Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

# x						ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE SECURITIES	EXCHANGE	ACT	OF	1934

For	the	fiscal	year	ended	December	31,	2013

Commission	file	number	1-3285

# 3M	COMPANY

State	of	Incorporation:	Delaware

# Principal	executive	offices:	3M	Center,	St.	Paul,	Minnesota	55144

# SECURITIES	REGISTERED	PURSUANT	TO	SECTION	12(b)	OF	THE	ACT:

# Title	of	each	class

Common	Stock,	Par	Value	$.01	Per	Share

Name	of	each	exchange

on	which	registered

New	York	Stock	Exchange,	Inc.

Chicago	Stock	Exchange,	Inc.

Note:	The	common	stock	of	the	Registrant	is	also	traded	on	the	SWX	Swiss	Exchange.

Securities	registered	pursuant	to	section	12(g)	of	the	Act:	None

Indicate	by	check	mark	if	the	Registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.		Yes		x				No		o

Indicate	by	check	mark	if	the	Registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.		Yes		o				No		x

Indicate	by	check	mark	whether	the	Registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during the	preceding	12	months	(or	for	such	shorter	period	that	the	Registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past 90	days.		Yes		x				No		o

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	Web	site,	if	any,	every	Interactive	Data	File	required	to be	submitted	and	posted	pursuant	to	Rule	405	of	Regulation	S-T	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	and post	such	files).		Yes		x				No		o

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	Form	10-K.

Indicate	by	check	mark	whether	the	Registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company.	See	the definitions	of	"large	accelerated	filer,"	"accelerated	filer"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.

Large	accelerated	filer	x

Accelerated	filer	o

Non-accelerated	filer	o

Smaller	reporting	company	o

(Do	not	check	if	a	smaller	reporting	company)

Indicate	by	check	mark	whether	the	Registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Act).			Yes		o					No		x

The	aggregate	market	value	of	voting	stock	held	by	nonaffiliates	of	the	Registrant,	computed	by	reference	to	the	closing	price	and	shares	outstanding,	was approximately	$85.0	billion	as	of	January	31,	2014	(approximately	$74.7	billion	as	of	June	28,	2013,	the	last	business	day	of	the	Registrant's	most	recently	completed second	quarter).

# DOCUMENTS	INCORPORATED	BY	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, 2013)	for	its	annual	meeting	to	be	held	on	May	13,	2014,	are	incorporated	by	reference	in	this	Form	10-K	in	response	to	Part	III,	Items	10,	11,	12,	13	and	14.

Beginning

PART	I

ITEM	1

Business

| ITEM	1A | Risk	Factors | 9 |
| :--- | :--- | :--- |
| ITEM\t1B | Unresolved\tStaff\tComments | 11 |
| ITEM\t2 | Properties | 11 |
| ITEM\t3 | Legal\tProceedings | 11 |
| ITEM\t4 | Mine\tSafety\tDisclosures | 11 |
| PART\tII |  |  |
| ITEM\t5 | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 12 |
| ITEM\t6 | Selected\tFinancial\tData | 14 |
| ITEM\t7 | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 15 |
| ITEM\t7A | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 41 |
| ITEM\t8 | Financial\tStatements\tand\tSupplementary\tData | 43 |
|  | Index\tto\tFinancial\tStatements | 43 |
| ITEM\t9 | Changes\tin\tand\tDisagreements\twith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 118 |
| ITEM\t9A | Controls\tand\tProcedures | 118 |
| ITEM\t9B | Other\tInformation | 118 |
| PART\tIII |  |  |
| ITEM\t10 | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 119 |
| ITEM\t11 | Executive\tCompensation | 119 |
| ITEM\t12 | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 120 |
| ITEM\t13 | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 120 |
| ITEM\t14 | Principal\tAccounting\tFees\tand\tServices | 120 |
| PART\tIV |  |  |
| ITEM\t15 | Exhibits,\tFinancial\tStatement\tSchedules | 121 |

ANNUAL	REPORT	ON	FORM	10-K

# Item	1.	Business.

3M	Company	was	incorporated	in	1929	under	the	laws	of	the	State	of	Delaware	to	continue	operations	begun	in	1902.	The	Company's	ticker	symbol	is	MMM.	As	used herein,	the	term	"3M"	or	"Company"	includes	3M	Company	and	its	subsidiaries	unless	the	context	indicates	otherwise.	In	this	document,	for	any	references	to	Note	1 through	Note	17,	refer	to	the	Notes	to	Consolidated	Financial	Statements	in	Item	8.

# Available	Information

The	SEC	maintains	a	website	that	contains	reports,	proxy	and	information	statements,	and	other	information	regarding	issuers,	including	the	Company,	that	file electronically	with	the	SEC.	The	public	can	obtain	any	documents	that	the	Company	files	with	the	SEC	at	http://www.sec.gov.	The	Company	files	annual	reports, quarterly	reports,	proxy	statements	and	other	documents	with	the	Securities	and	Exchange	Commission	(SEC)	under	the	Securities	Exchange	Act	of	1934	(Exchange Act).	The	public	may	read	and	copy	any	materials	that	the	Company	files	with	the	SEC	at	the	SEC's	Public	Reference	Room	at	100	F	Street,	N.E.,	Washington,	D.C. 20549.	The	public	may	obtain	information	on	the	operation	of	the	Public	Reference	Room	by	calling	the	SEC	at	1-800-SEC-0330.

3M	also	makes	available	free	of	charge	through	its	website	(http://investor.3M.com)	the	Company's	Annual	Report	on	Form	10-K,	Quarterly	Reports	on	Form	10-Q, Current	Reports	on	Form	8-K,	and,	if	applicable,	amendments	to	those	reports	filed	or	furnished	pursuant	to	the	Exchange	Act	as	soon	as	reasonably	practicable	after	the Company	electronically	files	such	material	with,	or	furnishes	it	to,	the	SEC.

# General

3M	is	a	diversified	technology	company	with	a	global	presence	in	the	following	businesses:	Industrial;	Safety	and	Graphics;	Electronics	and	Energy;	Health	Care;	and Consumer.	3M	is	among	the	leading	manufacturers	of	products	for	many	of	the	markets	it	serves.	Most	3M	products	involve	expertise	in	product	development, manufacturing	and	marketing,	and	are	subject	to	competition	from	products	manufactured	and	sold	by	other	technologically	oriented	companies.

At	December	31,	2013,	the	Company	employed	88,667	people	(full-time	equivalents),	with	34,719	employed	in	the	United	States	and	53,948	employed	internationally.

# Business	Segments

As	described	in	Note	15	to	the	Consolidated	Financial	Statements,	effective	in	the	first	quarter	of	2013,	the	Company	completed	a	realignment	of	its	business	segments to	better	serve	global	markets	and	customers.	In	addition,	as	described	in	Note	16,	during	the	first	quarter	of	2013,	3M	realigned	its	geographic	area	structure	to	include Puerto	Rico	in	the	United	States	rather	than	in	the	Latin	America/Canada	region.	Segment	and	geographic	area	information	presented	herein	reflects	the	impact	of	these changes	for	all	periods	presented.

3M	manages	its	operations	in	five	operating	business	segments:	Industrial;	Safety	and	Graphics;	Electronics	and	Energy;	Health	Care;	and	Consumer.	3M's	five	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.	These	segments	have	worldwide	responsibility	for	virtually	all	3M	product	lines.	Certain	small	businesses	and	lab-sponsored	products,	as	well	as various	corporate	assets	and	expenses,	are	not	attributed	to	the	business	segments.	Financial	information	and	other	disclosures	relating	to	3M's	business	segments	and operations	in	major	geographic	areas	are	provided	in	the	Notes	to	Consolidated	Financial	Statements.

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,	appliance,	paper	and	printing,	packaging,	food	and	beverage,	and	construction.	Industrial	products	include	tapes,	a	wide	variety of	coated,	non-woven	and	bonded	abrasives,	adhesives,	advanced	ceramics,	sealants,	specialty	materials,	3M	Purification	Inc.	(filtration	products),	closure	systems	for personal	hygiene	products,	acoustic	systems	products,	and	components	and	products	that

are	used	in	the	manufacture,	repair	and	maintenance	of	automotive,	marine,	aircraft	and	specialty	vehicles.	In	the	fourth	quarter	of	2012,	3M	acquired	Ceradyne,	Inc., which	develops	and	produces	advanced	technical	ceramics	for	demanding	applications	in	the	automotive,	oil	and	gas,	solar,	industrial,	electronics	and	defense	industries. In	2011,	3M	acquired	Winterthur	Technologie	AG,	a	leading	global	supplier	of	precision	grinding	technology	serving	customers	in	the	area	of	hard-to-grind	precision applications	in	industrial,	automotive,	aircraft	and	cutting	tools.

Major	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;	and	coated,	nonwoven	and	microstructured	surface	finishing	and	grinding	abrasives	for	the	industrial	market.	3M Purification	Inc.	provides	a	comprehensive	line	of	filtration	products	for	the	separation,	clarification	and	purification	of	fluids	and	gases.	Other	industrial	products include	fluoroelastomers	for	seals,	tubes	and	gaskets	in	engines.

Major	transportation	products	include	insulation	components,	including	Thinsulate™	Acoustic	Insulation	and	components	for	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.	In	addition,	3M	provides	paint finishing	and	detailing	products,	including	a	complete	system	of	cleaners,	dressings,	polishes,	waxes	and	other	products.

Safety	and	Graphics	Business:	The	Safety	and	Graphics	segment	serves	a	broad	range	of	markets	that	increase	the	safety,	security	and	productivity	of	people,	facilities and	systems.	Major	product	offerings	include	personal	protection	products;	traffic	safety	and	security	products,	including	border	and	civil	security	solutions;	commercial graphics	sheeting	and	systems;	architectural	surface	and	lighting	solutions;	cleaning	and	protection	products	for	commercial	establishments;	and	roofing	granules	for asphalt	shingles.

This	segment's	products	include	personal	protection	products,	such	as	certain	maintenance-free	and	reusable	respirators,	personal	protective	equipment,	head	and	face protection,	body	protection,	hearing	protection	and	protective	eyewear.	In	traffic	safety	and	security,	3M	provides	reflective	sheeting	used	on	highway	signs,	vehicle license	plates,	construction	work-zone	devices,	trucks	and	other	vehicles,	and	also	provides	pavement	marking	systems,	in	addition	to	electronic	surveillance	products, films	that	protect	against	counterfeiting,	and	reflective	materials	that	are	widely	used	on	apparel,	footwear	and	accessories,	enhancing	visibility	in	low-light	situations. Traffic	safety	and	security	also	provides	finger,	palm,	face	and	iris	biometric	systems	for	governments,	law	enforcement	agencies,	and	commercial	enterprises,	in addition	to	remote	people-monitoring	technologies	used	for	offender-monitoring	applications.	Major	commercial	graphics	products	include	films,	inks,	digital	signage systems	and	related	products	used	to	produce	graphics	for	vehicles,	signs	and	interior	surfaces.	Other	products	include	spill-control	sorbents;	nonwoven	abrasive materials	for	floor	maintenance	and	commercial	cleaning;	floor	matting;	and	natural	and	color-coated	mineral	granules	for	asphalt	shingles.

Electronics	and	Energy	Business:	The	Electronics	and	Energy	segment	serves	customers	in	electronics	and	energy	markets,	including	solutions	for	dependable,	cost- effective,	high-performance	electronic	devices,	telecommunications	networks,	electrical	products,	power	generation	and	distribution,	and	infrastructure	protection.

This	segment's	electronics	solutions	include	optical	film	solutions	for	the	electronic	display	industry.	3M	provides	distinct	products	for	five	market	segments,	including products	for:	1)	LCD	computer	monitors,	2)	LCD	televisions,	3)	hand-held	devices	such	as	cellular	phones	and	tablets,	4)	notebook	PCs	and	5)	automotive	displays.	This segment	also	provides	desktop	and	notebook	computer	screen	filters	that	address	display	light	control,	privacy,	and	glare	reduction	needs.	Major	electronics	products also	include	packaging	and	interconnection	devices;	high	performance	fluids	and	abrasives	used	in	the	manufacture	of	computer	chips,	and	for	cooling	electronics	and lubricating	computer	hard	disk	drives;	and	high-temperature	and	display	tapes.	3M™	Flexible	Circuits	use	electronic	packaging	and	interconnection	technology, providing	more	connections	in	less	space,	and	are	used	in	ink-jet	printer	cartridges,	cell	phones	and	electronic	devices.	This	segment	also	includes	the	touch	systems business,	including	touch	screens,	touch	monitors,	and	touch	sensor	components.

This	segment's	energy	solutions	include	electrical,	telecommunications,	renewable	energy,	and	infrastructure	protection	products.	This	segment	serves	the	worlds electrical	and	telecommunications	markets,	including	electrical	utilities,	electrical	construction,	maintenance	and	repair,	original	equipment	manufacturers	(OEM), telecommunications	central	office,	outside	plant	and	enterprise,	as	well	as	aerospace,	military,	automotive	and	medical	markets,	with	products	that	enable	the	efficient transmission	of	electrical	power	and	speed	the	delivery	of	information.	Products	in	this	segment	include	pressure	sensitive	tapes	and	resins,	electrical	insulation,	a	wide array	of	fiber-optic	and	copper-based	telecommunications	systems	for	rapid	deployment	of	fixed	and	wireless	networks,	as	well	as	the	3M™	Aluminum

Conductor	Composite	Reinforced	(ACCR)	electrical	power	cable	that	increases	transmission	capacity	for	existing	power	lines.	This	segment	also	includes	renewable energy	component	solutions	for	the	solar	and	wind	power	industries,	as	well	as	infrastructure	products	solutions	that	provide	municipalities	both	protection	and	detection solutions	for	electrical,	oil,	natural	gas,	water,	rebar	and	other	infrastructure	assets.

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.	Products	and	services	provided	to	these	and	other	markets	include	medical	and	surgical	supplies,	skin	health and	infection	prevention	products,	inhalation	and	transdermal	drug	delivery	systems,	dental	and	orthodontic	products	(oral	care),	health	information	systems,	and	food safety	products.

In	the	medical	and	surgical	areas,	3M	is	a	supplier	of	medical	tapes,	dressings,	wound	closure	products,	orthopedic	casting	materials,	electrodes	and	stethoscopes.	In infection	prevention,	3M	markets	a	variety	of	surgical	drapes,	masks	and	preps,	as	well	as	sterilization	assurance	equipment	and	patient	warming	solutions	designed	to prevent	hypothermia	in	surgical	settings.	Other	products	include	drug	delivery	systems,	such	as	metered-dose	inhalers,	transdermal	skin	patches	and	related	components. Dental	and	orthodontic	products	include	restoratives,	adhesives,	finishing	and	polishing	products,	crowns,	impression	materials,	preventive	sealants,	professional	tooth whiteners,	prophylaxis	and	orthodontic	appliances,	as	well	as	digital	workflow	solutions	to	transform	traditional	impression	and	analog	processes.	In	health	information systems,	3M	develops	and	markets	computer	software	for	hospital	coding	and	data	classification,	and	provides	related	consulting	services.	3M	provides	food	safety products	that	make	it	faster	and	easier	for	food	processors	to	test	the	microbiological	quality	of	food.

Consumer	Business:	The	Consumer	segment	serves	markets	that	include	consumer	retail,	office	retail,	home	improvement,	building	maintenance	and	other	markets. Products	in	this	segment	include	office	supply	products,	stationery	products,	construction	and	home	improvement	products	(do-it-yourself),	home	care	products, protective	material	products,	certain	consumer	retail	personal	safety	products,	and	consumer	health	care	products.

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®	Note	Pads,	Post-it®	Labeling	&	Cover-up	Tape,	and	Post-it®	Pop-up	Notes	and	Dispensers;	construction	and	home	improvement products,	including	surface-preparation	and	wood-finishing	materials,	Command™	Adhesive	Products	and	Filtrete™	Filters	for	furnaces	and	air	conditioners;	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.

# Distribution

3M	products	are	sold	through	numerous	distribution	channels,	including	directly	to	users	and	through	numerous	wholesalers,	retailers,	jobbers,	distributors	and	dealers in	a	wide	variety	of	trades	in	many	countries	around	the	world.	Management	believes	the	confidence	of	wholesalers,	retailers,	jobbers,	distributors	and	dealers	in	3M	and its	products	—	a	confidence	developed	through	long	association	with	skilled	marketing	and	sales	representatives	—	has	contributed	significantly	to	3M's	position	in	the marketplace	and	to	its	growth.

# Research	and	Patents

Research	and	product	development	constitutes	an	important	part	of	3M's	activities	and	has	been	a	major	driver	of	3M's	sales	growth.	Research,	development	and	related expenses	totaled	$1.715	billion	in	2013,	$1.634	billion	in	2012	and	$1.570	billion	in	2011.	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	$1.150	billion	in	2013,	$1.079	billion	in	2012	and	$1.036 billion	in	2011.	Related	expenses	primarily	include	technical	support	provided	by	3M	to	customers	who	are	using	existing	3M	products;	internally	developed	patent costs,	which	include	costs	and	fees	incurred	to	prepare,	file,	secure	and	maintain	patents;	amortization	of	externally	acquired	patents	and	externally	acquired	in-process research	and	development;	and	gains/losses	associated	with	certain	corporate	approved	investments	in	R&D-related	ventures,	such	as	equity	method	effects	and impairments.

The	Company's	products	are	sold	around	the	world	under	various	trademarks.	The	Company	also	owns,	or	holds	licenses	to	use,	numerous	U.S.	and	foreign	patents.	The Company's	research	and	development	activities	generate	a	steady	stream	of	inventions	that	are	covered	by	new	patents.	Patents	applicable	to	specific	products	extend	for varying	periods	according	to	the	date	of	patent	application	filing	or	patent	grant	and	the	legal	term	of	patents	in	the	various	countries	where	patent	protection	is	obtained. The	actual	protection	afforded	by	a	patent,	which	can	vary	from	country	to	country,	depends	upon	the	type	of	patent,	the	scope	of	its	coverage	and	the	availability	of legal	remedies	in	the	country.

The	Company	believes	that	its	patents	provide	an	important	competitive	advantage	in	many	of	its	businesses.	In	general,	no	single	patent	or	group	of	related	patents	is	in itself	essential	to	the	Company	as	a	whole	or	to	any	of	the	Company's	business	segments.	The	importance	of	patents	in	the	Electronics	and	Energy	segment	is	described in	"Performance	by	Business	Segment"	—	"Electronics	and	Energy	Business"	in	Part	II,	Item	7,	of	this	Annual	Report	on	Form	10-K.

# Raw	Materials

In	2013,	the	Company	experienced	stable	to	declining	costs	for	most	raw	material	categories	and	transportation	fuel.	This	was	driven	by	year-on-year	cost	decreases	in many	feedstock	categories,	including	petroleum	based	materials,	minerals,	metals	and	wood	pulp	based	products.	To	date,	the	Company	is	receiving	sufficient	quantities of	all	raw	materials	to	meet	its	reasonably	foreseeable	production	requirements.	It	is	impossible	to	predict	future	shortages	of	raw	materials	or	the	impact	any	such shortages	would	have.	3M	has	avoided	disruption	to	its	manufacturing	operations	through	careful	management	of	existing	raw	material	inventories	and	development	and qualification	of	additional	supply	sources.	3M	manages	commodity	price	risks	through	negotiated	supply	contracts,	price	protection	agreements	and	forward	physical contracts.

# Environmental	Law	Compliance

3M's	manufacturing	operations	are	affected	by	national,	state	and	local	environmental	laws	around	the	world.	3M	has	made,	and	plans	to	continue	making,	necessary expenditures	for	compliance	with	applicable	laws.	3M	is	also	involved	in	remediation	actions	relating	to	environmental	matters	from	past	operations	at	certain	sites	(refer to	"Environmental	Matters	and	Litigation"	in	Note	13,	Commitments	and	Contingencies).

Environmental	expenditures	relating	to	existing	conditions	caused	by	past	operations	that	do	not	contribute	to	current	or	future	revenues	are	expensed.	Reserves	for liabilities	for	anticipated	remediation	costs	are	recorded	on	an	undiscounted	basis	when	they	are	probable	and	reasonably	estimable,	generally	no	later	than	the completion	of	feasibility	studies	or	the	Company's	commitment	to	a	plan	of	action.	Environmental	expenditures	for	capital	projects	that	contribute	to	current	or	future operations	generally	are	capitalized	and	depreciated	over	their	estimated	useful	lives.

In	2013,	3M	expended	about	$31	million	for	capital	projects	related	to	protecting	the	environment.	This	amount	excludes	expenditures	for	remediation	actions	relating	to existing	matters	caused	by	past	operations	that	do	not	contribute	to	current	or	future	revenues,	which	are	expensed.	Capital	expenditures	for	environmental	purposes	have included	pollution	control	devices	—	such	as	wastewater	treatment	plant	improvements,	scrubbers,	containment	structures,	solvent	recovery	units	and	thermal	oxidizers —	at	new	and	existing	facilities	constructed	or	upgraded	in	the	normal	course	of	business.	Consistent	with	the	Company's	policies	stressing	environmental responsibility,	capital	expenditures	(other	than	for	remediation	projects)	for	known	projects	are	presently	expected	to	be	about	$54	million	over	the	next	two	years	for new	or	expanded	programs	to	build	facilities	or	modify	manufacturing	processes	to	minimize	waste	and	reduce	emissions.

While	the	Company	cannot	predict	with	certainty	the	future	costs	of	such	cleanup	activities,	capital	expenditures	or	operating	costs	for	environmental	compliance,	the Company	does	not	believe	they	will	have	a	material	effect	on	its	capital	expenditures,	earnings	or	competitive	position.

# Executive	Officers

Following	is	a	list	of	the	executive	officers	of	3M,	and	their	age,	present	position,	the	year	elected	to	their	present	position	and	other	positions	they	have	held	during	the past	five	years.	No	family	relationships	exist	among	any	of	the	executive	officers	named,	nor	is	there	any	undisclosed	arrangement	or	understanding	pursuant	to	which any	person	was	selected	as	an	officer.	This	information	is	presented	in	the	table	below	as	of	the	date	of	the	10-K	filing	(February	13,	2014).

Michael	G.	Vale

Executive	Vice	President,	Consumer

Executive	Vice	President,	Consumer	and	Office

Vice	President	and	General	Manager,	Aearo

# Cautionary	Note	Concerning	Factors	That	May	Affect	Future	Results

This	Annual	Report	on	Form	10-K,	including	"Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations"	in	Item	7,	contains	forward- looking	statements	within	the	meaning	of	the	Private	Securities	Litigation	Reform	Act	of	1995.	The	Company	may	also	make	forward-looking	statements	in	other reports	filed	with	the	Securities	and	Exchange	Commission,	in	materials	delivered	to	shareholders	and	in	press	releases.	In	addition,	the	Company's	representatives	may from	time	to	time	make	oral	forward-looking	statements.

Forward-looking	statements	relate	to	future	events	and	typically	address	the	Company's	expected	future	business	and	financial	performance.	Words	such	as	"plan," "expect,"	"aim,"	"believe,"	"project,"	"target,"	"anticipate,"	"intend,"	"estimate,"	"will,"	"should,"	"could"	and	other	words	and	terms	of	similar	meaning,	typically identify	such	forward-looking	statements.	In	particular,	these	include,	among	others,	statements	relating	to

·																		the	Company's	strategy	for	growth,	future	revenues,	earnings,	cash	flow,	uses	of	cash	and	other	measures	of	financial	performance,	and	market	position,

·																		worldwide	economic	and	capital	markets	conditions,	such	as	interest	rates,	foreign	currency	exchange	rates,	financial	conditions	of	our	suppliers	and	customers,

and	natural	and	other	disasters	affecting	the	operations	of	the	Company	or	our	suppliers	and	customers,

·																		new	business	opportunities,	product	development,	and	future	performance	or	results	of	current	or	anticipated	products,

·																		the	scope,	nature	or	impact	of	acquisition,	strategic	alliance	and	divestiture	activities,

·																		the	outcome	of	contingencies,	such	as	legal	and	regulatory	proceedings,

·																		future	levels	of	indebtedness,	common	stock	repurchases	and	capital	spending,

·																		pension	and	postretirement	obligation	assumptions	and	future	contributions,	asset	impairments,	tax	liabilities,	information	technology	security,	and ·																		the	effects	of	changes	in	tax,	environmental	and	other	laws	and	regulations	in	the	United	States	and	other	countries	in	which	we	operate.

# The	Company	assumes	no	obligation	to	update	or	revise	any	forward-looking	statements.

Forward-looking	statements	are	based	on	certain	assumptions	and	expectations	of	future	events	and	trends	that	are	subject	to	risks	and	uncertainties.	Actual	future	results and	trends	may	differ	materially	from	historical	results	or	those	reflected	in	any	such	forward-looking	statements	depending	on	a	variety	of	factors.	Important information	as	to	these	factors	can	be	found	in	this	document,	including,	among	others,	"Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of Operations"	under	the	headings	of	"Overview,"	"Critical	Accounting	Estimates"	and	"Financial	Condition	and	Liquidity."	Discussion	of	these	factors	is	incorporated	by reference	from	Part	I,	Item	1A,	"Risk	Factors,"	of	this	document,	and	should	be	considered	an	integral	part	of	Part	II,	Item	7,	"Management's	Discussion	and	Analysis of	Financial	Condition	and	Results	of	Operations."	For	additional	information	concerning	factors	that	may	cause	actual	results	to	vary	materially	from	those	stated	in	the forward-looking	statements,	see	our	reports	on	Form	10-K,	10-Q	and	8-K	filed	with	the	SEC	from	time	to	time.

# Item	1A.	Risk	Factors.

Provided	below	is	a	cautionary	discussion	of	what	we	believe	to	be	the	most	important	risk	factors	applicable	to	the	Company.	Discussion	of	these	factors	is incorporated	by	reference	into	and	considered	an	integral	part	of	Part	II,	Item	7,	"Management's	Discussion	and	Analysis	of	Financial	Conditions	and	Results	of Operations."

*	Results	are	impacted	by	the	effects	of,	and	changes	in,	worldwide	economic	and	capital	markets	conditions.	The	Company	operates	in	more	than	70	countries	and derives	approximately	two-thirds	of	its	revenues	from	outside	the	United	States.	The	Company's	business	is	subject	to	global	competition	and	may	be	adversely	affected by	factors	in	the	United	States	and	other	countries	that	are	beyond	its	control,	such	as	disruptions	in	financial	markets,	economic	downturns	in	the	form	of	either contained	or	widespread	recessionary	conditions,	elevated	unemployment	levels,	sluggish	or	uneven	recovery,	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	disasters	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,	or	regulations	in	the	jurisdictions	in	which	the Company	operates.

*	The	Company's	credit	ratings	are	important	to	3M's	cost	of	capital.	The	major	rating	agencies	routinely	evaluate	the	Company's	credit	profile	and	assign	debt	ratings to	3M.	The	Company	currently	has	an	AA-	credit	rating,	with	a	stable

outlook,	from	Standard	&	Poor's	and	an	Aa2	credit	rating,	with	a	stable	outlook,	from	Moody's	Investors	Service.	This	evaluation	is	based	on	a	number	of	factors, which	include	financial	strength,	business	and	financial	risk,	as	well	as	transparency	with	rating	agencies	and	timeliness	of	financial	reporting.	The	Company's	current ratings	have	served	to	lower	3M's	borrowing	costs	and	facilitate	access	to	a	variety	of	lenders.	Failure	to	maintain	strong	investment	grade	ratings	would	adversely	affect the	Company's	cost	of	funds	and	could	adversely	affect	liquidity	and	access	to	capital	markets.

*	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;	and	(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.

*	Foreign	currency	exchange	rates	and	fluctuations	in	those	rates	may	affect	the	Company's	ability	to	realize	projected	growth	rates	in	its	sales	and	earnings.	Because the	Company's	financial	statements	are	denominated	in	U.S.	dollars	and	approximately	two-thirds	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.

*	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	market.	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.	There	are	no	guarantees	that	new products	will	prove	to	be	commercially	successful.

*	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	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.	It	is	possible	that	any	of	its	supplier	relationships	could	be	interrupted	due	to	natural	and	other	disasters	and	other	events,	or	be	terminated in	the	future.	Any	sustained	interruption	in	the	Company's	receipt	of	adequate	supplies	could	have	a	material	adverse	effect	on	the	Company.	In	addition,	while	the Company	has	a	process	to	minimize	volatility	in	component	and	material	pricing,	no	assurance	can	be	given	that	the	Company	will	be	able	to	successfully	manage	price fluctuations	or	that	future	price	fluctuations	or	shortages	will	not	have	a	material	adverse	effect	on	the	Company.

*	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	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,	future	results	will	be	affected	by the	Company's	ability	to	integrate	acquired	businesses	quickly	and	obtain	the	anticipated	synergies.

*	The	Company's	future	results	may	be	affected	if	the	Company	generates	fewer	productivity	improvements	than	estimated.	The	Company	utilizes	various	tools,	such	as Lean	Six	Sigma,	to	improve	operational	efficiency	and	productivity.	There	can	be	no	assurance	that	all	of	the	projected	productivity	improvements	will	be	realized.

*	The	Company	employs	information	technology	systems	to	support	its	business,	including	ongoing	phased	implementation	of	an	enterprise	resource	planning	(ERP) system	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	and	its	customers	and	suppliers,	and	expose	the	Company	to	liability which	could	adversely	impact	the	Company's	business	and	reputation.	In	the	ordinary	course	of	business,	the	Company	relies	on	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	business	processes	and activities.	Additionally,	the	Company	collects	and	stores	certain	data,	including	proprietary	business	information,	and	may	have	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,	and	maintenance	of	backup	and	protective	systems)	which	are

continuously	reviewed	and	upgraded,	the	Company's	information	technology	networks	and	infrastructure	may	still	be	vulnerable	to	damage,	disruptions	or	shutdowns due	to	attack	by	hackers	or	breaches,	employee	error	or	malfeasance,	power	outages,	computer	viruses,	telecommunication	or	utility	failures,	systems	failures,	natural disasters	or	other	catastrophic	events.	While	we	have	experienced,	and	expect	to	continue	to	experience,	these	types	of	threats	to	the	Company's	information	technology networks	and	infrastructure,	none	of	them	to	date	has	had	a	material	impact	to	the	Company.	There	may	be	other	challenges	and	risks	as	the	Company	upgrades	and standardizes	its	ERP	system	on	a	worldwide	basis.	Any	such	events	could	result	in	legal	claims	or	proceedings,	liability	or	penalties	under	privacy	laws,	disruption	in operations,	and	damage	to	the	Company's	reputation,	which	could	adversely	affect	the	Company's	business.

*	The	Company's	future	results	may	be	affected	by	various	legal	and	regulatory	proceedings	and	legal	compliance	risks,	including	those	involving	product	liability, antitrust,	environmental,	the	U.S.	Foreign	Corrupt	Practices	Act	and	other	anti-bribery,	anti-corruption,	or	other	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.	Various	factors	or developments	can	lead	the	Company	to	change	current	estimates	of	liabilities	and	related	insurance	receivables	where	applicable,	or	make	such	estimates	for	matters previously	not	susceptible	of	reasonable	estimates,	such	as	a	significant	judicial	ruling	or	judgment,	a	significant	settlement,	significant	regulatory	developments	or changes	in	applicable	law.	A	future	adverse	ruling,	settlement	or	unfavorable	development	could	result	in	future	charges	that	could	have	a	material	adverse	effect	on	the Company's	results	of	operations	or	cash	flows	in	any	particular	period.	For	a	more	detailed	discussion	of	the	legal	proceedings	involving	the	Company	and	the associated	accounting	estimates,	see	the	discussion	in	Note	13	"Commitments	and	Contingencies"	within	the	Notes	to	Consolidated	Financial	Statements.

# Item	1B.	Unresolved	Staff	Comments.

# None.

# Item	2.	Properties.

3M's	general	offices,	corporate	research	laboratories,	and	certain	division	laboratories	are	located	in	St.	Paul,	Minnesota.	The	Company	operates	89	manufacturing facilities	in	29	states.	The	Company	operates	127	manufacturing	and	converting	facilities	in	38	countries	outside	the	United	States.

3M	owns	the	majority	of	its	physical	properties.	3M's	physical	facilities	are	highly	suitable	for	the	purposes	for	which	they	were	designed.	Because	3M	is	a	global enterprise	characterized	by	substantial	intersegment	cooperation,	properties	are	often	used	by	multiple	business	segments.

# Item	3.	Legal	Proceedings.

Discussion	of	legal	matters	is	incorporated	by	reference	from	Part	II,	Item	8,	Note	13,	"Commitments	and	Contingencies,"	of	this	document,	and	should	be	considered an	integral	part	of	Part	I,	Item	3,	"Legal	Proceedings."

# Item	4.	Mine	Safety	Disclosures.

Pursuant	to	Section	1503	of	the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	(the	"Act"),	the	Company	is	required	to	disclose,	in	connection	with	the mines	it	operates,	information	concerning	mine	safety	violations	or	other	regulatory	matters	in	its	periodic	reports	filed	with	the	SEC.	For	the	year	2013,	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.

# PART	II

Item	5.	Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities.

Equity	compensation	plans'	information	is	incorporated	by	reference	from	Part	III,	Item	12,	"Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and Related	Stockholder	Matters,"	of	this	document,	and	should	be	considered	an	integral	part	of	Item	5.	At	January	31,	2014,	there	were	91,440	shareholders	of	record. 3M's	stock	is	listed	on	the	New	York	Stock	Exchange,	Inc.	(NYSE),	the	Chicago	Stock	Exchange,	Inc.,	and	the	SWX	Swiss	Exchange.	3M	has	historically	declared	and paid	cash	dividends	in	the	same	quarter.	Cash	dividends	declared	totaled	$0.635	per	share	for	the	first	three	quarters	of	2013.	Cash	dividends	declared	in	the	fourth

quarter	of	2013	included	a	dividend	payable	in	November	2013	of	$0.635	per	share	and	a	dividend	payable	in	March	2014	of	$0.855	per	share.	Cash	dividends	declared totaled	$0.59	per	share	for	each	quarter	of	2012.	Stock	price	comparisons	follow:

# Stock	price	comparisons	(NYSE	composite	transactions)

|  |  | Second |  | Fourth |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Per\tshare\tamounts) | First\tQuarter | Quarter | Third\tQuarter | Quarter | Total |
| 2013\tHigh | $106.88 | $113.25 | $122.27 | $140.43 | $140.43 |
| 2013\tLow | 93.96 | 102.89 | 108.21 | 116.65 | 93.96 |
| 2012\tHigh | $90.00 | $89.95 | $94.30 | $95.46 | $95.46 |
| 2012\tLow | 82.70 | 81.99 | 85.34 | 86.74 | 81.99 |

# Issuer	Purchases	of	Equity	Securities

Repurchases	of	3M	common	stock	are	made	to	support	the	Company's	stock-based	employee	compensation	plans	and	for	other	corporate	purposes.	In	February	2011, 3M's	Board	of	Directors	authorized	the	repurchase	of	up	to	$7.0	billion	of	3M's	outstanding	common	stock,	with	no	pre-established	end	date.	In	February	2013,	3M's Board	of	Directors	replaced	the	February	2011	repurchase	program	with	a	new	repurchase	program.	This	new	program	authorizes	the	repurchase	of	up	to	$7.5	billion	of 3M's	outstanding	common	stock,	with	no	pre-established	end	date.	In	February	2014,	3M's	Board	of	Directors	replaced	the	Company's	February	2013	repurchase program	with	a	new	repurchase	program.	This	new	program	authorizes	the	repurchase	of	up	to	$12	billion	of	3M's	outstanding	common	stock,	with	no	pre-established end	date.

# (registered	pursuant	to	Section	12	of	the	Exchange	Act)

|  |  |  | Total	Number	of | Shares	that	May |
| :--- | :--- | :--- | :--- | :--- |
|  |  |  | Shares\tPurchased | Yet\tBe\tPurchased |
|  | Total\tNumber\tof | Average\tPrice | as\tPart\tof\tPublicly | under\tthe\tPlans |
|  | Shares\tPurchased | Paid\tper | Announced\tPlans | or\tPrograms |
| Period | (1) | Share | or\tPrograms\t(2) | (Millions) |
| January\t1-31,\t2013 | 1,664,478 | $97.17 | 1,634,216 | $2,306 |
| February\t1-28,\t2013 | 3,199,508 | $103.21 | 2,644,039 | $7,227 |
| March\t1-31,\t2013 | 2,995,946 | $105.13 | 2,981,063 | $6,913 |
| Total\tJanuary\t1-March\t31,\t2013 | 7,859,932 | $102.66 | 7,259,318 | $6,913 |
| April\t1-30,\t2013 | 2,739,109 | $105.56 | 2,730,861 | $6,625 |
| May\t1-31,\t2013 | 6,626,563 | $110.46 | 6,594,113 | $5,897 |
| June\t1-30,\t2013 | 1,930,590 | $109.34 | 1,930,331 | $5,685 |
| Total\tApril\t1-June\t30,\t2013 | 11,296,262 | $109.08 | 11,255,305 | $5,685 |
| July\t1-31,\t2013 | 4,367,343 | $114.23 | 4,359,967 | $5,187 |
| August\t1-31,\t2013 | 4,248,029 | $115.44 | 4,246,000 | $4,697 |
| September\t1-30,\t2013 | 4,885,431 | $118.91 | 4,868,307 | $4,118 |
| Total\tJuly\t1-September\t30,\t2013 | 13,500,803 | $116.31 | 13,474,274 | $4,118 |
| October\t1-31,\t2013 | 6,379,918 | $121.62 | 6,334,328 | $3,348 |
| November\t1-30,\t2013 | 3,769,708 | $129.01 | 3,768,421 | $2,862 |
| December\t1-31,\t2013 | 2,638,987 | $130.53 | 2,637,697 | $2,518 |
| Total\tOctober\t1-December\t31,\t2013 | 12,788,613 | $125.64 | 12,740,446 | $2,518 |
| Total\tJanuary\t1-December\t31,\t2013 | 45,445,610 | $114.78 | 44,729,343 | $2,518 |

(1)									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.

(2)									The	total	number	of	shares	purchased	as	part	of	publicly	announced	plans	or	programs	includes	shares	purchased	under	the	Board's	authorizations	described	above.

# Item	6.	Selected	Financial	Data.

| (Dollars	in	millions,	except	per	share	amounts) | 2013 | 2012 | 2011 | 2010 | 2009 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Years\tended\tDecember\t31: |  |  |  |  |  |
| Net\tsales | $30,871 | $29,904 | $29,611 | $26,662 | $23,123 |
| Net\tincome\tattributable\tto\t3M | 4,659 | 4,444 | 4,283 | 4,085 | 3,193 |
| Per\tshare\tof\t3M\tcommon\tstock: |  |  |  |  |  |
| Net\tincome\tattributable\tto\t3M\t—\tbasic | 6.83 | 6.40 | 6.05 | 5.72 | 4.56 |
| Net\tincome\tattributable\tto\t3M\t—\tdiluted | 6.72 | 6.32 | 5.96 | 5.63 | 4.52 |
| Cash\tdividends\tdeclared\tper\t3M\tcommon\tshare | 3.395 | 2.36 | 2.20 | 2.10 | 2.04 |
| Cash\tdividends\tpaid\tper\t3M\tcommon\tshare | 2.54 | 2.36 | 2.20 | 2.10 | 2.04 |
| At\tDecember\t31: |  |  |  |  |  |
| Total\tassets | $33,550 | $33,876 | $31,616 | $30,156 | $27,250 |
| Long-term\tdebt\t(excluding\tportion\tdue\twithin\tone\tyear) |  |  |  |  |  |
| and\tlong-term\tcapital\tlease\tobligations | 4,384 | 4,987 | 4,563 | 4,277 | 5,204 |

3M	has	historically	declared	and	paid	dividends	in	the	same	quarter.	In	December	2013,	3M's	Board	of	Directors	declared	a	first-quarter	2014	dividend	of	$0.855	per share	(payable	in	March	2014).	This	resulted	in	total	year	2013	declared	dividends	of	$3.395	per	share,	with	$2.54	per	share	paid	in	2013	and	the	additional	$0.855	per share	to	be	paid	in	March	2014.

Items	included	in	the	preceding	table	which	had	a	significant	impact	on	results	are	summarized	as	follows.	2010	included	a	one-time,	non-cash	income	tax	charge	of	$84

million,	or	12	cents	per	diluted	share,	resulting	from	the	March	2010	enactment	of	the	Patient	Protection	and	Affordable	Care	Act,	including	modifications	made	in	the Health	Care	and	Education	Reconciliation	Act	of	2010.	2009	results	included	net	losses	that	decreased	operating	income	by	$194	million	and	net	income	attributable	to 3M	by	$119	million.	2009	included	restructuring	actions	($209	million	pre-tax,	$128	million	after	tax	and	noncontrolling	interest),	which	were	partially	offset	by	a	gain on	sale	of	real	estate	($15	million	pre-tax,	$9	million	after	tax).

# Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations.

Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	(MD&A)	is	designed	to	provide	a	reader	of	3M's	financial	statements	with	a narrative	from	the	perspective	of	management.	3M's	MD&A	is	presented	in	eight	sections:

# OVERVIEW

3M	is	a	diversified	global	manufacturer,	technology	innovator	and	marketer	of	a	wide	variety	of	products.	As	described	in	Note	15	to	the	Consolidated	Financial Statements,	effective	in	the	first	quarter	of	2013,	the	Company	completed	a	realignment	of	its	business	segments	to	better	serve	global	markets	and	customers.	In addition,	during	the	first	quarter	of	2013,	as	described	in	Note	16,	3M	realigned	its	geographic	area	structure	to	include	Puerto	Rico	in	the	United	States	rather	than	in the	Latin	America/Canada	region.	Segment	and	geographic	area	information	presented	herein	reflects	the	impact	of	these	changes	for	all	periods	presented.	3M	manages its	operations	in	five	operating	business	segments:	Industrial;	Safety	and	Graphics;	Electronics	and	Energy;	Health	Care;	and	Consumer.	From	a	geographic	perspective, any	references	to	EMEA	refer	to	Europe,	Middle	East	and	Africa	on	a	combined	basis.

Fourth-quarter	2013	net	income	attributable	to	3M	was	$1.103	billion,	or	$1.62	per	diluted	share,	compared	to	$991	million,	or	$1.41	per	diluted	share,	in	the	fourth quarter	of	2012.	Fourth-quarter	2013	sales	totaled	$7.6	billion,	an	increase	of	2.4	percent	from	the	fourth	quarter	of	2012.	3M	achieved	organic	local-currency	sales growth	(which	includes	organic	volume	and	selling	price	impacts)	in	all	five	of	its	business	segments,	led	by	Industrial.	Industrial	organic	local-currency	sales	increased 5.8	percent,	led	by	advanced	materials,	automotive	OEM,	3M	Purification	Inc.	(filtration	products),	aerospace,	and	automotive	aftermarket.	Organic	local-currency	sales increased	4.8	percent	in	Safety	and	Graphics,	led	by	roofing	granules,	personal	safety,	commercial	graphics,	and	architectural	markets.	Organic	local-currency	sales grew	3.6	percent	in	the	Health	Care	business	segment,	with	the	strongest	sales	growth	in	health	information	systems,	food	safety,	critical	and	chronic	care,	and	infection prevention;	organic	local-currency	sales	declined	in	drug	delivery	systems.	Organic	local-currency	sales	increased	1.3	percent	in	the	Consumer	business	segment,	led	by the	consumer	health	care	and	home	care	businesses.	Electronics	and	Energy	organic	local-currency	sales	growth	was	0.4	percent,	with	increases	in	energy-related	sales led	by	renewable	energy	and	electrical	markets.	Electronic-related	sales	declined,	with	growth	in	optical	systems	and	electronic	solutions	more	than	offset	by	declines	in other	businesses.	For	the	Company	in	total,	organic-local	currency	sales	grew	3.4	percent,	with	higher	organic	volumes	contributing	2.0	percent	and	selling	price increases	contributing	1.4	percent.	Acquisitions	added	0.7	percent	to	sales,	which	related	to	the	late	November	2012	acquisition	of	Ceradyne,	Inc.	Foreign	currency translation	reduced	sales	by	1.7	percent	year-on-year.

From	a	geographic	area	perspective,	fourth-quarter	2013	organic	local-currency	sales	growth	was	4.5	percent	in	the	United	States,	3.4	percent	in	EMEA,	3.3	percent	in Asia	Pacific,	and	2.2	percent	in	Latin	America/Canada.	In	the	U.S.,	EMEA,	and	Asia	Pacific,	all	five	business	segments	generated	positive	organic	local-currency	sales growth.	Organic	local-currency	sales	growth	in	the	United	States	was	led	by	Industrial,	and	Safety	and	Graphics.	Organic	local-currency	sales	growth	in	EMEA	was	led by	Industrial.	West	Europe	grew	organically	by	3	percent	year-on-year,	continuing	the	positive	trends	3M	has	seen	in	recent	quarters.	Organic	local-currency	sales growth	in	Asia	Pacific	was	led	by	Consumer,	Safety	and	Graphics,	and	Health	Care.	Sales	in	Japan	grew	4	percent	organically.	China/Hong	Kong	grew	organically	by	1 percent,	impacted	by	a	strong	prior-year	comparison	of	16	percent	growth	in	the	fourth	quarter	of	2012	and	weakness	in	electronics.	Organic	local-currency	sales	growth in	Latin	America/Canada	was	positive	across	most	countries,	but	below	recent	trend	levels	for	a	few	reasons.	First,	slowing	in	government	tenders	for	infrastructure projects	in	certain	countries	impacted	sales	in	Electronics	and	Energy.	Consumer	was	also	soft	in	the	fourth	quarter	due	to	weak	retail	demand	and	challenging	year-on- year	comparisons.	And	lastly,	sales	in	Venezuela	declined	year-on-year	due	to	the	economic	and	political	situation	there.	Venezuela	diluted	fourth-quarter	organic	sales growth	in	Latin	America/Canada	by	1.5	percentage	points,	as	3M	continues	to	work	towards	minimizing	its	Bolivar	exposure	and	any	associated	costs.

For	total	year	2013,	net	income	attributable	to	3M	was	$4.659	billion,	or	$6.72	per	diluted	share,	compared	to	$4.444	billion,	or	$6.32	per	diluted	share,	in	2012,	an increase	of	6.3	percent	on	a	per	diluted	share	basis.	Sales	totaled	$30.9	billion,	an	increase	of	3.2	percent	from	2012.	From	a	business	segment	perspective,	organic local-currency	sales	growth	was	5.0	percent	in	Health	Care,	4.6	percent	in	Industrial,	4.2	percent	in	Safety	and	Graphics,	3.0	percent	in	Consumer,	and	was	flat	in Electronics	and	Energy.	From	a	geographic	area	perspective,	2013	organic	local-currency	sales	growth	was	7.1	percent	in	Latin	America/Canada,	3.6	percent	in	Asia Pacific,	3.1	percent	in	the	United	States,	and	2.1	percent	in	EMEA.	For	the	Company	in	total,	organic	local-currency	sales	grew	3.4	percent,	with	higher	organic	volumes contributing	2.5	percent	and	selling	price	increases	contributing	0.9	percent.	Acquisitions	added	1.4	percent	to	sales,	driven	by	the	November	2012	acquisition	of Ceradyne,	Inc.	(Industrial),	the	September	2012	purchase	of	the	net	assets	that	comprised	the	business	of	Federal	Signal	Technologies	Group	(Safety	and	Graphics),	and the	April	2012	acquisition	of	CodeRyte,	Inc.	(Health	Care).	Foreign	currency	translation	reduced	sales	by	1.6	percent	year-on-year.

Operating	income	in	2013	was	21.6	percent	of	sales,	compared	to	21.7	percent	of	sales	in	2012,	a	decline	of	0.1	percentage	points.	Items	that	reduced	operating	income margins	included	lower	factory	utilization/productivity,	strategic	investments	(including	business	transformation,	enabled	by	3M's	global	ERP	implementation),	the impact	of	2012	acquisitions,	and	other	factors.	These	factors	were	largely	offset	by	the	combination	of	selling	price	increases	and	raw	material	cost	decreases,	in	addition to	lower	pension/postretirement	benefit	costs.	Refer	to	the	section	entitled	"Results	of	Operations"	for	further	discussion.

The	income	tax	rate	was	28.1	percent	in	2013,	down	0.9	percentage	points	versus	2012,	which	increased	earnings	per	diluted	share	by	approximately	9	cents.	Weighted- average	diluted	shares	outstanding	in	2013	declined	1.4	percent	year-on-year	to	693.6	million,	which	increased	earnings	per	diluted	share	by	approximately	9	cents. Foreign	exchange	impacts	decreased	earnings	per	diluted	share	by	approximately	11	cents.

Fourth-quarter	2012	net	income	attributable	to	3M	was	$991	million,	or	$1.41	per	diluted	share,	compared	to	$954	million,	or	$1.35	per	diluted	share,	in	the	fourth quarter	of	2011.	Fourth-quarter	2012	sales	totaled	$7.4	billion,	an	increase	of	4.2	percent	from	the	fourth	quarter	of	2011.	Organic	local-currency	sales	grew	4.3	percent, acquisitions	added	0.9	percent	to	sales,	and	foreign	currency	translation	reduced	sales	by	1.0	percent	year-on-year.	From	a	business	segment	perspective,	Consumer	led with	organic	local-currency	sales	growth	of	8.8	percent,	driven	by	consumer	health	care,	construction	and	home	improvement	markets,	and	stationery	and	office supplies.	Health	Care	organic	local-currency	sales	grew	5.9	percent,	with	positive	growth	in	all	businesses,	led	by	food	safety,	health	information	systems,	critical	and

chronic	care,	and	oral	care.	Electronics	and	Energy	organic	local-currency	sales	growth	was	4.4	percent,	led	by	optical	systems,	with	sales	also	increasing	in infrastructure	protection,	electrical,	and	telecommunication	markets,	partially	offset	by	declines	in	renewable	energy	and	electronics	markets	materials.	Industrial organic	local-currency	sales	grew	4.4	percent,	led	by	3M	Purification	Inc.	(filtration	products),	aerospace,	industrial	adhesives	and	tapes,	abrasives	and	automotive	OEM partially	offset	by	declines	in	advanced	materials.	Organic	local-currency	sales	declined	0.3	percent	in	Safety	and	Graphics,	as	sales	growth	in	personal	safety, architectural	markets,	commercial	graphics,	and	roofing	granules	was	offset	by	a	year-on-year	decline	in	traffic	safety	and	security	systems.

From	a	geographic	area	perspective,	fourth-quarter	2012	organic	local-currency	sales	growth	was	9.9	percent	in	Latin	America/Canada,	5.8	percent	in	Asia	Pacific,	and 5.2	percent	in	the	United	States.	EMEA	organic	local-currency	sales	declined	1.0	percent,	impacted	by	a	weak	economy	in	Western	Europe.	Latin	America/Canada	sales growth	was	broad-based,	with	all	five	business	segments	generating	positive	organic	local-currency	sales	growth,	led	by	Health	Care;	Safety	and	Graphics;	Electronics and	Energy;	and	Consumer.	Organic	local-currency	sales	growth	increased	11	percent	in	Brazil,	in	the	face	of	a	still-recovering	economy,	and	Mexico	grew	nearly	10 percent.	In	Asia	Pacific,	Japan	declined	year-on-year,	reflecting	continued	challenging	economic	conditions.	Organic	local-currency	sales	in	the	rest	of	Asia	Pacific	grew nearly	10	percent,	with	China	up	over	16	percent.	Organic	local-currency	sales	growth	in	the	United	States	was	led	by	Consumer.

For	total	year	2012,	net	income	attributable	to	3M	was	$4.444	billion,	or	$6.32	per	diluted	share,	compared	to	$4.283	billion,	or	$5.96	per	diluted	share,	in	2011,	an increase	of	6.0	percent	on	a	per	diluted	share	basis.	Sales	totaled	$29.9	billion,	an	increase	of	1.0	percent	from	2011.	Organic	local-currency	sales	grew	2.6	percent, acquisitions	added	0.8	percent	to	sales	and	foreign	currency	translation	reduced	sales	by	2.4	percent	year-on-year.	From	a	business	segment	perspective,	organic	local- currency	sales	growth	was	5.2	percent	in	Industrial,	4.7	percent	in	Health	Care,	3.6	percent	in	Consumer,	and	2.4	percent	in	Safety	and	Graphics.	Organic	local-currency sales	declined	3.7	percent	in	Electronics	and	Energy.	From	a	geographic	area	perspective,	2012	organic	local-currency	sales	growth	was	11.1	percent	in	Latin America/Canada,	4.2	percent	in	the	United	States,	and	0.1	percent	in	Asia	Pacific.	Asia	Pacific	was	impacted	by	a	soft	global	consumer	electronics	industry.	EMEA organic	local-currency	sales	declined	0.6	percent,	impacted	by	a	weak	economy	in	Western	Europe.

Operating	income	in	2012	was	21.7	percent	of	sales,	compared	to	20.9	percent	of	sales	in	2011,	an	improvement	of	0.8	percentage	points.	The	primary	benefit	(as discussed	in	the	Results	of	Operations	section)	related	to	the	combination	of	selling	price	increases	and	raw	material	cost	decreases.	Currency	effects	reduced	diluted earnings	per	share	by	an	estimated	15	cents.	Net	insurance	recoveries	in	2012	related	to	the	2011	earthquake	and	tsunami	in	Japan	increased	earnings	by	approximately	4 cents	per	diluted	share.	In	2011,	the	impact	of	natural	disasters,	net	of	insurance	recoveries,	reduced	earnings	by	approximately	6	cents	per	diluted	share.	Early retirement/restructuring	costs	for	2012	totaled	approximately	8	cents	per	diluted	share,	which	included	the	first	quarter	2012	charge	of	approximately	3	cents	per	diluted share	related	to	a	voluntary	early	retirement	program	in	the	United	States.

The	most	significant	non-operating	items	that	impacted	earnings	in	2012	when	compared	to	2011	were	diluted	shares	outstanding	and	income	taxes.	Average	diluted shares	outstanding	declined	2.2	percent	in	2012	to	703.3	million,	which	increased	earnings	per	diluted	share	by	approximately	14	cents	when	compared	to	2011.	The income	tax	rate	for	2012	was	29.0	percent	compared	to	27.8	percent	in	2011,	which	decreased	earnings	per	diluted	share	by	approximately	11	cents.

