Q and page 97 of 2022 Form 10-K).

◦Amount of increase in PFAS-related accruals along with period-end balance of accrued liability (page 47 of 2023 Q2 Form 10-Q and page 111 of 2022 Form 10-K). Disclosures earlier in the note also include descriptions of particular agreements/settlements and, to extent material for disclosure, specific associated amounts—representative Zwijndrecht and Alabama examples, pages 101 and 104 of 2022 10-K; public water systems (PWS) proposed settlement example, page 40 of 2023 Q2 Form 10-Q.

◦Amount of charge related to CAE and period-end balance of accrued liability as applicable (pages 47-50 of 2023 Q2 Form 10-Q and page 112 of 2022 Form 10-K).

•Inclusion of appropriate references in 3M’s Management Discussion and Analysis providing further full context for these costs to the extent material.

In addition, 3M believes that disclosing the amount of legal fees incurred in connection with these matters has the potential to impair 3M’s ability to resolve efficiently these matters, which could be detrimental to the Company’s shareholders. These matters each involve a number of individual cases that, at any given time, may be in active litigation, active settlement discussions or in the process of implementing settlement agreements. Specific quantification of legal fees in connection with such ongoing matters is information that litigants typically would not exchange or disclose during ongoing litigation and could be disadvantageous to the Company’s position in these matters, which, in turn, could be disadvantageous to the Company’s shareholders as well.

Further, as indicated above, the Company believes it has complied with the guidance of C&DI Questions 100.01 and 102.03 and, as a result, has not caused associated non-GAAP measures to be misleading in the absence of additional component quantification requested by the Staff. 3M is also not aware of other guidance in terms of the C&DIs, Regulation G, or provisions of Item 10(e) of Regulation S-K requiring this additional component disclosure. 3M will, of course, continue to provide similar narrative discussion of the relevant significant components of non-GAAP charges, including “net costs for significant litigation.”

Read in the reply ↗

We note on page 20 that your non-GAAP net sales are the same as your GAAP measures in each of the periods presented. Please explain to us why management believes presenting this measure is meaningful to an investor. This comment also applies to similar presentations made in your March 31, 2019 Form 10-Q and Form 8-K filed on April 25, 2019.

The Company provided the referenced presentations to comply with Item 10(e)(1)(i)(B) of Regulation S-K regarding the reconciliation of applicable GAAP measures to the indicated adjusted amounts (non-GAAP measures). As one of these non-GAAP measures is adjusted operating income margin, 3M included net sales in the tables to aid the reader in understanding that this margin percentage is determined by dividing adjusted operating income by the net sales amount.

Rest of the answer

The inclusion of an amount for net sales in the bottom rows of the tables (“Adjusted Non-GAAP Measure”) was not intended to communicate that the unimpacted net sales was itself an adjusted amount (i.e. non-GAAP measure).

Beginning with 3M’s quarterly report on Form 10-Q filed on July 26, 2019, the Company removed the net sales column with respect to the Item 10(e)(1)(i)(B) reconciliation that is not impacted in arriving at the non-GAAP measures. See Appendix 1 for an excerpt from 3M’s second quarter Form 10-Q filed on July 26, 2019. Because net sales is no longer included in these tables and an associated unimpacted net sales amount is not referenced in the bottom rows thereof, the Company does not make reference to an adjusted net sales measure, which could be perceived as a non-GAAP measure. Accordingly, an associated disclosure of why an adjusted net sales measure is useful to investors under Item 10(e)(1)(i)(C) is not necessary.

Read in the reply ↗

We note that you present non-GAAP measures such as adjusted operating income, adjusted income before taxes, adjusted provision for income taxes, adjusted net income attributable to 3M, and adjusted earnings per diluted share which exclude the impact of the MN NRD litigation charge.

Rest of the question

We note similar non-GAAP measures within your March 31, 2019 Form 10-Q that are adjusted for other significant litigation-related charges incurred during the three months March 31, 2019. Please tell us how your presentation complies with the guidance in Item 10(e)(1)(ii)(B) of Regulation S-K. In closing, we remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.

3M considered Item 10(e)(1)(ii)(B) of Regulation S-K in its preparation of the presentation of certain amounts adjusted for significant litigation-related charges.

By way of reference, the Company considered significant litigation-related charges to be $897 million in 2018 associated with resolution of the Minnesota natural resource damages (MN NRD) lawsuit and $548 million in the first quarter of 2019 related to historical PFAS manufacturing and coal mine dust respirator mask lawsuits.

Rest of the answer

This was disclosed in the description of related non-GAAP measures on pages 53 and 19 of 3M’s Forms 10-Q for the quarter ended March 31, 2019 and 10-K for the year ended December 31, 2018, respectively. In each case, the disclosure referenced the Commitments and Contingencies note to the consolidated financial statements for further discussion of these matters. The respective amounts agree to this note and the Regulation S-K Item 10(e)(1)(i)(B) reconciliation as follows, for example, with respect to the Form 10-Q for the quarter ended March 31, 2019:

·

$897 million related to the MN NRD lawsuit in 2018—The amount is referenced at the top of page 38.

$548 million related to historical PFAS manufacturing and coal mine dust respirator mask lawsuits in the first quarter of 2019—The amount is comprised of the $235 million charge associated with historical PFAS manufacturing sites litigation in the third full paragraph on page 40 and the $313 million charge associated with coal mine dust lawsuits in the third full paragraph on page 32.

Item 10(e)(1)(ii)(B) indicates a registrant must not “adjust a non-GAAP performance measure to eliminate or smooth items identified as non-recurring, infrequent or unusual, when the nature of the charge or gain is such that it is reasonably likely to recur within two years or there was a similar charge or gain within the prior two years.” 3M evaluated this rule and concluded that it complied with the respective requirements. The Company considered the following in reaching this conclusion:

Throughout the applicable filings, 3M does not use any of the prohibited “non-recurring, infrequent or unusual” terminology in reference to the MN NRD resolution or the developments associated with historical PFAS manufacturing litigation and coal mine dust respirator mask lawsuits.

3M further considered Question 102.03 in the SEC’s Compliance and Disclosure Interpretations (CD&Is) – Non-GAAP Financial Measures. Question 102.03 clarifies that when presenting a non-GAAP measure that adjusts for such items, the prohibition of Item 10(e)(1)(ii)(B) relates to the description of the charge that is being adjusted—and not to the ability to present an adjusted amount. The Question concludes, “the fact that a registrant cannot describe a charge or gain as non-recurring, infrequent or unusual…does not mean that the registrant cannot adjust for that charge or gain.”

Further, the quantitative and qualitative aspects of these items were such that they had a significant impact to the Company’s financial results. As a result, management considered amounts adjusted for these items in evaluating and managing its operations and believed a discussion of results adjusted for these items was meaningful to investors in providing analysis of ongoing underlying operating trends. Accordingly, 3M made such reference in relation to these non-GAAP measures (complying with Items 10(e)(i)(C) and (D) of Regulation S-K).

Read in the reply ↗