The	following	table	contains	sales	and	operating	income	results	by	business	segment	for	the	years	ended	December	31,	2013	and	2012.	In	addition	to	the	discussion below,	refer	to	the	section	entitled	"Performance	by	Business	Segment"	and	"Performance	by	Geographic	Area"	later	in	MD&A	for	a	more	detailed	discussion	of	the sales	and	income	results	of	the	Company	and	its	respective	business	segments	(including	Corporate	and	Unallocated).	Refer	to	Note	15	for	additional	information	on business	segments,	including	Elimination	of	Dual	Credit.

|  |  |  |  |  |  |  | 2013	vs.	2012 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | 2013 |  |  | 2012 |  | %\tchange |  |
|  | Net | %\tof | Oper. | Net | %\tof | Oper. | Net | Oper. |
| (Dollars\tin\tmillions) | Sales | Total | Income | Sales | Total | Income | Sales | Income |
| Business\tSegments |  |  |  |  |  |  |  |  |
| Industrial | $10,584 | 34.3% | $2,296 | $9,943 | 33.2% | $2,236 | 6.5% | 2.7% |
| Safety\tand\tGraphics | 5,657 | 18.3% | 1,239 | 5,471 | 18.3% | 1,217 | 3.4% | 1.8% |
| Electronics\tand\tEnergy | 5,393 | 17.5% | 954 | 5,458 | 18.3% | 1,026 | (1.2)% | (7.0)% |
| Health\tCare | 5,334 | 17.3% | 1,672 | 5,138 | 17.2% | 1,641 | 3.8% | 1.9% |
| Consumer | 4,435 | 14.4% | 945 | 4,386 | 14.7% | 943 | 1.1% | 0.2% |
| Corporate\tand\tUnallocated | 8 | —% | (322) | 4 | —% | (471) | — | — |
| Elimination\tof\tDual\tCredit | (540) | (1.8)% | (118) | (496) | (1.7)% | (109) | — | — |
| Total\tCompany | $30,871 | 100.0% | $6,666 | $29,904 | 100.0% | $6,483 | 3.2% | 2.8% |

Sales	in	2013	increased	3.2	percent,	led	by	Industrial	at	6.5	percent,	Health	Care	at	3.8	percent,	and	Safety	and	Graphics	at	3.4	percent.	Sales	increased	1.1	percent	in Consumer	and	declined	1.2	percent	in	Electronics	and	Energy.	Total	company	organic	local-currency	sales	growth	(which	includes	organic	volume	and	selling	price impacts)	was	3.4	percent,	acquisitions	added	1.4	percent,	and	foreign	currency	translation	reduced	sales	by	1.6	percent.	Four	of	3M's	five	business	segments	posted operating	income	margins	in	excess	of	21	percent	in	2013.	Worldwide	operating	income	margins	for	2013	were	21.6	percent,	compared	to	21.7	percent	for	2012.

Sales	in	2012	increased	1.0	percent,	led	by	Consumer	at	3.7	percent,	Industrial	at	3.3	percent	and	Health	Care	at	2.5	percent.	Sales	increased	0.2	percent	in	Safety	and Graphics,	and	declined	4.8	percent	in	Electronics	and	Energy.	Total	company	organic	local-currency	sales	growth	was	2.6	percent,	acquisitions	added	0.8	percent,	and foreign	currency	translation	reduced	sales	by	2.4	percent.	Four	of	3M's	five	business	segments	posted	operating	income	margins	in	excess	of	21	percent	in	2012. Worldwide	operating	income	margins	for	2012	were	21.7	percent,	compared	to	20.9	percent	for	2011.

3M	generated	$5.817	billion	of	operating	cash	flow	in	2013,	an	increase	of	$517	million	when	compared	to	2012.	This	followed	an	increase	of	$16	million	when comparing	2012	to	2011.	Refer	to	the	section	entitled	"Financial	Condition	and	Liquidity"	later	in	MD&A	for	a	discussion	of	items	impacting	cash	flows.	In February	2014,	3M's	Board	of	Directors	authorized	the	repurchase	of	up	to	$12	billion	of	3M's	outstanding	common	stock,	which	replaced	the	Company's February	2013	repurchase	program.	This	new	program	has	no	pre-established	end	date.	In	2013,	the	Company	purchased	$5.212	billion	of	stock,	up	significantly	from $2.204	billion	in	2012	and	$2.701	billion	in	2011.	The	Company	expects	to	purchase	$3	billion	to	$5	billion	of	stock	in	2014.	In	December	2013,	3M's	Board	of Directors	declared	a	first-quarter	2014	dividend	of	$0.855	per	share,	an	increase	of	34.6	percent.	This	marked	the	56th	consecutive	year	of	dividend	increases	for	3M. 3M's	debt	to	total	capital	ratio	(total	capital	defined	as	debt	plus	equity)	was	25	percent	at

December	31,	2013,	2012	and	2011.	3M	has	an	AA-	credit	rating	with	a	stable	outlook	from	Standard	&	Poor's	and	an	Aa2	credit	rating	with	a	stable	outlook	from Moody's	Investors	Service.	The	Company	has	significant	cash	on	hand	and	sufficient	additional	access	to	capital	markets	to	meet	its	funding	needs.

In	2013,	the	Company	experienced	stable	to	declining	costs	for	most	raw	material	categories	and	transportation	fuel.	This	was	driven	by	year-on-year	cost	decreases	in many	feedstock	categories,	including	petroleum	based	materials,	minerals,	metals	and	wood	pulp	based	products.	To	date	the	Company	is	receiving	sufficient	quantities of	all	raw	materials	to	meet	its	reasonably	foreseeable	production	requirements.	It	is	impossible	to	predict	future	shortages	of	raw	materials	or	the	impact	any	such shortages	would	have.	3M	has	avoided	disruption	to	its	manufacturing	operations	through	careful	management	of	existing	raw	material	inventories	and	development	and

qualification	of	additional	supply	sources.	3M	manages	commodity	price	risks	through	negotiated	supply	contracts,	price	protection	agreements	and	forward	physical contracts.

On	a	worldwide	basis,	3M's	pension	and	postretirement	plans	were	94	percent	funded	at	year-end	2013.	The	primary	U.S.	qualified	plan,	which	is	approximately	66 percent	of	the	worldwide	pension	obligation,	was	103	percent	funded	and	the	international	pension	plans	were	91	percent	funded.	The	U.S.	non-qualified	pension	plan	is not	funded	due	to	tax	considerations	and	other	factors.	Asset	returns	in	2013	for	the	primary	U.S.	qualified	plan	was	6.02%,	as	3M	strategically	invests	in	both	growth assets	and	fixed	income	matching	assets	to	manage	its	funded	status,	which	improved	to	103	percent	funded	at	year-end	2013,	compared	to	96	percent	funded	at	year- end	2012.	For	the	primary	U.S.	qualified	pension	plan,	the	expected	long-term	rate	of	return	on	an	annualized	basis	for	2014	is	7.75%,	a	decrease	of	0.25	percentage points	from	2013.	The	primary	U.S.	qualified	plan	year-end	2013	discount	rate	was	4.98%,	up	0.84	percentage	points	from	the	year-end	2012	discount	rate	of	4.14%. The	increase	in	U.S.	discount	rates	resulted	in	a	lower	valuation	of	the	projected	benefit	obligation,	which	improved	the	plans'	funded	status.	The	changes	in	3M's defined	benefit	plans'	funded	status	significantly	impacted	several	balance	sheet	amounts.	In	the	fourth-quarter	of	2013,	these	required	annual	measurements	increased stockholders'	equity	by	$0.9	billion,	decreased	pension	and	postretirement	benefits'	long-term	liabilities	by	$0.8	billion,	increased	prepaid	pension	benefits'	assets	by $0.5	billion,	and	decreased	deferred	taxes	within	other	assets	by	$0.4	billion.	Other	pension	and	postretirement	changes	during	the	year,	such	as	contributions	and amortization,	also	impacted	these	balance	sheet	amounts.

3M	expects	to	contribute	approximately	$100	million	to	$200	million	of	cash	to	its	global	pension	and	postretirement	plans	in	2014.	The	Company	does	not	have	a required	minimum	cash	pension	contribution	obligation	for	its	U.S.	plans	in	2014.	3M	expects	defined	benefit	pension	and	postretirement	expense	in	2014	to	decrease	by approximately	$160	million	pre-tax	when	compared	to	2013.	The	change	in	both	defined	benefit	and	defined	contribution	plan	expenses	would	increase	earnings	per share	in	2014	by	approximately	15	cents	per	share	when	compared	to	2013,	or	approximately	17	cents	per	share	including	the	impact	of	defined	benefit	plan	expenses only.	Refer	to	"Critical	Accounting	Estimates"	within	MD&A	and	Note	10	(Pension	and	Postretirement	Benefit	Plans)	for	additional	information	concerning	3M's pension	and	post-retirement	plans.	In	addition,	3M	currently	expects	that	its	effective	tax	rate	for	2014	will	be	approximately	28.0	to	29.0	percent,	compared	to	28.1 percent	for	2013.

Forward-looking	statements	in	Item	7	may	involve	risks	and	uncertainties	that	could	cause	results	to	differ	materially	from	those	projected	(refer	to	the	section	entitled "Cautionary	Note	Concerning	Factors	That	May	Affect	Future	Results"	in	Item	1	and	the	risk	factors	provided	in	Item	1A	for	discussion	of	these	risks	and	uncertainties).

# RESULTS	OF	OPERATIONS

|  |  | 2013 |  |  | 2012 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | U.S. | Intl. | Worldwide | U.S. | Intl. | Worldwide |
| Net\tsales\t(millions) | $11,151 | $19,720 | $30,871 | $10,571 | $19,333 | $29,904 |
| \t%\tof\tworldwide\tsales | 36.1% | 63.9% |  | 35.3% | 64.7% |  |
| Components\tof\tnet\tsales\tchange: |  |  |  |  |  |  |
| Volume\t—\torganic | 2.4% | 2.7% | 2.5% | 2.1% | 0.8% | 1.2% |
| Price | 0.7 | 0.9 | 0.9 | 2.1 | 0.9 | 1.4 |
| Organic\tlocal-currency\tsales | 3.1 | 3.6 | 3.4 | 4.2 | 1.7 | 2.6 |
| Acquisitions | 2.5 | 0.9 | 1.4 | 0.8 | 0.8 | 0.8 |
| Divestitures | (0.1) | — | — | — | — | — |
| Translation | — | (2.5) | (1.6) | — | (3.6) | (2.4) |
| Total\tsales\tchange | 5.5% | 2.0% | 3.2% | 5.0% | (1.1)% | 1.0% |

In	2013,	organic	local-currency	sales	grew	3.4	percent,	with	increases	of	7.1	percent	in	Latin	America/Canada,	3.6	percent	in	Asia	Pacific,	3.1	percent	in	the	United States,	and	2.1	percent	in	Europe,	Middle	East	and	Africa.	Worldwide	organic	local-currency	sales	grew	5.0	percent	in	Health	Care,	4.6	percent	in	Industrial,	4.2	percent in	Safety	and	Graphics,	3.0	percent	in	Consumer,	and	were	flat	in	Electronics	and	Energy.	Acquisitions	added	1.4	percent	to	worldwide	growth	and	foreign	currency translation	reduced	worldwide	sales	growth	by	1.6	percent.

Worldwide	selling	prices	rose	0.9	percent	in	2013	and	1.4	percent	in	2012.	Selling	price	increases	were	driven	by	two	primary	factors	in	both	2013	and	2012.	First, investment	in	research	and	development	continues	to	support	a	strong	price/value	equation	in	many	of	the	markets	that	3M	serves.	Second,	3M	adjusts	selling	prices	to offset	currency	devaluations	in	certain	developing	countries.	These	increases	have	more	than	offset	selling	price	declines	in	3M's	optical	systems	business,	where	prices typically	decline	each	year,	which	is	common	for	the	electronics	industry.

In	2012,	organic	local-currency	sales	increased	2.6	percent.	Organic	local-currency	sales	growth	was	led	by	Latin	America/Canada	and	the	United	States,	while	Asia Pacific	was	flat,	and	EMEA	was	down	slightly.	Worldwide	organic	local-currency	sales	grew	5.2	percent	in	Industrial,	4.7	percent	in	Health	Care,	3.6	percent	in Consumer,	and	2.4	percent	in	Safety	and	Graphics.	Organic	local-currency	sales	declined	3.7	percent	in	Electronics	and	Energy.	Acquisitions	added	0.8	percent	to worldwide	growth	and	foreign	currency	translation	reduced	2012	worldwide	sales	growth	by	2.4	percent.

Refer	to	the	sections	entitled	"Performance	by	Business	Segment"	and	"Performance	by	Geographic	Area"	later	in	MD&A	for	additional	discussion	of	sales	change.

# Operating	Expenses:

|  |  |  |  | 2013	Versus | 2012	Versus |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Percent\tof\tnet\tsales) | 2013 | 2012 | 2011 | 2012 | \t2011 |
| Cost\tof\tsales | 52.1% | 52.4% | 53.0% | (0.3)% | (0.6)% |
| Selling,\tgeneral\tand\tadministrative\texpenses | 20.7 | 20.4 | 20.8 | 0.3 | (0.4) |
| Research,\tdevelopment\tand\trelated\texpenses | 5.6 | 5.5 | 5.3 | 0.1 | 0.2 |
| Operating\tincome | 21.6% | 21.7% | 20.9% | (0.1)% | 0.8% |

Pension	and	postretirement	expense	decreased	$97	million	in	2013	compared	to	2012,	compared	to	an	increase	of	$95	million	for	2012	compared	to	2011.	2012	includes a	$26	million	charge	related	to	the	first-quarter	2012	voluntary	early	retirement	incentive	program	(discussed	in	Note	10).	Pension	and	postretirement	expense	is recorded	in	cost	of	sales;	selling,	general	and	administrative	expenses	(SG&A);	and	research,	development	and	related	expenses	(R&D).	Refer	to	Note	10	(Pension	and Postretirement	Plans)	for	components	of	net	periodic	benefit	cost	and	the	assumptions	used	to	determine	net	cost.

Cost	of	Sales:

# Cost	of	sales	includes	manufacturing,	engineering	and	freight	costs.

Cost	of	sales,	measured	as	a	percent	of	net	sales,	was	52.1	percent	in	2013,	a	decrease	of	0.3	percentage	points	from	2012.	Cost	of	sales	as	a	percent	of	sales	decreased due	to	the	combination	of	selling	price	increases	and	raw	material	cost	decreases,	as	selling	prices	rose	0.9	percent	and	raw	material	cost	deflation	was	approximately	2 percent	favorable	year-on-year.	In	addition,	lower	pension	and	postretirement	costs	(of	which	a	portion	impacts	cost	of	sales),	in	addition	to	organic	volume	increases, decreased	cost	of	sales	as	a	percent	of	sales.	These	benefits	were	partially	offset	by	the	impact	of	2012	acquisitions	and	lower	factory	utilization.

Cost	of	sales,	measured	as	a	percent	of	net	sales,	was	52.4	percent	in	2012,	a	decrease	of	0.6	percentage	points	from	2011.	The	net	impact	of	selling	price/raw	material cost	changes	was	the	primary	factor	that	decreased	cost	of	sales	as	a	percent	of	sales,	as	selling	prices	increased	1.4	percent	and	raw	material	costs	decreased approximately	2	percent.	This	benefit	was	partially	offset	by	higher	pension	and	postretirement	costs.

# Selling,	General	and	Administrative	Expenses:

Selling,	general	and	administrative	expenses	(SG&A)	increased	$282	million,	or	4.6	percent,	in	2013	when	compared	to	2012.	In	2013,	SG&A	included	strategic investments	in	business	transformation,	enabled	by	3M's	global	enterprise	resource	planning	(ERP)	implementation,	in	addition	to	increases	from	acquired	businesses that	were	largely	not	in	3M's	2012	spending	(Ceradyne,	Inc.	and	Federal	Signal	Technologies),	which	were	partially	offset	by	lower	pension	and	postretirement	expense. SG&A,	measured	as	a	percent	of	sales,	increased	0.3	percentage	points	to	20.7	percent	in	2013,	compared	to	20.4	percent	in	2012.

SG&A	decreased	$68	million,	or	1.1	percent,	in	2012	when	compared	to	2011.	In	addition	to	cost-control	and	other	productivity	efforts,	3M	experienced	some	savings from	its	first-quarter	2012	voluntary	early	retirement	incentive	program	and	other	restructuring	actions.	These	benefits	more	than	offset	increases	related	to	acquisitions, higher	year-on-year	pension	and	postretirement	expense,	and	restructuring	expenses.	SG&A	in	2012	included	increases	from	acquired	businesses	which	were	not	in 3M's	full-year	2011	base	spending,	primarily	related	to	the	2011	acquisitions	of	Winterthur	Technologie	AG	and	the	do-it-yourself	and	professional	business	of	GPI Group,	in	addition	to	SG&A	spending	related	to	the	2012	acquisitions	of	Ceradyne,	Inc.,	Federal	Signal	Technologies	Group,	and	CodeRyte,	Inc.	SG&A,	measured	as	a percent	of	sales,	was	20.4	percent	in	2012,	a	decrease	of	0.4	percentage	points	when	compared	to	2011.

# Research,	Development	and	Related	Expenses:

Research,	development	and	related	expenses	(R&D)	increased	4.9	percent	in	2013	compared	to	2012	and	increased	4.1	percent	in	2012	compared	to	2011,	as	3M continued	to	support	its	key	growth	initiatives,	including	more	R&D	aimed	at	disruptive	innovation.	In	2013,	increases	from	acquired	businesses	that	were	largely	not	in 3M's	2012	spending	(primarily	Ceradyne,	Inc.	and	Federal	Signal	Technologies)	were	partially	offset	by	lower	pension	and	postretirement	expense.	In

2012,	investments	to	support	key	growth	initiatives,	along	with	higher	pension	and	postretirement	expense,	were	partially	offset	by	cost-control	efforts	and	savings	from 3M's	first-quarter	2012	voluntary	early	retirement	incentive	program.	R&D,	measured	as	a	percent	of	sales,	was	5.6	percent	in	2013,	compared	to	5.5	percent	in	2012 and	5.3	percent	in	2011.

# Operating	Income:

3M	uses	operating	income	as	one	of	its	primary	business	segment	performance	measurement	tools.

Operating	income	margins	were	21.6	percent	in	2013,	compared	to	21.7	in	2012,	a	decrease	of	0.1	percentage	points.	Items	that	reduced	operating	income	margins included	a	0.5	percentage	point	impact	from	lower	factory	utilization/productivity,	along	with	a	0.4	percentage	point	impact	from	the	combination	of	business transformation,	enabled	by	3M's	global	ERP	implementation,	along	with	more	R&D	aimed	at	disruptive	innovation.	The	recently	enacted	medical	device	excise	tax	in the	U.S.,	foreign	currency	effects,	acquisition	impacts,	and	other	net	impacts	reduced	operating	income	margins	by	0.7	percentage	points.	These	factors	were	largely offset	by	items	that	increased	operating	income	margins,	which	included	a	1.2	percentage	point	benefit	from	the	combination	of	selling	price	increases	and	raw	material cost	decreases.	Finally,	lower	pension/postretirement	benefit	costs	increased	operating	income	margins	by	0.3	percentage	points.

Operating	income	was	21.7	percent	of	sales	in	2012,	compared	to	20.9	percent	of	sales	in	2011,	an	improvement	of	0.8	percentage	points.	The	improvement	was	driven by	a	1.6	percentage	point	benefit	from	the	combination	of	selling	price	increases	and	raw	material	cost	decreases.	This	was	partially	offset	by	increased pension/postretirement	benefit	costs	and	acquisition	impacts,	each	of	which	reduced	margins	by	0.3	percentage	points,	and	other	net	impacts,	which	decreased	margins by	0.2	percentage	points.

# Interest	Expense	and	Income:

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Interest\texpense | $145 | $171 | $186 |
| Interest\tincome | (41) | (39) | (39) |
| Total | $104 | $132 | $147 |

Interest	Expense:	Interest	expense	decreased	in	both	2013	and	2012.	The	2013	decrease	was	primarily	due	to	lower	interest	rates.	The	2012	decrease	was	driven	by	lower average	international	debt	balances	and	lower	interest	rates	on	U.S.	debt.

Interest	Income:	Interest	income	was	up	$2	million	when	comparing	2013	to	2012,	as	higher	average	international	cash	balances	were	largely	offset	by	lower	average U.S.	balances	and	lower	U.S.	and	international	interest	rates.	In	2012,	lower	U.S.	cash	balances	and	lower	interest	rates	internationally	were	offset	by	higher	international cash	balances	and	higher	interest	rates	in	the	U.S.

# Provision	for	Income	Taxes:

The	effective	tax	rate	for	2013	was	28.1	percent,	compared	to	29.0	percent	in	2012,	a	decrease	of	0.9	percentage	points,	impacted	by	many	factors.	Factors	that	decreased the	Company's	effective	tax	rate	included	international	taxes	as	a	result	of	changes	to	the	geographic	mix	of	income	before	taxes,	the	reinstatement	of	the	U.S.	research and	development	credit	in	2013,	an	increase	in	the	domestic	manufacturer's	deduction	benefit,	the	restoration	of	tax	basis	on	certain	assets	for	which	depreciation deductions	were	previously	limited,	and	other	items.	Combined,	these	factors	decreased	the	Company's	effective	tax	rate	by	4.0	percentage	points.	This	benefit	was partially	offset	by	factors	that	increased	the	effective	tax	rate	by	3.1	percentage	points,	which	largely	related	to	adjustments	to	3M's	income	tax	reserves	for	2013	when compared	to	2012.

The	effective	tax	rate	for	2012	was	29.0	percent,	compared	to	27.8	percent	in	2011,	an	increase	of	1.2	percentage	points,	impacted	by	many	factors.	The	primary	factors that	increased	the	Company's	effective	tax	rate	year-on-year	include	international	taxes,	specifically	with	respect	to	the	corporate	reorganization	of	a	wholly	owned international	subsidiary	(which	benefited	2011),	state	income	taxes,	lower	domestic	manufacturer's	deduction,	and	the	lapse	of	the	U.S.	research	and	development credit.	These	and	other	factors,	when	compared	to	2011,	increased	the	2012	effective	tax	rate	by	2.1	percentage	points.	Factors	that	decreased	the	Company's	effective

# tax	rate	year-on-year	include	international	taxes	as	a

result	of	changes	to	the	geographic	mix	of	income	before	taxes	and	adjustments	to	its	income	tax	reserves.	These	factors,	when	compared	to	2011,	decreased	the effective	tax	rate	0.9	percentage	points.

The	Company	currently	expects	that	its	effective	tax	rate	for	total	year	2014	will	be	approximately	28.0	to	29.0	percent.	The	rate	can	vary	from	quarter	to	quarter	due	to discrete	items,	such	as	the	settlement	of	income	tax	audits	and	changes	in	tax	laws,	as	well	as	recurring	factors,	such	as	the	geographic	mix	of	income	before	taxes.

Refer	to	Note	7	for	further	discussion	of	income	taxes.

# Net	Income	Attributable	to	Noncontrolling	Interest:

Net	income	attributable	to	noncontrolling	interest	represents	the	elimination	of	the	income	or	loss	attributable	to	non-3M	ownership	interests	in	3M	consolidated	entities. The	changes	in	noncontrolling	interest	amounts	are	primarily	related	to	Sumitomo	3M	Limited	(Japan),	which	is	3M's	most	significant	consolidated	entity	with	non-3M ownership	interests.	As	of	December	31,	2013,	3M's	effective	ownership	in	Sumitomo	3M	Limited	is	75	percent.

# Currency	Effects:

3M	estimates	that	year-on-year	currency	effects,	including	hedging	impacts,	decreased	net	income	attributable	to	3M	by	approximately	$74	million	and	$103	million	in 2013	and	2012,	respectively.	These	estimates	include	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	and	the	negative	impact	of	swapping	Venezuelan	bolivars	into	U.S.	dollars.	3M	estimates	that	year-on-year	derivative	and	other	transaction gains	and	losses	decreased	net	income	attributable	to	3M	by	approximately	$12	million	in	2013	and	increased	net	income	attributable	to	3M	by	approximately	$49 million	in	2012.

# PERFORMANCE	BY	BUSINESS	SEGMENT

Disclosures	relating	to	3M's	business	segments	are	provided	in	Item	1,	Business	Segments.	Financial	information	and	other	disclosures	are	provided	in	the	Notes	to	the Consolidated	Financial	Statements.	As	discussed	in	Note	15,	effective	in	the	first	quarter	of	2013,	the	Company	completed	a	realignment	of	its	business	segments	to better	serve	global	markets	and	customers.	Segment	information	presented	herein	reflects	the	impacts	of	these	changes	for	all	periods	presented.	The	reportable segments	are	Industrial;	Safety	and	Graphics;	Electronics	and	Energy;	Health	Care;	and	Consumer.	Information	related	to	3M's	business	segments	is	presented	in	the tables	that	follow.	Organic	local-currency	sales	include	both	organic	volume	impacts	plus	selling	price	impacts.	Acquisition	impacts,	if	any,	are	measured	separately	for the	first	twelve	months	of	the	acquisition.	The	divestiture	impacts,	if	any,	foreign	currency	translation	impacts	and	total	sales	change	are	also	provided	for	each	business segment.	Any	references	to	EMEA	relate	to	Europe,	Middle	East	and	Africa	on	a	combined	basis.

# Corporate	and	Unallocated:

In	addition	to	these	five	operating	business	segments,	3M	assigns	certain	costs	to	"Corporate	and	Unallocated,"	which	is	presented	separately	in	the	preceding	business segments	table	and	in	Note	15.	Corporate	and	Unallocated	includes	a	variety	of	miscellaneous	items,	such	as	corporate	investment	gains	and	losses,	certain	derivative gains	and	losses,	certain	insurance-related	gains	and	losses,	certain	litigation	and	environmental	expenses,	corporate	restructuring	charges	and	certain	under-	or	over- absorbed	costs	(e.g.	pension,	stock-based	compensation)	that	the	Company	may	choose	not	to	allocate	directly	to	its	business	segments.	Because	this	category	includes	a variety	of	miscellaneous	items,	it	is	subject	to	fluctuation	on	a	quarterly	and	annual	basis.

Corporate	and	Unallocated	operating	expenses	decreased	by	$149	million	in	2013	when	compared	to	2012.	Of	the	$149	million	decrease	in	2013,	approximately	$127 million	was	due	to	lower	pension	and	postretirement	benefit	expense.	The	primary	items	driving	the	$51	million	increase	in	Corporate	and	Unallocated	in	2012	when compared	to	2011	were	pension	and	postretirement	expense,	as	a	portion	of	the	2012	increase	in	these	expenses	were	not	allocated	directly	to	the	five	operating	business segments	($63	million),	partially	offset	by	an	increase	in	other	environmental	insurance	receivables,	which	benefited	2012	by	$15	million	(as	discussed	in	Note	13).

# Operating	Business	Segments:

All	five	business	segments,	when	comparing	2013	to	2012,	were	impacted	by	investments	in	business	transformation,	which	are	enabled	by	3M's	global	ERP implementation,	and	by	higher	allocated	pension	and	postretirement	benefit	expenses.	The	implementation	of	3M's	ERP	system	has	increased	spending	in	total,	and	the transition	of	3M's	ERP	system	from	the	development	stage	into	deployment	has	also	resulted	in	more	ERP	costs	being	borne	by	the	five	operating	business	segments rather	than	Corporate	and	Unallocated.	This	negatively	impacted	each	business	segment's	annual	2013	operating	income	margins	by	approximately	0.30	percentage points	when	compared	to	2012.	3M's	pension	and	postretirement	benefit	expenses	declined	$97	million	when	comparing	2013	to	2012;	however,	$127	million	of	this reduction	was	allocated	to	Corporate	and	Unallocated,	resulting	in	$30	million	of	additional	expense	being	absorbed	by	the	five	operating	business	segments	in	2013,	or a	negative	year-on-year	impact	of	approximately	0.10	percentage	points.	Thus,	while	operating	income	margins	have	declined	when	comparing	2013	to	2012	for	all	five business	segments,	on	average	approximately	0.40	percentage	points	of	this	decline	relates	to	the	impact	of	higher	ERP	implementation	expenses	and	higher	pension	and postretirement	benefit	expenses.	When	comparing	2012	to	2011,	operating	business	segment	results	reflect	$32	million	in	higher	year-on-year	pension	and	postretirement benefit	expenses.

The	following	discusses	total	year	results	for	2013	compared	to	2012,	and	also	discusses	2012	compared	to	2011,	for	each	business	segment.

Industrial	Business	(34.3%	of	consolidated	sales):

| Sales	(millions) | $10,584 | $9,943 | $9,629 |
| :--- | :--- | :--- | :--- |
| Sales\tchange\tanalysis: |  |  |  |
| Organic\tlocal\tcurrency | 4.6% | 5.2% | 9.0% |
| Acquisitions | 3.6 | 1.1 | 6.1 |
| Translation | (1.7) | (3.0) | 3.5 |
| Total\tsales\tchange | 6.5% | 3.3% | 18.6% |
| Operating\tincome\t(millions) | $2,296 | $2,236 | $1,983 |
| Percent\tchange | 2.7% | 12.8% | 15.3% |
| Percent\tof\tsales | 21.7% | 22.5% | 20.6% |

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,	appliance,	paper	and	printing,	packaging,	food	and	beverage,	and	construction.	Industrial	products	include	tapes,	a	wide	variety	of	coated,	non-woven and	bonded	abrasives,	adhesives,	advanced	ceramics,	sealants,	specialty	materials,	3M	Purification	Inc.	(filtration	products),	closure	systems	for	personal	hygiene products,	acoustic	systems	products,	and	components	and	products	that	are	used	in	the	manufacture,	repair	and	maintenance	of	automotive,	marine,	aircraft	and	specialty vehicles.

Sales	in	Industrial	totaled	$10.6	billion,	up	6.5	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	4.6	percent,	acquisitions	added	3.6	percent,	and	foreign currency	translation	reduced	sales	by	1.7	percent.	On	an	organic	local-currency	basis,	all	of	Industrial's	businesses	experienced	positive	sales	growth	in	2013,	led	by aerospace,	automotive	OEM,	3M	Purification	Inc.	(filtration	products),	and	industrial	adhesives	and	tapes.	Acquisition	growth	related	to	the	2012	acquisition	of Ceradyne,	Inc.	(Ceradyne).	As	disclosed	in	Note	2,	in	November	2012,	3M	acquired	Ceradyne,	which	is	headquartered	in	Costa	Mesa,	California.	Ceradyne	is	involved in	the	development	and	production	of	advanced	technical	ceramics	for	demanding	applications	in	the	automotive,	oil	and	gas,	solar,	industrial,	electronics	and	defense industries.

Geographically,	organic	local-currency	sales	increased	8	percent	in	Latin	America/Canada,	5	percent	in	the	United	States,	4	percent	in	EMEA,	and	3	percent	in	Asia Pacific.

Operating	income	was	$2.3	billion	in	2013,	up	2.7	percent	year-on-year.	Operating	income	margins	decreased	by	0.8	percentage	points	to	21.7	percent.	This	decline	in margins	largely	related	to	the	Ceradyne	acquisition,	which	reduced	2013	operating	income	margins	by	0.7	percentage	points.

Sales	in	Industrial	totaled	$9.9	billion,	up	3.3	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	5.2	percent,	acquisitions	added	1.1	percent,	and	foreign currency	translation	reduced	sales	by	3.0	percent.	Acquisitions	growth	was	primarily	driven	by	Winterthur	Technologie	AG	(Winterthur)	in	the	abrasives	market, Ceradyne,	Inc.	(Ceradyne)	in	the	advanced	technical	ceramics	market,	and	Alpha	Beta	Enterprise	Co.	Ltd.	(Alpha	Beta)	in	industrial	tapes,	all	of	which	are	discussed further	below.	On	an	organic	local-currency	basis,	sales	growth	was	strongest	in	automotive	OEM,	aerospace,	abrasives	and	3M	Purification	Inc.

Geographically,	organic	local-currency	sales	increased	8	percent	in	the	United	States,	7	percent	in	Latin	America/Canada,	5	percent	in	Asia	Pacific,	and	1	percent	in EMEA.

Operating	income	was	$2.2	billion	in	2012,	12.8	percent	higher	than	2011,	with	the	primary	benefit	related	to	the	combination	of	selling	price	increases	and	raw	material cost	decreases.	Operating	income	growth	was	led	by	the	United	States.	Operating	income	margins	increased	by	1.9	percentage	points	to	22.5	percent.

3M	continued	to	invest	in	its	Industrial	business.	In	November	2012,	3M	acquired	Ceradyne.	In	March	2011,	3M	acquired	a	controlling	interest	in	Winterthur	via completion	of	a	public	tender	offer.	Winterthur,	based	in	Zug,	Switzerland,	is	a	leading	global	supplier	of	precision	grinding	technology	serving	customers	in	the	area	of hard-to-grind	precision	applications	in	industrial,	automotive,	aircraft,	and	cutting	tools.	In	addition,	in	February	2011,	3M	completed	its	acquisition

of	the	tape-related	assets	of	Alpha	Beta,	a	leading	manufacturer	of	box	sealing	tape	and	masking	tape	headquartered	in	Taipei,	Taiwan.

# Investment:

In	March	2005,	3M's	automotive	business	completed	the	purchase	of	19	percent	of	TI&M	Beteiligungsgesellschaft	mbH	(TI&M)	for	approximately	$55	million.	TI&M is	the	parent	company	of	I&T	Innovation	Technology	Entwicklungsund	Holding	Aktiengesellschaft	(I&T),	an	Austrian	maker	of	flat	flexible	cable	and	circuitry. Pursuant	to	a	Shareholders	Agreement,	3M	marketed	I&T's	flat	flexible	wiring	systems	for	automotive	interior	applications	to	the	global	automotive	market.	I&T	filed	a petition	for	bankruptcy	protection	in	August	2006.	As	part	of	its	agreement	to	purchase	the	shares	of	TI&M,	the	Company	was	granted	a	put	option	that	gave	the Company	the	right	to	sell	back	its	entire	ownership	interest	in	TI&M	to	the	other	investors	from	whom	the	Company	acquired	its	19	percent	interest.	The	put	option became	exercisable	January	1,	2007.	The	Company	exercised	the	put	option	and	recovered	approximately	$25	million	of	its	investment	from	one	of	the	investors	based in	Belgium	in	February	2007.	The	other	two	TI&M	investors	from	whom	the	Company	purchased	its	shares	filed	a	bankruptcy	petition	in	Austria	in	January	2007. Through	the	Austrian	bankruptcy	process	and	pursuit	of	recovery	from	the	bank	that	held	the	3M	purchase	price	paid	to	the	two	bankrupt	investors,	3M	recovered	all	but an	immaterial	amount	of	the	remaining	investment	through	October	2013	at	which	point	3M	resolved	its	remaining	claims.

# Safety	and	Graphics	Business	(18.3%	of	consolidated	sales):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Sales\t(millions) | $5,657 | $5,471 | $5,458 |
| Sales\tchange\tanalysis: |  |  |  |
| Organic\tlocal\tcurrency | 4.2% | 2.4% | 5.1% |
| Acquisitions | 1.3 | 0.6 | 3.3 |
| Translation | (2.1) | (2.8) | 3.6 |
| Total\tsales\tchange | 3.4% | 0.2% | 12.0% |
| Operating\tincome\t(millions) | $1,239 | $1,217 | $1,237 |

| Percent	change | 1.8% | (1.6)% | 8.7% |
| :--- | :--- | :--- | :--- |
| Percent\tof\tsales | 21.9% | 22.3% | 22.7% |

The	Safety	and	Graphics	segment	serves	a	broad	range	of	markets	that	increase	the	safety,	security	and	productivity	of	people,	facilities	and	systems.	Major	product offerings	include	personal	protection	products;	traffic	safety	and	security	products,	including	border	and	civil	security	solutions;	commercial	graphics	sheeting	and systems;	architectural	surface	and	lighting	solutions;	cleaning	and	protection	products	for	commercial	establishments,	and	roofing	granules	for	asphalt	shingles.

Sales	in	Safety	and	Graphics	totaled	$5.7	billion,	up	3.4	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	4.2	percent,	acquisitions	added	1.3	percent,	and foreign	currency	translation	reduced	sales	by	2.1	percent.	On	an	organic	local-currency	basis,	sales	growth	was	led	by	personal	safety,	commercial	graphics,	industrial minerals,	and	building	and	commercial	services.	Organic	local-currency	sales	declined	in	traffic	safety	and	security	systems.	Acquisition	growth	related	to	the September	2012	purchase	of	net	assets	that	comprised	the	business	of	Federal	Signal	Technologies	Group.

Organic	local-currency	sales	increased	9	percent	in	both	Latin	America/Canada	and	Asia	Pacific,	and	2	percent	in	the	United	States.	Organic	local-currency	sales	were flat	in	EMEA.

Operating	income	in	2013	totaled	$1.2	billion,	up	1.8	percent.	Operating	income	margins	were	21.9	percent	of	sales,	compared	to	22.3	percent	in	2012.	This	decline	in margins	related	to	the	Federal	Signal	Technologies	Group	acquisition,	which	reduced	2013	operating	income	margins	by	0.5	percentage	points.

Sales	in	Safety	and	Graphics	were	$5.5	billion,	up	0.2	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	2.4	percent,	led	by	architectural	markets,	personal safety,	and	commercial	graphics,	with	growth	also	in	building	and	commercial	services,	and	roofing	granules.	Organic	local-currency	sales	declined	in	traffic	safety	and security.	Acquisitions	sales	growth	of	0.6	percent	related	to	the	September	2012	purchase	of	the	net	assets	that	comprised	the	business	of	Federal	Signal	Technologies Group	from	Federal	Signal	Corp.	This	business	focuses	on	electronic	toll	collection	and	parking	management	hardware	and	software	services.	Foreign	currency translation	reduced	sales	by	2.8	percent.

Geographically,	organic	local-currency	sales	increased	16	percent	in	Latin	America/Canada	and	1	percent	in	both	the	United	States	and	Asia	Pacific.	Organic	local- currency	sales	declined	2	percent	in	EMEA.

Operating	income	in	2012	totaled	$1.2	billion,	down	1.6	percent.	Operating	income	margins	were	22.3	percent	of	sales,	compared	to	22.7	percent	in	2011.	The	year-on- year	decline	in	operating	income	dollars	and	margins	was	attributable	to	softness	in	traffic	safety	and	security,	which	has	been	impacted	by	lower	government	spending.

# Electronics	and	Energy	Business	(17.5%	of	consolidated	sales):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Sales\t(millions) | $5,393 | $5,458 | $5,732 |
| Sales\tchange\tanalysis: |  |  |  |
| Organic\tlocal\tcurrency | —% | (3.7)% | (0.5)% |
| Translation | (1.2) | (1.1) | 2.3 |
| Total\tsales\tchange | (1.2)% | (4.8)% | 1.8% |
| Operating\tincome\t(millions) | $954 | $1,026 | $1,140 |
| Percent\tchange | (7.0)% | (10.0)% | (5.5)% |
| Percent\tof\tsales | 17.7% | 18.8% | 19.9% |

The	Electronics	and	Energy	segment	serves	customers	in	the	electronics	and	energy	markets,	including	solutions	for	dependable,	cost-effective,	high-performance electronic	devices,	telecommunications	networks,	electrical	products,	power	generation	and	distribution,	and	infrastructure	protection.	This	segment's	electronics solutions	include	optical	film	solutions	for	the	electronic	display	industry;	packaging	and	interconnection	devices;	high	performance	fluids	and	abrasives;	high- temperature	and	display	tapes;	3M™	Flexible	Circuits,	which	use	electronic	packaging	and	interconnection	technology;	and	the	touch	systems	business,	which	includes touch	screens,	touch	monitors,	and	touch	sensor	components.	This	segment's	energy	solutions	include	pressure	sensitive	tapes	and	resins;	electrical	insulation;	a	wide array	of	fiber-optic	and	copper-based	telecommunications	systems;	renewable	energy	component	solutions	for	the	solar	and	wind	power	industries;	and	infrastructure products	that	provide	both	protection	and	detection	solutions.

The	optical	film	business	provides	films	that	serve	numerous	market	segments	of	the	electronic	display	industry.	3M	provides	distinct	products	for	five	market	segments, including	products	for:	1)	LCD	computer	monitors	2)	LCD	televisions	3)	handheld	devices	such	as	cellular	phones	and	tablets	4)	notebook	PCs	and	5)	automotive displays.	The	optical	business	includes	a	number	of	different	products	that	are	protected	by	various	patents	and	groups	of	patents.	These	patents	provide	varying	levels of	exclusivity	to	3M	for	a	number	of	such	products.	As	some	of	3M's	multi-layer	optical	film	patents	expired	at	the	end	of	2013	and	will	expire	over	several	years thereafter,	3M	will	likely	see	more	competition	in	these	products.	3M	continues	to	innovate	in	the	area	of	optical	films	and	files	patents	on	its	new	technology	and products.	3M's	proprietary	manufacturing	technology	and	know-how	also	provide	a	competitive	advantage	to	3M	independent	of	its	patents.

Electronics	and	Energy	sales	totaled	$5.4	billion,	down	1.2	percent	in	U.S.	dollars,	with	this	decrease	related	to	foreign	currency	translation.	Organic	local-currency	sales were	flat	in	3M's	electronics-related	businesses,	with	increases	in	touch	systems	and	optical	systems	offset	by	decreases	in	electronics	markets	materials.	Organic	local- currency	sales	were	also	flat	in	3M's	energy-related	businesses,	where	sales	gains	in	electrical	markets	were	offset	by	sales	declines	in	infrastructure	protection, telecommunication	markets,	and	renewable	energy.

On	a	geographic	basis,	organic	local-currency	sales	increased	slightly	in	Latin	America/Canada	and	Asia	Pacific.	Organic	local-currency	sales	declined	slightly	in	the United	States	and	EMEA.

Operating	income	decreased	7.0	percent	to	$954	million	in	2013.	Operating	income	margins	were	17.7	percent,	compared	to	18.8	percent	in	2012.	The	operating	margin decline	was	primarily	attributable	to	lower	factory	utilization	and	flat	year-on-year	organic	local-currency	sales.

Electronics	and	Energy	sales	totaled	$5.5	billion,	down	4.8	percent	in	U.S.	dollars.	Organic	local-currency	sales	declined	3.7	percent	and	foreign	currency	translation reduced	sales	by	1.1	percent.	Organic	local-currency	sales	declined	in	the	consumer	electronics-related	businesses,	including	a	9	percent	decline	in	optical	systems, driven	by	lower	optical	film	volumes	for	LCD	TVs.	In	addition,	organic	local-currency	sales	declined	in	the	renewable	energy	and	telecommunications	markets	business. Organic	local-currency	sales	increased	in	3M's	touch	systems,	infrastructure	protection,	and	electrical	markets	businesses.

On	a	geographic	basis,	organic	local-currency	sales	increased	14	percent	in	Latin	America/Canada	and	3	percent	in	the	United	States.	Organic	local-currency	sales declined	6	percent	in	EMEA	and	7	percent	in	Asia	Pacific.

Operating	income	decreased	10.0	percent	to	$1.0	billion	in	2012.	Operating	income	margins	were	18.8	percent,	compared	to	19.9	percent	in	2011.	The	year-on-year decline	was	largely	attributable	to	the	decline	in	optical	systems.

# Health	Care	Business	(17.3%	of	consolidated	sales):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Sales\t(millions) | $5,334 | $5,138 | $5,011 |
| Sales\tchange\tanalysis: |  |  |  |
| Organic\tlocal\tcurrency | 5.0% | 4.7% | 4.6% |
| Acquisitions | 0.1 | 0.3 | 3.8 |
| Translation | (1.3) | (2.5) | 3.1 |
| Total\tsales\tchange | 3.8% | 2.5% | 11.5% |
| Operating\tincome\t(millions) | $1,672 | $1,641 | $1,484 |
| Percent\tchange | 1.9% | 10.5% | 9.4% |
| Percent\tof\tsales | 31.3% | 31.9% | 29.6% |

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.	Products	and	services	provided	to	these	and	other	markets	include	medical	and	surgical	supplies,	skin	health	and	infection prevention	products,	inhalation	and	transdermal	drug	delivery	systems,	dental	and	orthodontic	products	(oral	care),	health	information	systems,	and	food	safety	products.

Health	Care	sales	totaled	$5.3	billion,	an	increase	of	3.8	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	5.0	percent,	acquisitions	added	0.1	percent,	and foreign	currency	translation	reduced	sales	by	1.3	percent.	Organic	local-currency	sales	growth	was	led	by	health	information	systems,	food	safety,	critical	and	chronic care,	infection	prevention,	and	oral	care.	Organic	local-currency	sales	declined	in	drug	delivery.	Acquisition	growth	related	to	the	April	2012	acquisition	of CodeRyte,	Inc.,	which	is	discussed	further	below.

On	a	geographic	basis,	organic	local-currency	sales	increased	10	percent	in	Latin	America/Canada,	8	percent	in	Asia	Pacific,	and	4	percent	in	both	EMEA	and	the	United States.

Operating	income	increased	1.9	percent	to	$1.7	billion.	Operating	income	margins	were	31.3	percent	in	2013,	compared	to	31.9	percent	in	2012.	Effective	January	1, 2013,	3M	began	to	absorb	additional	costs	related	to	the	U.S.	medical	device	excise	tax,	which	decreased	operating	income	margins	by	0.4	percentage	points.	The	third- quarter	2013	gain	from	sale	of	a	non-strategic	equity	method	investment	benefited	total	year	2013	operating	income	margins	by	0.3	percentage	points.

Health	Care	sales	totaled	$5.1	billion,	an	increase	of	2.5	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	4.7	percent,	led	by	food	safety,	health information	systems,	and	critical	and	chronic	care	solutions.	Sales	declined	year-on-year	in	drug	delivery	systems.	Acquisitions	added	0.3	percent,	as	3M	further strengthened	its	health	information	systems	business	in	April	2012	by	acquiring	CodeRyte,	Inc.,	which	provides	clinical	natural	language	processing	technology	and computer-assisted	coding	solutions	for	outpatient	providers.	Foreign	currency	translation	reduced	sales	by	2.5	percent.

On	a	geographic	basis,	organic	local-currency	sales	increased	12.5	percent	in	Latin	America/Canada,	10	percent	in	Asia	Pacific,	4	percent	in	the	United	States,	and	1 percent	in	EMEA.

Operating	income	increased	10.5	percent	to	$1.6	billion.	Operating	income	margins	were	31.9	percent	in	2012	compared	to	29.6	percent	in	2011,	driven	by	strong manufacturing	cost	control,	improved	utilization	and	production	efficiencies.	Operating	income	grew	in	all	major	geographic	areas.

# Consumer	Business	(14.4%	of	consolidated	sales):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Sales\t(millions) | $4,435 | $4,386 | $4,230 |
| Sales\tchange\tanalysis: |  |  |  |
| Organic\tlocal\tcurrency | 3.0% | 3.6% | 4.0% |
| Acquisitions | — | 2.0 | 1.3 |
| Divestitures | (0.1) | — | — |
| Translation | (1.8) | (1.9) | 2.4 |
| Total\tsales\tchange | 1.1% | 3.7% | 7.7% |
| Operating\tincome\t(millions) | $945 | $943 | $855 |
| Percent\tchange | 0.2% | 10.3% | (0.5)% |
| Percent\tof\tsales | 21.3% | 21.5% | 20.2% |

The	Consumer	segment	serves	markets	that	include	consumer	retail,	office	retail,	home	improvement,	building	maintenance	and	other	markets.	Products	in	this	segment include	office	supply	products,	stationery	products,	construction	and	home	improvement	products	(do-it-yourself),	home	care	products,	protective	material	products, certain	consumer	retail	personal	safety	products,	and	consumer	health	care	products.

Sales	in	Consumer	totaled	$4.4	billion,	up	1.1	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	3.0	percent,	divestitures	reduced	sales	by	0.1	percent,	and foreign	currency	translation	reduced	sales	by	1.8	percent.	On	an	organic	local-currency	basis,	sales	growth	was	led	by	consumer	health	care,	home	care,	and	construction

and	home	improvement.	Organic	local-currency	sales	increased	slightly	in	stationary	and	office	supplies,	impacted	by	continued	consolidation	trends	in	the	office	retail and	wholesale	market.

On	a	geographic	basis,	organic	local-currency	sales	increased	7	percent	in	Asia	Pacific	and	3	percent	in	both	Latin	America/Canada	and	the	United	States.	Organic	local- currency	sales	declined	1	percent	in	EMEA.

Consumer	operating	income	was	$945	million,	up	0.2	percent	from	2012.	Operating	income	margins	were	21.3	percent,	down	slightly	from	2012.

As	discussed	in	Note	2,	in	June	2013,	3M	completed	the	sale	of	the	Scientific	Anglers	and	Ross	Reels	businesses	to	The	Orvis	Company,	Inc.	based	in	Manchester, Vermont.

Sales	in	Consumer	totaled	$4.4	billion,	up	3.7	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	3.6	percent,	acquisitions	added	2.0	percent,	and	foreign currency	translation	reduced	sales	by	1.9	percent.	Organic	local-currency	sales	growth	was	led	by	the	consumer	health	care	and	construction	and	home	improvement businesses.	Organic	local-currency	sales	increased	slightly	in	stationery	and	office	supplies,	impacted	by	continued	softness	in	the	office	wholesale	and	retail	markets. Acquisition	growth	was	largely	due	to	the	October	2011	acquisition	of	the	do-it-yourself	and	professional	business	of	GPI	Group.	GPI	is	a	manufacturer	and	marketer	of home	improvement	products	such	as	tapes,	hooks,	insulation	and	floor	protection	products	and	accessories.	The	addition	of	GPI's	products	expands	3M's	product portfolio	in	core	and	complementary	categories	in	the	construction	and	home	improvement	markets.

On	a	geographic	basis,	organic	local-currency	sales	increased	10	percent	in	Latin	America/Canada,	and	4	percent	in	both	Asia	Pacific	and	the	United	States.	EMEA organic	local-currency	sales	decreased	2	percent.

Consumer	operating	income	increased	10.3	percent	to	$943	million.	Operating	income	margins	were	21.5	percent,	compared	to	20.2	percent	in	2011,	as	all	businesses and	major	geographic	areas	posted	operating	income	increases.	Consumer	benefited	from	the	combination	of	selling	price	increases	and	raw	material	cost	decreases,	in addition	to	cost-control	efforts.

# PERFORMANCE	BY	GEOGRAPHIC	AREA

While	3M	manages	its	businesses	globally	and	believes	its	business	segment	results	are	the	most	relevant	measure	of	performance,	the	Company	also	utilizes geographic	area	data	as	a	secondary	performance	measure.	Export	sales	are	generally	reported	within	the	geographic	area	where	the	final	sales	to	3M	customers	are made.	A	portion	of	the	products	or	components	sold	by	3M's	operations	to	its	customers	are	exported	by	these	customers	to	different	geographic	areas.	As	customers move	their	operations	from	one	geographic	area	to	another,	3M's	results	will	follow.	Thus,	net	sales	in	a	particular	geographic	area	are	not	indicative	of	end-user consumption	in	that	geographic	area.	Financial	information	related	to	3M	operations	in	various	geographic	areas	is	provided	in	Note	16.	As	discussed	in	Note	16,	during the	first	quarter	of	2013,	3M	realigned	its	geographic	area	structure	to	include	Puerto	Rico	in	the	United	States	rather	than	in	the	Latin	America/Canada	region. Geographic	area	information	presented	herein	reflects	the	impact	of	this	change	for	all	periods	presented.

A	summary	of	key	information	and	discussion	related	to	3M's	geographic	areas	follow:

|  |  |  | Europe, | Latin |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | United | Asia | Middle\tEast | America/ | Other |  |
|  | States | Pacific | &\tAfrica | Canada | Unallocated | Worldwide |
| Net\tsales\t(millions) | $11,151 | $9,047 | $7,085 | $3,611 | $(23) | $30,871 |
| %\tof\tworldwide\tsales | 36.1% | 29.3% | 22.9% | 11.7% | — | 100.0% |
| Components\tof\tnet\tsales\tchange: |  |  |  |  |  |  |
| Volume\t—\torganic | 2.4% | 4.3% | 1.5% | 1.5% | — | 2.5% |
| Price | 0.7 | (0.7) | 0.6 | 5.6 | — | 0.9 |
| Organic\tlocal-currency\tsales | 3.1 | 3.6 | 2.1 | 7.1 | — | 3.4 |
| Acquisitions | 2.5 | 0.2 | 2.0 | 0.3 | — | 1.4 |
| Divestitures | (0.1) | — | — | — | — | — |
| Translation | — | (4.3) | 1.2 | (5.1) | — | (1.6) |
| Total\tsales\tchange | 5.5% | (0.5)% | 5.3% | 2.3% | — | 3.2% |
| Operating\tincome\t(millions) | $2,210 | $2,386 | $1,168 | $908 | $(6) | $6,666 |
| Percent\tchange | 14.0% | (2.6)% | 0.4% | (3.0)% | — | 2.8% |

For	total	year	2013,	as	shown	in	the	preceding	table,	sales	rose	3.2	percent,	with	organic	volume	increases	of	2.5	percent	and	selling	price	increases	of	0.9	percent. Acquisitions	added	1.4	percent,	while	foreign	currency	translation	reduced	sales	by	1.6	percent.	Organic	local-currency	sales	increased	7.1	percent	in	Latin America/Canada,	3.6	percent	in	Asia	Pacific,	3.1	percent	in	the	United	States,	and	2.1	percent	in	EMEA.	For	2013,	international	operations	represented	63.9	percent	of 3M's	sales.

|  |  |  | Europe, | Latin |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | United | Asia | Middle\tEast | America/ | Other |  |
|  | States | Pacific | &\tAfrica | Canada | Unallocated | Worldwide |
| Net\tsales\t(millions) | $10,571 | $9,092 | $6,730 | $3,529 | $(18) | $29,904 |
| %\tof\tworldwide\tsales | 35.3% | 30.4% | 22.5% | 11.8% | — | 100.0% |
| Components\tof\tnet\tsales\tchange: |  |  |  |  |  |  |
| Volume\t—\torganic | 2.1% | 1.3% | (2.8)% | 7.0% | — | 1.2% |
| Price | 2.1 | (1.2) | 2.2 | 4.1 | — | 1.4 |
| Organic\tlocal-currency\tsales | 4.2 | 0.1 | (0.6) | 11.1 | — | 2.6 |
| Acquisitions | 0.8 | 0.3 | 1.9 | 0.1 | — | 0.8 |
| Translation | — | (0.6) | (6.2) | (6.4) | — | (2.4) |
| Total\tsales\tchange | 5.0% | (0.2)% | (4.9)% | 4.8% | — | 1.0% |
| Operating\tincome\t(millions) | $1,938 | $2,450 | $1,163 | $936 | $(4) | $6,483 |
| Percent\tchange | 18.2% | (2.9)% | 1.2% | 5.6% | — | 4.9% |

For	total	year	2012,	as	shown	in	the	preceding	table,	sales	rose	1.0	percent,	with	organic	volume	increases	of	1.2	percent	and	selling	price	increases	of	1.4	percent. Acquisitions	added	0.8	percent,	while	foreign	currency	translation	reduced	sales	by	2.4	percent.	Organic	local-currency	sales	growth	was	led	by	Latin	America/Canada

at	11.1	percent	and	the	United	States	at	4.2	percent.	Organic	local-currency	sales	increased	in	Asia	Pacific	by	0.1	percent	and	declined	in	EMEA	by	0.6	percent.	For 2012,	international	operations	represented	64.7	percent	of	3M's	sales.

# Geographic	Area	Supplemental	Information

| (Millions,	except	Employees) | 2013 | Employees	as	of	December	31,<br>2012 | 2011 | 2013 | Capital	Spending<br>2012 | 2011 | Property,	Plant	and<br>Equipment	-	net<br>as	of	December	31,<br>2013 | 2012 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| United\tStates | 34,719 | 34,851 | 33,246 | $941 | $816 | $688 | $4,478 | $4,279 |
| Asia\tPacific | 18,417 | 18,210 | 18,015 | 284 | 332 | 409 | 1,943 | 2,029 |
| Europe,\tMiddle\tEast\tand\tAfrica | 20,504 | 20,638 | 20,113 | 290 | 226 | 180 | 1,636 | 1,499 |
| Latin\tAmerica\tand\tCanada | 15,027 | 13,978 | 12,824 | 150 | 110 | 102 | 595 | 571 |
| Total\tCompany | 88,667 | 87,677 | 84,198 | $1,665 | $1,484 | $1,379 | $8,652 | $8,378 |

# Employment:

Employment	increased	by	990	positions	in	2013	and	3,479	positions	in	2012.	Acquisitions	increased	employment	by	approximately	2,500	full-time	equivalents	for	2012.

In	addition,	the	other	primary	factor	that	increased	employment	in	both	years	was	additions	in	developing	economies	to	support	growth.

# Capital	Spending/Net	Property,	Plant	and	Equipment:

Investments	in	property,	plant	and	equipment	enable	growth	across	many	diverse	markets,	helping	to	meet	product	demand	and	increasing	manufacturing	efficiency. Capital	spending	was	$1.665	billion	in	2013,	compared	to	$1.484	billion	in	2012	and	$1.379	billion	in	2011.	The	Company	expects	2014	capital	spending	to	be approximately	$1.7	billion	to	$1.8	billion,	as	3M	continues	to	invest	in	its	businesses.	In	2013,	3M	continued	its	expansion	of	manufacturing	capacity	in	key	growth markets,	including	investments	in	the	U.S.,	China,	Germany,	and	Brazil.	This	included	significant	investments	across	3M's	many	businesses,	such	as	abrasives, industrial	adhesives	and	tapes,	advanced	materials,	electronics-related,	infection	prevention,	and	other	businesses.	3M	continued	its	investments	in	IT	systems	and infrastructure,	including	ongoing	phased	implementation	of	an	ERP	system	on	a	worldwide	basis	over	the	next	several	years.	In	addition,	3M	is	sustaining	existing facilities	through	general	maintenance,	cost	reduction,	and	compliance	efforts.	In	2012,	3M	expanded	manufacturing	capacity	in	key	growth	markets,	particularly	with respect	to	international	and	emerging	market	countries.	This	included	investments	in	China,	Turkey	and	Poland,	in	addition	to	investments	in	Singapore	and	the	U.S.	3M also	increased	investments	in	IT	systems	and	infrastructure	and	made	strategic	investments	in	research/development	infrastructure	and	manufacturing	sites	to	lay	the foundation	for	future	growth.	In	2011,	a	large	portion	of	the	capital	investment	was	used	to	address	supply	constraints	in	a	number	of	businesses	with	significant	growth potential,	such	as	renewable	energy,	traffic	signage	in	developing	economies,	and	optically	clear	adhesives	and	glass	bubbles.	In	addition,	certain	2010	capital	projects carried	forward	into	2011.

3M	is	striving	to	increase	its	manufacturing	and	sourcing	capacity	in	developing	economies	in	order	to	more	closely	align	its	production	capability	with	its	sales	in	major geographic	regions.	The	initiative	is	expected	to	help	improve	customer	service,	lower	transportation	costs,	and	reduce	working	capital	requirements.	3M	will	continue	to make	investments	in	critical	emerging	markets,	such	as	China,	Brazil,	Poland	and	India,	including	plans	to	establish	and	begin	production	in	a	new	wholly-owned manufacturing	entity	in	India	to	serve	as	a	source	of	supply	to	3M's	business	in	India	and	in	other	countries.

# CRITICAL	ACCOUNTING	ESTIMATES

Information	regarding	significant	accounting	policies	is	included	in	Note	1.	As	stated	in	Note	1,	the	preparation	of	financial	statements	requires	management	to	make estimates	and	assumptions	that	affect	the	reported	amounts	of	assets,	liabilities,	revenue	and	expenses,	and	related	disclosure	of	contingent	assets	and	liabilities. Management	bases	its	estimates	on	historical	experience	and	on	various	assumptions	that	are	believed	to	be	reasonable	under	the	circumstances,	the	results	of	which form	the	basis	for	making	judgments	about	the	carrying	values	of	assets	and	liabilities	that	are	not	readily	apparent	from	other	sources.	Actual	results	may	differ	from these	estimates.

The	Company	believes	its	most	critical	accounting	estimates	relate	to	legal	proceedings,	the	Company's	pension	and	postretirement	obligations,	asset	impairments	and income	taxes.	Senior	management	has	discussed	the	development,	selection	and	disclosure	of	its	critical	accounting	estimates	with	the	Audit	Committee	of	3M's	Board of	Directors.

# Legal	Proceedings:

The	categories	of	claims	for	which	the	Company	has	a	probable	and	estimable	liability,	the	amount	of	its	liability	accruals,	and	the	estimates	of	its	related	insurance receivables	are	critical	accounting	estimates	related	to	legal	proceedings.	Please	refer	to	the	section	entitled	"Process	for	Disclosure	and	Recording	of	Liabilities	and Insurance	Receivables	Related	to	Legal	Proceedings"	(contained	in	"Legal	Proceedings"	in	Note	13)	for	additional	information	about	such	estimates.

# Pension	and	Postretirement	Obligations:

3M	has	various	company-sponsored	retirement	plans	covering	substantially	all	U.S.	employees	and	many	employees	outside	the	United	States.	The	primary	U.S. defined-benefit	pension	plan	was	closed	to	new	participants	effective	January	1,	2009.	The	Company	accounts	for	its	defined	benefit	pension	and	postretirement	health care	and	life	insurance	benefit	plans	in	accordance	with	Accounting	Standard	Codification	(ASC)	715,	Compensation	—	Retirement	Benefits,	in	measuring	plan	assets and	benefit	obligations	and	in	determining	the	amount	of	net	periodic	benefit	cost.	ASC	715	requires	employers	to	recognize	the	underfunded	or	overfunded	status	of	a defined	benefit	pension	or	postretirement	plan	as	an	asset	or	liability	in	its	statement	of	financial	position	and	recognize	changes	in	the	funded	status	in	the	year	in	which the	changes	occur	through	accumulated	other	comprehensive	income,	which	is	a	component	of	stockholders'	equity.	While	the	company	believes	the	valuation	methods used	to	determine	the	fair	value	of	plan	assets	are	appropriate	and	consistent	with	other	market	participants,	the	use	of	different	methodologies	or	assumptions	to determine	the	fair	value	of	certain	financial	instruments	could	result	in	a	different	estimate	of	fair	value	at	the	reporting	date.

Pension	benefits	associated	with	these	plans	are	generally	based	primarily	on	each	participant's	years	of	service,	compensation,	and	age	at	retirement	or	termination. Two	critical	assumptions,	the	discount	rate	and	the	expected	return	on	plan	assets,	are	important	elements	of	expense	and	liability	measurement.	See	Note	10	for additional	discussion	of	actuarial	assumptions	used	in	determining	pension	and	postretirement	health	care	liabilities	and	expenses.

The	Company	determines	the	discount	rate	used	to	measure	plan	liabilities	as	of	the	December	31	measurement	date	for	its	pension	and	postretirement	benefit	plans.	The discount	rate	reflects	the	current	rate	at	which	the	associated	liabilities	could	be	effectively	settled	at	the	end	of	the	year.	The	Company	sets	its	rate	to	reflect	the	yield	of

a	portfolio	of	high	quality,	fixed-income	debt	instruments	that	would	produce	cash	flows	sufficient	in	timing	and	amount	to	settle	projected	future	benefits.	Using	this methodology,	the	Company	determined	a	discount	rate	of	4.98%	for	the	primary	U.S.	qualified	pension	plan	and	4.83%	for	U.S.	postretirement	plans	to	be	appropriate	as of	December	31,	2013,	which	represents	an	increase	from	the	4.14%	and	4.00%	rates,	respectively,	used	as	of	December	31,	2012.	The	weighted	average	discount	rate for	international	pension	plans	as	of	December	31,	2013	was	4.02%,	an	increase	from	the	3.78%	rate	used	as	of	December	31,	2012.

A	significant	element	in	determining	the	Company's	pension	expense	in	accordance	with	ASC	715	is	the	expected	return	on	plan	assets,	which	is	based	on	historical results	for	similar	allocations	among	asset	classes.	For	the	primary	U.S.	qualified	pension	plan,	the	expected	long-term	rate	of	return	on	an	annualized	basis	for	2014	is 7.75%,	a	0.25%	decrease	from	2013.	Refer	to	Note	10	for	information	on	how	the	2014	rate	was	determined.	Return	on	assets	assumptions	for	international	pension	and other	post-retirement	benefit	plans	are	calculated	on	a	plan-by-plan	basis	using	plan	asset	allocations	and	expected	long-term	rate	of	return	assumptions.	The	weighted average	expected	return	for	the	international	pension	plan	is	5.83%	for	2014,	compared	to	5.87%	for	2013.

For	the	year	ended	December	31,	2013,	the	Company	recognized	total	consolidated	defined	benefit	pre-tax	pension	and	postretirement	expense	(after	settlements, curtailments	and	special	termination	benefits)	of	$553	million,	down	from	$650	million	in	2012.	Defined	benefit	pension	and	postretirement	expense	(before	settlements, curtailments	and	special	termination	benefits)	is	anticipated	to	decrease	to	$393	million	in	2014,	a	decrease	of	$160	million	compared	to	2013.	For	the	pension	plans, holding	all	other	factors	constant,	a	0.25	percentage	point	increase/decrease	in	the	expected	long-term	rate	of	return	on	plan	assets	would	decrease/increase	2014	pension expense	by	approximately	$34	million	for	U.S.	pension	plans	and	approximately	$14	million	for	international	pension	plans.	Also,	holding	all	other	factors	constant,	a 0.25	percentage	point	increase	in	the	discount	rate	used	to	measure	plan	liabilities	would	decrease	2014	pension	expense	by	approximately	$41	million	for	U.S.	pension plans	and	approximately	$21	million	for	international	pension	plans.	In	addition,	a	0.25	percentage	point	decrease	in	the	discount	rate	used	to	measure	plan	liabilities would	increase	2014	pension	expense	by	approximately	$42	million	for	U.S.	pension	plans	and	approximately	$24	million	for	international	pension	plans.

# Asset	Impairments:

As	of	December	31,	2013,	net	property,	plant	and	equipment	totaled	$8.7	billion	and	net	identifiable	intangible	assets	totaled	$1.7	billion.	Management	makes	estimates and	assumptions	in	preparing	the	consolidated	financial	statements	for	which	actual	results	will	emerge	over	long	periods	of	time.	This	includes	the	recoverability	of long-lived	assets	employed	in	the	business,	including	assets	of	acquired	businesses.	These	estimates	and	assumptions	are	closely	monitored	by	management	and periodically	adjusted	as	circumstances	warrant.	For	instance,	expected	asset	lives	may	be	shortened	or	an	impairment	recorded	based	on	a	change	in	the	expected	use	of the	asset	or	performance	of	the	related	asset	group.

3M	goodwill	totaled	approximately	$7.3	billion	as	of	December	31,	2013.	3M's	annual	goodwill	impairment	testing	is	performed	in	the	fourth	quarter	of	each	year. Impairment	testing	for	goodwill	is	done	at	a	reporting	unit	level,	with	all	goodwill	assigned	to	a	reporting	unit.	Reporting	units	are	one	level	below	the	business	segment level,	but	can	be	combined	when	reporting	units	within	the	same	segment	have	similar	economic	characteristics.	At	3M,	reporting	units	generally	correspond	to	a division.	3M	did	not	combine	any	of	its	reporting	units	for	impairment	testing.

An	impairment	loss	generally	would	be	recognized	when	the	carrying	amount	of	the	reporting	unit's	net	assets	exceeds	the	estimated	fair	value	of	the	reporting	unit.	The estimated	fair	value	of	a	reporting	unit	is	determined	using	earnings	for	the	reporting	unit	multiplied	by	a	price/earnings	ratio	for	comparable	industry	groups,	or	by	using a	discounted	cash	flow	analysis.	3M	typically	uses	the	price/earnings	ratio	approach	for	stable	and	growing	businesses	that	have	a	long	history	and	track	record	of generating	positive	operating	income	and	cash	flows.	3M	uses	the	discounted	cash	flow	approach	for	start-up,	loss	position	and	declining	businesses,	but	also	uses discounted	cash	flow	as	an	additional	tool	for	businesses	that	may	be	growing	at	a	slower	rate	than	planned	due	to	economic	or	other	conditions.

As	discussed	in	Notes	3	and	15	to	the	Consolidated	Financial	Statements,	effective	in	the	first	quarter	of	2013,	3M	completed	a	realignment	of	its	business	segments. Concurrent	with	this	business	segment	realignment,	certain	products	were	also	moved	between	business	segments.	For	any	product	moves	that	resulted	in	reporting	unit changes,	the	Company	applied	the	relative	fair	value	method	to	determine	the	impact	on	goodwill	of	the	associated	reporting	units.	During	the	first	quarter	of	2013,	the Company	completed	its	assessment	of	any	potential	goodwill	impairment	for	reporting	units	impacted	by	this	new	structure	and	determined	that	no	impairment	existed. The	discussion	that	follows	relates	to	the	separate	fourth	quarter	2013	annual	impairment	test	and	is	in	the	context	of	the	reporting	unit	structure	that	existed	at	that	time.

As	of	September	30,	2013,	3M	had	34	primary	reporting	units,	with	ten	reporting	units	accounting	for	approximately	80	percent	of	the	goodwill.	These	ten	reporting units	were	comprised	of	the	following	divisions:	3M	Purification	Inc.,	Personal	Safety,	Optical	Systems,	Traffic	Safety	and	Security	Systems,	Infection	Prevention,	3M ESPE,	Advanced	Materials,	Industrial	Adhesives	and	Tapes,	Communication	Markets,	and	Health	Information	Systems.	The	fair	values	for	all	significant	reporting	units were	in	excess	of	carrying	value	by	50	percent	or	more,	except	for	one	reporting	unit	with	approximately	$300	million	of	goodwill,	where	the	fair	value	exceeded	the carrying	value	by	approximately	30	percent.

In	2013,	3M	primarily	used	an	industry	price-earnings	ratio	approach,	but	also	used	a	discounted	cash	flows	approach	for	certain	reporting	units,	to	determine	fair values.	Where	applicable,	3M	used	a	weighted-average	discounted	cash	flow	analysis	for	certain	divisions,	using	projected	cash	flows	that	were	weighted	based	on different	sales	growth	and	terminal	value	assumptions,	among	other	factors.	The	weighting	was	based	on	management's	estimates	of	the	likelihood	of	each	scenario occurring.

Based	on	fourth-quarter	2013	testing,	3M's	estimated	fair	value	when	valuing	each	reporting	unit	individually	would	aggregate	to	approximately	$94	billion,	implying	a control	premium	of	17	percent	when	compared	to	3M's	market	value	of	approximately	$80	billion	at	September	30,	2013.	The	control	premium	is	defined	as	the	sum	of the	individual	reporting	units	estimated	market	values	compared	to	3M's	total	Company	estimated	fair	value,	with	the	sum	of	the	individual	values	typically	being	larger than	the	value	for	the	total	Company.	3M's	market	value	at	both	September	30,	2013	and	December	31,	2013	was	significantly	in	excess	of	its	equity	of	approximately $18	billion.	3M	is	an	integrated	materials	enterprise,	thus	many	of	3M's	businesses	could	not	easily	be	sold	on	a	stand-alone	basis.	3M's	focus	on	research	and development	has	resulted	in	a	portion	of	3M's	value	being	comprised	of	internally	developed	businesses	that	have	no	goodwill	associated	with	them.	Based	on	the annual	test	in	the	fourth	quarter	of	2013,	no	goodwill	impairment	was	indicated	for	any	of	the	reporting	units.

Factors	which	could	result	in	future	impairment	charges	include,	among	others,	changes	in	worldwide	economic	conditions,	changes	in	competitive	conditions	and customer	preferences,	and	fluctuations	in	foreign	currency	exchange	rates.	These	risk	factors	are	discussed	in	Item	1A,	"Risk	Factors,"	of	this	document.	In	addition, changes	in	the	weighted	average	cost	of	capital	could	also	impact	impairment	testing	results.	As	indicated	above,	during	the	first	quarter	of	2013,

the	Company	completed	its	assessment	of	any	potential	goodwill	impairment	for	reporting	units	impacted	by	this	new	structure	and	determined	that	no	impairment existed.	Long-lived	assets	with	a	definite	life	are	reviewed	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of	an	asset (asset	group)	may	not	be	recoverable.	If	future	non-cash	asset	impairment	charges	are	taken,	3M	would	expect	that	only	a	portion	of	the	long-lived	assets	or	goodwill would	be	impaired.	3M	will	continue	to	monitor	its	reporting	units	and	asset	groups	in	2014	for	any	triggering	events	or	other	indicators	of	impairment.

# Income	Taxes:

The	extent	of	3M's	operations	involves	dealing	with	uncertainties	and	judgments	in	the	application	of	complex	tax	regulations	in	a	multitude	of	jurisdictions.	The	final

taxes	paid	are	dependent	upon	many	factors,	including	negotiations	with	taxing	authorities	in	various	jurisdictions	and	resolution	of	disputes	arising	from	federal,	state, and	international	tax	audits.	The	Company	recognizes	potential	liabilities	and	records	tax	liabilities	for	anticipated	tax	audit	issues	in	the	United	States	and	other	tax jurisdictions	based	on	its	estimate	of	whether,	and	the	extent	to	which,	additional	taxes	will	be	due.	The	Company	follows	guidance	provided	by	ASC	740,	Income Taxes,	regarding	uncertainty	in	income	taxes,	to	record	these	liabilities	(refer	to	Note	7	for	additional	information).	The	Company	adjusts	these	reserves	in	light	of changing	facts	and	circumstances;	however,	due	to	the	complexity	of	some	of	these	uncertainties,	the	ultimate	resolution	may	result	in	a	payment	that	is	materially different	from	the	Company's	current	estimate	of	the	tax	liabilities.	If	the	Company's	estimate	of	tax	liabilities	proves	to	be	less	than	the	ultimate	assessment,	an additional	charge	to	expense	would	result.	If	payment	of	these	amounts	ultimately	proves	to	be	less	than	the	recorded	amounts,	the	reversal	of	the	liabilities	would	result in	tax	benefits	being	recognized	in	the	period	when	the	Company	determines	the	liabilities	are	no	longer	necessary.

# NEW	ACCOUNTING	PRONOUNCEMENTS

Information	regarding	new	accounting	pronouncements	is	included	in	Note	1	to	the	Consolidated	Financial	Statements.

# FINANCIAL	CONDITION	AND	LIQUIDITY

3M's	primary	short-term	liquidity	needs	are	met	through	cash	on	hand,	U.S.	commercial	paper	and	euro	commercial	paper	issuances.	3M	resumed	commercial	paper funding	in	July	2013	for	the	first	time	since	late	2008.	3M	expects	to	maintain	a	consistent	presence	in	the	market	and	believes	it	will	have	continuous	access	to	the commercial	paper	market.	3M's	commercial	paper	program	permits	the	Company	to	have	a	maximum	of	$3	billion	outstanding	with	a	maximum	maturity	of	397	days from	date	of	issuance.	At	both	of	December	31,	2013	and	2012,	3M's	outstanding	commercial	paper	balance	was	zero.

The	Company	has	sufficient	liquidity	and	generates	significant	ongoing	cash	flow,	which	have	been	used,	in	part,	to	repurchase	shares	and	to	pay	dividends	on	3M common	stock.	In	addition,	3M's	liquidity	and	cash	flow	enable	it	to	meet	currently	anticipated	growth	plans,	including	funds	for	capital	expenditures,	working	capital investments	and	acquisitions.	As	discussed	in	Note	2,	in	2012	3M	acquired	Ceradyne,	Inc.	and	other	acquisitions	for	approximately	$1.0	billion.	In	2011,	3M	acquired Winterthur	Technologie	AG	and	other	acquisitions	for	approximately	$700	million	(including	purchases	of	noncontrolling	interest).	3M	was	able	to	complete	these acquisitions	while	maintaining	a	strong	net	debt	position,	as	shown	in	the	table	below.

| At	December	31<br>(Millions) | 2013 | 2012 |
| :--- | :--- | :--- |
| Total\tDebt | $6,009 | $6,001 |
| Less:\tCash\tand\tcash\tequivalents\tand\tmarketable\tsecurities | 4,790 | 5,693 |
| Net\tDebt | $1,219 | $308 |

The	Company	defines	net	debt	as	total	debt	less	cash,	cash	equivalents	and	current	and	long-term	marketable	securities.	3M	considers	net	debt	to	be	an	important measure	of	liquidity	and	its	ability	to	meet	ongoing	obligations.	This	measure	is	not	defined	under	U.S.	generally	accepted	accounting	principles	and	may	not	be computed	the	same	as	similarly	titled	measures	used	by	other	companies.

At	December	31,	2013,	cash,	cash	equivalents	and	marketable	securities	held	by	the	Company's	foreign	subsidiaries	and	in	the	United	States	totaled	approximately	$4.3 billion	and	$0.5	billion,	respectively.	The	United	States	balance	and	62	percent	of	cash	and	securities	held	by	the	Company's	foreign	subsidiaries	were	invested	in	U.S. denominated	cash	or	cash	equivalents	or	U.S.	denominated	investments	in	money	market	funds,	asset-backed	securities,	agency	securities,

corporate	medium-term	note	securities	and	other	investment-grade	fixed	income	securities,	which	aggregated	to	$3.1	billion	at	December	31,	2013.	At	December	31, 2012,	cash,	cash	equivalents,	and	marketable	securities	held	by	the	Company's	foreign	subsidiaries	and	the	United	States	totaled	approximately	$3.7	billion	and	$2.0 billion,	respectively.	The	Company's	total	balance	of	cash,	cash	equivalents	and	marketable	securities	was	$0.9	billion	lower	at	December	31,	2013	when	compared	to December	31,	2012.	3M	is	able	to	manage	the	business	with	lower	cash	levels,	particularly	in	the	U.S.,	due	to	continued	business	growth	and	consistently	strong	cash flow	generation.	In	addition,	rising	interest	rates	are	positively	impacting	3M's	already	well-funded	pension	status,	thereby	enabling	the	Company	to	reduce	the	amount of	discretionary	contributions	to	the	plans.	3M	is	planning	for	added	leverage	of	$2	billion	to	$4	billion	in	2014	as	it	continues	to	improve	the	efficiency	of	its	capital structure.

3M's	net	debt	at	December	31,	2013	was	$1.219	billion,	compared	to	net	debt	of	$308	million	at	December	31,	2012.	At	December	31,	2013,	3M	had	$4.790	billion	of cash,	cash	equivalents,	and	marketable	securities	and	$6.009	billion	of	debt.	Debt	included	$4.326	billion	of	long-term	debt	and	$1.683	billion	related	to	the	current portion	of	long-term	debt	and	other	borrowings.	The	current	portion	of	long-term	debt	includes	a	Eurobond	due	in	July	2014	totaling	1.025	billion	Euros	($1.424	billion carrying	value	at	December	31,	2013).	In	August	2013,	3M	repaid	$850	million	(principal	amount)	of	medium-term	notes.	In	November	2013,	3M	issued	an	eight-year Eurobond	for	an	amount	of	600	million	Euros	(approximately	$815	million	carrying	value	at	December	31,	2013).	The	designated	use	of	proceeds	is	for	general corporate	purposes.	The	strength	of	3M's	capital	structure	and	consistency	of	its	cash	flows	provide	3M	reliable	access	to	capital	markets.	Additionally,	the	Company's maturity	profile	is	staggered	to	help	ensure	refinancing	needs	in	any	given	year	are	reasonable	in	proportion	to	the	total	portfolio.	The	Company	has	an	AA-	credit	rating, with	a	stable	outlook,	from	Standard	&	Poor's	and	an	Aa2	credit	rating,	with	a	stable	outlook,	from	Moody's	Investors	Service.

In	September	2012,	3M	entered	into	a	$1.5	billion,	five-year	multi-currency	revolving	credit	agreement,	which	amended	the	existing	agreement	that	was	entered	into	in August	2011.	This	amended	agreement	extended	the	expiration	date	from	August	2016	to	September	2017.	This	credit	agreement	includes	a	provision	under	which	3M may	request	an	increase	of	up	to	$500	million,	bringing	the	total	facility	up	to	$2	billion	(at	the	lenders'	discretion).	This	facility	was	undrawn	at	December	31,	2013.	In August	2013,	3M	entered	into	a	$150	million,	one-year	committed	letter	of	credit	facility	with	HSBC	Bank	USA,	which	replaced	the	one-year	$150	million	committed credit	facility	that	was	entered	into	in	August	2012.	As	of	December	31,	2013,	3M	letters	of	credit	issued	under	this	$150	million	committed	facility	totaled	$120 million.	In	December	2012,	3M	entered	into	a	three-year	66	million	British	Pound	(approximately	$106	million	based	on	agreement	date	exchange	rates)	committed credit	agreement	with	JP	Morgan	Chase	Bank,	which	is	fully	drawn	as	of	December	31,	2013.	Apart	from	the	committed	facilities,	an	additional	$51	million	in	stand- alone	letters	of	credit	was	also	issued	and	outstanding	at	December	31,	2013.	The	Company	also	utilized	$1	million	in	international	committed	lines	of	credit	and	$10 million	in	U.S.	committed	lines	of	credit	with	other	banking	partners	as	of	December	31,	2013.	These	lines	of	credit	are	utilized	in	connection	with	normal	business activities.	Under	both	the	$1.5	billion	and	$150	million	credit	agreements,	the	Company	is	required	to	maintain	its	EBITDA	to	Interest	Ratio	as	of	the	end	of	each	fiscal quarter	at	not	less	than	3.0	to	1.	This	is	calculated	(as	defined	in	the	agreement)	as	the	ratio	of	consolidated	total	EBITDA	for	the	four	consecutive	quarters	then	ended	to total	interest	expense	on	all	funded	debt	for	the	same	period.	At	December	31,	2013,	this	ratio	was	approximately	55	to	1.	Debt	covenants	do	not	restrict	the	payment	of dividends.

The	Company	has	a	"well-known	seasoned	issuer"	shelf	registration	statement,	effective	August	5,	2011,	which	registers	an	indeterminate	amount	of	debt	or	equity securities	for	future	sales.	This	replaced	3M's	previous	shelf	registration	dated	February	17,	2009.	In	September	2011,	in	connection	with	the	August	5,	2011	shelf registration	statement,	3M	established	a	$3	billion	medium-term	notes	program	(Series	F),	from	which	3M	issued	a	five-year	$1.0	billion	fixed	rate	note	with	a	coupon rate	of	1.375%.	Proceeds	were	used	for	general	corporate	purposes,	including	repayment	in	November	2011	of	$800	million	(principal	amount)	of	medium-term	notes.	In June	2012,	3M	issued	$650	million	aggregate	principal	amount	of	five-year	fixed	rate	medium-term	notes	due	2017	with	a	coupon	rate	of	1.000%	and	$600	million aggregate	principal	amount	of	ten-year	fixed	rate	medium-term	notes	due	2022	with	a	coupon	rate	of	2.000%,	which	were	both	issued	from	this	$3	billion	medium-term notes	program	(Series	F).	The	designated	use	of	proceeds	is	for	general	corporate	purposes.

Sources	for	cash	availability	in	the	United	States,	such	as	ongoing	cash	flow	from	operations	and	3M's	reliable	access	to	capital	markets,	have	historically	been

sufficient	to	fund	dividend	payments	to	shareholders	and	share	repurchases,	in	addition	to	funding	U.S.	acquisitions,	U.S.	capital	spending,	U.S.	pension/other postemployment	benefit	contributions,	and	other	items	as	needed.	For	those	international	earnings	considered	to	be	reinvested	indefinitely,	the	Company	currently	has no	plans	or	intentions	to	repatriate	these	funds	for	U.S.	operations.	However,	if	these	international	funds	are	needed	for	operations	in	the	U.S.,	3M	would	be	required	to accrue	and	pay	U.S.	taxes	to	repatriate	them.	Refer	to	Note	7	for	additional	information	on	unremitted	earnings	attributable	to	international	companies	that	have	been considered	to	be	reinvested	indefinitely.

In	2014,	the	Company	plans	to	contribute	an	amount	in	the	range	of	$100	million	to	$200	million	of	cash	to	its	pension	and	postretirement	plans.	The	Company	does	not have	a	required	minimum	cash	pension	contribution	obligation	for	its	U.S.	plans	in	2014.	Therefore,	the	amount	of	the	anticipated	discretionary	contribution	could	vary significantly	depending	on	the	U.S.	qualified	plans'	funded	status	as	of	the	2014	measurement	date	and	the	anticipated	tax	deductibility	of	the	contribution.	Future contributions	will	also	depend	on	market	conditions,	interest	rates	and	other	factors.	3M	believes	its	strong	cash	flow	and	balance	sheet	will	allow	it	to	fund	future pension	needs	without	compromising	growth	opportunities.

3M's	strong	balance	sheet	and	liquidity	provide	the	Company	with	significant	flexibility	to	take	advantage	of	numerous	opportunities	going	forward.	The	Company	will continue	to	invest	in	its	operations	to	drive	growth,	including	continual	review	of	acquisition	opportunities.	3M	paid	dividends	of	$1.730	billion	in	2013,	and	has	a	long history	of	dividend	increases.	In	December	2013,	3M's	Board	of	Directors	declared	a	dividend	of	85.5	cents	per	share	for	the	first-quarter	of	2014,	an	increase	of	34.6 percent.	This	is	equivalent	to	an	annual	dividend	of	$3.42	per	share	and	marked	the	56th	consecutive	year	of	dividend	increases	for	3M.	In	February	2014,	3M's	Board of	Directors	also	authorized	the	repurchase	of	up	to	$12	billion	of	3M's	outstanding	common	stock,	which	replaced	the	Company's	February	2013	repurchase	program. This	authorization	has	no	pre-established	end	date.	As	of	December	31,	2013,	approximately	$2.5	billion	remained	available	under	the	February	2013	repurchase authorization.

Various	assets	and	liabilities,	including	cash	and	short-term	debt,	can	fluctuate	significantly	from	month	to	month	depending	on	short-term	liquidity	needs.	Working capital	(defined	as	current	assets	minus	current	liabilities)	totaled	$5.235	billion	at	December	31,	2013,	compared	with	$7.430	billion	at	December	31,	2012,	a	decrease of	approximately	$2.2	billion.	Factors	which	reduced	working	capital	on	a	combined	basis	by	$2.4	billion	included	decreases	in	cash,	cash	equivalents,	and	current marketable	securities,	along	with	increases	in	the	current	portion	of	long	term	debt	(which	is	a	component	of	short-term	borrowings	and	current	portion	of	long-term debt)	and	increases	in	other	current	liabilities,	largely	related	to	the	dividend	declared	in	December	2013	that	will	not	be	paid	until	March	2014	(discussed	in	Note	5). This	was	partially	offset	by	increases	in	accounts	receivable	of	approximately	$0.2	billion.

The	Company	uses	various	working	capital	measures	that	place	emphasis	and	focus	on	certain	working	capital	assets	and	liabilities.	These	measures	are	not	defined under	U.S.	generally	accepted	accounting	principles	and	may	not	be	computed	the	same	as	similarly	titled	measures	used	by	other	companies.	One	of	the	primary working	capital	measures	3M	uses	is	a	combined	index,	which	includes	accounts	receivable,	inventories	and	accounts	payable.	This	combined	index	(defined	as quarterly	net	sales	—	fourth	quarter	at	year-end	—	multiplied	by	four,	divided	by	ending	net	accounts	receivable	plus	inventories	less	accounts	payable)	was	4.8	at	both December	31,	2013	and	December	31,	2012.	Receivables	increased	$192	million,	or	4.7	percent,	compared	with	December	31,	2012,	driven	by	a	year-on-year	increase in	December	sales,	partially	offset	by	currency	translation,	which	decreased	accounts	receivable	by	$135	million.	Inventories	increased	$27	million,	or	1	percent, compared	with	December	31,	2012,	with	the	increases	primarily	attributable	to	an	increase	in	demand	in	the	fourth-quarter	of	2013,	partially	offset	by	currency translation,	which	decreased	inventories	by	$75	million.	Accounts	payable	increased	$37	million	compared	with	December	31,	2012,	primarily	related	to	changes	in business	activity,	which	were	partially	offset	by	a	$29	million	decrease	due	to	currency	translation.

Cash	flows	from	operating,	investing	and	financing	activities	are	provided	in	the	tables	that	follow.	Individual	amounts	in	the	Consolidated	Statement	of	Cash	Flows exclude	the	effects	of	acquisitions,	divestitures	and	exchange	rate	impacts	on	cash	and	cash	equivalents,	which	are	presented	separately	in	the	cash	flows.	Thus,	the amounts	presented	in	the	following	operating,	investing	and	financing	activities	tables	reflect	changes	in	balances	from	period	to	period	adjusted	for	these	effects.

# Cash	Flows	from	Operating	Activities:

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Net\tincome\tincluding\tnoncontrolling\tinterest | $4,721 | $4,511 | $4,357 |
| Depreciation\tand\tamortization | 1,371 | 1,288 | 1,236 |
| Company\tpension\tcontributions | (476) | (1,079) | (517) |
| Company\tpostretirement\tcontributions | (6) | (67) | (65) |
| Company\tpension\texpense | 446 | 534 | 449 |
| Company\tpostretirement\texpense | 107 | 116 | 106 |
| Stock-based\tcompensation\texpense | 240 | 223 | 253 |
| Income\ttaxes\t(deferred\tand\taccrued\tincome\ttaxes) | 39 | 123 | 132 |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | (92) | (62) | (53) |
| Accounts\treceivable | (337) | (133) | (205) |
| Inventories | (86) | (251) | (196) |
| Accounts\tpayable | 16 | 72 | (83) |
| Product\tand\tother\tinsurance\treceivables\tand\tclaims | 41 | (32) | 9 |
| Other\t—\tnet | (167) | 57 | (139) |
| Net\tcash\tprovided\tby\toperating\tactivities | $5,817 | $5,300 | $5,284 |

Cash	flows	from	operating	activities	can	fluctuate	significantly	from	period	to	period,	as	pension	funding	decisions,	tax	timing	differences	and	other	items	can significantly	impact	cash	flows.

In	2013,	cash	flows	provided	by	operating	activities	increased	$517	million	compared	to	2012.	Operating	cash	flows	benefited	year-on-year	from	$664	million	of	lower pension	and	postretirement	plans	contributions	and	increases	in	net	income	including	noncontrolling	interest,	which	were	partially	offset	by	higher	year-on-year	working capital	requirements.	The	combination	of	accounts	receivable,	inventories	and	accounts	payable	increased	working	capital	by	$407	million	in	2013,	compared	to increases	of	$312	million	in	2012,	primarily	driven	by	year-on-year	increases	in	working	capital	requirements	due	to	increasing	sales.	Additional	discussion	on	working capital	changes	is	provided	earlier	in	the	"Financial	Condition	and	Liquidity"	section.

In	2012,	cash	flows	provided	by	operating	activities	increased	$16	million	compared	to	2011.	The	main	positive	contribution	to	operating	cash	flows	related	to	year-on- year	increases	in	net	income	including	noncontrolling	interest.	3M	was	able	to	achieve	this	growth	in	operating	cash	flow	despite	contributing	an	additional	$564	million in	its	pension	and	postretirement	plans	when	compared	to	2011.	The	combination	of	accounts	receivable,	inventories	and	accounts	payable	increased	working	capital	by

# Free	Cash	Flow	(non-GAAP	measure):

In	addition,	to	net	cash	provided	by	operating	activities,	3M	uses	free	cash	flow	as	a	useful	measure	of	performance	and	as	an	indication	of	the	strength	of	the	Company and	its	ability	to	generate	cash.	3M	defines	free	cash	flow	as	net	cash	provided	by	operating	activities	less	purchases	of	property,	plant	and	equipment	(which	is	classified as	an	investing	activity).	Free	cash	flow	is	not	defined	under	U.S.	generally	accepted	accounting	principles	(GAAP).	Therefore,	it	should	not	be	considered	a	substitute for	income	or	cash	flow	data	prepared	in	accordance	with	U.S.	GAAP	and	may	not	be	comparable	to	similarly	titled	measures	used	by	other	companies.	It	should	not	be inferred	that	the	entire	free	cash	flow	amount	is	available	for	discretionary	expenditures.	Below	find	a	recap	of	free	cash	flow	for	2013,	2012	and	2011.

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Net\tcash\tprovided\tby\toperating\tactivities | $5,817 | $5,300 | $5,284 |
| Purchases\tof\tproperty,\tplant\tand\tequipment\t(PP&amp;E) | (1,665) | (1,484) | (1,379) |
| Free\tCash\tFlow | $4,152 | $3,816 | $3,905 |

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Purchases\tof\tproperty,\tplant\tand\tequipment\t(PP&amp;E) | $(1,665) | $(1,484) | $(1,379) |
| Proceeds\tfrom\tsale\tof\tPP&amp;E\tand\tother\tassets | 128 | 41 | 55 |
| Acquisitions,\tnet\tof\tcash\tacquired | — | (1,046) | (649) |
| Purchases\tand\tproceeds\tfrom\tmaturities\tand\tsale\tof\tmarketable\tsecurities\tand\tinvestments,\tnet | 627 | (211) | (745) |
| Proceeds\tfrom\tsale\tof\tbusinesses | 8 | — | — |
| Other\tinvesting\tactivities | 46 | 14 | — |
| Net\tcash\tused\tin\tinvesting\tactivities | $(856) | $(2,686) | $(2,718) |

3M	is	striving	to	increase	its	manufacturing	and	sourcing	capacity,	particularly	in	developing	economies,	in	order	to	more	closely	align	its	production	capability	with	its sales	in	major	geographic	regions.	The	initiative	is	expected	to	help	improve	customer	service,	lower	transportation	costs,	and	reduce	working	capital	requirements.	3M will	continue	to	make	investments	in	critical	emerging	markets,	such	as	China,	Brazil,	Poland	and	India,	including	plans	to	establish	and	begin	production	in	a	new wholly-owned	manufacturing	entity	in	India	to	serve	as	a	source	of	supply	to	3M's	business	in	India	and	in	other	countries.

Proceeds	from	sale	of	PP&E	and	other	assets	totaled	$128	million	in	2013	compared	to	$41	million	in	2012.	Apart	from	the	normal	periodic	sales	of	PP&E,	2013 included	proceeds	of	$79	million	related	to	non-production	equipment,	which	resulted	in	a	pre-tax	loss	of	$7	million.

Refer	to	Note	2	for	information	on	acquisitions	and	divestitures.	The	Company	is	actively	considering	additional	acquisitions,	investments	and	strategic	alliances,	and from	time	to	time	may	also	divest	certain	businesses.

Purchases	of	marketable	securities	and	investments	and	proceeds	from	maturities	and	sale	of	marketable	securities	and	investments	are	primarily	attributable	to	asset- backed	securities,	agency	securities,	corporate	medium-term	note	securities	and	other	securities,	which	are	classified	as	available-for-sale.	Interest	rate	risk	and	credit risk	related	to	the	underlying	collateral	may	impact	the	value	of	investments	in	asset-backed	securities,	while	factors	such	as	general	conditions	in	the	overall	credit market	and	the	nature	of	the	underlying	collateral	may	affect	the	liquidity	of	investments	in	asset-backed	securities.	The	coupon	interest	rates	for	asset-backed	securities are	either	fixed	rate	or	floating.	Floating	rate	coupons	reset	monthly	or	quarterly	based	upon	the	corresponding	monthly	or	quarterly	LIBOR	rate.	Each	individual floating	rate	security	has	a	coupon	based	upon	the	respective	LIBOR	rate	+/-	an	amount	reflective	of	the	credit	risk	of	the	issuer	and	the	underlying	collateral	on	the original	issue	date.	Terms	of	the	reset	are	unique	to	individual	securities.	Fixed	rate	coupons	are	established	at	the	time	the	security	is	issued	and	are	based	upon	a	spread to	a	related	maturity	treasury	bond.	The	spread	against	the	treasury	bond	is	reflective	of	the	credit	risk	of	the	issuer	and	the	underlying	collateral	on	the	original	issue date.	3M	does	not	currently	expect	risk	related	to	its	holdings	in	asset-backed	securities	to	materially	impact	its	financial	condition	or	liquidity.	Refer	to	Note	8	for	more details	about	3M's	diversified	marketable	securities	portfolio,	which	totaled	$2.209	billion	as	of	December	31,	2013.	Purchases	of	investments	include	additional survivor	benefit	insurance,	plus	cost	method	and	equity	investments.

# Cash	Flows	from	Financing	Activities:

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Change\tin\tshort-term\tdebt\t—\tnet | $(2) | $(36) | $11 |
| Repayment\tof\tdebt\t(maturities\tgreater\tthan\t90\tdays) | (859) | (612) | (1,429) |
| Proceeds\tfrom\tdebt\t(maturities\tgreater\tthan\t90\tdays) | 824 | 1,370 | 1,111 |
| Total\tcash\tchange\tin\tdebt | $(37) | $722 | $(307) |

| Purchases	of	treasury	stock | (5,212) | (2,204) | (2,701) |
| :--- | :--- | :--- | :--- |
| Proceeds\tfrom\tissuances\tof\ttreasury\tstock\tpursuant\tto\tstock\toption\tand\tbenefit\tplans | 1,609 | 1,012 | 902 |
| Dividends\tpaid\tto\tstockholders | (1,730) | (1,635) | (1,555) |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | 92 | 62 | 53 |
| Other\t—\tnet | 32 | (15) | (67) |
| Net\tcash\tused\tin\tfinancing\tactivities | $(5,246) | $(2,058) | $(3,675) |

Total	debt	was	$6.0	billion	at	both	December	31,	2013	and	December	31,	2012,	compared	to	$5.2	billion	at	year-end	2011.	Total	debt	was	25	percent	of	total	capital (total	capital	is	defined	as	debt	plus	equity)	at	year-end	2013,	2012	and	2011.	In	2013,	repayment	of	debt	related	to	the	August	2013	repayment	of	$850	million (principal	amount)	of	medium-term	notes.	Proceeds	from	debt	in	2013	related	to	the	November	2013	issuance	of	an	eight-year	Eurobond	for	an	amount	of	600	million Euros	(approximately	$815	million	carrying	value	at	December	31,	2013).	In	2012,	repayment	of	debt	included	$500	million	(principal	amount)	of	medium-term	notes and	repayment	of	debt	acquired,	primarily	Ceradyne,	Inc.	Proceeds	from	debt	in	2012	related	to	the	June	2012	issuance	of	$650	million	aggregate	principal	amount	of five-year	fixed	rate	medium-term	notes	due	2017	and	$600	million	aggregate	principal	amount	of	ten-year	fixed	rate	medium-term	notes	due	2022,	in	addition	to	66 million	GBP	(approximately	$106	million)	in	UK	borrowings	(refer	to	Note	9	for	further	detail	on	these	items).	In	2011,	major	items	in	repayment	of	debt	included redemption	of	$800	million	(principal	amount)	of	medium-term	notes	in	November	2011,	redemption	of	Convertible	Notes,	repayment	of	debt	related	to	the	11.6	billion Japanese	Yen	note	(installments	paid	in	March	and	September	2011),	repayment	of	the	remainder	of	the	Canadian	Dollar	loan,	and	repayment	of	a	portion	of	debt	that was	acquired,	primarily	related	to	the	Winterthur	acquisition.	In	2011,	proceeds	from	debt	(maturities	greater	than	90	days)	primarily	related	to	the	issuance	of	a	$1 billion	medium	term	note	and	an	amendment	to	a	Canada	loan	agreement	which	increased	the	principal	amount	of	the	loan	by	100.5	million	Canadian	Dollars.

Repurchases	of	common	stock	are	made	to	support	the	Company's	stock-based	employee	compensation	plans	and	for	other	corporate	purposes.	In	February	2014,	3M's Board	of	Directors	authorized	the	repurchase	of	up	to	$12	billion	of	3M's	outstanding	common	stock,	which	replaced	the	Company's	February	2013	repurchase program.	This	authorization	has	no	pre-established	end	date.	In	2013,	the	Company	purchased	$5.212	billion	of	stock,	up	significantly	from	$2.204	billion	in	2012	and $2.701	billion	in	2011.	The	Company	expects	full-year	2014	gross	share	repurchases	will	be	in	the	range	of	$3.0	billion	to	$5.0	billion.	3M	is	increasing	share	purchases, which	is	enabled	by	its	continued	business	growth	and	consistently	strong	cash	flow,	the	well-funded	status	of	its	pension	plans,	and	the	strength	of	the	Company's capital	structure.	For	more	information,	refer	to	the	table	titled	"Issuer	Purchases	of	Equity	Securities"	in	Part	II,	Item	5.	The	Company	does	not	utilize	derivative instruments	linked	to	the	Company's	stock.

In	addition	to	the	items	described	below,	other	cash	flows	from	financing	activities	may	include	various	other	items,	such	as	distributions	to	or	sales	of	noncontrolling interests,	changes	in	cash	overdraft	balances,	and	principal	payments	for	capital	leases.

In	2011,	as	discussed	in	Note	5,	subsequent	to	acquiring	a	controlling	interest	in	Winterthur,	3M	purchased	additional	outstanding	shares	of	its	Winterthur	subsidiary	for $57	million,	increasing	3M's	ownership	interest	from	approximately	86	percent	to	100	percent	as	of	December	31,	2011.	These	additional	purchases	are	reflected	as other	financing	activities	in	the	statement	of	cash	flows.	In	addition,	during	2011,	3M	sold	a	noncontrolling	interest	in	a	newly	formed	subsidiary	for	an	immaterial amount,	which	was	also	classified	as	other	financing	activity	in	the	consolidated	statement	of	cash	flows.

# Off-Balance	Sheet	Arrangements	and	Contractual	Obligations:

As	of	December	31,	2013,	the	Company	has	not	utilized	special	purpose	entities	to	facilitate	off-balance	sheet	financing	arrangements.	Refer	to	the	section	entitled "Warranties/Guarantees"	in	Note	13	for	discussion	of	accrued	product	warranty	liabilities	and	guarantees.

In	addition	to	guarantees,	3M,	in	the	normal	course	of	business,	periodically	enters	into	agreements	that	require	the	Company	to	indemnify	either	major	customers	or suppliers	for	specific	risks,	such	as	claims	for	injury	or	property	damage	arising	out	of	the	use	of	3M	products	or	the	negligence	of	3M	personnel,	or	claims	alleging	that 3M	products	infringe	third-party	patents	or	other	intellectual	property.	While	3M's	maximum	exposure	under	these	indemnification	provisions	cannot	be	estimated, these	indemnifications	are	not	expected	to	have	a	material	impact	on	the	Company's	consolidated	results	of	operations	or	financial	condition.

A	summary	of	the	Company's	significant	contractual	obligations	as	of	December	31,	2013,	follows:

# Contractual	Obligations

|  |  |  |  |  |  |  | After |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) | Total | 2014 | 2015 | 2016 | 2017 | 2018 | 2018 |
| Long-term\tdebt,\tincluding\tcurrent\tportion |  |  |  |  |  |  |  |
| (Note\t9) | $5,912 | $1,586 | $109 | $996 | $720 | $— | $2,501 |
| Interest\ton\tlong-term\tdebt | 1,615 | 163 | 108 | 106 | 89 | 86 | 1,063 |
| Operating\tleases\t(Note\t13) | 848 | 216 | 170 | 128 | 98 | 54 | 182 |
| Capital\tleases\t(Note\t13) | 79 | 23 | 9 | 9 | 5 | 3 | 30 |
| Unconditional\tpurchase\tobligations\tand\tother | 1,428 | 1,000 | 181 | 88 | 64 | 34 | 61 |
| Total\tcontractual\tcash\tobligations | $9,882 | $2,988 | $577 | $1,327 | $976 | $177 | $3,837 |

Long-term	debt	payments	due	in	2014	and	2017	include	floating	rate	notes	totaling	$156	million	(classified	as	current	portion	of	long-term	debt)	and	$71	million (included	in	other	borrowings	in	the	long-term	debt	table),	respectively,	as	a	result	of	put	provisions	associated	with	these	debt	instruments.

Unconditional	purchase	obligations	are	defined	as	an	agreement	to	purchase	goods	or	services	that	is	enforceable	and	legally	binding	on	the	Company.	Included	in	the unconditional	purchase	obligations	category	above	are	certain	obligations	related	to	take	or	pay	contracts,	capital	commitments,	service	agreements	and	utilities.	These estimates	include	both	unconditional	purchase	obligations	with	terms	in	excess	of	one	year	and	normal	ongoing	purchase	obligations	with	terms	of	less	than	one	year. Many	of	these	commitments	relate	to	take	or	pay	contracts,	in	which	3M	guarantees	payment	to	ensure	availability	of	products	or	services	that	are	sold	to	customers.	The Company	expects	to	receive	consideration	(products	or	services)	for	these	unconditional	purchase	obligations.	Contractual	capital	commitments	are	included	in	the preceding	table,	but	these	commitments	represent	a	small	part	of	the	Company's	expected	capital	spending	in	2014	and	beyond.	The	purchase	obligation	amounts	do	not represent	the	entire	anticipated	purchases	in	the	future,	but	represent	only	those	items	for	which	the	Company	is	contractually	obligated.	The	majority	of	3M's	products and	services	are	purchased	as	needed,	with	no	unconditional	commitment.	For	this	reason,	these	amounts	will	not	provide	a	reliable	indicator	of	the	Company's	expected future	cash	outflows	on	a	stand-alone	basis.

Other	obligations,	included	in	the	preceding	table	within	the	caption	entitled	"Unconditional	purchase	obligations	and	other,"	include	the	current	portion	of	the	liability for	uncertain	tax	positions	under	ASC	740,	which	is	expected	to	be	paid	out	in	cash	in	the	next	12	months.	The	Company	is	not	able	to	reasonably	estimate	the	timing	of the	long-term	payments	or	the	amount	by	which	the	liability	will	increase	or	decrease	over	time;	therefore,	the	long-term	portion	of	the	net	tax	liability	of	$179	million	is excluded	from	the	preceding	table.	Refer	to	Note	7	for	further	details.

As	discussed	in	Note	10,	the	Company	does	not	have	a	required	minimum	cash	pension	contribution	obligation	for	its	U.S.	plans	in	2014	and	Company	contributions	to its	U.S.	and	international	pension	plans	are	expected	to	be	largely	discretionary	in	future	years;	therefore,	amounts	related	to	these	plans	are	not	included	in	the	preceding table.

# FINANCIAL	INSTRUMENTS

The	Company	enters	into	foreign	exchange	forward	contracts,	options	and	swaps	to	hedge	against	the	effect	of	exchange	rate	fluctuations	on	cash	flows	denominated	in foreign	currencies	and	certain	intercompany	financing	transactions.	The	Company	manages	interest	rate	risks	using	a	mix	of	fixed	and	floating	rate	debt.	To	help manage	borrowing	costs,	the	Company	may	enter	into	interest	rate	swaps.	Under	these	arrangements,	the	Company	agrees	to	exchange,	at	specified	intervals,	the difference	between	fixed	and	floating	interest	amounts	calculated	by	reference	to	an	agreed-upon	notional	principal	amount.	The	Company	manages	commodity	price risks	through	negotiated	supply	contracts,	price	protection	agreements	and	forward	physical	contracts.

Refer	to	Item	7A,	"Quantitative	and	Qualitative	Disclosures	About	Market	Risk",	for	further	discussion	of	foreign	exchange	rates	risk,	interest	rates	risk,	commodity prices	risk	and	value	at	risk	analysis.

# Item	7A.	Quantitative	and	Qualitative	Disclosures	About	Market	Risk.

In	the	context	of	Item	7A,	3M	is	exposed	to	market	risk	due	to	the	risk	of	loss	arising	from	adverse	changes	in	foreign	currency	exchange	rates,	interest	rates	and commodity	prices.	Changes	in	those	factors	could	cause	fluctuations	in	earnings	and	cash	flows.	Senior	management	provides	oversight	for	risk	management	and derivative	activities,	determines	certain	of	the	Company's	financial	risk	policies	and	objectives,	and	provides	guidelines	for	derivative	instrument	utilization.	Senior management	also	establishes	certain	associated	procedures	relative	to	control	and	valuation,	risk	analysis,	counterparty	credit	approval,	and	ongoing	monitoring	and reporting.

The	Company	is	exposed	to	credit	loss	in	the	event	of	nonperformance	by	counterparties	in	interest	rate	swaps,	currency	swaps,	commodity	price	swaps,	and	forward	and option	contracts.	However,	the	Company's	risk	is	limited	to	the	fair	value	of	the	instruments.	The	Company	actively	monitors	its	exposure	to	credit	risk	through	the	use of	credit	approvals	and	credit	limits,	and	by	selecting	major	international	banks	and	financial	institutions	as	counterparties.	The	Company	does	not	anticipate nonperformance	by	any	of	these	counterparties.

# Foreign	Exchange	Rates	Risk:

Foreign	currency	exchange	rates	and	fluctuations	in	those	rates	may	affect	the	Company's	net	investment	in	foreign	subsidiaries	and	may	cause	fluctuations	in	cash flows	related	to	foreign	denominated	transactions.	3M	is	also	exposed	to	the	translation	of	foreign	currency	earnings	to	the	U.S.	dollar.	The	Company	enters	into	foreign exchange	forward	and	option	contracts	to	hedge	against	the	effect	of	exchange	rate	fluctuations	on	cash	flows	denominated	in	foreign	currencies.	These	transactions	are designated	as	cash	flow	hedges.	Generally,	3M	dedesignates	these	cash	flow	hedge	relationships	in	advance	of	the	occurrence	of	the	forecasted	transaction.	The maximum	length	of	time	over	which	3M	hedges	its	exposure	to	the	variability	in	future	cash	flows	for	a	majority	of	the	forecasted	transactions	is	12	months	and, accordingly,	at	December	31,	2013,	the	majority	of	the	Company's	open	foreign	exchange	forward	and	option	contracts	had	maturities	of	one	year	or	less.	In	addition, 3M	enters	into	foreign	currency	forward	contracts	that	are	not	designated	in	hedging	relationships	to	offset,	in	part,	the	impacts	of	certain	intercompany	activities (primarily	associated	with	intercompany	licensing	arrangements	and	intercompany	financing	transactions).	As	circumstances	warrant,	the	Company	also	uses	cross currency	swaps,	forwards	and	foreign	currency	denominated	debt	as	hedging	instruments	to	hedge	portions	of	the	Company's	net	investments	in	foreign	operations.	The dollar	equivalent	gross	notional	amount	of	the	Company's	foreign	exchange	forward	and	option	contracts	designated	as	cash	flow	hedges	and	those	not	designated	as hedging	instruments	were	$1.7	billion	and	$7.5	billion,	respectively,	at	December	31,	2013.	As	of	December	31,	2013,	the	Company	had	no	cross	currency	swap	and foreign	currency	forward	contracts	designated	as	net	investment	hedges,	but	had	designated	certain	of	3M's	foreign	currency	denominated	debt	as	nonderivative hedging	instruments	in	certain	net	investment	hedges	as	discussed	in	Note	11	in	the	"Net	Investment	Hedges"	section.

# Interest	Rates	Risk:

The	Company	may	be	impacted	by	interest	rate	volatility	with	respect	to	existing	debt	and	future	debt	issuances.	3M	manages	interest	expense	using	a	mix	of	fixed	and floating	rate	debt.	To	help	manage	borrowing	costs,	the	Company	may	enter	into	interest	rate	swaps	that	are	designated	and	qualify	as	fair	value	hedges.	Under	these arrangements,	the	Company	agrees	to	exchange,	at	specified	intervals,	the	difference	between	fixed	and	floating	interest	amounts	calculated	by	reference	to	an	agreed- upon	notional	principal	amount.	The	dollar	equivalent	(based	on	inception	date	foreign	currency	exchange	rates)	gross	notional	amount	of	the	Company's	interest	rate swaps	at	December	31,	2013	was	$745	million.	Additional	details	about	3M's	long-term	debt	can	be	found	in	Note	9,	including	references	to	information	regarding derivatives	and/or	hedging	instruments	associated	with	the	Company's	long-term	debt.

# Commodity	Prices	Risk:

Certain	commodities	the	Company	uses	in	the	production	of	its	products	are	exposed	to	market	price	risks.	3M	manages	commodity	price	risks	through	negotiated supply	contracts,	price	protection	agreements	and	forward	physical	contracts.	The	Company	uses	commodity	price	swaps	relative	to	natural	gas	as	cash	flow	hedges	of forecasted	transactions	to	manage	price	volatility.	Generally,	the	length	of	time	over	which	3M	hedges	its	exposure	to	the	variability	in	future	cash	flows	for	its forecasted	natural	gas	transactions	is	12	months.	3M	also	enters	into	commodity	price	swaps	that	are	not	designated	in	hedge	relationships	to	offset,	in	part,	the	impacts of	fluctuations	in	costs	associated	with	the	use	of	certain	precious	metals.

The	dollar	equivalent	gross	notional	amount	of	the	Company's	natural	gas	commodity	price	swaps	designated	as	cash	flow	hedges	and	precious	metal	commodity	price swaps	not	designated	in	hedge	relationships	were	$19	million	and	$2	million,	respectively,	at	December	31,	2013.

# Value	At	Risk:

The	value	at	risk	analysis	is	performed	annually.	A	Monte	Carlo	simulation	technique	was	used	to	test	the	Company's	exposure	to	changes	in	currency	rates,	interest rates,	and	commodity	prices	and	assess	the	risk	of	loss	or	benefit	in	after-tax	earnings	of	financial	instruments	(primarily	debt),	derivatives	and	underlying	exposures outstanding	at	December	31,	2013.	The	model	(third-party	bank	dataset)	used	a	95	percent	confidence	level	over	a	12-month	time	horizon.	The	exposure	to	changes	in currency	rates	model	used	18	currencies,	interest	rates	related	to	four	currencies,	and	commodity	prices	related	to	five	commodities.	This	model	does	not	purport	to represent	what	actually	will	be	experienced	by	the	Company.	This	model	does	not	include	certain	hedge	transactions,	because	the	Company	believes	their	inclusion would	not	materially	impact	the	results.	Foreign	exchange	rate	risk	of	loss	or	benefit	increased	in	2013,	primarily	due	to	increases	in	exposures,	which	is	one	of	the	key drivers	in	the	valuation	model.	Interest	rate	volatility	remained	stable	in	2013	because	interest	rates	are	currently	very	low	and	are	projected	to	remain	low,	based	on forward	rates.	The	following	table	summarizes	the	possible	adverse	and	positive	impacts	to	after-tax	earnings	related	to	these	exposures.

|  | Adverse	impact	on	after-tax<br>earnings |  | Positive	impact	on	after-tax<br>earnings | Positive	impact	on	after-tax<br>earnings |
| :--- | :--- | :--- | :--- | :--- |
| (Millions) | 2013 | 2012 | 2013 | 2012 |
| Foreign\texchange\trates | $(111) | $(97) | $119 | $105 |
| Interest\trates | (2) | (2) | 1 | 1 |
| Commodity\tprices | (2) | (9) | 3 | 7 |

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,	had	the	following	effects	on	net	income	attributable	to	3M:	2013	($74	million	decrease)	and 2012	($103	million	decrease).	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	and	the	negative	impact	of	swapping	Venezuelan	bolivars	into	U.S.	dollars.	3M	estimates	that	year-on-year	derivative	and	other	transaction gains	and	losses	had	the	following	effects	on	net	income	attributable	to	3M:	2013	($12	million	decrease)	and	2012	($49	million	increase).

An	analysis	of	the	global	exposures	related	to	purchased	components	and	materials	is	performed	at	each	year-end.	A	one	percent	price	change	would	result	in	a	pre-tax cost	or	savings	of	approximately	$76	million	per	year.	The	global	energy	exposure	is	such	that	a	10	percent	price	change	would	result	in	a	pre-tax	cost	or	savings	of approximately	$45	million	per	year.

| Management's	Responsibility	for	Financial	Reporting | 44 |
| :--- | :--- |
| Management's\tReport\ton\tInternal\tControl\tOver\tFinancial\tReporting | 44 |
| Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 45 |
| Consolidated\tStatement\tof\tIncome\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 46 |
| Consolidated\tStatement\tof\tComprehensive\tIncome\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 47 |
| Consolidated\tBalance\tSheet\tat\tDecember\t31,\t2013\tand\t2012 | 48 |
| Consolidated\tStatement\tof\tChanges\tin\tEquity\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 49 |
| Consolidated\tStatement\tof\tCash\tFlows\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 51 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 52 |
| Note\t1.\tSignificant\tAccounting\tPolicies | 52 |
| Note\t2.\tAcquisitions\tand\tDivestitures | 59 |
| Note\t3.\tGoodwill\tand\tIntangible\tAssets | 62 |
| Note\t4.\tSupplemental\tBalance\tSheet\tInformation | 64 |
| Note\t5.\tSupplemental\tEquity\tand\tComprehensive\tIncome\tInformation | 65 |
| Note\t6.\tSupplemental\tCash\tFlow\tInformation | 67 |
| Note\t7.\tIncome\tTaxes | 68 |
| Note\t8.\tMarketable\tSecurities | 72 |
| Note\t9.\tLong-Term\tDebt\tand\tShort-Term\tBorrowings | 74 |
| Note\t10.\tPension\tand\tPostretirement\tBenefit\tPlans | 76 |
| Note\t11.\tDerivatives | 89 |
| Note\t12.\tFair\tValue\tMeasurements | 97 |
| Note\t13.\tCommitments\tand\tContingencies | 101 |
| Note\t14.\tStock-Based\tCompensation | 111 |
| Note\t15.\tBusiness\tSegments | 115 |
| Note\t16.\tGeographic\tAreas | 117 |
| Note\t17.\tQuarterly\tData\t(Unaudited) | 117 |

# Management's	Responsibility	for	Financial	Reporting

Management	is	responsible	for	the	integrity	and	objectivity	of	the	financial	information	included	in	this	report.	The	financial	statements	have	been	prepared	in accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America.	Where	necessary,	the	financial	statements	reflect	estimates	based	on management's	judgment.

Management	has	established	and	maintains	a	system	of	internal	accounting	and	other	controls	for	the	Company	and	its	subsidiaries.	This	system	and	its	established accounting	procedures	and	related	controls	are	designed	to	provide	reasonable	assurance	that	assets	are	safeguarded,	that	the	books	and	records	properly	reflect	all transactions,	that	policies	and	procedures	are	implemented	by	qualified	personnel,	and	that	published	financial	statements	are	properly	prepared	and	fairly	presented.	The Company's	system	of	internal	control	is	supported	by	widely	communicated	written	policies,	including	business	conduct	policies,	which	are	designed	to	require	all employees	to	maintain	high	ethical	standards	in	the	conduct	of	Company	affairs.	Internal	auditors	continually	review	the	accounting	and	control	system.

Management's	Report	on	Internal	Control	Over	Financial	Reporting

Management	is	responsible	for	establishing	and	maintaining	an	adequate	system	of	internal	control	over	financial	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 Internal	Control	—	Integrated	Framework	(1992).	Based	on	the	assessment,	management	concluded	that,	as	of	December	31,	2013,	the	Company's	internal	control	over financial	reporting	is	effective.

The	Company's	internal	control	over	financial	reporting	as	of	December	31,	2013	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,	2013.

# Report	of	Independent	Registered	Public	Accounting	Firm

# To	the	Stockholders	and	Board	of	Directors	of	3M	Company

In	our	opinion,	the	consolidated	financial	statements	listed	in	the	accompanying	index	present	fairly,	in	all	material	respects,	the	financial	position	of	3M	Company	and its	subsidiaries	(the	"Company")	at	December	31,	2013	and	2012	and	the	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended December	31,	2013	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,	2013,	based	on	criteria	established	in	Internal	Control	-	Integrated	Framework (1992)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).		The	Company's	management	is	responsible	for	these	financial statements,	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting, included	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial	Reporting.		Our	responsibility	is	to	express	opinions	on	these	financial statements	and	on	the	Company's	internal	control	over	financial	reporting	based	on	our	integrated	audits.		We	conducted	our	audits	in	accordance	with	the	standards	of the	Public	Company	Accounting	Oversight	Board	(United	States).		Those	standards	require	that	we	plan	and	perform	the	audits	to	obtain	reasonable	assurance	about whether	the	financial	statements	are	free	of	material	misstatement	and	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects. Our	audits	of	the	financial	statements	included	examining,	on	a	test	basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements,	assessing	the accounting	principles	used	and	significant	estimates	made	by	management,	and	evaluating	the	overall	financial	statement	presentation.		Our	audit	of	internal	control	over financial	reporting	included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	and	testing	and evaluating	the	design	and	operating	effectiveness	of	internal	control	based	on	the	assessed	risk.		Our	audits	also	included	performing	such	other	procedures	as	we considered	necessary	in	the	circumstances.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinions.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.		A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(i)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(ii)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	and	directors	of	the	company;	and	(iii)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.		Also,	projections	of	any	evaluation	of	effectiveness to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the	policies	or procedures	may	deteriorate.

/s/	PricewaterhouseCoopers	LLP

Minneapolis,	Minnesota

Consolidated	Statement	of	Income 3M	Company	and	Subsidiaries Years	ended	December	31

| (Millions,	except	per	share	amounts) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Net\tsales | $30,871 | $29,904 | $29,611 |
| Operating\texpenses |  |  |  |
| Cost\tof\tsales | 16,106 | 15,685 | 15,693 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 6,384 | 6,102 | 6,170 |
| Research,\tdevelopment\tand\trelated\texpenses | 1,715 | 1,634 | 1,570 |
| Total\toperating\texpenses | 24,205 | 23,421 | 23,433 |
| Operating\tincome | 6,666 | 6,483 | 6,178 |
| Interest\texpense\tand\tincome |  |  |  |
| Interest\texpense | 145 | 171 | 186 |
| Interest\tincome | (41) | (39) | (39) |
| Total\tinterest\texpense\t—\tnet | 104 | 132 | 147 |
| Income\tbefore\tincome\ttaxes | 6,562 | 6,351 | 6,031 |
| Provision\tfor\tincome\ttaxes | 1,841 | 1,840 | 1,674 |
| Net\tincome\tincluding\tnoncontrolling\tinterest | $4,721 | $4,511 | $4,357 |
| Less:\tNet\tincome\tattributable\tto\tnoncontrolling\tinterest | 62 | 67 | 74 |
| Net\tincome\tattributable\tto\t3M | $4,659 | $4,444 | $4,283 |

| Weighted	average	3M	common	shares	outstanding	—	basic | 681.9 | 693.9 | 708.5 |
| :--- | :--- | :--- | :--- |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t—\tbasic | $6.83 | $6.40 | $6.05 |
| Weighted\taverage\t3M\tcommon\tshares\toutstanding\t—\tdiluted | 693.6 | 703.3 | 719.0 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t—\tdiluted | $6.72 | $6.32 | $5.96 |
| Cash\tdividends\tpaid\tper\t3M\tcommon\tshare | $2.54 | $2.36 | $2.20 |

The	accompanying	Notes	to	Consolidated	Financial	Statements	are	an	integral	part	of	this	statement.

# Consolidated	Statement	of	Comprehensive	Income 3M	Company	and	Subsidiaries Years	ended	December	31

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Net\tincome\tincluding\tnoncontrolling\tinterest | $4,721 | $4,511 | $4,357 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax: |  |  |  |
| Cumulative\ttranslation\tadjustment | (505) | 71 | (250) |
| Defined\tbenefit\tpension\tand\tpostretirement\tplans\tadjustment | 1,245 | 201 | (1,280) |
| Debt\tand\tequity\tsecurities,\tunrealized\tgain\t(loss) | — | 4 | — |
| Cash\tflow\thedging\tinstruments,\tunrealized\tgain\t(loss) | 15 | (45) | 54 |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | 755 | 231 | (1,476) |
| Comprehensive\tincome\t(loss)\tincluding\tnoncontrolling\tinterest | 5,476 | 4,742 | 2,881 |
| Comprehensive\t(income)\tloss\tattributable\tto\tnoncontrolling\tinterest | 20 | (23) | (80) |
| Comprehensive\tincome\t(loss)\tattributable\tto\t3M | $5,496 | $4,719 | $2,801 |

| (Dollars	in	millions,	except	per	share	amount) | 2013 | 2012 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tassets |  |  |
| Cash\tand\tcash\tequivalents | $2,581 | $2,883 |
| Marketable\tsecurities\t—\tcurrent | 756 | 1,648 |
| Accounts\treceivable\t—\tnet\tof\tallowances\tof\t$104\tand\t$105 | 4,253 | 4,061 |
| Inventories |  |  |
| Finished\tgoods | 1,790 | 1,754 |
| Work\tin\tprocess | 1,139 | 1,186 |
| Raw\tmaterials\tand\tsupplies | 935 | 897 |
| Total\tinventories | 3,864 | 3,837 |
| Other\tcurrent\tassets | 1,279 | 1,201 |
| Total\tcurrent\tassets | 12,733 | 13,630 |
| Marketable\tsecurities\t—\tnon-current | 1,453 | 1,162 |
| Investments | 122 | 163 |
| Property,\tplant\tand\tequipment | 23,068 | 22,525 |
| Less:\tAccumulated\tdepreciation | (14,416) | (14,147) |
| Property,\tplant\tand\tequipment\t—\tnet | 8,652 | 8,378 |
| Goodwill | 7,345 | 7,385 |
| Intangible\tassets\t—\tnet | 1,688 | 1,925 |
| Prepaid\tpension\tbenefits | 577 | 16 |
| Other\tassets | 980 | 1,217 |
| Total\tassets | $33,550 | $33,876 |
| Liabilities |  |  |
| Current\tliabilities |  |  |
| Short-term\tborrowings\tand\tcurrent\tportion\tof\tlong-term\tdebt | $1,683 | $1,085 |
| Accounts\tpayable | 1,799 | 1,762 |
| Accrued\tpayroll | 708 | 701 |
| Accrued\tincome\ttaxes | 417 | 371 |
| Other\tcurrent\tliabilities | 2,891 | 2,281 |
| Total\tcurrent\tliabilities | 7,498 | 6,200 |
| Long-term\tdebt | 4,326 | 4,916 |
| Pension\tand\tpostretirement\tbenefits | 1,794 | 3,086 |
| Other\tliabilities | 1,984 | 1,634 |
| Total\tliabilities | $15,602 | $15,836 |

Commitments	and	contingencies	(Note	13)

Equity

3M	Company	shareholders'	equity:

| Common	stock,	par	value	$.01	per	share | $9 | $9 |
| :--- | :--- | :--- |
| Shares\toutstanding\t-\t2013:\t663,296,239 |  |  |
| Shares\toutstanding\t-\t2012:\t687,091,650 |  |  |
| Additional\tpaid-in\tcapital | 4,375 | 4,044 |
| Retained\tearnings | 32,416 | 30,679 |
| Treasury\tstock | (15,385) | (12,407) |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | (3,913) | (4,750) |
| Total\t3M\tCompany\tshareholders'\tequity | 17,502 | 17,575 |
| Noncontrolling\tinterest | 446 | 465 |
| Total\tequity | $17,948 | $18,040 |
| Total\tliabilities\tand\tequity | $33,550 | $33,876 |

# Consolidated	Statement	of	Changes	in	Equity 3M	Company	and	Subsidiaries

# Years	Ended	December	31

|  |  | Common |  |  | Accumulated |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Stock\tand |  |  | Other |  |
|  |  | Additional |  |  | Comprehen- |  |
|  |  | Paid-in | Retained | Treasury | sive\tIncome | Non-controlling |
| (Dollars\tin\tmillions,\texcept\tper\tshare\tamounts) | Total | Capital | Earnings | Stock | (Loss) | Interest |
| Balance\tat\tDecember\t31,\t2010 | $16,017 | $3,477 | $25,995 | $(10,266) | $(3,543) | $354 |
| Net\tincome | 4,357 |  | 4,283 |  |  | 74 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax: |  |  |  |  |  |  |
| Cumulative\ttranslation\tadjustment | (250) |  |  |  | (260) | 10 |
| Defined\tbenefit\tpension\tand\tpost-retirement\tplans |  |  |  |  |  |  |
| adjustment | (1,280) |  |  |  | (1,276) | (4) |
| Debt\tand\tequity\tsecurities\t-\tunrealized\tgain\t(loss) | — |  |  |  | — | — |
| Cash\tflow\thedging\tinstruments\t-\tunrealized\tgain |  |  |  |  |  |  |
| (loss) | 54 |  |  |  | 54 | — |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (1,476) |  |  |  |  |  |
| Dividends\tdeclared\t($2.20\tper\tshare) | (1,555) |  | (1,555) |  |  |  |
| Business\tcombination\tallocation\tto\tnoncontrolling |  |  |  |  |  |  |
| interest | 56 |  |  |  |  | 56 |
| Purchase\tand\tsale\tof\tsubsidiary\tshares\t-\tnet | (49) | (1) |  |  |  | (48) |
| Stock-based\tcompensation,\tnet\tof\ttax\timpacts | 300 | 300 |  |  |  |  |
| Reacquired\tstock | (2,694) |  |  | (2,694) |  |  |
| Issuances\tpursuant\tto\tstock\toption\tand\tbenefit\tplans | 906 |  | (375) | 1,281 |  |  |
| Balance\tat\tDecember\t31,\t2011 | $15,862 | $3,776 | $28,348 | $(11,679) | $(5,025) | $442 |
| Net\tincome | 4,511 |  | 4,444 |  |  | 67 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax: |  |  |  |  |  |  |
| Cumulative\ttranslation\tadjustment | 71 |  |  |  | 116 | (45) |
| Defined\tbenefit\tpension\tand\tpost-retirement\tplans |  |  |  |  |  |  |
| adjustment | 201 |  |  |  | 200 | 1 |
| Debt\tand\tequity\tsecurities\t-\tunrealized\tgain\t(loss) | 4 |  |  |  | 4 | — |
| Cash\tflow\thedging\tinstruments\t-\tunrealized\tgain |  |  |  |  |  |  |
| (loss) | (45) |  |  |  | (45) | — |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | 231 |  |  |  |  |  |
| Dividends\tdeclared\t($2.36\tper\tshare) | (1,635) |  | (1,635) |  |  |  |
| Stock-based\tcompensation,\tnet\tof\ttax\timpacts | 277 | 277 |  |  |  |  |
| Reacquired\tstock | (2,220) |  |  | (2,220) |  |  |
| Issuances\tpursuant\tto\tstock\toption\tand\tbenefit\tplans | 1,014 |  | (478) | 1,492 |  |  |
| Balance\tat\tDecember\t31,\t2012 | $18,040 | $4,053 | $30,679 | $(12,407) | $(4,750) | $465 |

# Consolidated	Statement	of	Changes	in	Equity	(continued)

|  |  | Common |  |  | Accumulated |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Stock\tand |  |  | Other |  |
|  |  | Additional |  |  | Comprehen- | Non- |
|  |  | Paid-in | Retained | Treasury | sive\tIncome | controlling |
| (Dollars\tin\tmillions,\texcept\tper\tshare\tamounts) | Total | Capital | Earnings | Stock | (Loss) | Interest |
| Balance\tat\tDecember\t31,\t2012 | $18,040 | $4,053 | $30,679 | $(12,407) | $(4,750) | $465 |
| Net\tincome | 4,721 |  | 4,659 |  |  | 62 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax: |  |  |  |  |  |  |
| Cumulative\ttranslation\tadjustment | (505) |  |  |  | (418) | (87) |
| Defined\tbenefit\tpension\tand\tpost-retirement\tplans |  |  |  |  |  |  |
| adjustment | 1,245 |  |  |  | 1,240 | 5 |
| Debt\tand\tequity\tsecurities\t-\tunrealized\tgain\t(loss) | — |  |  |  | — | — |
| Cash\tflow\thedging\tinstruments\t-\tunrealized |  |  |  |  |  |  |
| gain/(loss) |  |  |  |  |  |  |
|  | 15 |  |  |  | 15 | — |

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Cash\tFlows\tfrom\tOperating\tActivities |  |  |  |
| Net\tincome\tincluding\tnoncontrolling\tinterest | $4,721 | $4,511 | $4,357 |
| Adjustments\tto\treconcile\tnet\tincome\tincluding\tnoncontrolling\tinterest\tto\tnet\tcash\tprovided |  |  |  |
| by\toperating\tactivities |  |  |  |
| Depreciation\tand\tamortization | 1,371 | 1,288 | 1,236 |
| Company\tpension\tand\tpostretirement\tcontributions | (482) | (1,146) | (582) |
| Company\tpension\tand\tpostretirement\texpense | 553 | 650 | 555 |
| Stock-based\tcompensation\texpense | 240 | 223 | 253 |
| Deferred\tincome\ttaxes | (167) | 33 | 177 |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | (92) | (62) | (53) |
| Changes\tin\tassets\tand\tliabilities |  |  |  |
| Accounts\treceivable | (337) | (133) | (205) |
| Inventories | (86) | (251) | (196) |
| Accounts\tpayable | 16 | 72 | (83) |
| Accrued\tincome\ttaxes\t(current\tand\tlong-term) | 206 | 90 | (45) |
| Product\tand\tother\tinsurance\treceivables\tand\tclaims | 41 | (32) | 9 |
| Other\t—\tnet | (167) | 57 | (139) |
| Net\tcash\tprovided\tby\toperating\tactivities |  |  |  |
|  | 5,817 | 5,300 | 5,284 |
| Cash\tFlows\tfrom\tInvesting\tActivities |  |  |  |
| Purchases\tof\tproperty,\tplant\tand\tequipment\t(PP&amp;E) | (1,665) | (1,484) | (1,379) |
| Proceeds\tfrom\tsale\tof\tPP&amp;E\tand\tother\tassets | 128 | 41 | 55 |
| Acquisitions,\tnet\tof\tcash\tacquired | — | (1,046) | (649) |
| Purchases\tof\tmarketable\tsecurities\tand\tinvestments | (4,040) | (5,492) | (4,162) |
| Proceeds\tfrom\tmaturities\tand\tsale\tof\tmarketable\tsecurities\tand\tinvestments | 4,667 | 5,281 | 3,417 |
| Proceeds\tfrom\tsale\tof\tbusinesses | 8 | — | — |
| Other\tinvesting | 46 | 14 | — |
| Net\tcash\tused\tin\tinvesting\tactivities | (856) | (2,686) | (2,718) |
| Cash\tFlows\tfrom\tFinancing\tActivities |  |  |  |
| Change\tin\tshort-term\tdebt\t—\tnet | (2) | (36) | 11 |
| Repayment\tof\tdebt\t(maturities\tgreater\tthan\t90\tdays) | (859) | (612) | (1,429) |
| Proceeds\tfrom\tdebt\t(maturities\tgreater\tthan\t90\tdays) | 824 | 1,370 | 1,111 |
| Purchases\tof\ttreasury\tstock | (5,212) | (2,204) | (2,701) |
| Proceeds\tfrom\tissuance\tof\ttreasury\tstock\tpursuant\tto\tstock\toption\tand\tbenefit\tplans | 1,609 | 1,012 | 902 |
| Dividends\tpaid\tto\tshareholders | (1,730) | (1,635) | (1,555) |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | 92 | 62 | 53 |
| Other\t—\tnet | 32 | (15) | (67) |
| Net\tcash\tused\tin\tfinancing\tactivities | (5,246) | (2,058) | (3,675) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | (17) | 108 | (49) |
| Net\tincrease\t(decrease)\tin\tcash\tand\tcash\tequivalents | (302) | 664 | (1,158) |
| Cash\tand\tcash\tequivalents\tat\tbeginning\tof\tyear | 2,883 | 2,219 | 3,377 |
| Cash\tand\tcash\tequivalents\tat\tend\tof\tyear | $2,581 | $2,883 | $2,219 |

Notes	to	Consolidated	Financial	Statements

# NOTE	1.		Significant	Accounting	Policies

Consolidation:	3M	is	a	diversified	global	manufacturer,	technology	innovator	and	marketer	of	a	wide	variety	of	products.	All	subsidiaries	are	consolidated.	All significant	intercompany	transactions	are	eliminated.	As	used	herein,	the	term	"3M"	or	"Company"	refers	to	3M	Company	and	subsidiaries	unless	the	context	indicates otherwise.

Foreign	currency	translation:	Local	currencies	generally	are	considered	the	functional	currencies	outside	the	United	States.	Assets	and	liabilities	for	operations	in	local- currency	environments	are	translated	at	month-end	exchange	rates	of	the	period	reported.	Income	and	expense	items	are	translated	at	month-end	exchange	rates	of	each applicable	month.	Cumulative	translation	adjustments	are	recorded	as	a	component	of	accumulated	other	comprehensive	income	(loss)	in	shareholders'	equity.

Although	local	currencies	are	typically	considered	as	the	functional	currencies	outside	the	United	States,	under	Accounting	Standards	Codification	(ASC)	830,	Foreign Currency	Matters,	the	reporting	currency	of	a	foreign	entity's	parent	is	assumed	to	be	that	entity's	functional	currency	when	the	economic	environment	of	a	foreign entity	is	highly	inflationary	—	generally	when	its	cumulative	inflation	is	approximately	100	percent	or	more	for	the	three	years	that	precede	the	beginning	of	a	reporting period.	3M	has	a	subsidiary	in	Venezuela	with	operating	income	representing	less	than	1.0	percent	of	3M's	consolidated	operating	income	for	2013.	3M	has	determined that	the	cumulative	inflation	rate	of	Venezuela	has	exceeded,	and	continues	to	exceed,	100	percent	since	November	2009.	Accordingly,	since	January	1,	2010,	the financial	statements	of	the	Venezuelan	subsidiary	have	been	remeasured	as	if	its	functional	currency	were	that	of	its	parent.

The	Venezuelan	government	sets	official	rates	of	exchange	and	conditions	precedent	to	purchase	foreign	currency	at	these	rates	with	local	currency.	Such	rates	and conditions	are	subject	to	change.	For	the	periods	presented	through	January	2013,	this	rate	was	set	under	the	Transaction	System	for	Foreign	Currency	Denominated Securities	(SITME).	In	February	2013,	the	Venezuelan	government	announced	a	devaluation	of	its	currency,	the	elimination	of	the	SITME	market,	and	the	creation	of the	Superior	Body	for	the	Optimization	of	the	Exchange	System	to	oversee	its	foreign	currency	exchange	policies.	As	a	result,	the	new	official	exchange	rate	changed	to a	rate	less	favorable	than	the	previous	SITME	rate.	Since	January	1,	2010,	as	discussed	above,	the	financial	statements	of	3M's	Venezuelan	subsidiary	have	been remeasured	as	if	its	functional	currency	were	that	of	its	parent.	For	the	periods	presented,	this	remeasurement	utilized	the	SITME	rate	through	January	2013	and	the	new official	rate	discussed	above	thereafter.	Other	factors	notwithstanding,	the	elimination	of	the	SITME	rate	and	use	of	the	new	official	exchange	rate	beginning	in February	2013	did	not	have	a	material	impact	on	3M's	consolidated	results	of	operations	or	financial	condition.

The	Company	continues	to	monitor	circumstances	relative	to	its	Venezuelan	subsidiary.	In	January	2014,	the	Venezuelan	government	announced	that	it	was	making certain	changes	to	its	foreign	exchange	system,	the	details	of	which	have	not	been	fully	released.	These	changes	could	impact	the	rate	of	exchange	applicable	to remeasure	the	Company's	net	monetary	assets	denominated	in	Venezuelan	Bolivars	(VEF)	as	well	as	the	amount	of	VEF	required	to	obtain	other	currencies	in Venezuela	to	ultimately	satisfy	that	subsidiary's	non-VEF	denominated	intercompany	payables	to	other	3M	entities	primarily	as	a	result	of	the	importation	of	3M products	for	sale	in	Venezuela.	As	of	December	31,	2013,	the	balance	of	the	Company's	net	monetary	assets	denominated	in	VEF	was	less	than	12	million	VEF	and	the exchange	rate	established	by	the	Venezuelan	government	was	6.3	VEF	per	dollar.	In	addition,	the	balance	of	the	Venezuelan	subsidiary's	non-VEF	denominated intercompany	payables	to	other	3M	entities	was	approximately	$45	million	as	of	December	31,	2013.

Reclassifications:	Certain	amounts	in	the	prior	years'	consolidated	financial	statements	have	been	reclassified	to	conform	to	the	current	year	presentation.

Use	of	estimates:	The	preparation	of	financial	statements	in	conformity	with	U.S.	generally	accepted	accounting	principles	requires	management	to	make	estimates	and assumptions	that	affect	the	reported	amounts	of	assets	and	liabilities	and	the	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	the	financial	statements,	and	the reported	amounts	of	revenues	and	expenses	during	the	reporting	period.	Actual	results	could	differ	from	these	estimates.

Cash	and	cash	equivalents:	Cash	and	cash	equivalents	consist	of	cash	and	temporary	investments	with	maturities	of	three	months	or	less	when	acquired.

Marketable	securities:	The	classification	of	marketable	securities	as	current	or	non-current	is	dependent	upon	management's	intended	holding	period,	the	security's maturity	date	and	liquidity	considerations	based	on	market	conditions.	If	management	intends	to	hold	the	securities	for	longer	than	one	year	as	of	the	balance	sheet	date, they	are	classified	as	non-current.	3M	reviews	impairments	associated	with	its	marketable	securities	in	accordance	with	the	measurement	guidance	provided	by	ASC 320,	Investments-Debt	and	Equity	Securities,	when	determining	the	classification	of	the	impairment	as	"temporary"	or	"other-than-temporary".	A	temporary	impairment charge	results	in	an	unrealized	loss	being	recorded	in	the	other	comprehensive	income	component	of	shareholders'	equity.	Such	an	unrealized	loss	does	not	reduce	net income	for	the	applicable	accounting	period	because	the	loss	is	not	viewed	as	other-than-temporary.	The	factors	evaluated	to	differentiate	between	temporary	and	other- than-temporary	include	the	projected	future	cash	flows,	credit	ratings	actions,	and	assessment	of	the	credit	quality	of	the	underlying	collateral,	as	well	as	other	factors.

Investments:	Investments	primarily	include	equity	method,	cost	method,	and	available-for-sale	equity	investments.	Available-for-sale	investments	are	recorded	at	fair value.	Unrealized	gains	and	losses	relating	to	investments	classified	as	available-for-sale	are	recorded	as	a	component	of	accumulated	other	comprehensive	income	(loss) in	shareholders'	equity.

Other	assets:	Other	assets	include	deferred	income	taxes,	product	and	other	insurance	receivables,	the	cash	surrender	value	of	life	insurance	policies,	and	other	long- term	assets.	Investments	in	life	insurance	are	reported	at	the	amount	that	could	be	realized	under	contract	at	the	balance	sheet	date,	with	any	changes	in	cash	surrender value	or	contract	value	during	the	period	accounted	for	as	an	adjustment	of	premiums	paid.	Cash	outflows	and	inflows	associated	with	life	insurance	activity	are	included in	"Purchases	of	marketable	securities	and	investments"	and	"Proceeds	from	maturities	and	sale	of	marketable	securities	and	investments,"	respectively.

Inventories:	Inventories	are	stated	at	the	lower	of	cost	or	market,	with	cost	generally	determined	on	a	first-in,	first-out	basis.

Property,	plant	and	equipment:	Property,	plant	and	equipment,	including	capitalized	interest	and	internal	engineering	costs,	are	recorded	at	cost.	Depreciation	of property,	plant	and	equipment	generally	is	computed	using	the	straight-line	method	based	on	the	estimated	useful	lives	of	the	assets.	The	estimated	useful	lives	of buildings	and	improvements	primarily	range	from	10	to	40	years,	with	the	majority	in	the	range	of	20	to	40	years.	The	estimated	useful	lives	of	machinery	and	equipment primarily	range	from	three	to	15	years,	with	the	majority	in	the	range	of	five	to	10	years.	Fully	depreciated	assets	are	retained	in	property	and	accumulated	depreciation accounts	until	disposal.	Upon	disposal,	assets	and	related	accumulated	depreciation	are	removed	from	the	accounts	and	the	net	amount,	less	proceeds	from	disposal,	is charged	or	credited	to	operations.	Property,	plant	and	equipment	amounts	are	reviewed	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the carrying	amount	of	an	asset	(asset	group)	may	not	be	recoverable.	An	impairment	loss	would	be	recognized	when	the	carrying	amount	of	an	asset	exceeds	the	estimated undiscounted	future	cash	flows	expected	to	result	from	the	use	of	the	asset	and	its	eventual	disposition.	The	amount	of	the	impairment	loss	recorded	is	calculated	by	the excess	of	the	asset's	carrying	value	over	its	fair	value.	Fair	value	is	generally	determined	using	a	discounted	cash	flow	analysis.

Conditional	asset	retirement	obligations:	A	liability	is	initially	recorded	at	fair	value	for	an	asset	retirement	obligation	associated	with	the	retirement	of	tangible	long- lived	assets	in	the	period	in	which	it	is	incurred	if	a	reasonable	estimate	of	fair	value	can	be	made.	Conditional	asset	retirement	obligations	exist	for	certain	long-term assets	of	the	Company.	The	obligation	is	initially	measured	at	fair	value	using	expected	present	value	techniques.	Over	time	the	liabilities	are	accreted	for	the	change	in their	present	value	and	the	initial	capitalized	costs	are	depreciated	over	the	remaining	useful	lives	of	the	related	assets.	The	asset	retirement	obligation	liability	was	$90 million	and	$86	million	at	December	31,	2013	and	2012,	respectively.

Goodwill:	Goodwill	is	the	excess	of	cost	of	an	acquired	entity	over	the	amounts	assigned	to	assets	acquired	and	liabilities	assumed	in	a	business	combination.	Goodwill is	not	amortized.	Goodwill	is	tested	for	impairment	annually	in	the	fourth	quarter	of	each	year,	and	is	tested	for	impairment	between	annual	tests	if	an	event	occurs	or circumstances	change	that	would	indicate	the	carrying	amount	may	be	impaired.	Impairment	testing	for	goodwill	is	done	at	a	reporting	unit	level,	with	all	goodwill assigned	to	a	reporting	unit.	Reporting	units	are	one	level	below	the	business	segment	level,	but	can	be	combined	when	reporting	units	within	the	same	segment	have

similar	economic	characteristics.	3M	did	not	combine	any	of	its	reporting	units	for	impairment	testing.	An	impairment	loss	generally	would	be	recognized	when	the carrying	amount	of	the	reporting	unit's	net	assets	exceeds	the	estimated	fair	value	of	the	reporting	unit.	The	estimated	fair	value	of	a	reporting	unit	is	determined	using earnings	for	the	reporting	unit	multiplied	by	a	price/earnings	ratio	for	comparable	industry	groups,	or	by	using	a	discounted	cash	flow	analysis.

Intangible	assets:	Intangible	assets	include	patents,	tradenames	and	other	intangible	assets	acquired	from	an	independent	party.	Intangible	assets	with	an	indefinite	life, namely	certain	tradenames,	are	not	amortized.	Intangible	assets	with	a	definite	life	are	amortized	over	a	period	ranging	from	one	to	20	years	generally	on	a	straight	line basis,	unless	another	systematic	and	rational	basis	is	more	representative	of	the	asset's	use.	Indefinite-lived	intangible	assets	are	tested	for	impairment	annually,	and	are tested	for	impairment	between	annual	tests	if	an	event	occurs	or	circumstances	change	that	would	indicate	that	the	carrying	amount	may	be	impaired.	Intangible	assets with	a	definite	life	are	tested	for	impairment	whenever	events	or	circumstances	indicate	that	the	carrying	amount	of	an	asset	(asset	group)	may	not	be	recoverable.	An impairment	loss	is	recognized	when	the	carrying	amount	of	an	asset	exceeds	the	estimated	undiscounted	cash	flows	used	in	determining	the	fair	value	of	the	asset.	The amount	of	the	impairment	loss	recorded	is	calculated	by	the	excess	of	the	asset's	carrying	value	over	its	fair	value.	Fair	value	is	generally	determined	using	a	discounted cash	flow	analysis.	Costs	related	to	internally	developed	intangible	assets,	such	as	patents,	are	expensed	as	incurred,	primarily	in	"Research,	development	and	related expenses."

Restructuring	actions:	Restructuring	actions	generally	include	significant	actions	involving	employee-related	severance	charges,	contract	termination	costs,	and impairment	of	assets	associated	with	such	actions.	Employee-related	severance	charges	are	largely	based	upon	distributed	employment	policies	and	substantive severance	plans.	These	charges	are	reflected	in	the	quarter	when	the	actions	are	probable	and	the	amounts	are	estimable,	which	typically	is	when	management	approves the	associated	actions.	Severance	amounts	for	which	affected	employees	were	required	to	render	service	in	order	to	receive	benefits	at	their	termination	dates	were measured	at	the	date	such	benefits	were	communicated	to	the	applicable	employees	and	recognized	as	expense	over	the	employees'	remaining	service	periods.	Contract termination	and	other	charges	primarily	reflect	costs	to	terminate	a	contract	before	the	end	of	its	term	(measured	at	fair	value	at	the	time	the	Company	provided	notice	to the	counterparty)	or	costs	that	will	continue	to	be	incurred	under	the	contract	for	its	remaining	term	without	economic	benefit	to	the	Company.	Asset	impairment	charges related	to	intangible	assets	and	property,	plant	and	equipment	reflect	the	excess	of	the	assets'	carrying	values	over	their	fair	values.

Revenue	(sales)	recognition:	The	Company	sells	a	wide	range	of	products	to	a	diversified	base	of	customers	around	the	world	and	has	no	material	concentration	of	credit risk.	Revenue	is	recognized	when	the	risks	and	rewards	of	ownership	have	substantively	transferred	to	customers.	This	condition	normally	is	met	when	the	product	has been	delivered	or	upon	performance	of	services.	The	Company	records	estimated	reductions	to	revenue	or	records	expense	for	customer	and	distributor	incentives, primarily	comprised	of	rebates	and	free	goods,	at	the	time	of	the	initial	sale.	These	sales	incentives	are	accounted	for	in	accordance	with	ASC	605,	Revenue	Recognition. The	estimated	reductions	of	revenue	for	rebates	are	based	on	the	sales	terms,	historical	experience,	trend	analysis	and	projected	market	conditions	in	the	various	markets served.	Since	the	Company	serves	numerous	markets,	the	rebate	programs	offered	vary	across	businesses,	but	the	most	common	incentive	relates	to	amounts	paid	or credited	to	customers	for	achieving	defined	volume	levels	or	growth	objectives.	Free	goods	are	accounted	for	as	an	expense	and	recorded	in	cost	of	sales.	Sales,	use, value-added	and	other	excise	taxes	are	not	recognized	in	revenue.

The	vast	majority	of	3M's	sales	agreements	are	for	standard	products	and	services	with	customer	acceptance	occurring	upon	delivery	of	the	product	or	performance	of the	service.	However,	to	a	limited	extent	3M	also	enters	into	agreements	that	involve	multiple	elements	(such	as	equipment,	installation	and	service),	software,	or	non- standard	terms	and	conditions.

For	non-software	multiple-element	arrangements,	in	connection	with	3M's	adoption	on	a	prospective	basis	of	Accounting	Standards	Updated	(ASU)	No.	2009-13, Multiple-Deliverable	Revenue	Arrangements—a	consensus	of	the	FASB	Emerging	Issues	Task	Force,	to	new	or	materially	modified	arrangements	beginning	in	2011,	the Company	recognizes	revenue	for	delivered	elements	when	they	have	stand-alone	value	to	the	customer,	they	have	been	accepted	by	the	customer,	and	for	which	there are	only	customary	refund	or	return	rights.	Arrangement	consideration	is	allocated	to	the	deliverables	by	use	of	the	relative	selling	price	method.	The	selling	price	used for	each	deliverable	is	based	on	vendor-specific	objective	evidence	(VSOE)	if	available,	third-party	evidence	(TPE)	if	VSOE	is	not	available,	or	estimated	selling	price	if neither	VSOE	nor	TPE	is	available.	Estimated	selling	price	is	determined	in	a	manner	consistent	with	that	used	to	establish	the	price	to	sell	the	deliverable	on	a standalone	basis.	For	applicable	pre-existing	arrangements,	3M	recognizes	revenue	for	delivered	elements	when	the	fair	values	of	the	undelivered	items	are	known	and allocation	of	consideration	to	the	delivered	items	is	most	often	based	on	the	residual	method.	In	addition	to	the	preceding	conditions	under	ASU	No.	2009-13	and	for applicable	pre-existing	arrangements,	equipment	revenue	is	not	recorded	until	the	installation	has	been	completed	if	equipment	acceptance	is	dependent	upon	installation or	if	installation	is	essential	to	the	functionality	of	the	equipment.	Installation	revenues	are	not	recorded	until	installation	has	been	completed.

For	arrangements	(or	portions	of	arrangements)	falling	within	software	revenue	recognition	standards	and	that	do	not	involve	significant	production,	modification,	or customization,	revenue	for	each	software	or	software-related	element	is	recognized	when	the	Company	has	VSOE	of	the	fair	value	of	all	of	the	undelivered	elements	and applicable	criteria	have

been	met	for	the	delivered	elements.	When	the	arrangements	involve	significant	production,	modification	or	customization,	long-term	construction-type	accounting involving	proportional	performance	is	generally	employed.

For	prepaid	service	contracts,	sales	revenue	is	recognized	on	a	straight-line	basis	over	the	term	of	the	contract,	unless	historical	evidence	indicates	the	costs	are	incurred on	other	than	a	straight-line	basis.	License	fee	revenue	is	recognized	as	earned,	and	no	revenue	is	recognized	until	the	inception	of	the	license	term.

On	occasion,	agreements	will	contain	milestones,	or	3M	will	recognize	revenue	based	on	proportional	performance.	For	these	agreements,	and	depending	on	the specifics,	3M	may	recognize	revenue	upon	completion	of	a	substantive	milestone,	or	in	proportion	to	costs	incurred	to	date	compared	with	the	estimate	of	total	costs	to be	incurred.

Accounts	receivable	and	allowances:	Trade	accounts	receivable	are	recorded	at	the	invoiced	amount	and	do	not	bear	interest.	The	Company	maintains	allowances	for bad	debts,	cash	discounts,	product	returns	and	various	other	items.	The	allowance	for	doubtful	accounts	and	product	returns	is	based	on	the	best	estimate	of	the	amount of	probable	credit	losses	in	existing	accounts	receivable	and	anticipated	sales	returns.	The	Company	determines	the	allowances	based	on	historical	write-off	experience by	industry	and	regional	economic	data	and	historical	sales	returns.	The	Company	reviews	the	allowance	for	doubtful	accounts	monthly.	The	Company	does	not	have any	significant	off-balance-sheet	credit	exposure	related	to	its	customers.

Advertising	and	merchandising:	These	costs	are	charged	to	operations	in	the	period	incurred,	and	totaled	$423	million	in	2013,	$482	million	in	2012	and	$518	million	in 2011.

Research,	development	and	related	expenses:	These	costs	are	charged	to	operations	in	the	period	incurred	and	are	shown	on	a	separate	line	of	the	Consolidated Statement	of	Income.	Research,	development	and	related	expenses	totaled	$1.715	billion	in	2013,	$1.634	billion	in	2012	and	$1.570	billion	in	2011.	Research	and development	expenses,	covering	basic	scientific	research	and	the	application	of	scientific	advances	in	the	development	of	new	and	improved	products	and	their	uses, totaled	$1.150	billion	in	2013,	$1.079	billion	in	2012	and	$1.036	billion	in	2011.	Related	expenses	primarily	include	technical	support	provided	by	3M	to	customers	who are	using	existing	3M	products;	internally	developed	patent	costs,	which	include	costs	and	fees	incurred	to	prepare,	file,	secure	and	maintain	patents;	amortization	of externally	acquired	patents	and	externally	acquired	in-process	research	and	development;	and	gains/losses	associated	with	certain	corporate	approved	investments	in

# R&D-related	ventures,	such	as	equity	method	effects	and	impairments.

Internal-use	software:	The	Company	capitalizes	direct	costs	of	services	used	in	the	development	of	internal-use	software.	Amounts	capitalized	are	amortized	over	a period	of	three	to	seven	years,	generally	on	a	straight-line	basis,	unless	another	systematic	and	rational	basis	is	more	representative	of	the	software's	use.	Amounts	are reported	as	a	component	of	either	machinery	and	equipment	or	capital	leases	within	property,	plant	and	equipment.

Environmental:	Environmental	expenditures	relating	to	existing	conditions	caused	by	past	operations	that	do	not	contribute	to	current	or	future	revenues	are	expensed. Reserves	for	liabilities	related	to	anticipated	remediation	costs	are	recorded	on	an	undiscounted	basis	when	they	are	probable	and	reasonably	estimable,	generally	no later	than	the	completion	of	feasibility	studies	or	the	Company's	commitment	to	a	plan	of	action.	Environmental	expenditures	for	capital	projects	that	contribute	to current	or	future	operations	generally	are	capitalized	and	depreciated	over	their	estimated	useful	lives.

Income	taxes:	The	provision	for	income	taxes	is	determined	using	the	asset	and	liability	approach.	Under	this	approach,	deferred	income	taxes	represent	the	expected future	tax	consequences	of	temporary	differences	between	the	carrying	amounts	and	tax	basis	of	assets	and	liabilities.	The	Company	records	a	valuation	allowance	to reduce	its	deferred	tax	assets	when	uncertainty	regarding	their	realizability	exists.	As	of	December	31,	2013	and	2012,	the	Company	recorded	$23	million	and	$29 million,	respectively,	of	valuation	allowances.	The	Company	recognizes	and	measures	its	uncertain	tax	positions	based	on	the	rules	under	ASC	740,	Income	Taxes.

Earnings	per	share:	The	difference	in	the	weighted	average	3M	shares	outstanding	for	calculating	basic	and	diluted	earnings	per	share	attributable	to	3M	common shareholders	is	the	result	of	the	dilution	associated	with	the	Company's	stock-based	compensation	plans.	Certain	options	outstanding	under	these	stock-based compensation	plans	during	the	years	2013,	2012	and	2011	were	not	included	in	the	computation	of	diluted	earnings	per	share	attributable	to	3M	common	shareholders because	they	would	not	have	had	a	dilutive	effect	(2.0	million	average	options	for	2013,	12.6	million	average	options	for	2012,	and	17.4	million	average	options	for 2011).	The	computations	for	basic	and	diluted	earnings	per	share	for	the	years	ended	December	31	follow:

# Earnings	Per	Share	Computations

| (Amounts	in	millions,	except	per	share	amounts) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Numerator: |  |  |  |
| Net\tincome\tattributable\tto\t3M | $4,659 | $4,444 | $4,283 |
| Denominator:\nDenominator\tfor\tweighted\taverage\t3M\tcommon\tshares\toutstanding\t–\tbasic | 681.9 | 693.9 | 708.5 |
| Dilution\tassociated\twith\tthe\tCompany's\tstock-based\tcompensation\tplans | 11.7 | 9.4 | 10.5 |
| Denominator\tfor\tweighted\taverage\t3M\tcommon\tshares\toutstanding\t–\tdiluted | 693.6 | 703.3 | 719.0 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t–\tbasic | $6.83 | $6.40 | $6.05 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t–\tdiluted | $6.72 | $6.32 | $5.96 |

Stock-based	compensation:	The	Company	recognizes	compensation	expense	for	its	stock-based	compensation	programs,	which	include	stock	options,	restricted	stock, restricted	stock	units,	performance	shares,	and	the	General	Employees'	Stock	Purchase	Plan	(GESPP).	Under	applicable	accounting	standards,	the	fair	value	of	share- based	compensation	is	determined	at	the	grant	date	and	the	recognition	of	the	related	expense	is	recorded	over	the	period	in	which	the	share-based	compensation	vests. Refer	to	Note	14	for	additional	information.

Comprehensive	income:	Total	comprehensive	income	and	the	components	of	accumulated	other	comprehensive	income	(loss)	are	presented	in	the	Consolidated Statement	of	Comprehensive	Income	and	the	Consolidated	Statement	of	Changes	in	Equity.	Accumulated	other	comprehensive	income	(loss)	is	composed	of	foreign currency	translation	effects	(including	hedges	of	net	investments	in	international	companies),	defined	benefit	pension	and	postretirement	plan	adjustments,	unrealized gains	and	losses	on	available-for-sale	debt	and	equity	securities,	and	unrealized	gains	and	losses	on	cash	flow	hedging	instruments.

Derivatives	and	hedging	activities:	All	derivative	instruments	within	the	scope	of	ASC	815,	Derivatives	and	Hedging,	are	recorded	on	the	balance	sheet	at	fair	value. The	Company	uses	interest	rate	swaps,	currency	and	commodity	price	swaps,	and	foreign	currency	forward	and	option	contracts	to	manage	risks	generally	associated with	foreign	exchange	rate,	interest	rate	and	commodity	market	volatility.	All	hedging	instruments	that	qualify	for	hedge	accounting	are	designated	and	effective	as hedges,	in	accordance	with	U.S.	generally	accepted	accounting	principles.	If	the	underlying	hedged	transaction	ceases	to	exist,	all	changes	in	fair	value	of	the	related derivatives	that	have	not	been	settled	are	recognized	in	current	earnings.	Instruments	that	do	not	qualify	for	hedge	accounting	are	marked	to	market	with	changes recognized	in	current	earnings.	Cash	flows	from	derivative	instruments	are	classified	in	the	statement	of	cash	flows	in	the	same	category	as	the	cash	flows	from	the	items subject	to	designated	hedge	or	undesignated	(economic)	hedge	relationships.	The	Company	does	not	hold	or	issue	derivative	financial	instruments	for	trading	purposes and	is	not	a	party	to	leveraged	derivatives.

Credit	risk:	The	Company	is	exposed	to	credit	loss	in	the	event	of	nonperformance	by	counterparties	in	interest	rate	swaps,	currency	swaps,	commodity	price	swaps,	and forward	and	option	contracts.	However,	the	Company's	risk	is	limited	to	the	fair	value	of	the	instruments.	The	Company	actively	monitors	its	exposure	to	credit	risk through	the	use	of	credit	approvals	and	credit	limits,	and	by	selecting	major	international	banks	and	financial	institutions	as	counterparties.	3M	enters	into	master	netting arrangements	with	counterparties	when	possible	to	mitigate	credit	risk	in	derivative	transactions.	A	master	netting	arrangement	may	allow	each	counterparty	to	net	settle amounts	owed	between	a	3M	entity	and	the	counterparty	as	a	result	of	multiple,	separate	derivative	transactions.	The	Company	does	not	anticipate	nonperformance	by any	of	these	counterparties.	3M	has	elected	to	present	the	fair	value	of	derivative	assets	and	liabilities	within	the	Company's	consolidated	balance	sheet	on	a	gross	basis even	when	derivative	transactions	are	subject	to	master	netting	arrangements	and	may	otherwise	qualify	for	net	presentation.

Fair	value	measurements:	3M	follows	ASC	820,	Fair	Value	Measurements	and	Disclosures,	with	respect	to	assets	and	liabilities	that	are	measured	at	fair	value	on	a recurring	basis	and	nonrecurring	basis.	Under	the	standard,	fair	value	is	defined	as	the	exit	price,	or	the	amount	that	would	be	received	to	sell	an	asset	or	paid	to	transfer a	liability	in	an	orderly	transaction	between	market	participants	as	of	the	measurement	date.	The	standard	also	establishes	a	hierarchy	for	inputs

used	in	measuring	fair	value	that	maximizes	the	use	of	observable	inputs	and	minimizes	the	use	of	unobservable	inputs	by	requiring	that	the	most	observable	inputs	be used	when	available.	Observable	inputs	are	inputs	market	participants	would	use	in	valuing	the	asset	or	liability	developed	based	on	market	data	obtained	from	sources independent	of	the	Company.	Unobservable	inputs	are	inputs	that	reflect	the	Company's	assumptions	about	the	factors	market	participants	would	use	in	valuing	the	asset or	liability	developed	based	upon	the	best	information	available	in	the	circumstances.	The	hierarchy	is	broken	down	into	three	levels.	Level	1	inputs	are	quoted	prices (unadjusted)	in	active	markets	for	identical	assets	or	liabilities.	Level	2	inputs	include	quoted	prices	for	similar	assets	or	liabilities	in	active	markets,	quoted	prices	for identical	or	similar	assets	or	liabilities	in	markets	that	are	not	active,	and	inputs	(other	than	quoted	prices)	that	are	observable	for	the	asset	or	liability,	either	directly	or indirectly.	Level	3	inputs	are	unobservable	inputs	for	the	asset	or	liability.	Categorization	within	the	valuation	hierarchy	is	based	upon	the	lowest	level	of	input	that	is

# significant	to	the	fair	value	measurement.

Acquisitions:	The	Company	accounts	for	business	acquisitions	in	accordance	with	ASC	805,	Business	Combinations.	This	standard	requires	the	acquiring	entity	in	a business	combination	to	recognize	all	(and	only)	the	assets	acquired	and	liabilities	assumed	in	the	transaction	and	establishes	the	acquisition-date	fair	value	as	the measurement	objective	for	all	assets	acquired	and	liabilities	assumed	in	a	business	combination.	Certain	provisions	of	this	standard	prescribe,	among	other	things,	the determination	of	acquisition-date	fair	value	of	consideration	paid	in	a	business	combination	(including	contingent	consideration)	and	the	exclusion	of	transaction	and acquisition-related	restructuring	costs	from	acquisition	accounting.

In	May	2011,	the	Financial	Accounting	Standards	Board	(FASB)	issued	Accounting	Standards	Update	(ASU)	No.	2011-04,	Fair	Value	Measurement:	Amendments	to Achieve	Common	Fair	Value	Measurement	and	Disclosure	Requirements	in	U.S.	GAAP	and	IFRSs.	This	standard	clarifies	guidance	on	how	to	measure	fair	value	and	is largely	consistent	with	existing	fair	value	measurement	principles.	The	ASU	also	expands	existing	disclosure	requirements	for	fair	value	measurements	and	makes	other amendments.	For	3M,	this	ASU	was	effective	prospectively	beginning	January	1,	2012.	The	adoption	of	this	standard	did	not	have	a	material	impact	on	3M's consolidated	results	of	operations	or	financial	condition.

In	June	2011,	the	FASB	issued	ASU	No.	2011-05,	Presentation	of	Comprehensive	Income,	and	in	December	2011	issued	ASU	No.	2011-12,	Deferral	of	the	Effective Date	for	Amendments	to	the	Presentation	of	Reclassification	of	Items	Out	of	Accumulated	Other	Comprehensive	Income	in	Accounting	Standards	Update	No.	2011-05. These	standards	require	entities	to	present	items	of	net	income	and	other	comprehensive	income	either	in	a	single	continuous	statement,	or	in	separate,	but	consecutive, statements	of	net	income	and	other	comprehensive	income.	The	new	requirements	do	not	change	which	components	of	comprehensive	income	are	recognized	in	net income	or	other	comprehensive	income,	or	when	an	item	of	other	comprehensive	income	must	be	reclassified	to	net	income.	Also,	the	earnings-per	share	computation does	not	change.	However,	the	option	under	previous	standards	to	report	other	comprehensive	income	and	its	components	in	the	statement	of	changes	in	equity	was eliminated.	For	3M,	these	standards	were	effective	retrospectively	beginning	January	1,	2012,	with	early	adoption	permitted.	3M	adopted	these	standards	in	the	fourth quarter	of	2011.	Since	these	standards	impact	presentation	and	disclosure	requirements	only,	their	adoption	did	not	have	a	material	impact	on	3M's	consolidated	results of	operations	or	financial	condition.

In	September	2011,	the	FASB	issued	ASU	No.	2011-08,	Testing	Goodwill	for	Impairment.	Under	this	standard,	entities	testing	goodwill	for	impairment	now	have	an option	of	performing	a	qualitative	assessment	before	having	to	calculate	the	fair	value	of	a	reporting	unit.	If	an	entity	determines,	on	the	basis	of	qualitative	factors,	that the	fair	value	of	the	reporting	unit	is	more-likely-than-not	less	than	the	carrying	amount,	the	existing	quantitative	impairment	test	is	required.	Otherwise,	no	further impairment	testing	is	required.	For	3M,	this	ASU	was	effective	beginning	January	1,	2012,	with	early	adoption	permitted	under	certain	conditions.	The	adoption	of	this standard	did	not	have	a	material	impact	on	3M's	consolidated	results	of	operations	or	financial	condition.

In	December	2011,	the	FASB	issued	ASU	No.	2011-11,	Disclosures	About	Offsetting	Assets	and	Liabilities,	and	in	January	2013	issued	ASU	No.	2013-01,	Clarifying the	Scope	of	Disclosures	About	Offsetting	Assets	and	Liabilities.	These	standards	created	new	disclosure	requirements	regarding	the	nature	of	an	entity's	rights	of	setoff and	related	arrangements	associated	with	its	derivative	instruments,	repurchase	agreements,	and	securities	lending	transactions.	Certain	disclosures	of	the	amounts	of certain	instruments	subject	to	enforceable	master	netting	arrangements	are	required,	irrespective	of	whether	the	entity	has	elected	to	offset	those	instruments	in	the statement	of	financial	position.	For	3M,	these	ASUs	were	effective	January	1,	2013	with	retrospective	application	required.	The	additional	disclosures	required	by	these ASUs	are	included	in	Note	11.	Since	these	standards	impact	disclosure	requirements	only,	their	adoption	did	not	have	a	material	impact	on	3M's	consolidated	results	of operations	or	financial	condition.

In	July	2012,	the	FASB	issued	ASU	No.	2012-02,	Testing	Indefinite-Lived	Intangible	Assets	for	Impairment.	Under	this	standard,	entities	testing	long-lived	intangible assets	for	impairment	now	have	an	option	of	performing	a	qualitative	assessment	to	determine	whether	further	impairment	testing	is	necessary.	If	an	entity	determines, on	the	basis	of	qualitative	factors,	that	the	fair	value	of	the	indefinite-lived	intangible	asset	is	more-likely-than-not	less	than	the	carrying	amount,	the	existing	quantitative impairment	test	is	required.	Otherwise,	no	further	impairment	testing	is	required.	For	3M,	this	ASU	was	effective	beginning	January	1,	2013.	The	adoption	of	this standard	did	not	have	a	material	impact	on	3M's	consolidated	results	of	operations	or	financial	condition.

In	February	2013,	the	FASB	issued	ASU	No.	2013-02,	Reporting	of	Amounts	Reclassified	Out	of	Accumulated	Other	Comprehensive	Income.	Under	this	standard, entities	are	required	to	disclose	additional	information	with	respect	to	changes	in	accumulated	other	comprehensive	income	(AOCI)	balances	by	component	and significant	items	reclassified	out	of	AOCI.	Expanded	disclosures	for	presentation	of	changes	in	AOCI	involve	disaggregating	the	total	change	of	each	component	of other	comprehensive	income	(for	example,	unrealized	gains	or	losses	on	available	for	sale	debt	and	equity	securities)	as	well	as	presenting	separately	for	each	such component	the	portion	of	change	in	AOCI	related	to	(1)	amounts	reclassified	into	income	and	(2)	current-period	other	comprehensive	income.	Additionally,	for	amounts reclassified	into	income,	disclosure	in	one	location	is	required,	based	upon	each	specific	AOCI	component,	of	the	amounts	impacting	individual	income	statement	line items.	Disclosure	of	the	income	statement	line	item	impacts	is	required	only	for	components	of	AOCI	reclassified	into	income	in	their	entirety.	Therefore,	disclosure	of the	income	statement	line	items	affected	by	AOCI	components	such	as	net	periodic	benefit	costs	is	not	included.	The	disclosures	required	with	respect	to	income statement	line	item	impacts	are	to	be	made	in	either	the	notes	to	the	consolidated	financial	statements	or	parenthetically	on	the	face	of	the	financial	statements.	For	3M, this	ASU	was	effective	beginning	January	1,	2013.	The	additional	disclosures	required	by	this	ASU	are	included	in	Note	5.	Because	this	standard	only	impacts presentation	and	disclosure	requirements,	its	adoption	did	not	have	a	material	impact	on	3M's	consolidated	results	of	operations	or	financial	condition.

In	March	2013,	the	FASB	issued	ASU	No.	2013-05,	Parent's	Accounting	for	the	Cumulative	Translation	Adjustment	upon	Derecognition	of	Certain	Subsidiaries	or Groups	of	Assets	within	a	Foreign	Entity	or	of	an	Investment	in	a	Foreign	Entity.	This	standard	provides	additional	guidance	with	respect	to	the	reclassification	into income	of	the	cumulative	translation	adjustment	(CTA)	recorded	in	accumulated	other	comprehensive	income	associated	with	a	foreign	entity	of	a	parent	company.	The ASU	differentiates	between	transactions	occurring	within	a	foreign	entity	and	transactions/events	affecting	an	investment	in	a	foreign	entity.	For	transactions	within	a foreign	entity,	the	full	CTA	associated	with	the	foreign	entity	would	be	reclassified	into	income	only	when	the	sale	of	a	subsidiary	or	group	of	net	assets	within	the foreign	entity	represents	the	substantially	complete	liquidation	of	that	foreign	entity.	For	transactions/events	affecting	an	investment	in	a	foreign	entity	(for	example, control	or	ownership	of	shares	in	a	foreign	entity),	the	full	CTA	associated	with	the	foreign	entity	would	be	reclassified	into	income	only	if	the	parent	no	longer	has	a controlling	interest	in	that	foreign	entity	as	a	result	of	the	transaction/event.	In	addition,	acquisitions	of	a	foreign	entity	completed	in	stages	will	trigger	release	of	the CTA	associated	with	an	equity	method	investment	in	that	entity	at	the	point	a	controlling	interest	in	the	foreign	entity	is	obtained.	For	3M,	this	ASU	is	effective prospectively	beginning	January	1,	2014,	with	early	adoption	permitted.	This	ASU	would	impact	3M's	consolidated	results	of	operations	and	financial	condition	only	in the	instance	of	an	event/transaction	as	described	above.

# NOTE	2.		Acquisitions	and	Divestitures

3M	makes	acquisitions	of	certain	businesses	from	time	to	time	that	the	Company	feels	align	with	its	strategic	intent	with	respect	to,	among	other	factors,	growth	markets and	adjacent	product	lines	or	technologies.

There	were	no	acquisitions	that	closed	during	2013.	The	impact	on	the	consolidated	balance	sheet	of	the	purchase	price	allocations	related	to	2012	and	2011	acquisitions,

including	adjustments	relative	to	other	acquisitions	within	the	allocation	period,	follows.	Adjustments	in	2013	to	the	preliminary	purchase	price	allocations	of	other acquisitions	within	the	allocation	period	were	not	material	and	primarily	related	to	the	2012	acquisition	of	Ceradyne,	Inc.	Adjustments	in	2012	to	the	preliminary purchase	price	allocations	of	other	acquisitions	within	the	allocation	period	were	not	material	and	primarily	related	to	the	2011	acquisitions	of	Winterthur	Technologie AG	and	the	business	acquired	from	GPI	Group.

| (Millions) |  | Other |  |
| :--- | :--- | :--- | :--- |
| Asset\t(Liability) | Ceradyne,\tInc. | Acquisitions | Total |
| Accounts\treceivable | $55 | $29 | $84 |
| Inventory | 112 | 13 | 125 |
| Other\tcurrent\tassets | 36 | 1 | 37 |
| Marketable\tsecurities | 250 | — | 250 |
| Property,\tplant,\tand\tequipment | 238 | 3 | 241 |
| Purchased\tfinite-lived\tintangible\tassets | 127 | 86 | 213 |
| Purchased\tindefinite-lived\tintangible\tassets | — | 2 | 2 |
| Purchased\tgoodwill | 198 | 141 | 339 |
| Accounts\tpayable\tand\tother\tliabilities,\tnet\tof\tother\tassets | (100) | (27) | (127) |
| Interest\tbearing\tdebt | (93) | (3) | (96) |
| Deferred\ttax\tasset/(liability) | (25) | 3 | (22) |
| Net\tassets\tacquired | $798 | $248 | $1,046 |
| Supplemental\tinformation: |  |  |  |
| Cash\tpaid | $850 | $248 | $1,098 |
| Less:\tCash\tacquired | 52 | — | 52 |
| Cash\tpaid,\tnet\tof\tcash\tacquired | $798 | $248 | $1,046 |

| (Millions) | Winterthur | Other |  |
| :--- | :--- | :--- | :--- |
| Asset\t(Liability) | Technologie\tAG | Acquisitions | Total |
| Accounts\treceivable | $45 | $61 | $106 |
| Inventory | 69 | 59 | 128 |
| Other\tcurrent\tassets | 6 | 36 | 42 |
| Property,\tplant,\tand\tequipment | 73 | 102 | 175 |
| Purchased\tfinite-lived\tintangible\tassets | 226 | 116 | 342 |
| Purchased\tgoodwill | 147 | 112 | 259 |
| Accounts\tpayable\tand\tother\tliabilities,\tnet\tof\tother\tassets | (70) | (78) | (148) |
| Interest\tbearing\tdebt | (79) | (24) | (103) |
| Deferred\ttax\tasset/(liability) | (58) | (28) | (86) |
| Net\tassets\tacquired | $359 | $356 | $715 |
| Noncontrolling\tinterest | (56) | — | (56) |
| Net\tassets\tacquired\texcluding\tnoncontrolling\tinterest | $303 | $356 | $659 |
| Supplemental\tinformation: |  |  |  |
| Cash\tpaid | $327 | $376 | $703 |
| Less:\tCash\tacquired | 34 | 20 | 54 |
| Cash\tpaid,\tnet\tof\tcash\tacquired | $293 | $356 | $649 |
| Non-cash | 10 | — | 10 |
| Net\tassets\tacquired\texcluding\tnoncontrolling\tinterest | $303 | $356 | $659 |

Goodwill	resulting	from	business	combinations	is	largely	attributable	to	the	existing	workforce	of	the	acquired	businesses	and	synergies	expected	to	arise	after	3M's acquisition	of	these	businesses.	In-process	research	and	development	associated	with	CodeRyte,	Inc.	is	reflected	in	the	preceding	2012	table	as	purchased	indefinite-lived intangible	assets.	Pro	forma	information	related	to	acquisitions	was	not	included	because	the	impact	on	the	Company's	consolidated	results	of	operations	was	not considered	to	be	material.

In	addition	to	business	combinations,	3M	periodically	acquires	certain	tangible	and/or	intangible	assets	and	purchases	interests	in	certain	enterprises	that	do	not otherwise	qualify	for	accounting	as	business	combinations.	These	transactions	are	largely	reflected	as	additional	asset	purchase	and	investment	activity.

# 2013	divestitures:

In	June	2013,	3M	(Consumer	Business)	completed	the	sale	of	its	Scientific	Anglers	and	Ross	Reels	businesses	to	The	Orvis	Company,	Inc.	based	in	Manchester, Vermont.

# 2012	acquisitions:

During	2012,	3M	completed	three	business	combinations.	The	purchase	price	paid	for	these	business	combinations	(net	of	cash	acquired)	and	the	impact	of	other	matters (net)	during	2012	aggregated	to	$1.046	billion.

(1)	In	April	2012,	3M	(Health	Care	Business)	purchased	all	of	the	outstanding	shares	of	CodeRyte,	Inc.,	an	industry	leader	in	clinical	natural	processing	technology	and computer-assisted	coding	solutions	for	healthcare	outpatient	providers,	which	is	headquartered	in	Bethesda,	Maryland.

(2)	In	September	2012,	3M	(Safety	and	Graphics	Business)	purchased	the	net	assets	of	Federal	Signal	Technologies	Group	from	Federal	Signal	Corp.,	for	a	total purchase	price	of	approximately	$104	million.	This	business	focuses	on	electronic	toll	collection	and	parking	management	hardware	and	software	services,	with	primary facilities	spread	throughout	the	United	States	and	in	the	U.K.

(3)	In	November	2012,	3M	(Industrial	Business)	purchased	all	of	the	outstanding	shares	of	Ceradyne,	Inc.	(Ceradyne)	for	$798	million,	net	of	cash	acquired.	The	net assets	acquired	in	this	transaction	included	$250	million	of	marketable	securities	and	$93	million	of	debt,	as	indicated	in	the	preceding	2012	table.	Ceradyne,

headquartered	in	Costa	Mesa,	California,	is	involved	in	the	development	and	production	of	advanced	technical	ceramics	for	demanding	applications	in	the	automotive, oil	and	gas,	solar,	industrial,	electronics	and	defense	industries.

Purchased	identifiable	finite-lived	intangible	assets	related	to	acquisition	activity	in	2012	totaled	$213	million.	The	associated	finite-lived	intangible	assets	acquired	in 2012	will	be	amortized	generally	on	a	straight-line	basis	over	a	weighted-average	life	of	12	years	(lives	ranging	from	two	to	20	years).	Acquired	in-process	research	and development	and	identifiable	intangible	assets	for	which	significant	assumed	renewals	or	extensions	of	underlying	arrangements	impacted	the	determination	of	their useful	lives	were	not	material.

During	2011,	3M	completed	nine	business	combinations.	The	purchase	price	paid	for	these	business	combinations	(net	of	cash	acquired)	and	the	impact	of	other	matters (net)	during	2011	aggregated	to	$649	million.

(1)	In	January	2011,	3M	(Industrial	Business)	purchased	certain	assets	of	Nida-Core	Corp.,	a	manufacturer	of	structural	honeycomb	core	and	fiber-reinforced	foam	core materials	based	in	Port	St.	Lucie,	Florida.

(2)	In	February	2011,	3M	(Industrial	Business)	announced	that	it	completed	its	acquisition	of	all	of	the	outstanding	shares	of	Alpha	Beta	Enterprise	Co.	Ltd.,	a manufacturer	of	box	sealing	tape	and	masking	tape	headquartered	in	Taipei,	Taiwan.

(3)	In	February	2011,	3M	(Consumer	Business)	purchased	all	of	the	outstanding	shares	of	Hybrivet	Systems	Inc.,	a	provider	of	instant-read	products	to	detect	lead	and other	contaminants	and	toxins,	which	is	based	in	Natick,	Massachusetts.

(4)	In	early	March	2011,	3M	(Industrial	Business)	acquired	a	controlling	interest	in	Winterthur	via	completion	of	a	public	tender	offer.	Winterthur,	based	in	Zug, Switzerland,	is	a	leading	global	supplier	of	precision	grinding	technology	serving	customers	in	the	area	of	hard-to-grind	precision	applications	in	industrial,	automotive, aircraft	and	cutting	tools.	As	of	the	settlement	date	of	the	tendered	shares	(the	business	acquisition	date),	3M	owned	approximately	86	percent	of	Winterthur

shares	via	the	tender	and	previous	open	market	share	purchases.	The	purchase	price	paid	in	the	preceding	table	includes	non-cash	consideration	of	$10	million representing	the	business	acquisition	date	fair	value	of	shares	previously	owned	by	3M	as	of	December	31,	2010	and	cash	consideration	paid,	net	of	cash	acquired,	of $293	million	for	subsequently	tendered	and	open	market	purchased	shares	through	the	business	acquisition	date.	Following	the	business	acquisition	date,	3M	purchased the	remaining	outstanding	shares	of	its	consolidated	Winterthur	subsidiary,	increasing	3M's	ownership	interest	to	100	percent	as	of	December	31,	2011	as	discussed	in Note	5.

(5)	In	April	2011,	3M	(Electronics	and	Energy	Business)	purchased	all	of	the	outstanding	shares	of	AP&T	Co.	Ltd.,	based	in	Korea,	which	provides	advanced	sputtering and	plating	services,	materials	and	manufacturing	capabilities	for	flexible	circuits	for	the	mobile	hand-held,	touch-screen	panel	and	display	markets.

(6)	In	April	2011,	3M	(Safety	and	Graphics	Business)	purchased	all	of	the	outstanding	shares	of	Original	Wraps	Inc.,	a	company	specializing	in	the	creative	business development,	technology	and	design	of	personalization	platforms	for	vehicles	and	vehicle	accessories,	which	is	based	in	Golden,	Colorado.

(7)	In	July	2011,	3M	(Industrial	Business)	purchased	all	of	the	outstanding	shares	of	Advanced	Chemistry	&	Technology	Inc.,	a	manufacturer	of	quick-cure,	light-weight polysulfide	sealants	for	aerospace	applications,	which	is	based	in	Garden	Grove,	California.

(8)	In	July	2011,	3M	(Industrial	Business)	purchased	certain	assets	of	Piranha	Plastics	LLC,	based	in	Santa	Clara,	California,	which	provides	plastic	molding	and	paint solutions	to	the	automotive	aftermarket.

(9)	In	October	2011,	3M	(Consumer	Business)	acquired	the	do-it-yourself	and	professional	business	of	GPI	Group.	GPI,	headquartered	in	France,	is	a	manufacturer	and marketer	of	home	improvement	products	such	as	tapes,	hooks,	insulation,	and	floor	protection	products	and	accessories.

Purchased	identifiable	finite-lived	intangible	assets	related	to	acquisition	activity	in	2011	totaled	$342	million.	The	associated	finite-lived	intangible	assets	acquired	in 2011	will	be	amortized	generally	on	a	straight-line	basis	over	a	weighted-average	life	of	14	years	(lives	ranging	from	three	to	20	years).	Acquired	identifiable	intangible assets	for	which	significant	assumed	renewals	or	extensions	of	underlying	arrangements	impacted	the	determination	of	their	useful	lives	were	not	material.

# NOTE	3.		Goodwill	and	Intangible	Assets

There	were	no	acquisitions	that	closed	during	2013.	Purchased	goodwill	from	acquisitions	totaled	$327	million	in	2012,	$41	million	of	which	is	deductible	for	tax purposes.	The	acquisition	activity	in	the	following	table	also	includes	the	net	impact	of	adjustments	to	the	preliminary	allocation	of	purchase	price	for	prior	year acquisitions,	which	increased	goodwill	by	$10	million	in	2013	and	increased	goodwill	by	$12	million	in	2012.	The	amounts	in	the	"Translation	and	other"	column	in	the following	table	primarily	relate	to	changes	in	foreign	currency	exchange	rates.	The	goodwill	balance	by	business	segment	follows:

# Goodwill

As	discussed	in	Note	15,	effective	in	the	first	quarter	of	2013,	3M	completed	a	realignment	of	its	business	segments.	Concurrent	with	this	business	segment	realignment, certain	products	were	also	moved	between	business	segments,	with	the	resulting	impact	reflected	in	the	goodwill	balances	by	business	segment	above	for	all	periods presented.	For	any	product	moves	that	resulted	in	reporting	unit	changes,	the	Company	applied	the	relative	fair	value	method	to	determine	the	impact	on	goodwill	of	the associated	reporting	units.	During	the	first	quarter	of	2013,	the	Company	completed	its	assessment	of	any	potential	goodwill	impairment	for	reporting	units	impacted	by this	new	structure	and	determined	that	no	impairment	existed.	The	Company	also	completed	its	annual	goodwill	impairment	test	in	the	fourth	quarter	of	2013	for	all reporting	units	and	determined	that	no	impairment	existed.	In	addition,	the	Company	had	no	impairments	of	goodwill	in	prior	years.

Acquired	Intangible	Assets

3M	did	not	complete	any	business	combinations	during	2013.	As	a	result,	gross	balances	of	acquired	intangible	assets	were	primarily	impacted	by	changes	in	foreign currency	exchange	rates.	The	gross	carrying	amount	and	accumulated	amortization	of	acquired	intangible	assets	as	of	December	31,	follow:

| (Millions) | 2013 | 2012 |
| :--- | :--- | :--- |
| Patents | $602 | $596 |
| Other\tamortizable\tintangible\tassets\t(primarily\ttradenames\tand\tcustomer\trelated\tintangibles) | 2,445 | 2,456 |
| Total\tgross\tcarrying\tamount | $3,047 | $3,052 |
| Accumulated\tamortization\t—\tpatents | (458) | (421) |
| Accumulated\tamortization\t—\tother | (1,030) | (833) |
| Total\taccumulated\tamortization | $(1,488) | $(1,254) |
| Total\tfinite-lived\tintangible\tassets\t—\tnet | $1,559 | $1,798 |
| Non-amortizable\tintangible\tassets\t(primarily\ttradenames) | 129 | 127 |
| Total\tintangible\tassets\t—\tnet | $1,688 | $1,925 |

3M	has	certain	tradenames	that	are	not	amortized	because	of	the	long-time	established	name	recognition	in	their	respective	industries.

Amortization	expense	for	the	years	ended	December	31	follows:

The	preceding	expected	amortization	expense	is	an	estimate.	Actual	amounts	of	amortization	expense	may	differ	from	estimated	amounts	due	to	additional	intangible asset	acquisitions,	changes	in	foreign	currency	exchange	rates,	impairment	of	intangible	assets,	accelerated	amortization	of	intangible	assets	and	other	events.	3M expenses	the	costs	incurred	to	renew	or	extend	the	term	of	intangible	assets.

# NOTE	4.		Supplemental	Balance	Sheet	Information

Accounts	payable	(included	as	a	separate	line	item	in	the	Consolidated	Balance	Sheet)	includes	drafts	payable	on	demand	of	$24	million	at	December	31,	2013,	and	$74 million	at	December	31,	2012.	Accumulated	depreciation	for	capital	leases	totaled	$85	million	and	$73	million	as	of	December	31,	2013,	and	2012,	respectively.

Additional	supplemental	balance	sheet	information	is	provided	in	the	table	that	follows.

| (Millions) | 2013 | 2012 |
| :--- | :--- | :--- |
| Other\tcurrent\tassets |  |  |
| Prepaid\texpenses\tand\tother | $602 | $555 |
| Deferred\tincome\ttaxes | 502 | 472 |
| Derivative\tassets-current | 76 | 49 |
| Product\tand\tother\tinsurance\treceivables | 99 | 125 |
| Total\tother\tcurrent\tassets | $1,279 | $1,201 |
| Investments |  |  |
| Equity\tmethod | $69 | $105 |
| Cost\tmethod | 45 | 47 |
| Other\tinvestments | 8 | 11 |
| Total\tinvestments | $122 | $163 |
| Property,\tplant\tand\tequipment\t-\tat\tcost |  |  |
| Land | $411 | $413 |
| Buildings\tand\tleasehold\timprovements | 7,062 | 6,975 |
| Machinery\tand\tequipment |  |  |
|  | 14,665 | 14,190 |
| Construction\tin\tprogress | 772 | 791 |
| Capital\tleases | 158 | 156 |
| Gross\tproperty,\tplant\tand\tequipment | 23,068 | 22,525 |
| Accumulated\tdepreciation | (14,416) | (14,147) |
| Property,\tplant\tand\tequipment\t-\tnet | $8,652 | $8,378 |
| Other\tassets |  |  |
| Deferred\tincome\ttaxes | $360 | $578 |
| Product\tand\tother\tinsurance\treceivables | 96 | 139 |
| Cash\tsurrender\tvalue\tof\tlife\tinsurance\tpolicies | 236 | 230 |
| Other\tassets | 288 | 270 |
| Total\tother\tassets | $980 | $1,217 |
| Other\tcurrent\tliabilities |  |  |
| Accrued\ttrade\tpayables | $547 | $516 |

| Deferred	income | 521 | 471 |
| :--- | :--- | :--- |
| Derivative\tliabilities | 103 | 106 |
| Dividends\tpayable | 567 | — |
| Employee\tbenefits\tand\twithholdings | 195 | 178 |
| Product\tand\tother\tclaims | 119 | 147 |
| Property\tand\tother\ttaxes | 88 | 87 |
| Pension\tand\tpostretirement\tbenefits | 61 | 55 |
| Deferred\tincome\ttaxes | 37 | 45 |
| Other | 653 | 676 |
| Total\tother\tcurrent\tliabilities | $2,891 | $2,281 |
| Other\tliabilities |  |  |
| Long\tterm\tincome\ttaxes\tpayable | $472 | $454 |
| Employee\tbenefits | 315 | 332 |
| Product\tand\tother\tclaims | 314 | 314 |
| Capital\tlease\tobligations | 58 | 71 |
| Deferred\tincome | 19 | 29 |
| Deferred\tincome\ttaxes | 538 | 167 |
| Other | 268 | 267 |
| Total\tother\tliabilities | $1,984 | $1,634 |

# NOTE	5.		Supplemental	Equity	and	Comprehensive	Income	Information

3M	has	historically	declared	and	paid	dividends	in	the	same	quarter.	In	December	2013,	3M's	Board	of	Directors	declared	a	first-quarter	2014	dividend	of	$0.855	per share	(payable	in	March	2014).	This	reduced	3M's	stockholders	equity	and	increased	other	current	liabilities	as	of	December	31,	2013	by	$567	million.	This	resulted	in total	year	2013	declared	dividends	of	$3.395	per	share,	with	$2.54	per	share	paid	in	2013	and	the	additional	$0.855	per	share	to	be	paid	in	March	2014.

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

|  |  | Defined	Benefit | Debt	and | Cash	Flow | Accumulated |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Pension\tand | Equity | Hedging | Other |
|  | Cumulative | Postretirement | Securities, | Instruments, | Comprehensive |
|  | Translation | Plans | Unrealized | Unrealized | Income |
| (Millions) | Adjustment | Adjustment | Gain\t(Loss) | Gain\t(Loss) | (Loss) |
| Balance\tat\tDecember\t31,\t2010,\tnet\tof\ttax | $374 | $(3,879) | $(6) | $(32) | $(3,543) |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |  |  |
| Amounts\tbefore\treclassifications | (253) | (2,452) | (10) | (39) | (2,754) |
| Amounts\treclassified\tout | — | 475 | 10 | 123 | 608 |
| Total\tother\tcomprehensive\tincome\t(loss),\tbefore\ttax | (253) | (1,977) | — | 84 | (2,146) |
| Tax\teffect | (7) | 701 | — | (30) | 664 |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (260) | (1,276) | — | 54 | (1,482) |
| Balance\tat\tDecember\t31,\t2011,\tnet\tof\ttax | $114 | $(5,155) | $(6) | $22 | $(5,025) |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |  |  |
| Amounts\tbefore\treclassifications | 133 | (204) | 6 | 3 | (62) |
| Amounts\treclassified\tout | — | 615 | — | (72) | 543 |
| Total\tother\tcomprehensive\tincome\t(loss),\tbefore\ttax | 133 | 411 | 6 | (69) | 481 |
| Tax\teffect | (17) | (211) | (2) | 24 | (206) |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | 116 | 200 | 4 | (45) | 275 |
| Balance\tat\tDecember\t31,\t2012,\tnet\tof\ttax | $230 | $(4,955) | $(2) | $(23) | $(4,750) |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |  |  |
| Amounts\tbefore\treclassifications | (462) | 1,361 | — | (98) | 801 |
| Amounts\treclassified\tout | — | 569 | — | 122 | 691 |
| Total\tother\tcomprehensive\tincome\t(loss),\tbefore\ttax | (462) | 1,930 | — | 24 | 1,492 |
| Tax\teffect | 44 | (690) | — | (9) | (655) |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (418) | 1,240 | — | 15 | 837 |
| Balance\tat\tDecember\t31,\t2013,\tnet\tof\ttax | $(188) | $(3,715) | $(2) | $(8) | $(3,913) |

Income	taxes	are	not	provided	for	foreign	translation	relating	to	permanent	investments	in	international	subsidiaries,	but	tax	effects	within	cumulative	translation	does include	impacts	from	items	such	as	net	investment	hedge	transactions.	Reclassification	adjustments	are	made	to	avoid	double	counting	in	comprehensive	income	items that	are	also	recorded	as	part	of	net	income.

The	previously	reported	before-tax	amounts	of	other	comprehensive	income	before	reclassifications	and	amounts	reclassified	out	of	other	comprehensive	income	for	the years	ended	December	31,	2012	and	2011	relative	to	foreign	currency	forward	contracts	in	the	table	above	and	the	table	below	were	impacted	by	the	immaterial revisions	discussed	in	Note	11.

# Reclassifications	out	of	Accumulated	Other	Comprehensive	Income	Attributable	to	3M

Amount	Reclassified	from

(Millions)

Accumulated	Other	Comprehensive	Income

| Details	about	Accumulated	Other<br>Comprehensive	Income	Components | Year	ended<br>December	31,<br>2013 | Year	ended<br>December	31,<br>2012 | Year	ended<br>December	31,<br>2011 | Location	on	Income<br>Statement |
| :--- | :--- | :--- | :--- | :--- |
| Gains\t(losses)\tassociated\twith,\tdefined\tbenefit\tpension |  |  |  |  |
| and\tpostretirement\tplans\tamortization |  |  |  |  |
| Transition\tasset | $1 | $1 | $2 | See\tNote\t10 |
| Prior\tservice\tbenefit | 77 | 84 | 75 | See\tNote\t10 |
| Net\tactuarial\tloss | (647) | (700) | (552) | See\tNote\t10 |
| Total\tbefore\ttax | (569) | (615) | (475) |  |
| Tax\teffect | 197 | 219 | 168 | Provision\tfor\tincome\ttaxes |
| Net\tof\ttax | $(372) | $(396) | $(307) |  |
| Debt\tand\tequity\tsecurity\tgains\t(losses) |  |  |  |  |
| Sales\tor\timpairments\tof\tsecurities | $— | $— | $(10) | Selling,\tgeneral\tand\tadministrative\texpenses |
| Total\tbefore\ttax | — | — | (10) |  |
| Tax\teffect | — | — | 4 | Provision\tfor\tincome\ttaxes |
| Net\tof\ttax | $— | $— | $(6) |  |
| Cash\tflow\thedging\tinstruments\tgains\t(losses) |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | $(11) | $41 | $(87) | Cost\tof\tsales |
| Foreign\tcurrency\tforward\tcontracts | (108) | 42 | (30) | Interest\texpense |
| Commodity\tprice\tswap\tcontracts | (2) | (10) | (6) | Cost\tof\tsales |
| Interest\trate\tswap\tcontracts | (1) | (1) | — | Interest\texpense |
| Total\tbefore\ttax | (122) | 72 | (123) |  |
| Tax\teffect | 45 | (26) | 44 | Provision\tfor\tincome\ttaxes |
| Net\tof\ttax | $(77) | $46 | $(79) |  |
| Total\treclassifications\tfor\tthe\tperiod,\tnet\tof\ttax | $(449) | $(350) | $(392) |  |

# Purchase	and	Sale	of	Subsidiary	Shares

In	March	2013,	3M	sold	shares	in	3M	India	Limited,	a	subsidiary	of	the	Company,	in	return	for	$8	million.	The	noncontrolling	interest	shares	of	this	subsidiary	trade	on a	public	exchange	in	India.	This	sale	of	shares	complied	with	an	amendment	to	Indian	securities	regulations	that	required	3M	India	Limited,	as	a	listed	company,	to achieve	a	minimum	public	shareholding	of	at	least	25	percent.	As	a	result	of	this	transaction,	3M's	ownership	in	3M	India	Limited	was	reduced	from	76	percent	to	75 percent.	The	$8	million	received	in	the	first	quarter	of	2013	was	classified	as	other	financing	activity	in	the	consolidated	statement	of	cash	flows.	Because	the	Company retained	its	controlling	interest,	the	sales	resulted	in	an	increase	of	3M	Company	shareholder's	equity	of	$7	million	and	an	increase	in	noncontrolling	interest	of	$1 million.

As	discussed	in	Note	2,	in	early	March	2011,	3M	acquired	a	controlling	interest	in	Winterthur	Technologie	AG	(Winterthur),	making	Winterthur	a	consolidated subsidiary	as	of	that	business	acquisition	date.	Subsequent	to	this	business	acquisition	date,	3M	purchased	additional	outstanding	shares	of	its	Winterthur	subsidiary increasing	3M's	ownership	interest	from	approximately	86	percent	as	of	the	business	acquisition	date	to	100	percent	as	of	December	31,	2011.	The	$57	million	of	cash paid	in	2011	as	a	result	of	these	additional	purchases	of	Winterthur	shares	was	classified	as	other	financing	activity	in	the	consolidated	statement	of	cash	flows.	These additional	purchases	did	not	result	in	a

material	transfer	from	noncontrolling	interest	to	3M	Company	shareholders'	equity.	In	addition,	during	2011,	3M	sold	a	noncontrolling	interest	in	a	newly	formed subsidiary	for	an	immaterial	amount,	which	was	also	classified	as	other	financing	activity	in	the	consolidated	statement	of	cash	flows.

# NOTE	6.		Supplemental	Cash	Flow	Information

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Cash\tincome\ttax\tpayments,\tnet\tof\trefunds | $1,803 | $1,717 | $1,542 |
| Cash\tinterest\tpayments | 169 | 166 | 219 |
| Capitalized\tinterest | 21 | 23 | 19 |

Cash	interest	payments	include	interest	paid	on	debt	and	capital	lease	balances,	including	net	interest	payments/receipts	related	to	accreted	debt	discounts/premiums,	as well	as	net	interest	payments/receipts	associated	with	interest	rate	swap	contracts.

Individual	amounts	in	the	Consolidated	Statement	of	Cash	Flows	exclude	the	impacts	of	acquisitions,	divestitures	and	exchange	rate	impacts,	which	are	presented separately.

Transactions	related	to	investing	and	financing	activities	with	significant	non-cash	components	are	as	follows:

·																		During	the	third	quarter	of	2013,	3M	sold	its	equity	interest	in	a	non-strategic	investment	in	exchange	for	a	note	receivable	of	approximately	$24	million,	which is	considered	non-cash	investing	activity.	As	a	result	of	this	transaction,	in	the	third	quarter	of	2013,	3M	recorded	a	pre-tax	gain	of	$18	million	in	its	Health Care	business	segment.	In	October	2013,	cash	was	received	for	the	note	receivable	and	is	reflected	in	other	investing	activity	in	the	consolidated	statement	of cash	flows	for	the	total	year	2013.

·																		During	the	second	quarter	of	2013,	the	Company's	Sumitomo	3M	Limited	subsidiary	moved	its	administrative	headquarters	to	a	new	leased	location	and	sold the	former	site	under	an	installment	sale	arrangement.	As	a	result,	at	the	time	of	the	closing	of	the	sale	transaction,	the	Company	received	certain	cash	proceeds (included	in	proceeds	from	sale	of	property,	plant	and	equipment	in	the	consolidated	statement	of	cash	flows)	and	recorded	a	note	receivable	(due	in	quarterly installments	through	the	first	quarter	of	2016)	of	$78	million	and	deferred	profit	of	$49	million	(both	based	on	the	foreign	currency	exchange	rate	at	the	time	of closing).	Remaining	quarterly	installments	are	due	through	the	first	quarter	of	2016	and	will	be	included	in	other	investing	activities	in	the	consolidated statement	of	cash	flows.	Deferred	profit	is	reduced	and	recognized	into	income	in	connection	with	such	quarterly	installments.

In	addition,	as	discussed	in	Note	5,	during	the	fourth	quarter,	3M's	Board	of	Directors	declared	a	first-quarter	2014	dividend	of	$0.855	per	share	(payable	in	March 2014).	This	reduced	3M's	stockholders	equity	and	increased	other	current	liabilities	as	of	December	31,	2013	by	$567	million.	3M	has	historically	declared	and paid	dividends	in	the	same	quarter;	however,	in	this	case,	the	cash	outlay	will	occur	in	the	first	quarter	of	2014.

# NOTE	7.		Income	Taxes

# Income	Before	Income	Taxes

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| United\tStates | $3,194 | $2,902 | $2,516 |
| International | 3,368 | 3,449 | 3,515 |
| Total | $6,562 | $6,351 | $6,031 |

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Currently\tpayable |  |  |  |
| Federal | $948 | $743 | $431 |
| State | 91 | 75 | 51 |
| International | 901 | 918 | 861 |
| Deferred |  |  |  |
| Federal | (123) | (3) | 181 |
| State | (2) | 10 | 12 |
| International | 26 | 97 | 138 |
| Total | $1,841 | $1,840 | $1,674 |

# Components	of	Deferred	Tax	Assets	and	Liabilities

| (Millions) | 2013 | 2012 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Accruals\tnot\tcurrently\tdeductible |  |  |
| Employee\tbenefit\tcosts | $140 | $115 |
| Product\tand\tother\tclaims | 155 | 161 |
| Miscellaneous\taccruals | 130 | 137 |
| Pension\tcosts | 447 | 969 |
| Stock-based\tcompensation | 322 | 415 |
| Net\toperating/capital\tloss\tcarryforwards | 225 | 304 |
| Foreign\ttax\tcredits | 316 | 285 |
| Inventory | 221 | 189 |
| Other\t-\tnet | — | 18 |
| Gross\tdeferred\ttax\tassets | 1,956 | 2,593 |
| Valuation\tallowance | (23) | (29) |
| Total\tdeferred\ttax\tassets | $1,933 | $2,564 |
| Deferred\ttax\tliabilities: |  |  |
| Product\tand\tother\tinsurance\treceivables | $(46) | $(60) |
| Accelerated\tdepreciation | (813) | (858) |
| Intangible\tamortization | (780) | (808) |
| Other | (7) | — |
| Total\tdeferred\ttax\tliabilities | $(1,646) | $(1,726) |
| Net\tdeferred\ttax\tassets | $287 | $838 |

The	net	deferred	tax	assets	are	included	as	components	of	Other	Current	Assets,	Other	Assets,	Other	Current	Liabilities,	and	Other	Liabilities	within	the	Consolidated Balance	Sheet.	See	Note	4	"Supplemental	Balance	Sheet	Information"	for	further	details.

As	of	December	31,	2013,	the	Company	had	tax	effected	operating	loss,	capital	loss,	and	tax	credit	carryovers	for	federal,	state,	and	international	of	approximately	$30 million,	$4	million,	and	$191	million	(before	valuation	allowances),

respectively.	The	federal	tax	attribute	carryovers	will	expire	after	16	to	17	years,	the	state	after	five	to	10	years,	and	the	majority	of	international	after	six	years	with	the remaining	international	expiring	in	one	year	or	with	an	indefinite	carryover	period.	The	tax	attributes	being	carried	over	arise	as	certain	jurisdictions	may	have	tax	losses or	may	have	inabilities	to	utilize	certain	losses	without	the	same	type	of	taxable	income.	As	of	December	31,	2013,	the	Company	has	provided	$23	million	of	valuation allowance	against	certain	of	these	deferred	tax	assets	based	on	management's	determination	that	it	is	more-likely-than-not	that	the	tax	benefits	related	to	these	assets	will not	be	realized.	The	valuation	allowance	was	reduced	in	2013	mainly	due	to	the	expiration	of	the	tax	attributes.

During	2013,	the	Company	contributed	$476	million	to	its	U.S.	and	international	pension	plans	and	$6	million	to	its	postretirement	plans.	During	2012,	the	Company contributed	$1.079	billion	to	its	U.S.	and	international	pension	plans	and	$67	million	to	its	postretirement	plans.	During	2011,	the	Company	contributed	$517	million	to its	U.S.	and	international	pension	plans	and	$65	million	to	its	postretirement	plans.	The	current	income	tax	provision	includes	a	benefit	for	the	pension	contributions;	the deferred	tax	provision	includes	a	cost	for	the	related	temporary	difference.

# Reconciliation	of	Effective	Income	Tax	Rate

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Statutory\tU.S.\ttax\trate | 35.0% | 35.0% | 35.0% |
| State\tincome\ttaxes\t-\tnet\tof\tfederal\tbenefit | 0.9 | 0.9 | 0.7 |
| International\tincome\ttaxes\t-\tnet | (6.3) | (4.2) | (4.6) |
| U.S.\tresearch\tand\tdevelopment\tcredit | (0.7) | — | (0.5) |
| Reserves\tfor\ttax\tcontingencies | 1.2 | (1.9) | (1.2) |
| Domestic\tManufacturer's\tdeduction | (1.6) | (1.2) | (1.5) |
| All\tother\t-\tnet | (0.4) | 0.4 | (0.1) |
| Effective\tworldwide\ttax\trate | 28.1% | 29.0% | 27.8% |

The	effective	tax	rate	for	2013	was	28.1	percent,	compared	to	29.0	percent	in	2012,	a	decrease	of	0.9	percentage	points,	impacted	by	many	factors.	Factors	that	decreased the	Company's	effective	tax	rate	included	international	taxes	as	a	result	of	changes	to	the	geographic	mix	of	income	before	taxes,	the	reinstatement	of	the	U.S.	research

and	development	credit	in	2013,	an	increase	in	the	domestic	manufacturer's	deduction	benefit,	the	restoration	of	tax	basis	on	certain	assets	for	which	depreciation deductions	were	previously	limited,	and	other	items.	Combined,	these	factors	decreased	the	Company's	effective	tax	rate	by	4.0	percentage	points.	This	benefit	was partially	offset	by	factors	that	increased	the	effective	tax	rate	by	3.1	percentage	points,	which	largely	related	to	adjustments	to	3M's	income	tax	reserves	for	2013	when compared	to	2012.

The	effective	tax	rate	for	2012	was	29.0	percent,	compared	to	27.8	percent	in	2011,	an	increase	of	1.2	percentage	points,	impacted	by	many	factors.	The	primary	factors that	increased	the	Company's	effective	tax	rate	year-on-year	include	international	taxes,	specifically	with	respect	to	the	corporate	reorganization	of	a	wholly	owned international	subsidiary	(which	benefited	2011),	state	income	taxes,	lower	domestic	manufacturer's	deduction,	and	the	lapse	of	the	U.S.	research	and	development credit.	These	and	other	factors,	when	compared	to	2011,	increased	the	2012	effective	tax	rate	by	2.1	percentage	points.	Factors	that	decreased	the	Company's	effective tax	rate	year-on-year	include	international	taxes	as	a	result	of	changes	to	the	geographic	mix	of	income	before	taxes	and	adjustments	to	its	income	tax	reserves.	These factors,	when	compared	to	2011,	decreased	the	effective	tax	rate	0.9	percentage	points.

The	Company	files	income	tax	returns	in	the	U.S.	federal	jurisdiction,	and	various	states	and	foreign	jurisdictions.	With	few	exceptions,	the	Company	is	no	longer subject	to	U.S.	federal,	state	and	local,	or	non-U.S.	income	tax	examinations	by	tax	authorities	for	years	before	2004.

The	IRS	completed	its	field	examination	of	the	Company's	U.S.	federal	income	tax	returns	for	the	years	2005	through	2007	in	the	fourth	quarter	of	2009.	The	Company protested	certain	IRS	positions	within	these	tax	years	and	entered	into	the	administrative	appeals	process	with	the	IRS	during	the	first	quarter	of	2010.	During	the	first quarter	of	2010,	the	IRS	completed	its	field	examination	of	the	Company's	U.S.	federal	income	tax	return	for	the	2008	year.	The	Company	protested	certain	IRS positions	for	2008	and	entered	into	the	administrative	appeals	process	with	the	IRS	during	the	second	quarter	of	2010.	During	the	first	quarter	of	2011,	the	IRS	completed its	field	examination	of	the	Company's	U.S.	federal	income	tax	return	for	the	2009	year.	The	Company	protested	certain	IRS	positions	for	2009	and	entered	into	the administrative	appeals	process	with	the	IRS	during	the	second	quarter	of	2011.	During	the	first	quarter	of	2012,	the	IRS	completed	its	field	examination	of	the Company's	U.S.	federal	income	tax	return	for	the	2010	year.	The	Company	protested	certain	IRS	positions	for	2010	and	entered	into	the	administrative	appeals	process with	the	IRS	during	the

second	quarter	of	2012.	In	December	2012,	the	Company	received	a	statutory	notice	of	deficiency	for	the	2006	year.	The	Company	filed	a	petition	in	Tax	Court	in	the first	quarter	of	2013	relating	to	the	2006	tax	year.

Currently,	the	Company	is	under	examination	by	the	IRS	for	its	U.S.	federal	income	tax	returns	for	the	years	2011,	2012,	and	2013.	It	is	anticipated	that	the	IRS	will complete	its	examination	of	the	Company	for	2011	and	2012	by	the	end	of	the	first	quarter	of	2014	and	for	2013	by	the	end	of	the	first	quarter	of	2015.	As	of December	31,	2013,	the	IRS	has	not	proposed	any	significant	adjustments	to	the	Company's	tax	positions	for	which	the	Company	is	not	adequately	reserved.

During	the	first	quarter	of	2010,	the	Company	paid	the	agreed	upon	assessments	for	the	2005	tax	year.	During	the	second	quarter	of	2010,	the	Company	paid	the	agreed upon	assessments	for	the	2008	tax	year.	During	the	second	quarter	of	2011,	the	Company	received	a	refund	from	the	IRS	for	the	2004	tax	year.	During	the	first	quarter	of 2012,	the	Company	paid	the	agreed	upon	assessments	for	the	2010	tax	year.	Payments	relating	to	other	proposed	assessments	arising	from	the	2005	through	2013 examinations	may	not	be	made	until	a	final	agreement	is	reached	between	the	Company	and	the	IRS	on	such	assessments	or	upon	a	final	resolution	resulting	from	the administrative	appeals	process	or	judicial	action.	In	addition	to	the	U.S.	federal	examination,	there	is	also	limited	audit	activity	in	several	U.S.	state	and	foreign jurisdictions.

3M	anticipates	changes	to	the	Company's	uncertain	tax	positions	due	to	the	closing	of	various	audit	years	mentioned	above.	Currently,	the	Company	is	not	able	to reasonably	estimate	the	amount	by	which	the	liability	for	unrecognized	tax	benefits	will	increase	or	decrease	during	the	next	12	months	as	a	result	of	the	ongoing	income tax	authority	examinations.

A	reconciliation	of	the	beginning	and	ending	amount	of	gross	unrecognized	tax	benefits	(UTB)	is	as	follows:

# Federal,	State	and	Foreign	Tax

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Gross\tUTB\tBalance\tat\tJanuary\t1 | $528 | $594 | $622 |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | 97 | 80 | 92 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 158 | 114 | 69 |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (29) | (120) | (123) |
| Settlements | (17) | (50) | 9 |
| Reductions\tdue\tto\tlapse\tof\tapplicable\tstatute\tof\tlimitations | (78) | (90) | (75) |
| Gross\tUTB\tBalance\tat\tDecember\t31 | $659 | $528 | $594 |
| Net\tUTB\timpacting\tthe\teffective\ttax\trate\tat\tDecember\t31 | $262 | $185 | $295 |

The	total	amount	of	UTB,	if	recognized,	would	affect	the	effective	tax	rate	by	$262	million	as	of	December	31,	2013,	$185	million	as	of	December	31,	2012,	and	$295 million	as	of	December	31,	2011.	The	ending	net	UTB	results	from	adjusting	the	gross	balance	for	items	such	as	Federal,	State,	and	non-U.S.	deferred	items,	interest	and penalties,	and	deductible	taxes.	The	net	UTB	is	included	as	components	of	Other	Current	Assets,	Other	Current	Liabilities,	Accrued	Income	Taxes,	and	Other	Liabilities within	the	Consolidated	Balance	Sheet.

The	Company	recognizes	interest	and	penalties	accrued	related	to	unrecognized	tax	benefits	in	tax	expense.	The	Company	recognized	in	the	consolidated	statement	of income	on	a	gross	basis	approximately	$22	million	of	expense,	$12	million	of	benefit,	and	$1	million	of	benefit	in	2013,	2012,	and	2011,	respectively.	At	December	31, 2013	and	December	31,	2012,	accrued	interest	and	penalties	in	the	consolidated	balance	sheet	on	a	gross	basis	were	$62	million	and	$44	million,	respectively.	Included in	these	interest	and	penalty	amounts	are	interest	and	penalties	related	to	tax	positions	for	which	the	ultimate	deductibility	is	highly	certain	but	for	which	there	is uncertainty	about	the	timing	of	such	deductibility.	Because	of	the	impact	of	deferred	tax	accounting,	other	than	interest	and	penalties,	the	disallowance	of	the	shorter deductibility	period	would	not	affect	the	annual	effective	tax	rate	but	would	accelerate	the	payment	of	cash	to	the	taxing	authority	to	an	earlier	period.

As	a	result	of	certain	employment	commitments	and	capital	investments	made	by	3M,	income	from	manufacturing	activities	in	China,	Taiwan,	Korea,	Brazil,	and Singapore	is	subject	to	reduced	tax	rates	or,	in	some	cases,	is	exempt	from	tax	for	years	through	2013,	2016,	2018,	2023,	and	2023,	respectively.	The	income	tax benefits	attributable	to	the	tax	status	of	these	subsidiaries	are	estimated	to	be	$87	million	(13	cents	per	diluted	share)	in	2013,	$64	million	(9	cents	per	diluted	share)	in 2012,	and	$77	million	(11	cents	per	diluted	share)	in	2011.

The	Company	has	not	provided	deferred	taxes	on	unremitted	earnings	attributable	to	international	companies	that	have	been	considered	to	be	reinvested	indefinitely. These	earnings	relate	to	ongoing	operations	and	were	approximately	$9.7	billion	as	of	December	31,	2013.	Because	of	the	availability	of	U.S.	foreign	tax	credits,	it	is	not practicable	to	determine	the	income	tax	liability	that	would	be	payable	if	such	earnings	were	not	indefinitely	reinvested.

# NOTE	8.		Marketable	Securities

The	Company	invests	in	agency	securities,	corporate	securities,	asset-backed	securities	and	other	securities.	The	following	is	a	summary	of	amounts	recorded	on	the Consolidated	Balance	Sheet	for	marketable	securities	(current	and	non-current).

| (Millions) | December	31,<br>2013 | December	31,<br>2012 |
| :--- | :--- | :--- |
| U.S.\tgovernment\tagency\tsecurities | $103 | $162 |
| Foreign\tgovernment\tagency\tsecurities | 30 | 16 |
| Corporate\tdebt\tsecurities | 143 | 471 |
| Commercial\tpaper | 60 | 116 |
| Certificates\tof\tdeposit/time\tdeposits | 20 | 41 |
| U.S.\ttreasury\tsecurities | — | 54 |
| U.S.\tmunicipal\tsecurities | 2 | 13 |
| Asset-backed\tsecurities: |  |  |
| Automobile\tloan\trelated | 287 | 567 |
| Credit\tcard\trelated | 52 | 123 |
| Equipment\tlease\trelated | 30 | 54 |
| Other | 29 | 31 |
| Asset-backed\tsecurities\ttotal | 398 | 775 |
| Current\tmarketable\tsecurities | $756 | $1,648 |
| U.S.\tgovernment\tagency\tsecurities | $131 | $125 |
| Foreign\tgovernment\tagency\tsecurities | 95 | 51 |
| Corporate\tdebt\tsecurities | 638 | 494 |
| Certificates\tof\tdeposit/time\tdeposits | 20 | — |
| U.S.\ttreasury\tsecurities | 49 | 18 |
| U.S.\tmunicipal\tsecurities | — | 14 |
| Auction\trate\tsecurities | 11 | 7 |
| Asset-backed\tsecurities: |  |  |
| Automobile\tloan\trelated | 298 | 375 |
| Credit\tcard\trelated | 128 | 34 |
| Equipment\tlease\trelated | 37 | 36 |
| Other | 46 | 8 |
| Asset-backed\tsecurities\ttotal | 509 | 453 |
| Non-current\tmarketable\tsecurities | $1,453 | $1,162 |
| Total\tmarketable\tsecurities | $2,209 | $2,810 |

Classification	of	marketable	securities	as	current	or	non-current	is	dependent	upon	management's	intended	holding	period,	the	security's	maturity	date	and	liquidity considerations	based	on	market	conditions.	If	management	intends	to	hold	the	securities	for	longer	than	one	year	as	of	the	balance	sheet	date,	they	are	classified	as	non- current.	At	December	31,	2013,	gross	unrealized	losses	totaled	approximately	$5	million	(pre-tax),	while	gross	unrealized	gains	totaled	approximately	$1	million	(pre- tax).	At	December	31,	2012,	gross	unrealized	losses	totaled	approximately	$6	million	(pre-tax),	while	gross	unrealized	gains	totaled	approximately	$3	million	(pre-tax). Refer	to	Note	5	for	a	table	that	provides	the	net	realized	gains	(losses)	related	to	sales	or	impairments	of	debt	and	equity	securities,	which	includes	marketable	securities. The	gross	amounts	of	the	realized	gains	or	losses	were	not	material.	Cost	of	securities	sold	use	the	first	in,	first	out	(FIFO)	method.	Since	these	marketable	securities	are classified	as	available-for-sale	securities,	changes	in	fair	value	will	flow	through	other	comprehensive	income,	with	amounts	reclassified	out	of	other	comprehensive income	into	earnings	upon	sale	or	"other-than-temporary"	impairment.

3M	reviews	impairments	associated	with	its	marketable	securities	in	accordance	with	the	measurement	guidance	provided	by	ASC	320,	Investments-Debt	and	Equity Securities,	when	determining	the	classification	of	the	impairment	as	"temporary"	or	"other-than-temporary".	A	temporary	impairment	charge	results	in	an	unrealized	loss being	recorded	in	the	other	comprehensive	income	component	of	shareholders'	equity.	Such	an	unrealized	loss	does	not	reduce	net	income	attributable	to	3M	for	the applicable	accounting	period	because	the	loss	is	not	viewed	as	other-than-temporary.	The	factors	evaluated	to	differentiate	between	temporary	and	other-than-temporary include	the	projected	future	cash	flows,	credit	ratings	actions,	and	assessment	of	the	credit	quality	of	the	underlying	collateral,	as	well	as	other	factors.

The	balance	at	December	31,	2013	for	marketable	securities	by	contractual	maturity	are	shown	below.	Actual	maturities	may	differ	from	contractual	maturities	because the	issuers	of	the	securities	may	have	the	right	to	prepay	obligations	without	prepayment	penalties.

3M	has	a	diversified	marketable	securities	portfolio	of	$2.209	billion	as	of	December	31,	2013.	Within	this	portfolio,	current	and	long-term	asset-backed	securities

(estimated	fair	value	of	$907	million)	primarily	include	interests	in	automobile	loans,	credit	cards	and	equipment	leases.	3M's	investment	policy	allows	investments	in asset-backed	securities	with	minimum	credit	ratings	of	Aa2	by	Moody's	or	AA	by	S&P	or	Fitch.	At	December	31,	2013,	all	asset-backed	security	investments	were	in compliance	with	this	policy.	Approximately	98.1	percent	of	all	asset-backed	security	investments	were	rated	AAA	or	A-1+	by	Standard	&	Poor's	and/or	Aaa	or	P-1	by Moody's	Investors	Service	and/or	AAA	or	F1+	by	Fitch	Ratings.

3M's	marketable	securities	portfolio	includes	auction	rate	securities	that	represent	interests	in	investment	grade	credit	default	swaps;	however,	currently	these	holdings comprise	less	than	one	percent	of	this	portfolio.	The	estimated	fair	value	of	auction	rate	securities	are	$11	million	and	$7	million	as	of	December	31,	2013	and	2012, respectively.	Gross	unrealized	losses	within	accumulated	other	comprehensive	income	related	to	auction	rate	securities	totaled	$2	million	(pre-tax)	and	$6	million	(pre- tax)	as	of	December	31,	2013	and	2012,	respectively.	As	of	December	31,	2013,	auction	rate	securities	associated	with	these	balances	have	been	in	a	loss	position	for more	than	12	months.	Since	the	second	half	of	2007,	these	auction	rate	securities	failed	to	auction	due	to	sell	orders	exceeding	buy	orders.	Liquidity	for	these	auction- rate	securities	is	typically	provided	by	an	auction	process	that	resets	the	applicable	interest	rate	at	pre-determined	intervals,	usually	every	7,	28,	35,	or	90	days.	The	funds associated	with	failed	auctions	will	not	be	accessible	until	a	successful	auction	occurs	or	a	buyer	is	found	outside	of	the	auction	process.	Refer	to	Note	12	for	a	table	that reconciles	the	beginning	and	ending	balances	of	auction	rate	securities.

# NOTE	9.		Long-Term	Debt	and	Short-Term	Borrowings

The	following	debt	tables	reflect	interest	rates,	including	the	effects	of	interest	rate	swaps,	as	of	December	31,	2013.	Carrying	value	includes	the	impact	of derivative/hedging	activity.	Long-term	debt	and	short-term	borrowings	as	of	December	31	consisted	of	the	following:

# Long-Term	Debt

|  | Currency/ | Effective | Final |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) | Fixed\tvs. | Interest | Maturity | Carrying\tValue |  |
| Description\t/\t2013\tPrincipal\tAmount | Floating | Rate | Date | 2013 | 2012 |
| Eurobond\t(775\tmillion\tEuros) | Euro\tFixed | 4.30% | 2014 | $1,075 | $1,034 |
| Medium-term\tnote\t($1\tbillion) | USD\tFixed | 1.62% | 2016 | 995 | 994 |
| Medium-term\tnote | USD\tFixed | —% | — | — | 850 |
| 30-year\tbond\t($750\tmillion) | USD\tFixed | 5.73% | 2037 | 748 | 747 |
| Medium-term\tnote\t($650\tmillion) | USD\tFixed | 1.10% | 2017 | 648 | 647 |
| Medium-term\tnote\t($600\tmillion) | USD\tFixed | 2.17% | 2022 | 592 | 592 |
| Eurobond\t(300\tmillion\tEuros) | Euro\tFixed | 1.97% | 2021 | 411 | — |
| Eurobond\t(300\tmillion\tEuros) | Euro\tFloating | 0.57% | 2021 | 404 | — |
| Eurobond\t(250\tmillion\tEuros) | Euro\tFloating | 0.43% | 2014 | 349 | 349 |
| 30-year\tdebenture\t($330\tmillion) | USD\tFixed | 6.01% | 2028 | 346 | 347 |
| UK\tborrowing\t(66\tmillion\tGBP) | GBP\tFloating | 1.35% | 2015 | 109 | 106 |
| Floating\trate\tnote\t($97\tmillion) | USD\tFloating | 0.00% | 2041 | 97 | 97 |
| Floating\trate\tnote\t($59\tmillion) | USD\tFloating | 0.00% | 2044 | 59 | 59 |
| Other\tborrowings | Various | 0.64% | 2014-2040 | 79 | 80 |
| Total\tlong-term\tdebt |  |  |  | $5,912 | $5,902 |
| Less:\tcurrent\tportion\tof\tlong-term\tdebt |  |  |  | 1,586 | 986 |
| Long-term\tdebt\t(excluding\tcurrent\tportion) |  |  |  | $4,326 | $4,916 |

# Short-Term	Borrowings	and	Current	Portion	of	Long-Term	Debt

|  | Effective | Carrying	Value |  |
| :--- | :--- | :--- | :--- |
| (Millions) | Interest\tRate | 2013 | 2012 |
| Current\tportion\tof\tlong-term\tdebt | 3.05% | $1,586 | $986 |
| U.S.\tdollar\tcommercial\tpaper | —% | — | — |
| Other\tborrowings | 5.35% | 97 | 99 |
| Total\tshort-term\tborrowings\tand\tcurrent\tportion\tof\tlong-term\tdebt |  | $1,683 | $1,085 |

The	following	weighted-average	effective	interest	rate	table	reflects	the	combined	effects	of	interest	rate	and	currency	swaps	at	December	31,	2013	and	2012.

# Weighted-Average	Effective	Interest	Rate

The	floating	rate	notes	contain	put	provisions	granting	the	holders	the	option	to	require	3M	to	repurchase	the	securities	on	certain	dates.	Under	the	terms	of	the	floating rate	notes	due	in	2044,	holders	have	an	annual	put	feature.	3M	would	be

required	to	repurchase	these	securities	at	100	percent	of	par	value	from	2014	and	every	anniversary	thereafter	until	final	maturity.	Under	the	terms	of	the	floating	rate notes	due	in	2027,	2040,	and	2041,	holders	have	put	options	that	commence	ten	years	after	the	date	of	issuance	and	each	third	anniversary	thereafter	until	final	maturity. 3M	would	be	required	to	repurchase	these	securities	at	various	prices,	ranging	from	99	percent	to	100	percent	of	par	value	according	to	the	redemption	schedules	for each	security.	In	2013,	2011,	2010,	2009	and	2008,	3M	was	required	to	repurchase	an	immaterial	amount	of	principal	on	the	aforementioned	floating	rate	notes.

The	Company	has	a	"well-known	seasoned	issuer"	shelf	registration	statement,	effective	August	5,	2011,	which	registers	an	indeterminate	amount	of	debt	or	equity securities	for	future	sales.	In	September	2011,	in	connection	with	this	August	5,	2011	shelf	registration	statement,	3M	established	a	$3	billion	medium-term	notes program	(Series	F),	from	which	3M	issued	$1	billion	aggregate	principal	amount	of	five-year	fixed	rate	medium-term	notes	with	a	coupon	rate	of	1.375%.	In	June	2012, 3M	issued	$650	million	aggregate	principal	amount	of	five-year	fixed	rate	medium-notes	due	2017	with	a	coupon	rate	of	1.000%	and	$600	million	aggregate	principal amount	of	ten-year	fixed	rate	medium-term	notes	due	2022	with	a	coupon	rate	of	2.000%,	which	were	both	issued	from	this	$3	billion	medium-term	notes	program (Series	F).	The	designated	use	of	these	proceeds	is	for	general	corporate	purposes.

In	connection	with	a	prior	"well-known	seasoned	issuer"	shelf	registration,	in	June	2007	the	Company	established	a	$3	billion	medium-term	notes	program.	Three	debt securities	were	issued	under	this	medium-term	notes	program.	First,	in	December	2007,	3M	issued	a	five-year,	$500	million,	fixed	rate	note	with	a	coupon	rate	of 4.65%,	which	matured	in	December	2012.	Second,	in	August	2008,	3M	issued	a	five-year,	$850	million,	fixed	rate	note	with	a	coupon	rate	of	4.375%,	which	matured	in August	2013.	Third,	in	October	2008,	the	Company	issued	a	three-year	$800	million,	fixed	rate	note	with	a	coupon	rate	of	4.50%.	The	Company	entered	into	interest rate	swaps	to	convert	this	$800	million	note	to	a	floating	rate.	This	three-year	fixed	rate	note	and	related	interest	rate	swaps	matured	in	the	fourth	quarter	of	2011.

The	Company	also	issued	notes	under	a	$1.5	billion	medium-term	note	program	established	in	December	2003.	In	March	2007,	the	Company	issued	a	30-year,	$750 million,	fixed	rate	note	with	a	coupon	rate	of	5.70%.	In	November	2006,	3M	issued	a	three-year,	$400	million,	fixed	rate	note.	The	Company	entered	into	an	interest rate	swap	to	convert	this	to	a	rate	based	on	a	floating	LIBOR	index.	Both	the	note	and	related	swap	matured	in	November	2009.	In	December	2004,	3M	issued	a	40- year,	$60	million	floating	rate	note,	with	the	rate	based	on	a	floating	LIBOR	index.	This	$1.5	billion	medium	term	note	program	was	replaced	by	the	$3	billion	program established	in	June	2007.

In	July	2007,	3M	issued	a	seven-year	5.0%	fixed	rate	Eurobond	for	an	amount	of	750	million	Euros	(carrying	value	of	approximately	$1.042	billion	in	U.S.	Dollars	at December	31,	2013).	In	addition,	in	December	2007,	3M	reopened	its	existing	seven	year	5.0%	fixed	rate	Eurobond	for	an	additional	amount	of	275	million	Euros (carrying	value	of	approximately	$382	million	in	U.S.	Dollars	at	December	31,	2013).	This	security	was	issued	at	a	premium	and	was	subsequently	consolidated	with	the original	security	in	January	2008.	Upon	the	initial	debt	issuance	in	July	2007,	3M	completed	a	fixed-to-floating	interest	rate	swap	on	a	notional	amount	of	400	million Euros	as	a	fair	value	hedge	of	a	portion	of	the	fixed	interest	rate	Eurobond	obligation.	In	August	2010,	the	Company	terminated	150	million	Euros	of	the	notional amount	of	this	swap.	As	a	result,	the	notional	amount	remaining	after	the	partial	termination	is	250	million	Euros.	The	termination	of	a	portion	of	this	swap	did	not impact	the	terms	of	the	remaining	portion.	After	these	swaps,	the	fixed	rate	portion	of	the	Eurobond	totaled	775	million	Euros	and	the	floating	rate	portion	totaled	250 million	Euros.

In	November	2013,	3M	issued	an	eight-year	1.875%	fixed	rate	Eurobond	for	an	amount	of	600	million	Euros	(carrying	value	of	approximately	$815	million	in	U.S. Dollars	at	December	31,	2013).	Upon	debt	issuance,	3M	completed	a	fixed-to-floating	interest	rate	swap	on	a	notional	amount	of	300	million	Euros	as	a	fair	value	hedge of	a	portion	of	the	fixed	interest	rate	Eurobond	obligation.	After	this	swap,	the	fixed	rate	portion	of	the	Eurobond	totaled	300	million	Euros	and	the	floating	rate	portion totaled	300	million	Euros.

The	Company	has	an	AA-	credit	rating,	with	a	stable	outlook,	from	Standard	&	Poor's	and	an	Aa2	credit	rating,	with	a	stable	outlook,	from	Moody's	Investors	Service. In	September	2012,	3M	entered	into	a	$1.5	billion,	five-year	multi-currency	revolving	credit	agreement,	which	amended	the	existing	agreement	that	was	entered	into	in August	2011.	This	amended	agreement	extended	the	expiration	date	from	August	2016	to	September	2017.	This	credit	agreement	includes	a	provision	under	which	3M may	request	an	increase	of	up	to	$500	million,	bringing	the	total	facility	up	to	$2	billion	(at	the	lenders'	discretion).	This	facility	was	undrawn	at	December	31,	2013.	In August	2013,	3M	entered	into	a	$150	million,	one-year	committed	letter	of	credit	facility	with	HSBC	Bank	USA,	which	replaced	the	one-year	$150	million	committed credit	facility	that	was	entered	into	in	August	2012.	As	of	December	31,	2013,	3M	letters	of	credit	issued	under	this	$150	million	committed	facility	totaled	$120 million.	In	December	2012,	3M	entered	into	a	three-year	66	million	British	Pound	(approximately	$106	million)	committed	credit	facility	agreement	with	JP	Morgan Chase	Bank,	which	is	fully	drawn	as	of	December	31,	2013.	Apart	from	the	committed	facilities,	an	additional	$51	million	in	stand-alone	letters	of	credit	are	also	issued and	outstanding	at	December	31,	2013.	The	Company	also	utilized	$1	million	in	international	committed	lines	of

credit	and	$10	million	in	U.S.	committed	lines	of	credit	with	other	banking	partners	as	of	December	31,	2013.	These	lines	of	credit	are	utilized	in	connection	with normal	business	activities.	Under	both	the	$1.5	billion	and	$150	million	credit	agreements,	the	Company	is	required	to	maintain	its	EBITDA	to	Interest	Ratio	as	of	the end	of	each	fiscal	quarter	at	not	less	than	3.0	to	1.	This	is	calculated	(as	defined	in	the	agreement)	as	the	ratio	of	consolidated	total	EBITDA	for	the	four	consecutive quarters	then	ended	to	total	interest	expense	on	all	funded	debt	for	the	same	period.	At	December	31,	2013,	this	ratio	was	approximately	55	to	1.	Debt	covenants	do	not restrict	the	payment	of	dividends.

# NOTE	10.		Pension	and	Postretirement	Benefit	Plans

3M	has	company-sponsored	retirement	plans	covering	substantially	all	U.S.	employees	and	many	employees	outside	the	United	States.	In	total,	3M	has	over	80	defined benefit	plans	in	25	countries.	Pension	benefits	associated	with	these	plans	generally	are	based	on	each	participant's	years	of	service,	compensation,	and	age	at	retirement or	termination.	The	primary	U.S.	defined-benefit	pension	plan	was	closed	to	new	participants	effective	January	1,	2009.	The	Company	also	provides	certain postretirement	health	care	and	life	insurance	benefits	for	substantially	all	of	its	U.S.	employees	who	reach	retirement	age	while	employed	by	the	Company.	Most international	employees	and	retirees	are	covered	by	government	health	care	programs.	The	cost	of	company-provided	postretirement	health	care	plans	for	international employees	is	not	material	and	is	combined	with	U.S.	amounts	in	the	tables	that	follow.

The	Company	also	sponsors	employee	savings	plans	under	Section	401(k)	of	the	Internal	Revenue	Code.	These	plans	are	offered	to	substantially	all	regular	U.S. employees.	Effective	January	1,	2010,	substantially	all	Company	contributions	to	the	plans	are	made	in	cash.	For	substantially	all	employees	hired	prior	to	January	1, 2009,	employee	401(k)	contributions	of	up	to	6%	of	eligible	compensation	are	matched	at	rates	of	60%	or	75%,	depending	on	the	plan	the	employee	participated	in. Employees	hired	on	or	after	January	1,	2009	receive	a	cash	match	of	100%	for	employee	401(k)	contributions	of	up	to	6%	of	eligible	compensation	and	also	receive	an employer	retirement	income	account	cash	contribution	of	3%	of	the	participant's	total	eligible	compensation.	All	contributions	are	invested	in	a	number	of	investment funds	pursuant	to	the	employees'	elections.	Employer	contributions	to	the	U.S.	plans	were	$136	million,	$124	million	and	$109	million	for	2013,	2012	and	2011, respectively.	3M	subsidiaries	in	various	international	countries	also	participate	in	defined	contribution	plans.	Employer	contributions	to	the	international	plans	were	$71 million,	$58	million	and	$54	million	for	2013,	2012	and	2011,	respectively.

The	Company's	defined	benefit	pension	funding	policy	is	to	deposit	with	independent	trustees	amounts	allowable	by	law.	Trust	funds	and	deposits	with	insurance companies	are	maintained	to	provide	pension	benefits	to	plan	participants	and	their	beneficiaries.	There	are	no	plan	assets	in	the	non-qualified	plan	due	to	its	nature.	For its	U.S.	postretirement	health	care	and	life	insurance	benefit	plans,	the	Company	has	set	aside	amounts	at	least	equal	to	annual	benefit	payments	with	an	independent trustee.

In	August	2006,	the	Pension	Protection	Act	(PPA)	was	signed	into	law	in	the	U.S.	The	PPA	transition	rules	increased	the	funding	target	for	defined	benefit	pension	plans to	100%	of	the	target	liability	by	2011.	3M's	primary	U.S.	qualified	defined	benefit	plan	does	not	have	a	mandatory	cash	contribution	because	the	Company	has	a significant	credit	balance	from	previous	discretionary	contributions	that	can	be	applied	to	any	PPA	funding	requirements.

In	the	fourth	quarter	of	2010,	the	Company	made	further	changes	to	its	U.S.	postretirement	benefit	plans.	As	a	result	of	these	changes,	the	Company	will	transition	all current	and	future	retirees	to	the	savings	account	benefits-based	plan	announced	in	2008.	These	changes	became	effective	beginning	January	1,	2013,	for	all	Medicare eligible	retirees	and	their	Medicare	eligible	dependents	and	will	become	effective	beginning	January	1,	2015,	for	all	non-Medicare	eligible	retirees	and	their	eligible dependents.

In	December	2011,	the	Company	began	offering	a	voluntary	early	retirement	incentive	program	to	certain	eligible	participants	of	its	U.S.	pension	plans	who	meet	age and	years	of	pension	service	requirements.	The	eligible	participants	who	accepted	the	offer	and	retired	on	February	1,	2012	received	an	enhanced	pension	benefit. Pension	benefits	were	enhanced	by	adding	one	additional	year	of	pension	service	and	one	additional	year	of	age	for	certain	benefit	calculations.	616	participants accepted	the	offer	and	retired	on	February	1,	2012.	As	a	result,	the	Company	incurred	a	$26	million	charge	related	to	these	special	termination	benefits	in	the	first quarter	of	2012.

Effective	July	1,	2012,	3M	Canada	closed	its	pension	plans	for	salaried	employees	to	new	participants.	The	change	did	not	trigger	a	plan	remeasurement	and	therefore there	is	no	immediate	impact	to	the	liability	and	expense.

3M	was	informed	during	the	first	quarter	of	2009	that	the	general	partners	of	WG	Trading	Company,	in	which	3M's	benefit	plans	hold	limited	partnership	interests,	are the	subject	of	a	criminal	investigation	as	well	as	civil	proceedings	by	the	SEC

and	CFTC	(Commodity	Futures	Trading	Commission).	In	March	2011,	over	the	objections	of	3M	and	six	other	limited	partners	of	WG	Trading	Company,	the	district court	judge	ruled	in	favor	of	the	court	appointed	receiver's	proposed	distribution	plan	(and	in	April	2013,	the	United	States	Court	of	Appeals	for	the	Second	Circuit affirmed	the	district	court's	ruling).	The	benefit	plan	trustee	holdings	of	WG	Trading	Company	interests	were	adjusted	to	reflect	the	decreased	estimated	fair	market value,	inclusive	of	estimated	insurance	proceeds,	as	of	the	annual	measurement	dates.	The	Company	has	insurance	that	it	believes,	based	on	what	is	currently	known, will	result	in	the	probable	recovery	of	a	portion	of	the	decrease	in	original	asset	value.	As	of	the	2013	measurement	date	these	holdings	represented	less	than	one	percent of	3M's	fair	value	of	total	plan	assets.	3M	currently	believes	that	the	resolution	of	these	events	will	not	have	a	material	adverse	effect	on	the	consolidated	financial position	of	the	Company.

The	following	tables	include	a	reconciliation	of	the	beginning	and	ending	balances	of	the	benefit	obligation	and	the	fair	value	of	plan	assets	as	well	as	a	summary	of	the related	amounts	recognized	in	the	Company's	consolidated	balance	sheet	as	of	December	31	of	the	respective	years.	3M	also	has	certain	non-qualified	unfunded	pension and	postretirement	benefit	plans,	inclusive	of	plans	related	to	supplement/excess	benefits	for	employees	impacted	by	particular	relocations	and	other	matters,	that individually	and	in	the	aggregate	are	not	significant	and	which	are	not	included	in	the	tables	that	follow.	The	obligations	for	these	plans	are	included	within	other liabilities	in	the	Company's	consolidated	balance	sheet	and	aggregated	less	than	$30	million	as	of	December	31,	2013	and	approximately	$40	million	as	of December	30,	2012.	Due	to	the	growth	in	one	of	the	U.S.	non-qualified	unfunded	pension	plans	it	has	been	added	to	the	schedules	below	as	of	December	31,	2013.

|  | United	States | United	States | International |  | Benefits |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 |
| Change\tin\tbenefit\tobligation |  |  |  |  |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $14,830 | $14,499 | $6,414 | $5,332 | $2,205 | $2,108 |
| Acquisitions/Transfers\tin | 15 | 11 | — | 26 | — | — |
| Service\tcost | 258 | 254 | 147 | 124 | 80 | 78 |
| Interest\tcost | 598 | 587 | 238 | 247 | 88 | 86 |
| Participant\tcontributions | — | — | 8 | 5 | 30 | 52 |
| Foreign\texchange\trate\tchanges | — | — | (79) | 83 | (13) | (2) |
| Plan\tamendments | — | — | 3 | (7) | (20) | — |
| Actuarial\t(gain)\tloss | (986) | 179 | (163) | 882 | (225) | 31 |
| Medicare\tPart\tD\tReimbursement | — | — | — | — | 2 | 8 |
| Benefit\tpayments | (747) | (726) | (222) | (278) | (130) | (156) |
| Settlements,\tcurtailments,\tspecial |  |  |  |  |  |  |
| termination\tbenefits\tand\tother | (1) | 26 | — | — | — | — |
| Benefit\tobligation\tat\tend\tof\tyear | $13,967 | $14,830 | $6,346 | $6,414 | $2,017 | $2,205 |
| Change\tin\tplan\tassets |  |  |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof |  |  |  |  |  |  |
| year | $13,781 | $12,102 | $5,222 | $4,643 | $1,321 | $1,209 |
| Acquisitions | — | 8 | — | — | — | — |
| Actual\treturn\ton\tplan\tassets | 803 | 1,645 | 421 | 463 | 178 | 149 |
| Company\tcontributions | 53 | 752 | 423 | 327 | 6 | 67 |
| Participant\tcontributions | — | — | 8 | 5 | 30 | 52 |
| Foreign\texchange\trate\tchanges | — | — | (94) | 62 | — | — |
| Benefit\tpayments | (747) | (726) | (222) | (278) | (130) | (156) |
| Settlements,\tcurtailments,\tspecial |  |  |  |  |  |  |
| termination\tbenefits\tand\tother | (1) | — | — | — | — | — |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear | $13,889 | $13,781 | $5,758 | $5,222 | $1,405 | $1,321 |
| Funded\tstatus\tat\tend\tof\tyear | $(78) | $(1,049) | $(588) | $(1,192) | $(612) | $(884) |

|  |  | Qualified	and	Non-qualified |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Pension\tBenefits |  |  | Postretirement |  |
|  | United\tStates |  | International |  | Benefits |  |
| (Millions) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 |
| Amounts\trecognized\tin\tthe\tConsolidated |  |  |  |  |  |  |
| Balance\tSheet\tas\tof\tDec.\t31, |  |  |  |  |  |  |
| Non-current\tassets | $399 | $— | $178 | $16 | $— | $— |
| Accrued\tbenefit\tcost |  |  |  |  |  |  |
| Current\tliabilities | (47) | (43) | (10) | (8) | (4) | (4) |
| Non-current\tliabilities | (430) | (1,006) | (756) | (1,200) | (608) | (880) |
| Ending\tbalance | $(78) | $(1,049) | $(588) | $(1,192) | $(612) | $(884) |
| Amounts\trecognized\tin\taccumulated\tother |  |  |  |  |  |  |
| comprehensive\tincome\tas\tof\tDec.\t31, |  |  |  |  |  |  |
| Net\ttransition\tobligation\t(asset) | $— | $— | $(4) | $(5) | $— | $— |

| Net	actuarial	loss	(gain) | 3,537 | 4,679 | 1,949 | 2,458 | 616 | 1,028 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Prior\tservice\tcost\t(credit) | 20 | 24 | (117) | (150) | (151) | (197) |
| Ending\tbalance | $3,557 | $4,703 | $1,828 | $2,303 | $465 | $831 |

The	balance	of	amounts	recognized	for	international	plans	in	accumulated	other	comprehensive	income	as	of	December	31	in	the	preceding	table	are	presented	based	on the	foreign	currency	exchange	rate	on	that	date.

The	pension	accumulated	benefit	obligation	represents	the	actuarial	present	value	of	benefits	based	on	employee	service	and	compensation	as	of	the	measurement	date and	does	not	include	an	assumption	about	future	compensation	levels.	The	accumulated	benefit	obligation	of	the	U.S.	pension	plans	was	$13.357	billion	and	$14.127 billion	at	December	31,	2013	and	2012,	respectively.	The	accumulated	benefit	obligation	of	the	international	pension	plans	was	$5.825	billion	and	$5.942	billion	at December	31,	2013	and	2012,	respectively.

The	following	amounts	relate	to	pension	plans	with	accumulated	benefit	obligations	in	excess	of	plan	assets	as	of	December	31:

|  | United	States |  | International |  |
| :--- | :--- | :--- | :--- | :--- |
| (Millions) | 2013 | 2012 | 2013 | 2012 |
| Projected\tbenefit\tobligation | $486 | $505 | $2,198 | $5,122 |
| Accumulated\tbenefit\tobligation | 463 | 492 | 1,960 | 4,808 |
| Fair\tvalue\tof\tplan\tassets | 9 | 8 | 1,547 | 4,038 |

# Components	of	net	periodic	cost	and	other	amounts	recognized	in	other	comprehensive	income

Net	periodic	benefit	cost	is	recorded	in	cost	of	sales,	selling,	general	and	administrative	expenses,	and	research,	development	and	related	expenses.	Components	of	net periodic	benefit	cost	and	other	changes	in	plan	assets	and	benefit	obligations	recognized	in	other	comprehensive	income	for	the	years	ended	December	31	follow:

|  |  |  | Pension	Benefits |  |  |  |  | Postretirement |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | United\tStates |  |  | International |  |  | Benefits |  |
| (Millions) | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 |
| Net\tperiodic\tbenefit\tcost\t(benefit) |  |  |  |  |  |  |  |  |  |
| Service\tcost | $258 | $254 | $206 | $147 | $124 | $124 | $80 | $78 | $61 |
| Interest\tcost | 598 | 587 | 626 | 238 | 247 | 261 | 88 | 86 | 92 |
| Expected\treturn\ton\tplan\tassets | (1,046) | (992) | (927) | (291) | (295) | (289) | (90) | (84) | (77) |
| Amortization\tof\ttransition\t(asset)\tobligation | — | — | — | (1) | (1) | (2) | — | — | — |
| Amortization\tof\tprior\tservice\tcost\t(benefit) | 5 | 5 | 11 | (16) | (17) | (14) | (66) | (72) | (72) |
| Amortization\tof\tnet\tactuarial\t(gain)\tloss | 399 | 470 | 334 | 153 | 122 | 116 | 95 | 108 | 102 |
| Net\tperiodic\tbenefit\tcost\t(benefit) | $214 | $324 | $250 | $230 | $180 | $196 | $107 | $116 | $106 |
| Settlements,\tcurtailments,\tspecial\ttermination\tbenefits |  |  |  |  |  |  |  |  |  |
| and\tother | — | 26 | 1 | 2 | 4 | 2 | — | — | — |
| Net\tperiodic\tbenefit\tcost\t(benefit)\tafter\tsettlements, |  |  |  |  |  |  |  |  |  |
| curtailments,\tspecial\ttermination\tbenefits\tand\tother | $214 | $350 | $251 | $232 | $184 | $198 | $107 | $116 | $106 |
| Other\tchanges\tin\tplan\tassets\tand\tbenefit\tobligations |  |  |  |  |  |  |  |  |  |
| recognized\tin\tother\tcomprehensive\t(income)\tloss |  |  |  |  |  |  |  |  |  |
| Transition\t(asset)\tobligation | $— | $— | $— | $— | $— | $(2) | $— | $— | $— |
| Amortization\tof\ttransition\t(asset)\tobligation | — | — | — | 1 | 1 | 2 | — | — | — |
| Prior\tservice\tcost\t(benefit) | — | — | 8 | 3 | (7) | (32) | (20) | — | — |
| Amortization\tof\tprior\tservice\tcost\t(benefit) | (5) | (5) | (11) | 16 | 17 | 14 | 66 | 72 | 72 |
| Net\tactuarial\t(gain)\tloss | (743) | (470) | 1,976 | (294) | 707 | 315 | (313) | (33) | 212 |
| Amortization\tof\tnet\tactuarial\t(gain)\tloss | (399) | (470) | (334) | (153) | (122) | (116) | (95) | (108) | (102) |
| Foreign\tcurrency | — | — | — | (47) | 24 | (17) | (2) | (1) | (2) |
| Total\trecognized\tin\tother\tcomprehensive\t(income)\tloss | $(1,147) | $(945) | $1,639 | $(474) | $620 | $164 | $(364) | $(70) | $180 |
| Total\trecognized\tin\tnet\tperiodic\tbenefit\tcost\t(benefit) |  |  |  |  |  |  |  |  |  |
| and\tother\tcomprehensive\t(income)\tloss | $(933) | $(595) | $1,890 | $(242) | $804 | $362 | $(257) | $46 | $286 |

# Amounts	expected	to	be	amortized	from	accumulated	other	comprehensive	income	into	net	periodic	benefit	costs	over	the	next	fiscal	year

The	Company	is	in	the	process	of	transitioning	all	current	and	future	retirees	to	the	savings	account	benefits-based	plan	announced	in	2008.	The	contributions	provided by	the	Company	to	the	health	savings	accounts	increase	three	percent	per	year.	Therefore,	the	Company	no	longer	has	material	exposure	to	health	care	cost	inflation.

# Weighted-average	assumptions	used	to	determine	net	cost	for	years	ended

|  |  | Qualified	and	Non-qualified	Pension	Benefits | Qualified	and	Non-qualified	Pension	Benefits | Qualified	and	Non-qualified	Pension	Benefits |  |  |  | Postretirement |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013 | United\tStates\n2012 | 2011 | 2013 | International\n2012 | 2011 | 2013 | Benefits\n2012 | 2011 |
| Discount\trate | 4.14% | 4.15% | 5.23% | 3.78% | 4.58% | 5.04% | 4.00% | 4.04% | 5.09% |
| Expected\treturn\ton\tassets | 8.00% | 8.25% | 8.50% | 5.87% | 6.38% | 6.58% | 7.19% | 7.30% | 7.38% |

The	Company	determines	the	discount	rate	used	to	measure	plan	liabilities	as	of	the	December	31	measurement	date	for	the	pension	and	postretirement	benefit	plans, which	is	also	the	date	used	for	the	related	annual	measurement	assumptions.	The	discount	rate	reflects	the	current	rate	at	which	the	associated	liabilities	could	be effectively	settled	at	the	end	of	the	year.	The	Company	sets	its	rate	to	reflect	the	yield	of	a	portfolio	of	high	quality,	fixed-income	debt	instruments	that	would	produce cash	flows	sufficient	in	timing	and	amount	to	settle	projected	future	benefits.	Using	this	methodology,	the	Company	determined	a	discount	rate	of	4.98%	for	pension	and 4.83%	for	postretirement	benefits	to	be	appropriate	for	its	U.S.	plans	as	of	December	31,	2013,	which	is	an	increase	of	0.84	percentage	points	and	0.83	percentage points,	respectively,	from	the	rates	used	as	of	December	31,	2012.	For	the	international	pension	and	postretirement	plans	the	discount	rates	also	reflect	the	current	rate	at which	the	associated	liabilities	could	be	effectively	settled	at	the	end	of	the	year.	If	the	country	has	a	deep	market	in	corporate	bonds	the	Company	matches	the	expected cash	flows	from	the	plan	either	to	a	portfolio	of	bonds	that	generate	sufficient	cash	flow	or	a	notional	yield	curve	generated	from	available	bond	information.	In countries	that	do	not	have	a	deep	market	in	corporate	bonds,	government	bonds	are	considered	with	a	risk	premium	to	approximate	corporate	bond	yields.

For	the	primary	U.S.	qualified	pension	plan,	the	Company's	assumption	for	the	expected	return	on	plan	assets	was	8.00%	in	2013.	The	Company	is	lowering	the	2014 expected	return	on	plan	assets	for	its	U.S.	pension	plan	by	0.25	percentage	points	to	7.75%.	This	will	increase	the	2014	expected	pension	expense	by	approximately	$34 million.	Projected	returns	are	based	primarily	on	broad,	publicly	traded	equity	and	fixed-income	indices	and	forward-looking	estimates	of	active	portfolio	and investment	management.	As	of	December	31,	2013,	the	Company's	2014	expected	long-term	rate	of	return	on	U.S.	plan	assets	is	based	on	an	asset	allocation	assumption of	21%	global	equities,	with	an	expected	long-term	rate	of	return	of	7.5%;	16%	private	equities,	with	an	expected	long-term	rate	of	return	of	12.5%;	47%	fixed-income securities,	with	an	expected	long-term	rate	of	return	of	4.5%;	and	16%	absolute	return	investments	independent	of	traditional	performance	benchmarks,	with	an	expected long	term	return	of	6.00%.	The	Company	expects	additional	positive	return	from	active	investment	management.	These	assumptions	result	in	an	7.75%	expected	rate	of return	on	an	annualized	basis	in	2014.	The	actual	rate	of	return	on	plan	assets	in	2013	was	6.02%.	In	2012	the	plan	earned	a	rate	of	return	of	13.6%	and	in	2011	earned	a return	of	8.7%.	The	average	annual	actual	return	on	the	plan	assets	over	the	past	10	and	25	years	has	been	8.7%	and	10.3%,	respectively.	Return	on	assets	assumptions for	international	pension	and	other	post-retirement	benefit	plans	are	calculated	on	a	plan-by-plan	basis	using	plan	asset	allocations	and	expected	long-term	rate	of	return assumptions.

During	2013,	the	Company	contributed	$476	million	to	its	U.S.	and	international	pension	plans	and	$6	million	to	its	postretirement	plans.	During	2012,	the	Company contributed	$1.079	billion	to	its	U.S.	and	international	pension	plans	and	$67	million	to	its	postretirement	plans.	In	2014,	the	Company	expects	to	contribute	an	amount in	the	range	of	$100	million

to	$200	million	of	cash	to	its	U.S.	and	international	retirement	plans.	The	Company	does	not	have	a	required	minimum	cash	pension	contribution	obligation	for	its	U.S. plans	in	2014.	Therefore,	the	amount	of	the	anticipated	discretionary	contribution	could	vary	significantly	depending	on	the	U.S.	plans'	funded	status	and	the	anticipated tax	deductibility	of	the	contribution.	Future	contributions	will	also	depend	on	market	conditions,	interest	rates	and	other	factors.

# Future	Pension	and	Postretirement	Benefit	Payments

The	following	table	provides	the	estimated	pension	and	postretirement	benefit	payments	that	are	payable	from	the	plans	to	participants.

|  | Qualified	and	Non-qualified |  |  |
| :--- | :--- | :--- | :--- |
|  | Pension\tBenefits |  | Postretirement |
| (Millions) | United\tStates | International | Benefits |
| 2014\tBenefit\tPayments | $782 | $225 | $125 |
| 2015\tBenefit\tPayments | 810 | 236 | 135 |
| 2016\tBenefit\tPayments | 837 | 254 | 151 |
| 2017\tBenefit\tPayments | 861 | 259 | 151 |
| 2018\tBenefit\tPayments | 884 | 284 | 151 |
| Following\tfive\tyears | 4,729 | 1,658 | 775 |

# Plan	Asset	Management

3M's	investment	strategy	for	its	pension	and	postretirement	plans	is	to	manage	the	funds	on	a	going-concern	basis.	The	primary	goal	of	the	funds	is	to	meet	the obligations	as	required.	The	secondary	goal	is	to	earn	the	highest	rate	of	return	possible,	without	jeopardizing	its	primary	goal,	and	without	subjecting	the	Company	to an	undue	amount	of	contribution	rate	volatility.	Fund	returns	are	used	to	help	finance	present	and	future	obligations	to	the	extent	possible	within	actuarially	determined funding	limits	and	tax-determined	asset	limits,	thus	reducing	the	level	of	contributions	3M	must	make.	The	investment	strategy	has	used	long	duration	cash	and derivative	instruments	to	offset	a	significant	portion	of	the	interest	rate	sensitivity	of	U.S.	pension	liabilities.	In	addition,	credit	risk	is	managed	through	mandates	for public	securities	and	maximum	issuer	limits	that	are	established	and	monitored	on	a	regular	basis.

Normally,	3M	does	not	buy	or	sell	any	of	its	own	stock	as	a	direct	investment	for	its	pension	and	other	postretirement	benefit	funds.	However,	due	to	external	investment management	of	the	funds,	the	plans	may	indirectly	buy,	sell	or	hold	3M	stock.	The	aggregate	amount	of	shares	are	not	considered	to	be	material	relative	to	the	aggregate fund	percentages.

The	discussion	that	follows	references	the	fair	value	measurements	of	certain	assets	in	terms	of	levels	1,	2	and	3.	See	Note	12	for	descriptions	of	these	levels.	While	the company	believes	the	valuation	methods	are	appropriate	and	consistent	with	other	market	participants,	the	use	of	different	methodologies	or	assumptions	to	determine the	fair	value	of	certain	financial	instruments	could	result	in	a	different	estimate	of	fair	value	at	the	reporting	date.

# U.S.	Pension	Plans	Assets

In	order	to	achieve	the	investment	objectives	in	the	U.S.	pension	plans,	the	investment	policy	includes	a	target	strategic	asset	allocation.	The	investment	policy	allows some	tolerance	around	the	target	in	recognition	that	market	fluctuations	and	illiquidity	of	some	investments	may	cause	the	allocation	to	a	specific	asset	class	to	stray from	the	target	allocation,	potentially	for	long	periods	of	time.	Acceptable	ranges	have	been	designed	to	allow	for	deviation	from	long-term	targets	and	to	allow	for	the opportunity	for	tactical	over-	and	under-weights.	The	portfolio	will	normally	be	rebalanced	when	the	quarter-end	asset	allocation	deviates	from	acceptable	ranges.	The allocation	is	reviewed	regularly	by	the	named	fiduciary	of	the	plans.

The	fair	values	of	the	assets	held	by	the	U.S.	pension	plans	by	asset	class	are	as	follows:

|  |  |  | Fair	Value	Measurements	Using	Inputs	Considered	as | Fair	Value	Measurements	Using	Inputs	Considered	as |  |  | Fair	Value	at | Fair	Value	at |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions)\nAsset\tClass | Level\t1\n2013 | 2012 | Level\t2\n2013 | 2012 | Level\t3\n2013 | 2012 | Dec.\t31,\n2013 | 2012 |
| Equities |  |  |  |  |  |  |  |  |
| U.S.\tequities | $1,595 | $1,662 | $3 | $11 | $3 | $5 | $1,601 | $1,678 |

| Non-U.S.	equities | 1,324 | 1,332 | 1 | — | — | — | 1,325 | 1,332 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Derivatives | — | — | — | 5 | — | — | — | 5 |
| EAFE\tindex\tfunds | — | — | — | 250 | — | — | — | 250 |
| Index\tfunds | — | — | 151 | 156 | 1 | 1 | 152 | 157 |
| Long/short\tequity | — | — | — | — | 460 | 477 | 460 | 477 |
| Total\tEquities | $2,919 | $2,994 | $155 | $422 | $464 | $483 | $3,538 | $3,899 |
| Fixed\tIncome |  |  |  |  |  |  |  |  |
| U.S.\tgovernment\tsecurities | $908 | $844 | $601 | $796 | $— | $— | $1,509 | $1,640 |
| Non-U.S.\tgovernment\tsecurities | 20 | — | 316 | 378 | — | — | 336 | 378 |
| Preferred\tand\tconvertible\tsecurities | — | 4 | 4 | — | — | — | 4 | 4 |
| U.S.\tcorporate\tbonds | 14 | 196 | 2,046 | 1,249 | — | — | 2,060 | 1,445 |
| Non-U.S.\tcorporate\tbonds | — | — | 412 | 286 | — | — | 412 | 286 |
| Asset-backed\tsecurities | — | — | 26 | 21 | — | — | 26 | 21 |
| Collateralized\tmortgage\tobligations | — | — | 28 | 43 | — | — | 28 | 43 |
| Private\tplacements | — | — | 251 | 164 | 2 | 2 | 253 | 166 |
| Derivative\tinstruments | (1) | — | 6 | 76 | — | — | 5 | 76 |
| Other | — | — | 37 | 29 | — | — | 37 | 29 |
| Total\tFixed\tIncome | $941 | $1,044 | $3,727 | $3,042 | $2 | $2 | $4,670 | $4,088 |
| Private\tEquity |  |  |  |  |  |  |  |  |
| Buyouts | $— | $— | $— | $— | $737 | $662 | $737 | $662 |
| Derivative\tinstruments | — | — | — | — | (97) | (51) | (97) | (51) |
| Direct\tinvestments | — | — | — | — | 467 | 129 | 467 | 129 |
| Distressed\tdebt | — | — | — | — | 211 | 301 | 211 | 301 |
| Growth\tequity | 21 | 7 | — | — | 170 | 84 | 191 | 91 |
| Mezzanine | — | — | — | — | 83 | 82 | 83 | 82 |
| Real\testate | — | — | — | — | 156 | 136 | 156 | 136 |
| Secondary | — | — | — | — | 152 | 166 | 152 | 166 |
| Venture\tcapital | — | — | — | — | 548 | 627 | 548 | 627 |
| Total\tPrivate\tEquity | $21 | $7 | $— | $— | $2,427 | $2,136 | $2,448 | $2,143 |
| Absolute\tReturn |  |  |  |  |  |  |  |  |
| Hedge\tfunds\tand\thedge\tfund\tof\tfunds\tfunds | $— | $— | $176 | $833 | $21 | $664 | $197 | $1,497 |
| Bank\tloan\tand\tother\tfixed\tincome\tfunds | — | — | 899 | — | 737 | 201 | 1,636 | 201 |
| Total\tAbsolute\tReturn | $— | $— | $1,075 | $833 | $758 | $865 | $1,833 | $1,698 |
| Commodities | $— | $— | $88 | $102 | $— | $107 | $88 | $209 |
| Cash\tand\tCash\tEquivalents | $301 | $429 | $1,017 | $1,547 | $— | $— | $1,318 | $1,976 |
| Total | $4,182 | $4,474 | $6,062 | $5,946 | $3,651 | $3,593 | $13,895 | $14,013 |
| Other\titems\tto\treconcile\tto\tfair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $(6) | $(232) |
| Fair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $13,889 | $13,781 |

Publicly	traded	equities	are	valued	at	the	closing	price	reported	in	the	active	market	in	which	the	individual	securities	are	traded.	Index	funds,	including	Europe,

Australasia,	and	Far	East	(EAFE)	funds,	are	valued	at	the	net	asset	value	(NAV)	as	determined	by	the	custodian	of	the	fund.	The	NAV	is	based	on	the	fair	value	of	the underlying	assets	owned	by	the	fund,

minus	its	liabilities	then	divided	by	the	number	of	units	outstanding.	Long/short	equity	interests	are	valued	using	the	NAV	as	determined	by	the	administrator	or custodian	of	the	fund.

Fixed	income	includes	derivative	instruments	such	as	credit	default	swaps,	interest	rate	swaps	and	futures	contracts	that	are	used	to	help	manage	risks.	U.S.	government and	government	agency	bonds	and	notes	are	valued	at	the	closing	price	reported	in	the	active	market	in	which	the	individual	security	is	traded.	Corporate	bonds	and notes,	asset	backed	securities	and	collateralized	mortgage	obligations	are	valued	at	either	the	yields	currently	available	on	comparable	securities	of	issuers	with	similar credit	ratings	or	valued	under	a	discounted	cash	flows	approach	that	maximizes	observable	inputs,	such	as	current	yields	of	similar	instruments,	but	includes	adjustments for	certain	risks	that	may	not	be	observable	such	as	credit	and	liquidity	risks.	Private	placements	are	valued	by	the	custodian	using	recognized	pricing	services	and sources.	Swaps	and	derivative	instruments	are	valued	by	the	custodian	using	closing	market	swap	curves	and	market	derived	inputs.

The	private	equity	portfolio	is	a	diversified	mix	of	direct	investments,	derivative	instruments	and	partnership	interests	including	buyouts,	distressed	debt,	growth	equity, mezzanine,	real	estate	and	venture	capital	investments.	Partnership	interests	are	valued	using	the	most	recent	general	partner	statement	of	fair	value,	updated	for	any subsequent	partnership	interests'	cash	flows	or	expected	changes	in	fair	value.	Direct	investments	are	equity	co-investments	in	private	companies	and	projects,	the majority	of	which	are	power	infrastructure	investments,	which	are	valued	by	an	independent	valuation	agent.

Absolute	return	consists	primarily	of	private	partnership	interests	in	hedge	funds,	hedge	fund	of	funds	and	bank	loan	funds.	Partnership	interests	are	valued	using	the NAV	as	determined	by	the	administrator	or	custodian	of	the	fund.	Hedge	fund	partnership	interests,	which	have	a	redemption	right	and	are	past	any	lock-up	redemption period,	are	classified	as	level	2.	A	hedge	fund	was	restructured	during	2012,	extending	the	lock-up	redemption	period,	and	therefore	was	moved	to	level	3	during	2012.

Commodities	consist	of	commodity-linked	notes	and	commodity-linked	derivative	contracts	designed	to	deliver	investment	returns	similar	to	the	Goldman	Sachs Commodities	Index	(GSCI)	or	Dow	Jones	UBS	Commodity	index	returns.	Commodities	are	valued	at	closing	prices	determined	by	calculation	agents	for	outstanding transactions.

Other	items	to	reconcile	to	fair	value	of	plan	assets	include	the	net	of	insurance	receivables	for	WG	Trading	Company,	interest	receivables,	amounts	due	for	securities sold,	amounts	payable	for	securities	purchased	and	interest	payable.

The	following	table	sets	forth	a	summary	of	changes	in	the	fair	values	of	the	U.S.	pension	plans'	level	3	assets	for	the	years	ended	December	31,	2013	and	2012:

|  |  | Fair	Value	Measurement	Using	Significant	Unobservable	Inputs	(Level	3) | Fair	Value	Measurement	Using	Significant	Unobservable	Inputs	(Level	3) | Fair	Value	Measurement	Using	Significant	Unobservable	Inputs	(Level	3) |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Private | Absolute |  |  |
| (Millions) | Equities | Fixed\tIncome | Equity | Return | Commodities | Total |
| Beginning\tbalance\tat\tJan.\t1,\t2012 | $442 | $74 | $2,062 | $520 | $105 | $3,203 |
| Net\ttransfers\tinto\t/\t(out\tof)\tlevel\t3 | — | (5) | — | 472 | — | 467 |
| Purchases,\tsales,\tissuances,\tand\tsettlements, | (1) | (73) | (108) | (225) | — | (407) |
| net |  |  |  |  |  |  |
| Realized\tgain\t/\t(loss) | — | 25 | 120 | 76 | — | 221 |
| Change\tin\tunrealized\tgains\t/\t(losses) |  |  |  |  |  |  |
| relating\tto\tinstruments\tsold\tduring\tthe |  |  |  |  |  |  |
| period | (1) | (19) | (3) | (49) | (1) | (73) |
| Change\tin\tunrealized\tgains\t/\t(losses) |  |  |  |  |  |  |
| relating\tto\tinstruments\tstill\theld\tat\tthe |  |  |  |  |  |  |
| reporting\tdate | 43 | — | 65 | 71 | 3 | 182 |
| Ending\tbalance\tat\tDec.\t31,\t2012 | 483 | 2 | 2,136 | 865 | 107 | 3,593 |

| Net	transfers	into	/	(out	of)	level	3 | — | — | — | — | — | — |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Purchases,\tsales,\tissuances,\tand\tsettlements, |  |  |  |  |  |  |
| net | (92) | — | 54 | (104) | (96) | (238) |
| Realized\tgain\t/\t(loss) | 10 | — | 126 | 45 | (1) | 180 |
| Change\tin\tunrealized\tgains\t/\t(losses) |  |  |  |  |  |  |
| relating\tto\tinstruments\tsold\tduring\tthe |  |  |  |  |  |  |
| period | (5) | — | 3 | (30) | (10) | (42) |
| Change\tin\tunrealized\tgains\t/\t(losses) |  |  |  |  |  |  |
| relating\tto\tinstruments\tstill\theld\tat\tthe |  |  |  |  |  |  |
| reporting\tdate | 68 | — | 108 | (18) | — | 158 |
| Ending\tbalance\tat\tDec.\t31,\t2013 | $464 | $2 | $2,427 | $758 | $— | $3,651 |

# International	Pension	Plans	Assets

Outside	the	U.S.,	pension	plan	assets	are	typically	managed	by	decentralized	fiduciary	committees.	The	disclosure	below	of	asset	categories	is	presented	in	aggregate	for over	70	defined	benefit	plans	in	24	countries;	however,	there	is	significant	variation	in	policy	asset	allocation	from	country	to	country.	Local	regulations,	local	funding rules,	and	local	financial	and	tax	considerations	are	part	of	the	funding	and	investment	allocation	process	in	each	country.	3M's	Treasury	group	provides	standard funding	and	investment	guidance	to	all	international	plans	with	more	focused	guidance	to	the	larger	plans.

Each	plan	has	its	own	strategic	asset	allocation.	The	asset	allocations	are	reviewed	periodically	and	rebalanced	when	necessary.

The	fair	values	of	the	assets	held	by	the	international	pension	plans	by	asset	class	are	as	follows:

|  |  | Fair	Value	Measurements	Using	Inputs	Considered	as | Fair	Value	Measurements	Using	Inputs	Considered	as | Fair	Value	Measurements	Using	Inputs	Considered	as |  |  | Fair	Value	at | Fair	Value	at |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions)\nAsset\tClass | Level\t1\n2013 | 2012 | Level\t2\n2013 | 2012 | Level\t3\n2013 | 2012 | Dec.\t31,\n2013 | 2012 |
| Equities |  |  |  |  |  |  |  |  |
| Growth\tequities | $733 | $628 | $190 | $133 | $— | $— | $923 | $761 |
| Value\tequities | 653 | 468 | 14 | 23 | — | — | 667 | 491 |
| Core\tequities | 19 | 88 | 668 | 376 | 5 | 5 | 692 | 469 |
| Total\tEquities | $1,405 | $1,184 | $872 | $532 | $5 | $5 | $2,282 | $1,721 |
| Fixed\tIncome |  |  |  |  |  |  |  |  |
| Domestic\tgovernment\tdebt | $199 | $297 | $539 | $694 | $3 | $— | $741 | $991 |
| Foreign\tgovernment\tdebt | 28 | 170 | 657 | 445 | 1 | 2 | 686 | 617 |
| Corporate\tdebt\tsecurities | 1 | — | 638 | 630 | 20 | 18 | 659 | 648 |
| Mortgage\tbacked\tdebt | — | — | 75 | 31 | — | — | 75 | 31 |
| Other\tdebt\tobligations | — | — | 391 | 268 | 13 | 16 | 404 | 284 |
| Total\tFixed\tIncome | $228 | $467 | $2,300 | $2,068 | $37 | $36 | $2,565 | $2,571 |
| Private\tEquity |  |  |  |  |  |  |  |  |
| Private\tequity\tfunds | $— | $— | $— | $— | $22 | $22 | $22 | $22 |
| Real\testate | 3 | 3 | 87 | 42 | 53 | 49 | 143 | 94 |
| Total\tPrivate\tEquity | $3 | $3 | $87 | $42 | $75 | $71 | $165 | $116 |
| Absolute\tReturn |  |  |  |  |  |  |  |  |
| Hedge\tfunds | $— | $— | $62 | $75 | $56 | $50 | $118 | $125 |
| Insurance | — | — | — | — | 492 | 433 | 492 | 433 |
| Derivatives | 2 | — | 3 | 20 | — | — | 5 | 20 |
| Other | — | — | 2 | 24 | 2 | 2 | 4 | 26 |
| Total\tAbsolute\tReturn | $2 | $— | $67 | $119 | $550 | $485 | $619 | $604 |
| Cash\tand\tCash\tEquivalents | $112 | $211 | $14 | $21 | $— | $— | $126 | $232 |
| Total | $1,750 | $1,865 | $3,340 | $2,782 | $667 | $597 | $5,757 | $5,244 |
| Other\titems\tto\treconcile\tto\tfair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $1 | $(22) |
| Fair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $5,758 | $5,222 |

Equities	consist	primarily	of	mandates	in	public	equity	securities	managed	to	the	Morgan	Stanley	Capital	All	Country	World	Index.	Publicly	traded	equities	are	valued at	the	closing	price	reported	in	the	active	market	in	which	the	individual	securities	are	traded.

Fixed	Income	investments	include	domestic	and	foreign	government,	corporate,	mortgage	backed	and	other	debt.	Governments,	corporate	bonds	and	notes	and	mortgage backed	securities	are	valued	at	the	closing	price	reported	if	traded	on	an	active	market	or	at	yields	currently	available	on	comparable	securities	of	issuers	with	similar credit	ratings	or	valued	under	a	discounted	cash	flow	approach	that	maximizes	observable	inputs,	such	as	current	yields	of	similar	instruments,	but	includes	adjustments for	certain	risks	that	may	not	be	observable	such	as	credit	and	liquidity	risks.

Private	equity	funds	consist	of	both	active	and	passive	mandates.	Partnership	interests	are	valued	using	the	most	recent	general	partner	statement	of	fair	value,	updated for	any	subsequent	partnership	interests'	cash	flows	or	expected	changes	in	fair	value.	Real	estate	consists	of	property	funds	and	REITS	(Real	Estate	Investment	Trusts). Property	funds	are	valued	using	the	most	recent	partnership	statement	of	fair	value,	updated	for	any	subsequent	partnership	interests'	cash	flows.	REITS	are	valued	at	the closing	price	reported	in	the	active	market	in	which	it	is	traded.

Absolute	return	consists	of	private	partnership	interests	in	hedge	funds,	insurance	contracts,	derivative	instruments,	hedge	fund	of	funds,	and	bank	loan	funds.	Insurance consists	of	insurance	contracts,	which	are	valued	using	cash	surrender	values	which	is	the	amount	the	plan	would	receive	if	the	contract	was	cashed	out	at	year	end. Derivative	instruments	consist	of	interest	rate	swaps	that	are	used	to	help	manage	risks.	Hedge	funds	are	valued	at	the	NAV	as	determined	by	the	independent administrator	or	custodian	of	the	fund.

Other	items	to	reconcile	to	fair	value	of	plan	assets	include	the	net	of	interest	receivables,	amounts	due	for	securities	sold,	amounts	payable	for	securities	purchased	and interest	payable.

The	following	table	sets	forth	a	summary	of	changes	in	the	fair	values	of	the	international	pension	plans'	level	3	assets	for	the	years	ended	December	31,	2013	and	2012:

Fair	Value	Measurement	Using	Significant	Unobservable	Inputs	(Level	3)

Equities

Fixed	Income

Private Equity

Absolute Return

Total

| Beginning	balance	at	Jan.	1,	2012 | $5 | $39 | $67 | $370 | $481 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Net\ttransfers\tinto\t/\t(out\tof)\tlevel\t3 | — | — | — | — | — |
| Foreign\tcurrency\texchange | — | 2 | (4) | 2 | — |
| Purchases,\tsales,\tissuances,\tand\tsettlements,\tnet | — | (2) | 11 | 92 | 101 |
| Realized\tgain\t/\t(loss) | — | — | — | — | — |
| Change\tin\tunrealized\tgains\t/\t(losses)\trelating\tto |  |  |  |  |  |
| instruments\tsold\tduring\tthe\tperiod | — | — | — | — | — |
| Change\tin\tunrealized\tgains\t/\t(losses)\trelating\tto |  |  |  |  |  |
| instruments\tstill\theld\tat\tthe\treporting\tdate | — | (3) | (3) | 21 | 15 |
| Ending\tbalance\tat\tDec.\t31,\t2012 | 5 | 36 | 71 | 485 | 597 |
| Net\ttransfers\tinto\t/\t(out\tof)\tlevel\t3 | — | — | — | — | — |
| Foreign\tcurrency\texchange | — | (2) | (1) | 9 | 6 |
| Purchases,\tsales,\tissuances,\tand\tsettlements,\tnet | — | (2) | 1 | 50 | 49 |
| Realized\tgain\t/\t(loss) | — | — | 2 | — | 2 |
| Change\tin\tunrealized\tgains\t/\t(losses)\trelating\tto |  |  |  |  |  |
| instruments\tsold\tduring\tthe\tperiod | — | — | — | 1 | 1 |
| Change\tin\tunrealized\tgains\t/\t(losses)\trelating\tto |  |  |  |  |  |
| instruments\tstill\theld\tat\tthe\treporting\tdate | — | 5 | 2 | 5 | 12 |
| Ending\tbalance\tat\tDec.\t31,\t2013 | $5 | $37 | $75 | $550 | $667 |

# Postretirement	Benefit	Plans	Assets

In	order	to	achieve	the	investment	objectives	in	the	U.S.	postretirement	plan,	the	investment	policy	includes	a	target	strategic	asset	allocation.	The	investment	policy allows	some	tolerance	around	the	target	in	recognition	that	market	fluctuations	and	illiquidity	of	some	investments	may	cause	the	allocation	to	a	specific	asset	class	to stray	from	the	target	allocation,	potentially	for	long	periods	of	time.	Acceptable	ranges	have	been	designed	to	allow	for	deviation	from	long-term	targets	and	to	allow	for the	opportunity	for	tactical	over-	and	under-weights.	The	portfolio	will	normally	be	rebalanced	when	the	quarter-end	asset	allocation	deviates	from	acceptable	ranges. The	allocation	is	reviewed	regularly	by	the	named	fiduciary	of	the	plan.

The	fair	values	of	the	assets	held	by	the	postretirement	benefit	plans	by	asset	class	are	as	follows:

|  |  | Fair	Value	Measurements	Using	Inputs	Considered	as | Fair	Value	Measurements	Using	Inputs	Considered	as | Fair	Value	Measurements	Using	Inputs	Considered	as |  |  | Fair	Value	at |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions)\nAsset\tClass | Level\t1\n2013 | 2012 | Level\t2\n2013 | 2012 | Level\t3\n2013 | 2012 | Dec.\t31,\n2013 | 2012 |
| Equities |  |  |  |  |  |  |  |  |
| U.S.\tequities | $552 | $466 | $— | $— | $— | $— | $552 | $466 |
| Non-U.S.\tequities | 58 | 54 | — | — | — | — | 58 | 54 |
| EAFE\tindex\tfunds | — | — | — | 8 | — | — | — | 8 |
| Index\tfunds | — | — | 44 | 42 | — | — | 44 | 42 |
| Long/short\tequity | — | — | — | — | 16 | 16 | 16 | 16 |
| Total\tEquities | $610 | $520 | $44 | $50 | $16 | $16 | $670 | $586 |
| Fixed\tIncome |  |  |  |  |  |  |  |  |
| U.S.\tgovernment\tsecurities | $62 | $63 | $202 | $217 | $— | $— | $264 | $280 |
| Non-U.S.\tgovernment\tsecurities | 1 | — | 14 | 16 | — | — | 15 | 16 |
| U.S.\tcorporate\tbonds | — | 6 | 96 | 68 | — | — | 96 | 74 |
| Non-U.S.\tcorporate\tbonds | — | — | 21 | 16 | — | — | 21 | 16 |
| Asset-backed\tsecurities | — | — | 9 | 6 | — | — | 9 | 6 |
| Collateralized\tmortgage\tobligations | — | — | 5 | 4 | — | — | 5 | 4 |
| Private\tplacements | — | — | 16 | 11 | — | — | 16 | 11 |
| Derivative\tinstruments | — | — | — | 2 | — | — | — | 2 |
| Other | — | — | 1 | 1 | — | — | 1 | 1 |
| Total\tFixed\tIncome | $63 | $69 | $364 | $341 | $— | $— | $427 | $410 |
| Private\tEquity |  |  |  |  |  |  |  |  |
| Buyouts | $— | $— | $— | $— | $58 | $51 | $58 | $51 |
| Derivative\tinstruments | — | — | — | — | (3) | (2) | (3) | (2) |
| Direct\tinvestments | — | — | — | — | 16 | 4 | 16 | 4 |
| Distressed\tdebt | — | — | — | — | 7 | 11 | 7 | 11 |
| Growth\tequity | 1 | — | — | — | 6 | 3 | 7 | 3 |
| Mezzanine | — | — | — | — | 3 | 3 | 3 | 3 |
| Real\testate | — | — | — | — | 5 | 4 | 5 | 4 |
| Secondary | — | — | — | — | 5 | 5 | 5 | 5 |
| Venture\tcapital | — | — | — | — | 64 | 91 | 64 | 91 |
| Total\tPrivate\tEquity | $1 | $— | $— | $— | $161 | $170 | $162 | $170 |
| Absolute\tReturn |  |  |  |  |  |  |  |  |
| Hedge\tfunds\tand\thedge\tfund\tof\tfunds | $— | $— | $6 | $27 | $1 | $21 | $7 | $48 |
| Bank\tloan\tand\tother\tfixed\tincome\tfunds | — | — | 31 | — | 25 | 7 | 56 | 7 |
| Total\tAbsolute\tReturn | $— | $— | $37 | $27 | $26 | $28 | $63 | $55 |
| Commodities | $— | $— | $3 | $3 | $— | $4 | $3 | $7 |
| Cash\tand\tCash\tEquivalents | $35 | $51 | $34 | $50 | $— | $— | $69 | $101 |
| Total | $709 | $640 | $482 | $471 | $203 | $218 | $1,394 | $1,329 |
| Other\titems\tto\treconcile\tto\tfair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $11 | $(8) |
| Fair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $1,405 | $1,321 |

Publicly	traded	equities	are	valued	at	the	closing	price	reported	in	the	active	market	in	which	the	individual	securities	are	traded.	Index	funds	are	valued	at	the	NAV	as determined	by	the	custodian	of	the	fund.	The	NAV	is	based	on	the	fair	value	of	the	underlying	assets	owned	by	the	fund,	minus	its	liabilities	then	divided	by	the	number of	units	outstanding.	Long/short	equity	interests	are	valued	using	the	NAV	as	determined	by	the	administrator	or	custodian	of	the	fund.

Fixed	income	includes	derivative	investments	such	as	credit	default	swaps,	interest	rate	swaps	and	futures	contracts	that	are	used	to	help	manage	risks.	U.S.	government and	government	agency	bonds	and	notes	are	valued	at	the	closing	price	reported	in	the	active	market	in	which	the	individual	security	is	traded.	Corporate	bonds	and notes,	asset	backed

securities	and	collateralized	mortgage	obligations	are	valued	at	either	the	yields	currently	available	on	comparable	securities	of	issuers	with	similar	credit	ratings	or valued	under	a	discounted	cash	flow	approach	that	maximizes	observable	inputs,	such	as	current	yields	of	similar	instruments,	but	includes	adjustments	for	certain	risks that	may	not	be	observable	such	as	credit	and	liquidity	risks.	Swaps	and	derivative	instruments	are	valued	by	the	custodian	using	market	swap	curves	and	market	derived inputs.

Absolute	return	primarily	consists	of	private	partnership	interests	in	hedge	funds,	hedge	fund	of	funds	and	bank	loan	funds.	Partnership	interests	are	valued	using	the NAV	as	determined	by	the	independent	administrator	or	custodian	of	the	fund.

Commodities	consist	of	commodity-linked	notes	and	commodity-linked	derivative	contracts	designed	to	deliver	investment	returns	similar	to	the	GSCI	or	Dow	Jones UBS	Commodity	index	returns.	Commodities	are	valued	at	closing	prices	determined	by	calculation	agents	for	outstanding	transactions.

Other	items	to	reconcile	to	fair	value	of	plan	assets	include	the	net	of	interest	receivables,	amounts	due	for	securities	sold,	foreign	currency	fluctuations,	amounts	payable for	securities	purchased	and	interest	payable.

The	following	table	sets	forth	a	summary	of	changes	in	the	fair	values	of	the	postretirement	plans'	level	3	assets	for	the	years	ended	December	31,	2013	and	2012:

|  |  | Fair	Value	Measurement	Using	Significant	Unobservable	Inputs	(Level	3) | Fair	Value	Measurement	Using	Significant	Unobservable	Inputs	(Level	3) | Fair	Value	Measurement	Using	Significant	Unobservable	Inputs	(Level	3) |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Private | Absolute |  |  |
| (Millions) | Equities | Fixed\tIncome | Equity | Return | Commodities | Total |
| Beginning\tbalance\tat\tJan.\t1,\t2012 | $14 | $2 | $187 | $17 | $4 | $224 |
| Net\ttransfers\tinto\t/\t(out\tof)\tlevel\t3 | — | — | — | 15 | — | 15 |
| Purchases,\tsales,\tissuances,\tand\tsettlements, |  |  |  |  |  |  |
| net | — | (2) | (27) | (7) | — | (36) |
| Realized\tgain\t/\t(loss) | — | 1 | 11 | 2 | — | 14 |
| Change\tin\tunrealized\tgains\t/\t(losses) |  |  |  |  |  |  |
| relating\tto\tinstruments\tsold\tduring\tthe |  |  |  |  |  |  |
| period | — | (1) | (4) | (1) | — | (6) |
| Change\tin\tunrealized\tgains\t/\t(losses) |  |  |  |  |  |  |
| relating\tto\tinstruments\tstill\theld\tat\tthe |  |  |  |  |  |  |
| reporting\tdate | 2 | — | 3 | 2 | — | 7 |
| Ending\tbalance\tat\tDec.\t31,\t2012 | 16 | — | 170 | 28 | 4 | 218 |
| Net\ttransfers\tinto\t/\t(out\tof)\tlevel\t3 | — | — | — | — | — | — |
| Purchases,\tsales,\tissuances,\tand\tsettlements, |  |  |  |  |  |  |
| net | (3) | — | (27) | (4) | (4) | (38) |
| Realized\tgain\t/\t(loss) | — | — | 10 | 2 | — | 12 |
| Change\tin\tunrealized\tgains\t/\t(losses) |  |  |  |  |  |  |
| relating\tto\tinstruments\tsold\tduring\tthe |  |  |  |  |  |  |
| period | — | — | (3) | (1) | — | (4) |
| Change\tin\tunrealized\tgains\t/\t(losses) |  |  |  |  |  |  |
| relating\tto\tinstruments\tstill\theld\tat\tthe |  |  |  |  |  |  |
| reporting\tdate | 3 | — | 11 | 1 | — | 15 |
| Ending\tbalance\tat\tDec.\t31,\t2013 | $16 | $— | $161 | $26 | $— | $203 |

# NOTE	11.		Derivatives

The	Company	uses	interest	rate	swaps,	currency	swaps,	commodity	price	swaps,	and	forward	and	option	contracts	to	manage	risks	generally	associated	with	foreign exchange	rate,	interest	rate	and	commodity	price	fluctuations.	The	information	that	follows	explains	the	various	types	of	derivatives	and	financial	instruments	used	by 3M,	how	and	why	3M	uses	such	instruments,	how	such	instruments	are	accounted	for,	and	how	such	instruments	impact	3M's	financial	position	and	performance.

Additional	information	with	respect	to	the	impacts	on	other	comprehensive	income	of	nonderivative	hedging	and	derivative	instruments	is	included	in	Note	5. Additional	information	with	respect	to	the	fair	value	of	derivative	instruments	is	included	in	Note	12.	References	to	information	regarding	derivatives	and/or	hedging instruments	associated	with	the	Company's	long-term	debt	are	also	made	in	Note	9.

# Types	of	Derivatives/Hedging	Instruments	and	Inclusion	in	Income/Other	Comprehensive	Income

# Cash	Flow	Hedges:

For	derivative	instruments	that	are	designated	and	qualify	as	cash	flow	hedges,	the	effective	portion	of	the	gain	or	loss	on	the	derivative	is	reported	as	a	component	of other	comprehensive	income	and	reclassified	into	earnings	in	the	same	period	during	which	the	hedged	transaction	affects	earnings.	Gains	and	losses	on	the	derivative representing	either	hedge	ineffectiveness	or	hedge	components	excluded	from	the	assessment	of	effectiveness	are	recognized	in	current	earnings.

Cash	Flow	Hedging	-	Foreign	Currency	Forward	and	Option	Contracts:	The	Company	enters	into	foreign	exchange	forward	and	option	contracts	to	hedge	against	the effect	of	exchange	rate	fluctuations	on	cash	flows	denominated	in	foreign	currencies.	These	transactions	are	designated	as	cash	flow	hedges.	The	settlement	or	extension of	these	derivatives	will	result	in	reclassifications	(from	accumulated	other	comprehensive	income)	to	earnings	in	the	period	during	which	the	hedged	transactions	affect earnings.	Generally,	3M	dedesignates	these	cash	flow	hedge	relationships	in	advance	of	the	occurrence	of	the	forecasted	transaction.	The	portion	of	gains	or	losses	on the	derivative	instrument	previously	accumulated	in	other	comprehensive	income	for	dedesignated	hedges	remains	in	accumulated	other	comprehensive	income	until	the forecasted	transaction	occurs.	Changes	in	the	value	of	derivative	instruments	after	dedesignation	are	recorded	in	earnings	and	are	included	in	the	Derivatives	Not Designated	as	Hedging	Instruments	section	below.	Hedge	ineffectiveness	and	the	amount	excluded	from	effectiveness	testing	recognized	in	income	on	cash	flow	hedges were	not	material	for	2013,	2012	and	2011.	The	maximum	length	of	time	over	which	3M	hedges	its	exposure	to	the	variability	in	future	cash	flows	for	a	majority	of	the forecasted	transactions	is	12	months	and,	accordingly,	at	December	31,	2013,	the	majority	of	the	Company's	open	foreign	exchange	forward	and	option	contracts	had maturities	of	one	year	or	less.	The	dollar	equivalent	gross	notional	amount	of	the	Company's	foreign	exchange	forward	and	option	contracts	designated	as	cash	flow hedges	at	December	31,	2013	was	approximately	$1.7	billion.

Cash	Flow	Hedging	-	Commodity	Price	Management:	The	Company	manages	commodity	price	risks	through	negotiated	supply	contracts,	price	protection	agreements

and	forward	physical	contracts.	The	Company	uses	commodity	price	swaps	relative	to	natural	gas	as	cash	flow	hedges	of	forecasted	transactions	to	manage	price volatility.	The	related	mark-to-market	gain	or	loss	on	qualifying	hedges	is	included	in	other	comprehensive	income	to	the	extent	effective,	and	reclassified	into	cost	of sales	in	the	period	during	which	the	hedged	transaction	affects	earnings.	Generally,	the	length	of	time	over	which	3M	hedges	its	exposure	to	the	variability	in	future	cash flows	for	its	forecasted	natural	gas	transactions	is	12	months.	No	significant	commodity	cash	flow	hedges	were	discontinued	and	hedge	ineffectiveness	was	not	material for	2013,	2012	and	2011.	The	dollar	equivalent	gross	notional	amount	of	the	Company's	natural	gas	commodity	price	swaps	designated	as	cash	flow	hedges	at December	31,	2013	was	$19	million.

Cash	Flow	Hedging	—	Forecasted	Debt	Issuance:	In	August	2011,	in	anticipation	of	the	September	2011	issuance	of	$1	billion	in	five-year	fixed	rate	notes,	3M executed	a	pre-issuance	cash	flow	hedge	on	a	notional	amount	of	$400	million	by	entering	into	a	forward-starting	five-year	floating-to-fixed	interest	rate	swap.	Upon debt	issuance	in	September	2011,	3M	terminated	the	floating-to-fixed	interest	rate	swap.	The	termination	of	the	swap	resulted	in	a	$7	million	pre-tax	loss	($4	million after-tax)	that	will	be	amortized	over	the	five-year	life	of	the	note	and,	when	material,	is	included	in	the	tables	below	as	part	of	the	loss	recognized	in	income	on	the effective	portion	of	derivatives	as	a	result	of	reclassification	from	accumulated	other	comprehensive	income.

As	of	December	31,	2013,	the	Company	had	a	balance	of	$8	million	associated	with	the	after	tax	net	unrealized	loss	associated	with	cash	flow	hedging	instruments recorded	in	accumulated	other	comprehensive	income.	This	includes	a	$2	million	balance	(loss)	related	to	a	floating-to-fixed	interest	rate	swap	(discussed	in	the

preceding	paragraph),	which	will	be

amortized	over	the	five-year	life	of	the	note.	3M	expects	to	reclassify	a	majority	of	the	remaining	balance	to	earnings	over	the	next	12	months	(with	the	impact	offset	by cash	flows	from	underlying	hedged	items).

The	location	in	the	consolidated	statements	of	income	and	comprehensive	income	and	amounts	of	gains	and	losses	related	to	derivative	instruments	designated	as	cash flow	hedges	are	provided	in	the	following	table.	Reclassifications	of	amounts	from	accumulated	other	comprehensive	income	into	income	include	accumulated	gains (losses)	on	dedesignated	hedges	at	the	time	earnings	are	impacted	by	the	forecasted	transaction.

The	Company	revised	amounts	previously	presented	in	the	tables	below	for	the	pretax	gain	(loss)	recognized	in	other	comprehensive	income	on	effective	portion	of derivative	("Gain	Recognized	in	OCI")	and	the	pretax	gain	(loss)	recognized	in	income	on	effective	portion	of	derivative	as	a	result	of	reclassification	from	accumulated other	comprehensive	income	("Gain	Reclassified	into	Income")	for	the	years	ended	December	31,	2012	and	2011	relative	to	foreign	currency	forward	contracts.	These immaterial	corrections	increased	both	the	previously	presented	amounts	of	the	Gain	Recognized	in	OCI	and	the	Gain	Reclassified	into	Income	in	the	disclosure	tables below	by	$13	million	and	$11	million	in	2012	and	2011,	respectively.	The	revisions	had	no	impact	on	the	Company's	consolidated	results	of	operations	or	financial condition.

# Fair	Value	Hedges:

For	derivative	instruments	that	are	designated	and	qualify	as	fair	value	hedges,	the	gain	or	loss	on	the	derivatives	as	well	as	the	offsetting	loss	or	gain	on	the	hedged	item attributable	to	the	hedged	risk	are	recognized	in	current	earnings.

Fair	Value	Hedging	-	Interest	Rate	Swaps:	The	Company	manages	interest	expense	using	a	mix	of	fixed	and	floating	rate	debt.	To	help	manage	borrowing	costs,	the Company	may	enter	into	interest	rate	swaps.	Under	these	arrangements,	the	Company	agrees	to	exchange,	at	specified	intervals,	the	difference	between	fixed	and floating	interest	amounts	calculated	by	reference	to	an	agreed-upon	notional	principal	amount.	The	mark-to-market	of	these	fair	value	hedges	is	recorded	as	gains	or losses	in	interest	expense	and	is	offset	by	the	gain	or	loss	of	the	underlying	debt	instrument,	which	also	is	recorded	in	interest	expense.	These	fair	value	hedges	are	highly effective	and,	thus,	there	is	no	impact	on	earnings	due	to	hedge	ineffectiveness.	The	dollar	equivalent	(based	on	inception	date	foreign	currency	exchange	rates)	gross notional	amount	of	the	Company's	interest	rate	swaps	at	December	31,	2013	was	$745	million.

At	December	31,	2013,	the	Company	had	interest	rate	swaps	designated	as	fair	value	hedges	of	underlying	fixed	rate	obligations.	In	July	2007,	in	connection	with	the issuance	of	a	seven-year	Eurobond	for	an	amount	of	750	million	Euros,	the	Company	completed	a	fixed-to-floating	interest	rate	swap	on	a	notional	amount	of	400 million	Euros	as	a	fair	value	hedge	of	a	portion	of	the	fixed	interest	rate	Eurobond	obligation.	In	August	2010,	the	Company	terminated	150	million	Euros	of	the notional	amount	of	this	swap.	As	a	result,	a	gain	of	18	million	Euros,	recorded	as	part	of	the	balance	of	the	underlying	debt,	will	be	amortized	as	an	offset	to	interest expense	over	this	debt's	remaining	life.	Prior	to	termination	of	the	applicable	portion	of	the	interest	rate	swap,	the	mark-to-market	of	the	hedge	instrument	was	recorded as	gains	or	losses	in	interest	expense	and	was	offset	by	the	gain	or	loss	on	carrying	value	of	the	underlying	debt	instrument.	Consequently,	the	subsequent	amortization of	the	18	million	Euros	recorded	as	part	of	the	underlying	debt	balance	is	not	part	of	gains	on	hedged	items	recognized	in	income	in	the	tables	below.

In	November	2013,	3M	issued	an	eight-year	1.875%	fixed	rate	Eurobond	for	a	face	amount	of	600	million	Euros.	Upon	debt	issuance,	3M	completed	a	fixed-to-floating interest	rate	swap	on	a	notional	amount	of	300	million	Euros	as	a	fair	value	hedge	of	a	portion	of	the	fixed	interest	rate	Eurobond	obligation.

The	Company	also	had	two	fixed-to-floating	interest	rate	swaps	with	an	aggregate	notional	amount	of	$800	million	designated	as	fair	value	hedges	of	the	fixed	interest rate	obligation	under	the	$800	million,	three-year,	4.50%	notes	issued	in	October	2008.	These	swaps	and	underlying	note	matured	in	the	fourth	quarter	of	2011.

The	location	in	the	consolidated	statements	of	income	and	amounts	of	gains	and	losses	related	to	derivative	instruments	designated	as	fair	value	hedges	and	similar information	relative	to	the	hedged	items	are	as	follows:

| Year	ended	December	31,	2011 | Gain	(Loss)	on	Derivative | Gain	(Loss)	on	Derivative | Gain	(Loss)	on	Hedged	Item | Gain	(Loss)	on	Hedged	Item |
| :--- | :--- | :--- | :--- | :--- |
| (Millions) | Recognized\tin\tIncome |  | Recognized\tin\tIncome |  |
| Derivatives\tin\tFair\tValue\tHedging\tRelationships | Location | Amount | Location | Amount |
| Interest\trate\tswap\tcontracts | Interest\texpense | $(10) | Interest\texpense | $10 |
| Total | $(10) | $(10) | $10 | $10 |

# Net	Investment	Hedges:

As	circumstances	warrant,	the	Company	uses	cross	currency	swaps,	forwards	and	foreign	currency	denominated	debt	to	hedge	portions	of	the	Company's	net investments	in	foreign	operations.	For	hedges	that	meet	the	effectiveness	requirements,	the	net	gains	or	losses	attributable	to	changes	in	spot	exchange	rates	are	recorded in	cumulative	translation	within	other	comprehensive	income.	The	remainder	of	the	change	in	value	of	such	instruments	is	recorded	in	earnings.	Recognition	in	earnings of	amounts	previously	recorded	in	cumulative	translation	is	limited	to	circumstances	such	as	complete	or	substantially	complete	liquidation	of	the	net	investment	in	the hedged	foreign	operation.	At	December	31,	2013,	there	were	no	cross	currency	swaps	and	foreign	currency	forward	contracts	designated	as	net	investment	hedges.

In	addition	to	the	derivative	instruments	used	as	hedging	instruments	in	net	investment	hedges,	3M	also	uses	foreign	currency	denominated	debt	as	nonderivative hedging	instruments	in	certain	net	investment	hedges.	In	July	and	December	2007,	the	Company	issued	seven-year	fixed	rate	Eurobond	securities	for	amounts	of	750 million	Euros	and	275	million	Euros,	respectively.	In	November	2013,	the	Company	issued	eight-year	fixed	rate	Eurobond	securities	for	600	million	Euros.	3M designated	each	of	these	Eurobond	issuances	as	hedging	instruments	of	the	Company's	net	investment	in	its	European	subsidiaries.

In	anticipation	of	the	November	2013	Eurobond	issuance,	the	Company	entered	into	foreign	currency	forward	contracts	with	notional	amounts	totaling	594	million Euros.	These	forward	contracts	were	designated	as	hedging	instruments	of	the	Company's	net	investment	in	its	European	subsidiaries.	These	contracts	matured	in November	2013.

The	location	in	the	consolidated	statements	of	income	and	comprehensive	income	and	amounts	of	gains	and	losses	related	to	derivative	and	nonderivative	instruments designated	as	net	investment	hedges	are	as	follows.	There	were	no	reclassifications	of	the	effective	portion	of	net	investment	hedges	out	of	accumulated	other comprehensive	income	into	income	for	the	periods	presented	in	the	table	below.

|  | Pretax	Gain	(Loss) |  |  |
| :--- | :--- | :--- | :--- |
|  | Recognized\tas\tCumulative | Ineffective\tPortion\tof\tGain | Ineffective\tPortion\tof\tGain |
|  | Translation\twithin\tOther | (Loss)\ton\tInstrument\tand | (Loss)\ton\tInstrument\tand |
|  | Comprehensive\tIncome | Amount\tExcluded\tfrom | Amount\tExcluded\tfrom |
| Derivative\tand\tNonderivative\tInstruments\tin\tNet\tInvestment\tHedging | on\tEffective\tPortion\tof | Effectiveness\tTesting | Effectiveness\tTesting |
| Relationships | Instrument | Recognized\tin\tIncome | Recognized\tin\tIncome |
| (Millions) | Amount | Location | Amount |
| Foreign\tcurrency\tdenominated\tdebt | $(82) | N/A | $— |
| Foreign\tcurrency\tforward\tcontracts | 12 | N/A | — |
| Total | $(70) | $— | $— |

# Pretax	Gain	(Loss)

|  | Pretax	Gain	(Loss) |  |  |
| :--- | :--- | :--- | :--- |
|  | Recognized\tas\tCumulative | Ineffective\tPortion\tof\tGain | Ineffective\tPortion\tof\tGain |
|  | Translation\twithin\tOther | (Loss)\ton\tInstrument\tand | (Loss)\ton\tInstrument\tand |
|  | Comprehensive\tIncome | Amount\tExcluded\tfrom | Amount\tExcluded\tfrom |
| Derivative\tand\tNonderivative\tInstruments\tin\tNet\tInvestment\tHedging | on\tEffective\tPortion\tof | Effectiveness\tTesting | Effectiveness\tTesting |
| Relationships | Instrument | Recognized\tin\tIncome | Recognized\tin\tIncome |
| (Millions) | Amount | Location | Amount |
| Foreign\tcurrency\tdenominated\tdebt | $41 | N/A | $— |
| Total | $41 | $— | $— |

# Derivatives	Not	Designated	as	Hedging	Instruments:

Derivatives	not	designated	as	hedging	instruments	include	dedesignated	foreign	currency	forward	and	option	contracts	that	formerly	were	designated	in	cash	flow hedging	relationships	(as	referenced	in	the	Cash	Flow	Hedges	section	above).	In	addition,	3M	enters	into	foreign	currency	forward	contracts	and	commodity	price	swaps to	offset,	in	part,	the	impacts	of	certain	intercompany	activities	(primarily	associated	with	intercompany	licensing	arrangements)	and	fluctuations	in	costs	associated with	the	use	of	certain	precious	metals,	respectively.	These	derivative	instruments	are	not	designated	in	hedging	relationships;	therefore,	fair	value	gains	and	losses	on these	contracts	are	recorded	in	earnings.	The	dollar	equivalent	gross	notional	amount	of	these	forward,	option	and	swap	contracts	not	designated	as	hedging	instruments totaled	$7.5	billion	as	of	December	31,	2013.	The	Company	does	not	hold	or	issue	derivative	financial	instruments	for	trading	purposes.

The	location	in	the	consolidated	statements	of	income	and	amounts	of	gains	and	losses	related	to	derivative	instruments	not	designated	as	hedging	instruments	are	as follows:

|  | Year	ended	December	31,	2013 |  | Year	ended	December	31,	2012 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Gain\t(Loss)\ton\tDerivative\tRecognized\tin |  | Gain\t(Loss)\ton\tDerivative\tRecognized\tin |  |
| Derivatives\tNot\tDesignated\tas\tHedging\tInstruments | Income |  | Income |  |
| (Millions) | Location | Amount | Location | Amount |
| Foreign\tcurrency\tforward/option\tcontracts | Cost\tof\tsales | $20 | Cost\tof\tsales | $(24) |
| Foreign\tcurrency\tforward\tcontracts | Interest\texpense | (43) | Interest\texpense | 22 |
| Commodity\tprice\tswap\tcontracts | Cost\tof\tsales | (1) | Cost\tof\tsales | — |
| Total |  | $(24) |  | $(2) |

# Gain	(Loss)	on	Derivative	Recognized	in

|  | Year	ended	December	31,	2011 | Year	ended	December	31,	2011 |
| :--- | :--- | :--- |
|  | Gain\t(Loss)\ton\tDerivative\tRecognized\tin | Gain\t(Loss)\ton\tDerivative\tRecognized\tin |
| Derivatives\tNot\tDesignated\tas\tHedging\tInstruments | Income |  |
| (Millions) | Location | Amount |
| Foreign\tcurrency\tforward/option\tcontracts | Cost\tof\tsales | $13 |
| Foreign\tcurrency\tforward\tcontracts | Interest\texpense | 9 |
| Total |  | $22 |

# Location	and	Fair	Value	Amount	of	Derivative	Instruments

The	following	tables	summarize	the	fair	value	of	3M's	derivative	instruments,	excluding	nonderivative	instruments	used	as	hedging	instruments,	and	their	location	in	the consolidated	balance	sheet.	Additional	information	with	respect	to	the	fair	value	of	derivative	instruments	is	included	in	Note	12.

| (Millions) | Assets |  | Liabilities |  |
| :--- | :--- | :--- | :--- | :--- |
| Fair\tValue\tof\tDerivative\tInstruments | Location | Amount | Location | Amount |
| Derivatives\tdesignated\tas\thedging\tinstruments |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | Other\tcurrent\tassets | $24 | Other\tcurrent\tliabilities | $35 |
| Commodity\tprice\tswap\tcontracts | Other\tcurrent\tassets | 1 | Other\tcurrent\tliabilities | — |
| Interest\trate\tswap\tcontracts | Other\tassets | 8 | Other\tliabilities | 7 |
| Total\tderivatives\tdesignated\tas\thedging\tinstruments |  | $33 |  | $42 |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | Other\tcurrent\tassets | $51 | Other\tcurrent\tliabilities | $68 |
| Total\tderivatives\tnot\tdesignated\tas\thedging |  |  |  |  |
| instruments |  | $51 |  | $68 |
| Total\tderivative\tinstruments |  | $84 |  | $110 |

| (Millions) | Assets |  | Liabilities |  |
| :--- | :--- | :--- | :--- | :--- |
| Fair\tValue\tof\tDerivative\tInstruments | Location | Amount | Location | Amount |
| Derivatives\tdesignated\tas\thedging\tinstruments |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | Other\tcurrent\tassets | $39 | Other\tcurrent\tliabilities | $85 |
| Commodity\tprice\tswap\tcontracts | Other\tcurrent\tassets | — | Other\tcurrent\tliabilities | 1 |
| Interest\trate\tswap\tcontracts | Other\tassets | 23 | Other\tliabilities | — |
| Total\tderivatives\tdesignated\tas\thedging\tinstruments |  | $62 |  | $86 |
| Derivatives\tnot\tdesignated\tas\thedging\tinstruments |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | Other\tcurrent\tassets | $10 | Other\tcurrent\tliabilities | $20 |
| Total\tderivatives\tnot\tdesignated\tas\thedging |  |  |  |  |
| instruments |  | $10 |  | $20 |
| Total\tderivative\tinstruments |  | $72 |  | $106 |

# Credit	Risk	and	Offsetting	of	Assets	and	Liabilities	of	Derivative	Instruments

The	Company	is	exposed	to	credit	loss	in	the	event	of	nonperformance	by	counterparties	in	interest	rate	swaps,	currency	swaps,	commodity	price	swaps,	and	forward	and option	contracts.	However,	the	Company's	risk	is	limited	to	the	fair	value	of	the	instruments.	The	Company	actively	monitors	its	exposure	to	credit	risk	through	the	use of	credit	approvals	and	credit	limits,	and	by	selecting	major	international	banks	and	financial	institutions	as	counterparties.	3M	enters	into	master	netting	arrangements with	counterparties	when	possible	to	mitigate	credit	risk	in	derivative	transactions.	A	master	netting	arrangement	may	allow	each	counterparty	to	net	settle	amounts owed	between	a	3M	entity	and	the	counterparty	as	a	result	of	multiple,	separate	derivative	transactions.	As	of	December	31,	2013,	3M	has	International	Swaps	and Derivatives	Association	(ISDA)	agreements	with	11	applicable	banks	and	financial	institutions	which	contain	netting	provisions.	In	addition	to	a	master	agreement	with 3M	supported	by	a	primary	counterparty's	parent	guarantee,	3M	also	has	associated	credit	support	agreements	in	place	with	10	of	its	primary	derivative	counterparties which,	among	other	things,	provide	the	circumstances	under	which	either	party	is	required	to	post	eligible	collateral	(when	the	market	value	of	transactions	covered	by these	agreements	exceeds	specified	thresholds	or	if	a	counterparty's	credit	rating	has	been	downgraded	to	a	predetermined	rating).	The	Company	does	not	anticipate nonperformance	by	any	of	these	counterparties.

3M	has	elected	to	present	the	fair	value	of	derivative	assets	and	liabilities	within	the	Company's	consolidated	balance	sheet	on	a	gross	basis	even	when	derivative transactions	are	subject	to	master	netting	arrangements	and	may	otherwise	qualify	for	net	presentation.	However,	the	following	tables	provide	information	as	if	the Company	had	elected	to	offset	the	asset	and	liability	balances	of	derivative	instruments,	netted	in	accordance	with	various	criteria	in	the	event	of	default	or	termination as	stipulated	by	the	terms	of	netting	arrangements	with	each	of	the	counterparties.	For	each	counterparty,	if	netted,	the	Company	would	offset	the	asset	and	liability balances	of	all	derivatives	at	the	end	of	the	reporting	period	based	on	the	3M	entity	that	is	a	party	to	the	transactions.	Derivatives	not	subject	to	master	netting agreements	are	not	eligible	for	net	presentation.	As	of	the	applicable	dates	presented	below,	no	cash	collateral	had	been	received	or	pledged	related	to	these	derivative instruments.

# Offsetting	of	Financial	Assets/Liabilities	under	Master	Netting	Agreements	with	Derivative	Counterparties

# Gross	Amounts	not	Offset	in	the

|  |  | Gross	Amounts	not	Offset	in	the | Gross	Amounts	not	Offset	in	the |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Consolidated\tBalance\tSheet\tthat\tare\tSubject | Consolidated\tBalance\tSheet\tthat\tare\tSubject |  |
|  | Gross\tAmount\tof | to\tMaster\tNetting\tAgreements | to\tMaster\tNetting\tAgreements |  |
|  | Derivative\tAssets | Gross\tAmount\tof |  |  |
|  | Presented\tin\tthe | Eligible\tOffsetting |  |  |
|  | Consolidated | Recognized | Cash\tCollateral | Net\tAmount\tof |
| (Millions) | Balance\tSheet | Derivative\tLiabilities | Received | Derivative\tAssets |
| Derivatives\tsubject\tto\tmaster\tnetting\tagreements | $83 | $51 | $— | $32 |
| Derivatives\tnot\tsubject\tto\tmaster\tnetting |  |  |  |  |
| agreements | 1 |  |  | 1 |
| Total | $84 |  |  | $33 |

|  |  | Gross	Amounts	not	Offset	in	the | Gross	Amounts	not	Offset	in	the |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Consolidated\tBalance\tSheet\tthat\tare\tSubject | Consolidated\tBalance\tSheet\tthat\tare\tSubject |  |
|  | Gross\tAmount\tof | to\tMaster\tNetting\tAgreements | to\tMaster\tNetting\tAgreements |  |
|  | Derivative\tLiabilities | Gross\tAmount\tof |  |  |
|  | Presented\tin\tthe | Eligible\tOffsetting |  |  |
|  | Consolidated | Recognized | Cash\tCollateral | Net\tAmount\tof |
| (Millions) | Balance\tSheet | Derivative\tAssets | Pledged | Derivative\tLiabilities |
| Derivatives\tsubject\tto\tmaster\tnetting\tagreements | $110 | $51 | $— | $59 |
| Derivatives\tnot\tsubject\tto\tmaster\tnetting |  |  |  |  |
| agreements | — |  |  | — |
| Total | $110 |  |  | $59 |

|  |  | Gross	Amounts	not	Offset	in	the | Gross	Amounts	not	Offset	in	the |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Consolidated\tBalance\tSheet\tthat\tare\tSubject | Consolidated\tBalance\tSheet\tthat\tare\tSubject |  |
|  | Gross\tAmount\tof | to\tMaster\tNetting\tAgreements | to\tMaster\tNetting\tAgreements |  |
|  | Derivative\tAssets | Gross\tAmount\tof |  |  |
|  | Presented\tin\tthe | Eligible\tOffsetting |  |  |
|  | Consolidated | Recognized | Cash\tCollateral | Net\tAmount\tof |
| (Millions) | Balance\tSheet | Derivative\tLiabilities | Received | Derivative\tAssets |
| Derivatives\tsubject\tto\tmaster\tnetting\tagreements | $67 | $25 | $— | $42 |
| Derivatives\tnot\tsubject\tto\tmaster\tnetting |  |  |  |  |
| agreements | 5 |  |  | 5 |
| Total | $72 |  |  | $47 |

|  |  | Gross	Amounts	not	Offset	in	the | Gross	Amounts	not	Offset	in	the |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Consolidated\tBalance\tSheet\tthat\tare\tSubject | Consolidated\tBalance\tSheet\tthat\tare\tSubject |  |
|  | Gross\tAmount\tof | to\tMaster\tNetting\tAgreements | to\tMaster\tNetting\tAgreements |  |
|  | Derivative\tLiabilities | Gross\tAmount\tof |  |  |
|  | Presented\tin\tthe | Eligible\tOffsetting |  |  |
|  | Consolidated | Recognized | Cash\tCollateral | Net\tAmount\tof |
| (Millions) | Balance\tSheet | Derivative\tAssets | Pledged | Derivative\tLiabilities |
| Derivatives\tsubject\tto\tmaster\tnetting\tagreements | $106 | $25 | $— | $81 |
| Derivatives\tnot\tsubject\tto\tmaster\tnetting |  |  |  |  |
| agreements | — |  |  | — |

Currency	Effects:	3M	estimates	that	year-on-year	currency	effects,	including	hedging	impacts,	decreased	net	income	attributable	to	3M	by	approximately	$74	million and	$103	million	in	2013	and	2012,	respectively.	These	estimates	include	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	and	the	negative	impact	of	swapping	Venezuelan	bolivars	into	U.S.	dollars.	3M	estimates	that	year-on-year	derivative	and other	transaction	gains	and	losses	decreased	net	income	attributable	to	3M	by	approximately	$12	million	in	2013	and	increased	net	income	attributable	to	3M	by	$49 million	in	2012.

# NOTE	12.		Fair	Value	Measurements

3M	follows	ASC	820,	Fair	Value	Measurements	and	Disclosures,	with	respect	to	assets	and	liabilities	that	are	measured	at	fair	value	on	a	recurring	basis	and nonrecurring	basis.	Under	the	standard,	fair	value	is	defined	as	the	exit	price,	or	the	amount	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	in	an orderly	transaction	between	market	participants	as	of	the	measurement	date.	The	standard	also	establishes	a	hierarchy	for	inputs	used	in	measuring	fair	value	that maximizes	the	use	of	observable	inputs	and	minimizes	the	use	of	unobservable	inputs	by	requiring	that	the	most	observable	inputs	be	used	when	available.	Observable inputs	are	inputs	market	participants	would	use	in	valuing	the	asset	or	liability	developed	based	on	market	data	obtained	from	sources	independent	of	the	Company. Unobservable	inputs	are	inputs	that	reflect	the	Company's	assumptions	about	the	factors	market	participants	would	use	in	valuing	the	asset	or	liability	developed	based upon	the	best	information	available	in	the	circumstances.	The	hierarchy	is	broken	down	into	three	levels.	Level	1	inputs	are	quoted	prices	(unadjusted)	in	active	markets for	identical	assets	or	liabilities.	Level	2	inputs	include	quoted	prices	for	similar	assets	or	liabilities	in	active	markets,	quoted	prices	for	identical	or	similar	assets	or liabilities	in	markets	that	are	not	active,	and	inputs	(other	than	quoted	prices)	that	are	observable	for	the	asset	or	liability,	either	directly	or	indirectly.	Level	3	inputs	are unobservable	inputs	for	the	asset	or	liability.	Categorization	within	the	valuation	hierarchy	is	based	upon	the	lowest	level	of	input	that	is	significant	to	the	fair	value measurement.

# Assets	and	Liabilities	that	are	Measured	at	Fair	Value	on	a	Recurring	Basis:

For	3M,	assets	and	liabilities	that	are	measured	at	fair	value	on	a	recurring	basis	primarily	relate	to	available-for-sale	marketable	securities,	available-for-sale investments	(included	as	part	of	investments	in	the	Consolidated	Balance	Sheet)	and	certain	derivative	instruments.	Derivatives	include	cash	flow	hedges,	interest	rate swaps	and	most	net	investment	hedges.	The	information	in	the	following	paragraphs	and	tables	primarily	addresses	matters	relative	to	these	financial	assets	and liabilities.	Separately,	there	were	no	material	fair	value	measurements	with	respect	to	nonfinancial	assets	or	liabilities	that	are	recognized	or	disclosed	at	fair	value	in	the Company's	financial	statements	on	a	recurring	basis	for	2013	and	2012.

3M	uses	various	valuation	techniques,	which	are	primarily	based	upon	the	market	and	income	approaches,	with	respect	to	financial	assets	and	liabilities.	Following	is	a description	of	the	valuation	methodologies	used	for	the	respective	financial	assets	and	liabilities	measured	at	fair	value.

# Available-for-sale	marketable	securities	—	except	auction	rate	securities:

Marketable	securities,	except	auction	rate	securities,	are	valued	utilizing	multiple	sources.	A	weighted	average	price	is	used	for	these	securities.	Market	prices	are obtained	for	these	securities	from	a	variety	of	industry	standard	data	providers,	security	master	files	from	large	financial	institutions,	and	other	third-party	sources.	These multiple	prices	are	used	as	inputs	into	a	distribution-curve-based	algorithm	to	determine	the	daily	fair	value	to	be	used.	3M	classifies	U.S.	treasury	securities	as	level	1, while	all	other	marketable	securities	(excluding	auction	rate	securities)	are	classified	as	level	2.	Marketable	securities	are	discussed	further	in	Note	8.

# Available-for-sale	marketable	securities	—	auction	rate	securities	only:

As	discussed	in	Note	8,	auction	rate	securities	held	by	3M	failed	to	auction	since	the	second	half	of	2007.	As	a	result,	investments	in	auction	rate	securities	are	valued utilizing	third-party	indicative	bid	levels	in	markets	that	are	not	active	and	broker-dealer	valuation	models	that	utilize	inputs	such	as	current/forward	interest	rates, current	market	conditions	and	credit	default	swap	spreads.	3M	classifies	these	securities	as	level	3.

# Available-for-sale	investments:

Investments	include	equity	securities	that	are	traded	in	an	active	market.	Closing	stock	prices	are	readily	available	from	active	markets	and	are	used	as	being representative	of	fair	value.	3M	classifies	these	securities	as	level	1.

# Derivative	instruments:

The	Company's	derivative	assets	and	liabilities	within	the	scope	of	ASC	815,	Derivatives	and	Hedging,	are	required	to	be	recorded	at	fair	value.	The	Company's derivatives	that	are	recorded	at	fair	value	include	foreign	currency	forward	and	option	contracts,	commodity	price	swaps,	interest	rate	swaps,	and	net	investment	hedges where	the	hedging	instrument	is	recorded	at	fair	value.	Net	investment	hedges	that	use	foreign	currency	denominated	debt	to	hedge	3M's	net	investment	are	not impacted	by	the	fair	value	measurement	standard	under	ASC	820,	as	the	debt	used	as	the	hedging	instrument	is

marked	to	a	value	with	respect	to	changes	in	spot	foreign	currency	exchange	rates	and	not	with	respect	to	other	factors	that	may	impact	fair	value.

3M	has	determined	that	foreign	currency	forwards	and	commodity	price	swaps	will	be	considered	level	1	measurements	as	these	are	traded	in	active	markets	which	have identical	asset	or	liabilities,	while	currency	swaps,	foreign	currency	options,	interest	rate	swaps	and	cross-currency	swaps	will	be	considered	level	2.	For	level	2 derivatives,	3M	uses	inputs	other	than	quoted	prices	that	are	observable	for	the	asset.	These	inputs	include	foreign	currency	exchange	rates,	volatilities,	and	interest rates.	The	level	2	derivative	positions	are	primarily	valued	using	standard	calculations/models	that	use	as	their	basis	readily	observable	market	parameters.	Industry standard	data	providers	are	3M's	primary	source	for	forward	and	spot	rate	information	for	both	interest	rates	and	currency	rates,	with	resulting	valuations	periodically validated	through	third-party	or	counterparty	quotes	and	a	net	present	value	stream	of	cash	flows	model.

The	following	tables	provide	information	by	level	for	assets	and	liabilities	that	are	measured	at	fair	value	on	a	recurring	basis.

Assets:

Level	1

| U.S.	government	agency	securities | $234 | $— | $234 | $— |
| :--- | :--- | :--- | :--- | :--- |
| Foreign\tgovernment\tagency\tsecurities | 125 | — | 125 | — |
| Corporate\tdebt\tsecurities | 781 | — | 781 | — |
| Certificates\tof\tdeposit/time\tdeposits | 40 | — | 40 | — |
| Commercial\tpaper | 60 | — | 60 | — |
| Asset-backed\tsecurities: |  |  |  |  |
| Automobile\tloan\trelated | 585 | — | 585 | — |
| Credit\tcard\trelated | 180 | — | 180 | — |
| Equipment\tlease\trelated | 67 | — | 67 | — |
| Other | 75 | — | 75 | — |
| U.S.\ttreasury\tsecurities | 49 | 49 | — | — |
| U.S.\tmunicipal\tsecurities | 2 | — | 2 | — |
| Auction\trate\tsecurities | 11 | — | — | 11 |
| Investments | 2 | 2 | — | — |
| Derivative\tinstruments\t—\tassets: |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | 75 | 75 | — | — |
| Commodity\tprice\tswap\tcontracts | 1 | 1 | — | — |
| Interest\trate\tswap\tcontracts | 8 | — | 8 | — |
| Liabilities: |  |  |  |  |
| Derivative\tinstruments\t—\tliabilities: |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | 103 | 103 | — | — |
| Interest\trate\tswap\tcontracts | 7 | — | 7 | — |

|  |  |  | Fair	Value	Measurements |  |
| :--- | :--- | :--- | :--- | :--- |
| (Millions) | Fair\tValue\tat |  | Using\tInputs\tConsidered\tas |  |
| Description | Dec.\t31,\t2012 | Level\t1 | Level\t2 | Level\t3 |
| Assets: |  |  |  |  |
| Available-for-sale: |  |  |  |  |
| Marketable\tsecurities: |  |  |  |  |
| U.S.\tgovernment\tagency\tsecurities | $287 | $— | $287 | $— |
| Foreign\tgovernment\tagency\tsecurities | 67 | — | 67 | — |
| Corporate\tdebt\tsecurities | 965 | — | 965 | — |
| Certificates\tof\tdeposit/time\tdeposits | 41 | — | 41 | — |
| Commercial\tpaper | 116 | — | 116 | — |
| Asset-backed\tsecurities: |  |  |  |  |
| Automobile\tloan\trelated | 942 | — | 942 | — |
| Credit\tcard\trelated | 157 | — | 157 | — |
| Equipment\tlease\trelated | 90 | — | 90 | — |
| Other | 39 | — | 39 | — |
| U.S.\ttreasury\tsecurities | 72 | 72 | — | — |
| U.S.\tmunicipal\tsecurities | 27 | — | 27 | — |
| Auction\trate\tsecurities | 7 | — | — | 7 |
| Investments | 3 | 3 | — | — |
| Derivative\tinstruments\t—\tassets: |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | 49 | 49 | — | — |
| Interest\trate\tswap\tcontracts | 23 | — | 23 | — |
| Liabilities: |  |  |  |  |
| Derivative\tinstruments\t—\tliabilities: |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | 105 | 104 | 1 | — |
| Commodity\tprice\tswap\tcontracts | 1 | 1 | — | — |

The	following	table	provides	a	reconciliation	of	the	beginning	and	ending	balances	of	items	measured	at	fair	value	on	a	recurring	basis	in	the	table	above	that	used significant	unobservable	inputs	(Level	3).

| Marketable	securities	—	auction	rate	securities	only | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Beginning\tbalance | $7 | $4 | $7 |
| Total\tgains\tor\tlosses: |  |  |  |
| Included\tin\tearnings | — | — | — |
| Included\tin\tother\tcomprehensive\tincome | 4 | 3 | (3) |
| Purchases,\tissuances,\tand\tsettlements | — | — | — |
| Transfers\tin\tand/or\tout\tof\tLevel\t3 | — | — | — |
| Ending\tbalance\t(December\t31) | 11 | 7 | 4 |
| Change\tin\tunrealized\tgains\tor\tlosses\tfor\tthe\tperiod\tincluded\tin\tearnings\tfor\tsecurities\theld\tat\nthe\tend\tof\tthe\treporting\tperiod | — | — | — |

In	addition,	the	plan	assets	of	3M's	pension	and	postretirement	benefit	plans	are	measured	at	fair	value	on	a	recurring	basis	(at	least	annually).	Refer	to	Note	10.

Assets	and	Liabilities	that	are	Measured	at	Fair	Value	on	a	Nonrecurring	Basis:

Disclosures	are	required	for	certain	assets	and	liabilities	that	are	measured	at	fair	value,	but	are	recognized	and	disclosed	at	fair	value	on	a	nonrecurring	basis	in	periods subsequent	to	initial	recognition.	For	3M,	such	measurements	of	fair	value	relate	primarily	to	long-lived	asset	impairments.	There	were	no	material	long-lived	asset impairments	for	2013,	2012	and	2011.

# Fair	Value	of	Financial	Instruments:

The	Company's	financial	instruments	include	cash	and	cash	equivalents,	marketable	securities,	accounts	receivable,	certain	investments,	accounts	payable,	borrowings, and	derivative	contracts.	The	fair	values	of	cash	and	cash	equivalents,	accounts	receivable,	accounts	payable,	and	short-term	borrowings	and	current	portion	of	long-term debt	(except	the	Eurobond	securities	due	2014	totaling	1.025	billion	Euros,	which	were	moved	from	long-term	debt	to	current	portion	of	long-term	debt	in	July	2013	and are	shown	separately	in	the	table	below)	approximated	carrying	values	because	of	the	short-term	nature	of	these	instruments.	Available-for-sale	marketable	securities and	investments,	in	addition	to	certain	derivative	instruments,	are	recorded	at	fair	values	as	indicated	in	the	preceding	disclosures.	For	its	long-term	debt	the	Company utilized	third-party	quotes	to	estimate	fair	values	(classified	as	level	2).	Information	with	respect	to	the	carrying	amounts	and	estimated	fair	values	of	these	financial instruments	follow:

|  | December	31,	2013 |  | December	31,	2012 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying | Fair | Carrying | Fair |
| (Millions) | Value | Value | Value | Value |
| Eurobond\tsecurities\tdue\t2014\t(long-term\tin\t2012\tand\tshort-term\tin\t2013) | $1,424 | $1,447 | $1,383 | $1,443 |
| Long-term\tdebt,\texcluding\tcurrent\tportion\tand\tEurobond\tsecurities\tdue\t2014 | 4,326 | 4,463 | 3,533 | 3,920 |

The	fair	values	reflected	above	consider	the	terms	of	the	related	debt	absent	the	impacts	of	derivative/hedging	activity.	The	carrying	amount	of	long-term	debt	referenced above	is	impacted	by	certain	fixed-to-floating	interest	rate	swaps	that	are	designated	as	fair	value	hedges	and	by	the	designation	of	fixed	rate	Eurobond	securities	issued by	the	Company	as	hedging	instruments	of	the	Company's	net	investment	in	its	European	subsidiaries.	Many	of	3M's	fixed-rate	bonds	were	trading	at	a	premium	at December	31,	2013	and	2012	due	to	the	low	interest	rates	and	tightening	of	3M's	credit	spreads.

# NOTE	13.		Commitments	and	Contingencies

# Capital	and	Operating	Leases:

Rental	expense	under	operating	leases	was	$330	million	in	2013,	$300	million	in	2012	and	$279	million	in	2011.	It	is	3M's	practice	to	secure	renewal	rights	for	leases, thereby	giving	3M	the	right,	but	not	the	obligation,	to	maintain	a	presence	in	a	leased	facility.	3M	has	two	primary	capital	leases.	First,	3M	has	a	capital	lease,	which became	effective	in	April	2003,	that	involves	a	building	in	the	United	Kingdom	(with	a	lease	term	of	22	years).	During	the	second	quarter	of	2003,	3M	recorded	a	capital lease	asset	and	obligation	of	approximately	33.5	million	British	Pound	(GBP),	or	approximately	$55	million	at	December	31,	2013	exchange	rates.	Second,	during	the fourth	quarter	of	2009,	3M	recorded	a	capital	lease	asset	and	obligation	of	approximately	$50	million	related	to	an	IT	investment	with	an	amortization	period	of	seven years.

Minimum	lease	payments	under	capital	and	operating	leases	with	non-cancelable	terms	in	excess	of	one	year	as	of	December	31,	2013,	were	as	follows:

| (Millions) | Capital	Leases | Leases |
| :--- | :--- | :--- |
| 2014 | $23 | $216 |
| 2015 | 9 | 170 |
| 2016 | 9 | 128 |
| 2017 | 5 | 98 |
| 2018 | 3 | 54 |
| After\t2018 | 30 | 182 |
| Total | $79 | $848 |
| Less:\tAmounts\trepresenting\tinterest | 4 |  |
| Present\tvalue\tof\tfuture\tminimum\tlease\tpayments | 75 |  |
| Less:\tCurrent\tobligations\tunder\tcapital\tleases | 17 |  |
| Long-term\tobligations\tunder\tcapital\tleases | $58 |  |

# Warranties/Guarantees:

3M's	accrued	product	warranty	liabilities,	recorded	on	the	Consolidated	Balance	Sheet	as	part	of	current	and	long-term	liabilities,	are	estimated	at	approximately	$31 million	at	December	31,	2013	and	$28	million	at	December	31,	2012.	3M	does	not	consider	this	amount	to	be	material.	The	fair	value	of	3M	guarantees	of	loans	with third	parties	and	other	guarantee	arrangements	are	not	material.

# Related	Party	Activity:

3M	does	not	have	any	material	related	party	activity	that	is	not	in	the	ordinary	course	of	business.

The	Company	and	some	of	its	subsidiaries	are	involved	in	numerous	claims	and	lawsuits,	principally	in	the	United	States,	and	regulatory	proceedings	worldwide.	These include	various	products	liability	(involving	products	that	the	Company	now	or	formerly	manufactured	and	sold),	intellectual	property,	and	commercial	claims	and lawsuits,	including	those	brought	under	the	antitrust	laws,	and	environmental	proceedings.	Unless	otherwise	stated,	the	Company	is	vigorously	defending	all	such litigation.

Process	for	Disclosure	and	Recording	of	Liabilities	and	Insurance	Receivables	Related	to	Legal	Proceedings

Many	lawsuits	and	claims	involve	highly	complex	issues	relating	to	causation,	scientific	evidence,	and	whether	there	are	actual	damages	and	are	otherwise	subject	to substantial	uncertainties.	Assessments	of	lawsuits	and	claims	can	involve	a	series	of	complex	judgments	about	future	events	and	can	rely	heavily	on	estimates	and assumptions.	The	Company	complies	with	the	requirements	of	ASC	Topic	450,	Contingencies,	and	related	guidance,	and	records	liabilities	for	legal	proceedings	in	those instances	where	it	can	reasonably	estimate	the	amount	of	the	loss	and	where	liability	is	probable.	Where	the	reasonable	estimate	of	the	probable	loss	is	a	range,	the Company	records	the	most	likely	estimate	of	the	loss,	or	the	low	end	of	the	range	if	there	is	no	one	best	estimate.	The	Company	either	discloses	the	amount	of	a	possible loss	or	range	of	loss	in	excess	of	established	accruals	if	estimable,	or	states	that	such	an	estimate	cannot	be	made.	The

Company	discloses	significant	legal	proceedings	even	where	liability	is	not	probable	or	the	amount	of	the	liability	is	not	estimable,	or	both,	if	the	Company	believes there	is	at	least	a	reasonable	possibility	that	a	loss	may	be	incurred.

The	Company	estimates	insurance	receivables	based	on	an	analysis	of	its	numerous	policies,	including	their	exclusions,	pertinent	case	law	interpreting	comparable policies,	its	experience	with	similar	claims,	and	assessment	of	the	nature	of	the	claim	and	remaining	coverage,	and	records	an	amount	it	has	concluded	is	likely	to	be recovered.	For	those	insured	matters	where	the	Company	has	taken	an	accrual,	the	Company	also	records	receivables	for	the	amount	of	insurance	that	it	expects	to recover	under	the	Company's	insurance	program.	For	those	insured	matters	where	the	Company	has	not	taken	an	accrual	because	the	liability	is	not	probable	or	the amount	of	the	liability	is	not	estimable,	or	both,	but	where	the	Company	has	incurred	an	expense	in	defending	itself,	the	Company	records	receivables	for	the	amount	of insurance	that	it	expects	to	recover	for	the	expense	incurred.

Because	litigation	is	subject	to	inherent	uncertainties,	and	unfavorable	rulings	or	developments	could	occur,	there	can	be	no	certainty	that	the	Company	may	not ultimately	incur	charges	in	excess	of	presently	recorded	liabilities.	A	future	adverse	ruling,	settlement,	or	unfavorable	development	could	result	in	future	charges	that could	have	a	material	adverse	effect	on	the	Company's	results	of	operations	or	cash	flows	in	the	period	in	which	they	are	recorded.	The	Company	currently	believes	that such	future	charges,	if	any,	would	not	have	a	material	adverse	effect	on	the	consolidated	financial	position	of	the	Company.	Based	on	experience	and	developments,	the Company	reexamines	its	estimates	of	probable	liabilities	and	associated	expenses	and	receivables	each	period,	and	whether	it	is	able	to	estimate	a	liability	previously determined	to	be	not	estimable	and/or	not	probable.	Where	appropriate,	the	Company	makes	additions	to	or	adjustments	of	its	estimated	liabilities.	As	a	result,	the current	estimates	of	the	potential	impact	on	the	Company's	consolidated	financial	position,	results	of	operations	and	cash	flows	for	the	legal	proceedings	and	claims pending	against	the	Company	could	change	in	the	future.

The	following	table	shows	the	major	categories	of	significant	legal	matters	—	respirator	mask/asbestos	litigation	(including	Aearo	—	described	below),	environmental remediation	and	other	environmental	liabilities	—	for	which	the	Company	has	been	able	to	estimate	its	probable	liability	and	for	which	the	Company	has	recorded accruals	and	the	related	insurance	receivables:

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Respirator\tmask/asbestos\tliabilities | $152 | $154 | $130 |
| Respirator\tmask/asbestos\tinsurance\treceivables | 58 | 87 | 121 |
| Environmental\tremediation\tliabilities | $27 | $29 | $28 |
| Environmental\tremediation\tinsurance\treceivables | 11 | 11 | 15 |
| Other\tenvironmental\tliabilities | $48 | $57 | $75 |
| Other\tenvironmental\tinsurance\treceivables | 15 | 15 | — |

The	following	sections	first	describe	the	significant	legal	proceedings	in	which	the	Company	is	involved,	and	then	describe	the	liabilities	and	associated	insurance receivables	the	Company	has	accrued	relating	to	its	significant	legal	proceedings.

# Respirator	Mask/Asbestos	Litigation

As	of	December	31,	2013,	the	Company	is	a	named	defendant,	with	multiple	co-defendants,	in	numerous	lawsuits	in	various	courts	that	purport	to	represent approximately	2,200	individual	claimants,	compared	to	approximately	2,060	individual	claimants	with	actions	pending	at	December	31,	2012.

The	vast	majority	of	the	lawsuits	and	claims	resolved	by	and	currently	pending	against	the	Company	allege	use	of	some	of	the	Company's	mask	and	respirator	products and	seek	damages	from	the	Company	and	other	defendants	for	alleged	personal	injury	from	workplace	exposures	to	asbestos,	silica,	coal	mine	dust	or	other	occupational dusts	found	in	products	manufactured	by	other	defendants	or	generally	in	the	workplace.	A	minority	of	the	lawsuits	and	claims	resolved	by	and	currently	pending against	the	Company	generally	allege	personal	injury	from	occupational	exposure	to	asbestos	from	products	previously	manufactured	by	the	Company,	which	are	often unspecified,	as	well	as	products	manufactured	by	other	defendants,	or	occasionally	at	Company	premises.

The	Company's	current	volume	of	new	and	pending	matters	is	substantially	lower	than	its	historical	experience.	The	Company	expects	that	filing	of	claims	by unimpaired	claimants	in	the	future	will	continue	to	be	at	much	lower	levels	than	in	the	past.	Accordingly,	the	number	of	claims	alleging	more	serious	injuries,	including mesothelioma	and	other	malignancies,

will	represent	a	greater	percentage	of	total	claims	than	in	the	past.	The	Company	has	prevailed	in	all	nine	cases	taken	to	trial,	including	seven	of	the	eight	cases	tried	to verdict	(such	trials	occurred	in	1999,	2000,	2001,	2003,	2004,	and	2007),	and	an	appellate	reversal	in	2005	of	the	2001	jury	verdict	adverse	to	the	Company.	The	ninth case,	tried	in	2009,	was	dismissed	by	the	Court	at	the	close	of	plaintiff's	evidence,	based	on	the	Court's	legal	finding	that	the	plaintiff	had	not	presented	sufficient evidence	to	support	a	jury	verdict.	The	plaintiffs	appealed,	but	in	February	2012	the	California	Court	of	Appeals	granted	the	plaintiff's	voluntary	dismissal	of	the	appeal.

The	Company	has	demonstrated	in	these	past	trial	proceedings	that	its	respiratory	protection	products	are	effective	as	claimed	when	used	in	the	intended	manner	and	in the	intended	circumstances.	Consequently	the	Company	believes	that	claimants	are	unable	to	establish	that	their	medical	conditions,	even	if	significant,	are	attributable to	the	Company's	respiratory	protection	products.	Nonetheless	the	Company's	litigation	experience	indicates	that	claims	of	persons	with	malignant	conditions	are costlier	to	resolve	than	the	claims	of	unimpaired	persons,	and	it	therefore	believes	the	average	cost	of	resolving	pending	and	future	claims	on	a	per-claim	basis	will continue	to	be	higher	than	it	experienced	in	prior	periods	when	the	vast	majority	of	claims	were	asserted	by	the	unimpaired.

As	previously	reported,	the	State	of	West	Virginia,	through	its	Attorney	General,	filed	a	complaint	in	2003	against	the	Company	and	two	other	manufacturers	of respiratory	protection	products	in	the	Circuit	Court	of	Lincoln	County,	West	Virginia	and	amended	its	complaint	in	2005.	The	amended	complaint	seeks	substantial,	but unspecified,	compensatory	damages	primarily	for	reimbursement	of	the	costs	allegedly	incurred	by	the	State	for	worker's	compensation	and	healthcare	benefits	provided to	all	workers	with	occupational	pneumoconiosis	and	unspecified	punitive	damages.	While	the	case	has	been	inactive	since	the	fourth	quarter	of	2007,	the	court	held	a case	management	conference	in	March	2011.	In	November	2013,	the	Attorney	General	of	the	State	of	West	Virginia	filed	a	motion	to	bifurcate	the	lawsuit	into	separate liability	and	damages	proceedings.	A	hearing	on	that	motion	is	expected	to	occur	in	the	first	quarter	of	2014.	No	liability	has	been	recorded	for	this	matter	because	the Company	believes	that	liability	is	not	probable	and	estimable	at	this	time.	In	addition,	the	Company	is	not	able	to	estimate	a	possible	loss	or	range	of	loss	given	the	lack of	any	meaningful	discovery	responses	by	the	State	of	West	Virginia,	the	otherwise	minimal	activity	in	this	case	and	the	fact	that	the	complaint	asserts	claims	against two	other	manufacturers	where	a	defendant's	share	of	liability	may	turn	on	the	law	of	joint	and	several	liability	and	by	the	amount	of	fault,	if	any,	a	jury	might	allocate to	each	defendant	if	the	case	is	ultimately	tried.

Plaintiffs	have	asserted	specific	dollar	claims	for	damages	in	approximately	50%	of	the	1,321	lawsuits	that	were	pending	against	the	Company	at	the	end	of	2013	in	all jurisdictions.	A	majority	of	states	restrict	or	prohibit	specifying	damages	in	tort	cases	such	as	these,	and	most	of	the	remaining	jurisdictions	do	not	require	such specification.	In	those	cases	in	which	plaintiffs	choose	to	assert	specific	dollar	amounts	in	their	complaints,	brought	in	states	that	permit	such	pleading,	the	amounts claimed	are	typically	not	meaningful	as	an	indicator	of	the	Company's	potential	liability.	This	is	because	(a)	the	amounts	claimed	typically	bear	no	relation	to	the	extent

of	the	plaintiff's	injury,	if	any;	(b)	the	complaints	nearly	always	assert	claims	against	multiple	defendants	with	the	typical	complaint	asserting	claims	against	as	few	as	a dozen	different	defendants	to	upwards	of	100	different	defendants,	the	damages	alleged	are	not	attributed	to	individual	defendants,	and	a	defendant's	share	of	liability may	turn	on	the	law	of	joint	and	several	liability,	which	can	vary	by	state,	and	by	the	amount	of	fault	a	jury	allocates	to	each	defendant	if	a	case	is	ultimately	tried	before a	jury;	(c)	many	cases	are	filed	against	the	Company	even	though	the	plaintiffs	did	not	use	any	of	the	Company's	products	and,	ultimately,	are	withdrawn	or	dismissed without	any	payment;	and	(d)	many	cases	are	brought	on	behalf	of	plaintiffs	who	have	not	suffered	any	medical	injury,	and,	ultimately,	are	resolved	without	any payment	or	a	payment	that	is	a	small	fraction	of	the	damages	initially	claimed.	Of	the	667	pending	cases	in	which	purported	damage	amounts	are	specified	in	the complaints,	391	cases	involve	claims	of	$100,000	or	less	(9	of	which	also	allege	punitive	damages	of	$75,000,	27	of	which	also	allege	punitive	damages	of	$10	million, and	3	of	which	also	allege	punitive	damages	of	$20	million);	53	cases	involve	claims	between	$100,000	and	$3	million	(45	of	which	also	allege	punitive	damages	of $250,000,	3	of	which	also	allege	punitive	damages	of	$1	million,	and	1	of	which	also	alleges	punitive	damages	of	$4	million);	10	cases	involve	claims	between	$3 million	and	$7.5	million	(all	of	which	also	allege	punitive	damages	of	$5	million);	1	case	involves	a	claim	of	$10	million;	170	cases	involve	claims	of	$10	million	to $50	million	(159	of	which	also	allege	punitive	damages	of	$13	million,	1	of	which	also	alleges	punitive	damages	of	$15	million,	2	of	which	also	allege	punitive damages	of	$20	million,	and	8	of	which	also	allege	punitive	damages	of	$90.5	million);	6	cases	involve	claims	of	$50	million	(all	of	which	also	allege	punitive	damages of	$50	million);	and	36	cases	involve	claims	of	over	$50	million	(all	of	which	allege	punitive	damages	of	$100	million).	Some	complaints	allege	that	the	compensatory and	punitive	damages	are	at	least	the	amounts	specified.	As	previously	stated,	the	Company's	experience	and	the	other	reasons	cited	indicate	that	the	damage	amounts specified	in	complaints	are	not	a	meaningful	factor	in	any	assessment	of	the	Company's	potential	liability.

Respirator	Mask/Asbestos	Liabilities	and	Insurance	Receivables:	The	Company	estimates	its	respirator	mask/asbestos	liabilities,	including	the	cost	to	resolve	the	claims and	defense	costs,	by	examining:	(i)	the	Company's	experience	in	resolving	claims,	(ii)	apparent	trends,	(iii)	the	apparent	quality	of	claims	(e.g.,	whether	the	claim	has been	asserted	on	behalf	of	asymptomatic	claimants),	(iv)	changes	in	the	nature	and	mix	of	claims	(e.g.,	the	proportion	of	claims	asserting	usage	of	the	Company's	mask or	respirator	products	and	alleging	exposure	to	each	of	asbestos,	silica,	coal	or	other	occupational	dusts,	and	claims	pleading	use	of	asbestos-containing	products allegedly	manufactured	by	the	Company),

(v)	the	number	of	current	claims	and	a	projection	of	the	number	of	future	asbestos	and	other	claims	that	may	be	filed	against	the	Company,	(vi)	the	cost	to	resolve recently	settled	claims,	and	(vii)	an	estimate	of	the	cost	to	resolve	and	defend	against	current	and	future	claims.

Developments	may	occur	that	could	affect	the	Company's	estimate	of	its	liabilities.	These	developments	include,	but	are	not	limited	to,	significant	changes	in	(i)	the number	of	future	claims,	(ii)	the	average	cost	of	resolving	claims,	(iii)	the	legal	costs	of	defending	these	claims	and	in	maintaining	trial	readiness,	(iv)	changes	in	the	mix and	nature	of	claims	received,	(v)	trial	and	appellate	outcomes,	(vi)	changes	in	the	law	and	procedure	applicable	to	these	claims,	and	(vii)	the	financial	viability	of	other co-defendants	and	insurers.

As	a	result	of	the	Company's	on-going	review	of	its	accruals	and	the	greater	cost	of	resolving	claims	of	persons	who	claim	more	serious	injuries,	including mesothelioma	and	other	malignancies,	the	Company	increased	its	accruals	in	2013	for	respirator	mask/asbestos	liabilities	by	$48	million.	In	2013,	the	Company	made payments	for	fees	and	settlements	of	$47	million	related	to	the	respirator	mask/asbestos	litigation.	As	of	December	31,	2013,	the	Company	had	accruals	for	respirator mask/asbestos	liabilities	of	$127	million	(excluding	Aearo	accruals).	The	Company	cannot	estimate	the	amount	or	range	of	amounts	by	which	the	liability	may	exceed the	accrual	the	Company	has	established	because	of	the	(i)	inherent	difficulty	in	projecting	the	number	of	claims	that	have	not	yet	been	asserted,	(ii)	the	complaints nearly	always	assert	claims	against	multiple	defendants	where	the	damages	alleged	are	typically	not	attributed	to	individual	defendants	so	that	a	defendant's	share	of liability	may	turn	on	the	law	of	joint	and	several	liability,	which	can	vary	by	state,	(iii)	the	multiple	factors	described	above	that	the	Company	considers	in	estimating	its liabilities,	and	(iv)	the	several	possible	developments	described	above	that	may	occur	that	could	affect	the	Company's	estimate	of	liabilities.

As	of	December	31,	2013,	the	Company's	receivable	for	insurance	recoveries	related	to	the	respirator	mask/asbestos	litigation	was	$58	million.	The	Company	estimates insurance	receivables	based	on	an	analysis	of	its	numerous	policies,	including	their	exclusions,	pertinent	case	law	interpreting	comparable	policies,	its	experience	with similar	claims,	and	assessment	of	the	nature	of	each	claim	and	remaining	coverage,	and	records	an	amount	it	has	concluded	is	likely	to	be	recovered.	Various	factors could	affect	the	timing	and	amount	of	recovery	of	this	receivable,	including	(i)	delays	in	or	avoidance	of	payment	by	insurers;	(ii)	the	extent	to	which	insurers	may become	insolvent	in	the	future,	and	(iii)	the	outcome	of	negotiations	with	insurers	and	legal	proceedings	with	respect	to	respirator	mask/asbestos	liability	insurance coverage.

As	previously	reported,	on	January	5,	2007	the	Company	was	served	with	a	declaratory	judgment	action	filed	on	behalf	of	two	of	its	insurers	(Continental	Casualty	and Continental	Insurance	Co.	—	both	part	of	the	Continental	Casualty	Group)	disclaiming	coverage	for	respirator	mask/asbestos	claims.	The	action,	in	the	District	Court	in Ramsey	County,	Minnesota,	sought	declaratory	judgment	regarding	coverage	provided	by	the	policies	and	the	allocation	of	covered	costs	among	the	policies	issued	by the	various	insurers.	The	action	named,	in	addition	to	the	Company,	over	60	of	the	Company's	insurers.	The	plaintiffs,	Continental	Casualty	and	Continental	Insurance Co.,	as	well	as	a	significant	number	of	the	insurer	defendants	named	in	the	amended	complaint	had	been	dismissed	because	of	settlements	they	had	reached	with	the Company	regarding	the	matters	at	issue	in	the	lawsuit.	In	July	2013,	the	Company	reached	agreements	in	principle	with	the	remaining	insurers	in	the	lawsuit.	The Company	and	those	insurers	have	been	in	the	process	of	preparing	formal	settlement	agreements.	After	all	of	the	settlement	agreements	have	been	executed,	the	Court will	issue	dismissal	orders	at	which	time	this	matter	will	be	concluded.	During	2013,	the	Company	received	payments	of	$29	million	from	settlements	with	insurers.

The	Company	has	unresolved	coverage	with	claims-made	carriers	for	respirator	mask	claims.	Once	the	claims-made	insurance	coverage	is	resolved,	the	Company	will have	collected	substantially	all	of	its	remaining	insurance	coverage	for	respirator	mask	claims.

# Respirator	Mask/Asbestos	Litigation	—	Aearo	Technologies

On	April	1,	2008,	a	subsidiary	of	the	Company	purchased	the	stock	of	Aearo	Holding	Corp.,	the	parent	of	Aearo	Technologies	("Aearo").	Aearo	manufactured	and	sold various	products,	including	personal	protection	equipment,	such	as	eye,	ear,	head,	face,	fall	and	certain	respiratory	protection	products.

As	of	December	31,	2013,	Aearo	and/or	other	companies	that	previously	owned	and	operated	Aearo's	respirator	business	(American	Optical	Corporation,	Warner- Lambert	LLC,	AO	Corp.	and	Cabot	Corporation	("Cabot"))	are	named	defendants,	with	multiple	co-defendants,	including	the	Company,	in	numerous	lawsuits	in	various courts	in	which	plaintiffs	allege	use	of	mask	and	respirator	products	and	seek	damages	from	Aearo	and	other	defendants	for	alleged	personal	injury	from	workplace exposures	to	asbestos,	silica-related,	or	other	occupational	dusts	found	in	products	manufactured	by	other	defendants	or	generally	in	the	workplace.

As	of	December	31,	2013,	the	Company,	through	its	Aearo	subsidiary,	has	recorded	$25	million	as	the	best	estimate	of	the	probable	liabilities	for	product	liabilities	and defense	costs	related	to	current	and	future	Aearo-related	asbestos	and	silica-related	claims.	Responsibility	for	legal	costs,	as	well	as	for	settlements	and	judgments,	is currently	shared	in	an	informal	arrangement	among	Aearo,	Cabot,	American	Optical	Corporation	and	a	subsidiary	of	Warner	Lambert	and	their	insurers	(the

"Payor	Group").	Liability	is	allocated	among	the	parties	based	on	the	number	of	years	each	company	sold	respiratory	products	under	the	"AO	Safety"	brand	and/or owned	the	AO	Safety	Division	of	American	Optical	Corporation	and	the	alleged	years	of	exposure	of	the	individual	plaintiff.	Aearo's	share	of	the	contingent	liability	is further	limited	by	an	agreement	entered	into	between	Aearo	and	Cabot	on	July	11,	1995.	This	agreement	provides	that,	so	long	as	Aearo	pays	to	Cabot	a	quarterly	fee	of $100,000,	Cabot	will	retain	responsibility	and	liability	for,	and	indemnify	Aearo	against,	any	product	liability	claims	involving	exposure	to	asbestos,	silica,	or		silica

products	for	respirators	sold	prior	to	July	11,	1995.	Because	of	the	difficulty	in	determining	how	long	a	particular	respirator	remains	in	the	stream	of	commerce	after being	sold,	Aearo	and	Cabot	have	applied	the	agreement	to	claims	arising	out	of	the	alleged	use	of	respirators	involving	exposure	to	asbestos,	silica	or	silica	products prior	to	January	1,	1997.	With	these	arrangements	in	place,	Aearo's	potential	liability	is	limited	to	exposures	alleged	to	have	arisen	from	the	use	of	respirators	involving exposure	to	asbestos,	silica,	or	silica	products	on	or	after	January	1,	1997.	To	date,	Aearo	has	elected	to	pay	the	quarterly	fee.	Aearo	could	potentially	be	exposed	to additional	claims	for	some	part	of	the	pre-July	11,	1995	period	covered	by	its	agreement	with	Cabot	if	Aearo	elects	to	discontinue	its	participation	in	this	arrangement,	or if	Cabot	is	no	longer	able	to	meet	its	obligations	in	these	matters.

In	March	2012,	Cabot	CSC	Corporation	and	Cabot	Corporation	filed	a	lawsuit	against	Aearo	in	the	Superior	Court	of	Suffolk	County,	Massachusetts	seeking	declaratory relief	as	to	the	scope	of	Cabot's	indemnity	obligations	under	the	July	11,	1995	agreement,	including	whether	Cabot	has	retained	liability	for	coal	workers' pneumoconiosis	claims,	and	seeking	damages	for	breach	of	contract.

Developments	may	occur	that	could	affect	the	estimate	of	Aearo's	liabilities.	These	developments	include,	but	are	not	limited	to:	(i)	significant	changes	in	the	number	of future	claims,	(ii)	significant	changes	in	the	average	cost	of	resolving	claims,	(iii)	significant	changes	in	the	legal	costs	of	defending	these	claims,	(iv)	significant	changes in	the	mix	and	nature	of	claims	received,	(v)	trial	and	appellate	outcomes,	(vi)	significant	changes	in	the	law	and	procedure	applicable	to	these	claims,	(vii)	significant changes	in	the	liability	allocation	among	the	co-defendants,	(viii)	the	financial	viability	of	members	of	the	Payor	Group	including	exhaustion	of	available	coverage limits,	and/or	(ix)	a	determination	that	the	interpretation	of	the	contractual	obligations	on	which	Aearo	has	estimated	its	share	of	liability	is	inaccurate.	The	Company cannot	determine	the	impact	of	these	potential	developments	on	its	current	estimate	of	Aearo's	share	of	liability	for	these	existing	and	future	claims.	If	any	of	the developments	described	above	were	to	occur,	the	actual	amount	of	these	liabilities	for	existing	and	future	claims	could	be	significantly	larger	than	the	amount	accrued.

Because	of	the	inherent	difficulty	in	projecting	the	number	of	claims	that	have	not	yet	been	asserted,	the	complexity	of	allocating	responsibility	for	future	claims	among the	Payor	Group,	and	the	several	possible	developments	that	may	occur	that	could	affect	the	estimate	of	Aearo's	liabilities,	the	Company	cannot	estimate	the	amount	or range	of	amounts	by	which	Aearo's	liability	may	exceed	the	accrual	the	Company	has	established.

# Environmental	Matters	and	Litigation

The	Company's	operations	are	subject	to	environmental	laws	and	regulations	including	those	pertaining	to	air	emissions,	wastewater	discharges,	toxic	substances,	and the	handling	and	disposal	of	solid	and	hazardous	wastes	enforceable	by	national,	state,	and	local	authorities	around	the	world,	and	private	parties	in	the	United	States	and abroad.	These	laws	and	regulations	provide,	under	certain	circumstances,	a	basis	for	the	remediation	of	contamination,	for	restoration	of	or	compensation	for	damages	to natural	resources,	and	for	personal	injury	and	property	damage	claims.	The	Company	has	incurred,	and	will	continue	to	incur,	costs	and	capital	expenditures	in complying	with	these	laws	and	regulations,	defending	personal	injury	and	property	damage	claims,	and	modifying	its	business	operations	in	light	of	its	environmental responsibilities.	In	its	effort	to	satisfy	its	environmental	responsibilities	and	comply	with	environmental	laws	and	regulations,	the	Company	has	established,	and periodically	updates,	policies	relating	to	environmental	standards	of	performance	for	its	operations	worldwide.

Under	certain	environmental	laws,	including	the	United	States	Comprehensive	Environmental	Response,	Compensation	and	Liability	Act	of	1980	and	similar	state	laws, the	Company	may	be	jointly	and	severally	liable,	typically	with	other	companies,	for	the	costs	of	remediation	of	environmental	contamination	at	current	or	former facilities	and	at	off-site	locations.	The	Company	has	identified	numerous	locations,	most	of	which	are	in	the	United	States,	at	which	it	may	have	some	liability.	Please refer	to	the	section	entitled	"Environmental	Liabilities	and	Insurance	Receivables"	that	follows	for	information	on	the	amount	of	the	accrual.

# Environmental	Matters

As	previously	reported,	the	Company	has	been	voluntarily	cooperating	with	ongoing	reviews	by	local,	state,	national	(primarily	the	U.S.	Environmental	Protection Agency	(EPA)),	and	international	agencies	of	possible	environmental	and	health	effects	of	various	perfluorinated	compounds	("PFCs"),	including	perfluorooctanyl compounds	such	as	perfluorooctanoate	("PFOA")	and	perfluorooctane	sulfonate	("PFOS").	As	a	result	of	its	phase-out	decision	in	May	2000,	the	Company	no	longer manufactures	perfluorooctanyl	compounds.	The	company	ceased	manufacturing	and	using	the	vast	majority	of	these	compounds	within	approximately	two	years	of	the phase-out	announcement,	and	ceased	all	manufacturing	and	the	last

significant	use	of	this	chemistry	by	2008.	Through	its	ongoing	life	cycle	management	and	its	raw	material	composition	identification	processes	associated	with	the Company's	policies	covering	the	use	of	all	persistent	and	bio-accumulative	materials,	the	Company	has	on	occasion	identified	the	presence	of	precursor	chemicals	in materials	purchased	from	suppliers	that	may	ultimately	degrade	to	PFOA,	PFOS,	or	similar	compounds.	Upon	such	identification,	the	Company	works	to	find alternatives	for	such	chemicals.

Regulatory	activities	concerning	PFOA	and/or	PFOS	continue	in	the	United	States,	Europe	and	elsewhere,	and	before	certain	international	bodies.	These	activities include	gathering	of	exposure	and	use	information,	risk	assessment,	and	consideration	of	regulatory	approaches.	The	EPA	continues	to	develop	Drinking	Water	Health Advisories	for	PFOS	and	PFOA,	which	are	expected	to	be	released	in	2014.	Those	advisory	levels	will	supersede	the	current	provisional	advisory	levels.	In	an	effort	to move	toward	developing	standards	under	the	Safe	Drinking	Water	Act,	the	EPA	published	on	May	2,	2012	a	list	of	unregulated	substances,	including	six	PFCs,	required to	be	monitored	during	the	period	2013-2015	by	public	water	system	suppliers	to	determine	the	extent	of	their	occurrence.

The	Company	is	continuing	to	make	progress	in	its	work,	under	the	supervision	of	state	regulators,	to	address	its	historic	disposal	of	PFC-containing	waste	associated with	manufacturing	operations	at	the	Cottage	Grove,	Minnesota	and	Decatur,	Alabama	plants.

3M	completed	its	third	and	final	phase	of	work	pursuant	to	a	Memorandum	of	Understanding	with	the	EPA	regarding	an	environmental	assessment	program	at	the Company's	Decatur	manufacturing	site.	That	work	included	groundwater	sampling	off-site	from	the	3M	Decatur	facility	as	well	as	at	three	local	landfills	used	by	the facility.	The	Company	shared	results	from	this	final	phase	of	sampling	work	with	the	EPA	in	September	2012	and	submitted	an	updated	analysis	of	the	sampling	work	in late	2013.	The	submittal	of	the	updated	analysis	fulfilled	3M's	obligations	under	the	Memorandum	of	Understanding.

As	previously	reported,	the	Company	entered	into	a	voluntary	remedial	action	agreement	with	the	Alabama	Department	of	Environmental	Management	(ADEM)	to address	the	presence	of	PFCs	in	the	soil	at	the	Company's	manufacturing	facility	in	Decatur,	Alabama.	Pursuant	to	a	permit	issued	by	ADEM,	for	approximately	twenty years,	the	Company	incorporated	its	wastewater	treatment	plant	sludge	containing	PFCs	in	fields	at	its	Decatur	facility.	After	a	review	of	the	available	options	to	address the	presence	of	PFCs	in	the	soil,	ADEM	agreed	that	the	preferred	remediation	option	is	to	use	a	multilayer	cap	over	the	former	sludge	incorporation	areas	on	the manufacturing	site	with	subsequent	groundwater	migration	controls	and	treatment.	Implementation	of	that	option	will	continue	throughout	the	balance	of	2014	and	is expected	to	be	completed	in	2017.

The	Company	continues	to	work	with	the	Minnesota	Pollution	Control	Agency	(MPCA)	pursuant	to	the	terms	of	the	previously	disclosed	May	2007	Settlement Agreement	and	Consent	Order	to	address	the	presence	of	certain	PFCs	in	the	soil	and	groundwater	at	former	disposal	sites	in	Washington	County,	Minnesota	(Oakdale and	Woodbury)	and	at	the	Company's	manufacturing	facility	at	Cottage	Grove,	Minnesota.	Under	this	agreement,	the	Company's	principal	obligations	include (i)	evaluating	releases	of	certain	PFCs	from	these	sites	and	proposing	response	actions;	(ii)	providing	treatment	or	alternative	drinking	water	upon	identifying	any	level exceeding	a	Health	Based	Value	("HBV")	or	Health	Risk	Limit	("HRL")	(i.e.,	the	amount	of	a	chemical	in	drinking	water	determined	by	the	Minnesota	Department	of Health	(MDH)	to	be	safe	for	human	consumption	over	a	lifetime)	for	certain	PFCs		for	which	a	HBV	and/or	HRL	exists	as	a	result	of	contamination	from	these	sites; (iii)	remediating	identified	sources	of	other	PFCs	at	these	sites	that	are	not	controlled	by	actions	to	remediate	PFOA	and	PFOS;	and	(iv)	sharing	information	with	the MPCA	about	certain	perfluorinated	compounds.	During	2008,	the	MPCA	issued	formal	decisions	adopting	remedial	options	for	the	former	disposal	sites	in	Washington County,	Minnesota	(Oakdale	and	Woodbury).	In	August	2009,	the	MPCA	issued	a	formal	decision	adopting	remedial	options	for	the	Company's	Cottage	Grove

manufacturing	facility.	During	the	spring	and	summer	of	2010,	3M	began	implementing	the	agreed	upon	remedial	options	at	the	Cottage	Grove	and	Woodbury	sites.	3M commenced	the	remedial	option	at	the	Oakdale	site	in	late	2010.	At	each	location	the	remedial	options	were	recommended	by	the	Company	and	approved	by	the	MPCA. Remediation	work	has	been	completed	at	the	Oakdale	and	Woodbury	sites,	and	they	are	in	an	operational	maintenance	mode.	Remediation	will	continue	at	the	Cottage Grove	site	during	2014.

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

# Environmental	Litigation

As	previously	reported,	a	former	employee	filed	a	purported	class	action	lawsuit	in	2002	in	the	Circuit	Court	of	Morgan	County,	Alabama,	seeking	unstated	damages and	alleging	that	the	plaintiffs	suffered	fear,	increased	risk,	subclinical	injuries,	and	property	damage	from	exposure	to	certain	perfluorochemicals	at	or	near	the Company's	Decatur,	Alabama,	manufacturing	facility.	The	Circuit	Court	in	2005	granted	the	Company's	motion	to	dismiss	the	named	plaintiff's	personal	injury-related claims	on	the	basis	that	such	claims	are	barred	by	the	exclusivity	provisions	of	the	state's	Workers	Compensation	Act.	The	plaintiffs'	counsel	filed	an	amended	complaint in	November	2006,	limiting	the	case	to	property

damage	claims	on	behalf	of	a	purported	class	of	residents	and	property	owners	in	the	vicinity	of	the	Decatur	plant.	In	May	2013,	the	Court	stayed	the	case	for	an unknown	period	due	to	the	filing	of	a	bankruptcy	petition	by	a	co-defendant.

Also,	in	2005,	the	judge	in	a	second	purported	class	action	lawsuit	(filed	by	three	residents	of	Morgan	County,	Alabama,	seeking	unstated	compensatory	and	punitive damages	involving	alleged	damage	to	their	property	from	emissions	of	certain	perfluorochemical	compounds	from	the	Company's	Decatur,	Alabama,	manufacturing facility	that	formerly	manufactured	those	compounds)	granted	the	Company's	motion	to	abate	the	case,	effectively	putting	the	case	on	hold	pending	the	resolution	of class	certification	issues	in	the	first	action	described	above,	filed	in	the	same	court	in	2002.	Despite	the	stay,	plaintiffs	filed	an	amended	complaint	seeking	damages	for alleged	personal	injuries	and	property	damage	on	behalf	of	the	named	plaintiffs	and	the	members	of	a	purported	class.	No	further	action	in	the	case	is	expected	unless and	until	the	stay	is	lifted.

In	February	2009,	a	resident	of	Franklin	County,	Alabama,	filed	a	purported	class	action	lawsuit	in	the	Circuit	Court	of	Franklin	County	seeking	compensatory	damages and	injunctive	relief	based	on	the	application	by	the	Decatur	utility's	wastewater	treatment	plant	of	wastewater	treatment	sludge	to	farmland	and	grasslands	in	the	state that	allegedly	contain	PFOA,	PFOS	and	other	perfluorochemicals.	The	named	defendants	in	the	case	include	3M,	its	subsidiary	Dyneon	LLC,	Daikin	America,	Inc., Synagro-WWT,	Inc.,	Synagro	South,	LLC,	and	Biological	Processors	of	America.	The	named	plaintiff	seeks	to	represent	a	class	of	all	persons	within	the	State	of Alabama	who	have	had	PFOA,	PFOS,	and	other	perfluorochemicals	released	or	deposited	on	their	property.	In	March	2010,	the	Alabama	Supreme	Court	ordered	the case	transferred	from	Franklin	County	to	Morgan	County.	In	May	2010,	consistent	with	its	handling	of	the	other	matters,	the	Morgan	County	Circuit	Court	abated	this case,	putting	it	on	hold	pending	the	resolution	of	the	class	certification	issues	in	the	first	case	filed	there.

In	December	2010,	the	State	of	Minnesota,	by	its	Attorney	General	Lori	Swanson,	acting	in	its	capacity	as	trustee	of	the	natural	resources	of	the	State	of	Minnesota,	filed a	lawsuit	in	Hennepin	County	District	Court	against	3M	to	recover	damages	(including	unspecified	assessment	costs	and	reasonable	attorney's	fees)	for	alleged	injury	to, destruction	of,	and	loss	of	use	of	certain	of	the	State's	natural	resources	under	the	Minnesota	Environmental	Response	and	Liability	Act	(MERLA)	and	the	Minnesota Water	Pollution	Control	Act	(MWPCA),	as	well	as	statutory	nuisance	and	common	law	claims	of	trespass,	nuisance,	and	negligence	with	respect	to	the	presence	of PFCs	in	the	groundwater,	surface	water,	fish	or	other	aquatic	life,	and	sediments	(the	"NRD	Lawsuit").	The	State	also	seeks	declarations	under	MERLA	that	3M	is responsible	for	all	damages	the	State	may	suffer	in	the	future	for	injuries	to	natural	resources	from	releases	of	PFCs	into	the	environment,	and	under	MWPCA	that	3M	is responsible	for	compensation	for	future	loss	or	destruction	of	fish,	aquatic	life,	and	other	damages.

In	January	2011,	the	City	of	Lake	Elmo	filed	a	motion	to	intervene	in	the	NRD	Lawsuit	and	seeking	damages	in	excess	of	$50,000	and	other	legal	and	equitable	relief, including	reasonable	attorneys'	fees,	for	alleged	contamination	of	city	property,	wells,	groundwater	and	water	contained	in	the	wells	with	PFCs	under	several	theories, including	common	law	and	statutory	nuisance,	strict	liability,	trespass,	negligence,	and	conversion.	The	court	granted	the	City	of	Lake	Elmo's	motion	to	intervene	in	this lawsuit.	In	August	2013,	the	City	of	Lake	Elmo	voluntarily	dismissed	without	prejudice	its	claims	in	the	NRD	Lawsuit.

In	November	2011,	the	Metropolitan	Council	filed	a	motion	to	intervene	and	a	complaint	in	the	NRD	Lawsuit	seeking	compensatory	damages	and	other	legal, declaratory	and	equitable	relief,	including	reasonable	attorneys'	fees,	for	costs	and	fees	that	the	Metropolitan	Council	alleges	it	will	be	required	to	assess	at	some	time	in the	future	if	the	MPCA	imposes	restrictions	on	Metropolitan	Council's	PFOS	discharges	to	the	Mississippi	River,	including	the	installation	and	maintenance	of	a	water treatment	system.	The	Metropolitan	Council's	intervention	motion	was	based	on	several	theories,	including	common	law	negligence,	and	statutory	claims	under MERLA	for	response	costs,	and	under	the	Minnesota	Environmental	Rights	Act	(MERA)	for	declaratory	and	equitable	relief	against	3M	for	PFOS	and	other	PFC pollution	of	the	waters	and	sediments	of	the	Mississippi	River.	3M	did	not	object	to	the	motion	to	intervene.	In	January	2012,	3M	answered	the	Metropolitan	Council's complaint	and	filed	a	counterclaim	alleging	that	the	Metropolitan	Council	discharges	PFCs	to	the	Mississippi	River	and	discharges	PFC-containing	sludge	and	biosolids from	one	or	more	of	its	wastewater	treatment	plants	onto	agricultural	lands	and	local	area	landfills.	Accordingly,	3M	requested	that	if	the	Court	finds	that	the	State	is entitled	to	any	of	the	damages	the	State	seeks,	3M	seeks	contribution	and	apportionment	from	the	Metropolitan	Council,	including	attorneys'	fees,	under	MERLA,	and contribution	from	and	liability	for	the	Metropolitan	Council's	proportional	share	of	damages	awarded	to	the	State	under	the	MWPCA,	as	well	as	under	statutory nuisance	and	common	law	theories	of	trespass,	nuisance,	and	negligence.	3M	also	seeks	declaratory	relief	under	MERA.

In	May	2012,	3M	filed	a	motion	to	disqualify	the	State	of	Minnesota's	counsel,	Covington	&	Burling,	LLP	(Covington).	In	October	2012,	the	court	granted	3M's	motion to	disqualify	Covington	as	counsel	to	the	State	and	the	State	and	Covington	appealed	the	court's	disqualification	to	the	Minnesota	Court	of	Appeals.	In	July	2013,	the Minnesota	Court	of	Appeals	affirmed	the	district	court's	disqualification	order.	In	October	2013,	the	Minnesota	Supreme	Court	granted	both	the	State's	and	Covington's petition	for	review	of	the	decision	of	the	Minnesota	Court	of	Appeals.	In	January	2014,	the	Minnesota

Supreme	Court	heard	oral	arguments.	If	the	Court	affirms	the	Court	of	Appeals	decision,	the	State	will	have	180	days	following	issuance	of	the	Minnesota	Supreme Court's	decision	to	secure	new	counsel.	In	a	separate	but	related	action,	the	Company	filed	suit	against	Covington	for	breach	of	its	fiduciary	duties	to	the	Company	and for	breach	of	contract	arising	out	of	Covington's	representation	of	the	State	of	Minnesota	in	the	NRD	Lawsuit.

The	State	of	New	Jersey	filed	suit	in	2005	against	Occidental	Chemical	Corporation,	Tierra	Solutions	Inc.,	Maxus	Energy	Corporation	and	five	other	companies	seeking cleanup	and	removal	costs	and	other	damages	associated	with	the	presence	of	dioxin	and	other	hazardous	substances	in	the	sediment	of	a	17-mile	stretch	of	the	Passaic River	in	New	Jersey.	In	June	2009,	the	Company,	along	with	more	than	250	other	companies,	was	served	with	a	third-party	complaint	by	Tierra	Solutions	Inc.	and Maxus	Energy	Corporation	seeking	contribution	towards	the	cost	and	damages	asserted	or	incurred	for	investigation	and	remediation	of	discharges	to	the	Passaic	River. The	third-party	complaint	seeks	to	spread	those	costs	among	the	third-party	defendants,	including	3M.	Allegations	asserted	against	3M	relate	to	its	use	of	two commercial	drum	conditioning	facilities	in	New	Jersey.	In	March	2013,	3M	and	other	third	party	defendants	entered	into	a	settlement	agreement	with	the	state	of	New Jersey	for	an	amount	that	is	not	material	to	3M.	In	December	2013,	the	Court	approved	the	settlement	and	entered	the	Consent	Judgment.	The	settlement	resolves	claims or	potential	claims	by	the	State	of	New	Jersey	regarding	discharges	or	alleged	discharges	into	the	Passaic	River	by	the	settling	parties,	and	precludes	certain	cost

recovery	actions	by	the	third-party	plaintiffs.	The	settlement	with	the	State	of	New	Jersey	does	not	include	release	from	potential	federal	claims	yet	to	be	asserted.	Total costs	for	the	remedy	currently	proposed	by	EPA	could	easily	exceed	$1	billion.	While	the	Company	does	not	yet	have	a	basis	for	estimating	its	potential	exposure	in	the yet	to	be	asserted	EPA	claim,	the	Company	currently	believes	its	allocable	share	of	the	possible	loss,	if	any,	is	likely	to	be	a	fraction	of	one	percent	of	the	total	costs because	of	the	Company's	limited	potential	involvement	at	this	site.

For	environmental	litigation	matters	described	in	this	section	for	which	a	liability,	if	any,	has	been	recorded,	the	Company	believes	the	amount	recorded,	as	well	as	the possible	loss	or	range	of	loss	in	excess	of	the	established	accrual	is	not	material	to	the	Company's	consolidated	results	of	operations	or	financial	condition.	For	those matters	for	which	a	liability	has	not	been	recorded,	the	Company	believes	such	liability	is	not	probable	and	estimable	and	the	Company	is	not	able	to	estimate	a	possible loss	or	range	of	loss	at	this	time,	with	the	exception	of	the	Passaic	River	litigation,	where	the	Company's	potential	exposure,	if	any,	is	likely	to	be	a	fraction	of	one percent	of	the	total	costs.

# Environmental	Liabilities	and	Insurance	Receivables

As	of	December	31,	2013,	the	Company	had	recorded	liabilities	of	$27	million	for	estimated	"environmental	remediation"	costs	based	upon	an	evaluation	of	currently available	facts	with	respect	to	each	individual	site	and	also	recorded	related	insurance	receivables	of	$11	million.	The	Company	records	liabilities	for	remediation	costs on	an	undiscounted	basis	when	they	are	probable	and	reasonably	estimable,	generally	no	later	than	the	completion	of	feasibility	studies	or	the	Company's	commitment to	a	plan	of	action.	Liabilities	for	estimated	costs	of	environmental	remediation,	depending	on	the	site,	are	based	primarily	upon	internal	or	third-party	environmental studies,	and	estimates	as	to	the	number,	participation	level	and	financial	viability	of	any	other	potentially	responsible	parties,	the	extent	of	the	contamination	and	the nature	of	required	remedial	actions.	The	Company	adjusts	recorded	liabilities	as	further	information	develops	or	circumstances	change.	The	Company	expects	that	it	will pay	the	amounts	recorded	over	the	periods	of	remediation	for	the	applicable	sites,	currently	ranging	up	to	20	years.

As	of	December	31,	2013,	the	Company	had	recorded	liabilities	of	$48	million	for	"other	environmental	liabilities"	based	upon	an	evaluation	of	currently	available	facts to	implement	the	Settlement	Agreement	and	Consent	Order	with	the	MPCA,	the	remedial	action	agreement	with	ADEM,	and	to	address	trace	amounts	of	perfluorinated compounds	in	drinking	water	sources	in	the	City	of	Oakdale,	Minnesota,	as	well	as	presence	in	the	soil	and	groundwater	at	the	Company's	manufacturing	facilities	in Decatur,	Alabama,	and	Cottage	Grove,	Minnesota,	and	at	two	former	disposal	sites	in	Washington	County,	Minnesota	(Oakdale	and	Woodbury).	The	Company	expects that	most	of	the	spending	will	occur	over	the	next	four	years.	As	of	December	31,	2013,	the	Company's	receivable	for	insurance	recoveries	related	to	"other environmental	liabilities"	was	$15	million.

It	is	difficult	to	estimate	the	cost	of	environmental	compliance	and	remediation	given	the	uncertainties	regarding	the	interpretation	and	enforcement	of	applicable environmental	laws	and	regulations,	the	extent	of	environmental	contamination	and	the	existence	of	alternative	cleanup	methods.	Developments	may	occur	that	could affect	the	Company's	current	assessment,	including,	but	not	limited	to:	(i)	changes	in	the	information	available	regarding	the	environmental	impact	of	the	Company's operations	and	products;	(ii)	changes	in	environmental	regulations,	changes	in	permissible	levels	of	specific	compounds	in	drinking	water	sources,	or	changes	in enforcement	theories	and	policies,	including	efforts	to	recover	natural	resource	damages;	(iii)	new	and	evolving	analytical	and	remediation	techniques;	(iv)	success	in allocating	liability	to	other	potentially	responsible	parties;	and	(v)	the	financial	viability	of	other	potentially	responsible	parties	and	third-party	indemnitors.	For	sites included	in	both	"environmental	remediation	liabilities"	and	"other	environmental	liabilities,"	at	which	remediation	activity	is	largely	complete	and	remaining	activity relates	primarily	to	operation	and	maintenance	of	the	remedy,	including	required	post-remediation	monitoring,	the	Company	believes	the	exposure	to	loss	in	excess	of the	amount	accrued

would	not	be	material	to	the	Company's	consolidated	results	of	operations	or	financial	condition.	However,	for	locations	at	which	remediation	activity	is	largely ongoing,	the	Company	cannot	estimate	a	possible	loss	or	range	of	loss	in	excess	of	the	associated	established	accruals	for	the	reasons	described	above.

# Other	Matters

# Commercial	Litigation

3M	completed	its	acquisition	of	Cogent,	Inc.	in	December	2010.	Several	holders	of	Cogent	shares,	representing	a	total	of	approximately	5.8	million	shares,	asserted appraisal	rights	under	Delaware	law.	Trial	in	Delaware	occurred	in	November	2012,	and	in	July	2013,	the	Delaware	Chancery	Court	decided	that	the	fair	value	of Cogent's	shares	on	the	closing	date	of	the	acquisition	was	$10.87	per	share	(plus	pre-judgment	interest),	slightly	more	than	the	$10.50	per	share	paid	at	closing.	The Court	entered	its	final	order	on	July	23,	2013.	Neither	party	appealed,	and	the	Company	paid	the	holders	of	the	approximately	5.8	million	shares	the	fair	value determined	by	the	Delaware	Chancery	Court	(plus	pre-judgment	interest).

In	October	2012,	four	plaintiffs	filed	purported	class	actions	against	Ceradyne,	Inc.,	its	directors,	3M,	and	Cyborg	Acquisition	Corporation	(a	direct	wholly	owned subsidiary	of	3M)	in	connection	with	3M's	proposed	acquisition	of	Ceradyne.	Two	suits	were	filed	in	California	Superior	Court	for	Orange	County,	and	two	were	filed	in the	Delaware	Chancery	Court.	The	suits	alleged	that	the	defendants	breached	and/or	aided	and	abetted	the	breach	of	their	fiduciary	duties	to	Ceradyne	by	seeking	to	sell Ceradyne	through	an	allegedly	unfair	process	and	for	an	unfair	price	and	on	unfair	terms,	and/or	by	allegedly	failing	to	make	adequate	disclosures	to	Ceradyne stockholders	regarding	the	acquisition	of	Ceradyne.	3M	completed	its	acquisition	of	Ceradyne	in	November	2012.	In	November	2012,	the	parties	reached	a	settlement with	the	California	plaintiffs	for	an	amount	that	is	not	material	to	the	Company,	while	the	Delaware	plaintiffs	dismissed	their	complaints	without	prejudice.	The settlement	will	bind	all	former	Ceradyne	shareholders	and	has	received	preliminary	approval	from	the	California	court.	A	final	approval	hearing	was	held	in	July	2013, and	the	California	Court	denied	approval	of	the	settlement.	The	plaintiffs	filed	a	motion	for	reconsideration	of	the	denial	of	approval	of	the	settlement,	which	motion	was denied	by	the	California	court.	The	plaintiffs	then	filed	a	motion	for	leave	to	amend	their	complaint,	which	motion	was	denied	without	prejudice	in	January	2014.

Separately,	one	Ceradyne	shareholder,	who	purports	to	hold	16,656	shares,	filed	a	petition	for	appraisal	rights	under	Delaware	law.	In	2013,	the	parties	reached	a settlement	of	this	matter	for	an	amount	that	is	not	material	to	the	Company.

The	previously	disclosed	patent	infringement	litigation	against	Avery	Dennison	Corporation	in	the	United	States	District	Court	for	the	District	of	Minnesota	relating	to retroreflective	sheeting	products	used	on	traffic	signs,	pavement	markings	and	other	traffic	control	products	was	resolved	in	2013	with	the	court	entering	a	consent judgment	in	favor	of	3M.	Avery's	separate	claims	of	patent	infringement	and	antitrust	violations	against	3M	have	been	dismissed	by	the	court	with	prejudice.

3M	sued	TransWeb	Corporation	in	Minnesota	in	2010	for	infringement	of	several	3M	patents	covering	fluorination	and	hydrocharging	of	filter	media	used	in	3M's respirators	and	furnace	filters.	TransWeb	does	not	make	finished	goods,	but	sells	filter	media	to	competitors	of	3M's	respirator	and	furnace	filter	businesses.	TransWeb filed	a	declaratory	judgment	action	in	and	successfully	moved	the	litigation	to	the	U.S.	District	Court	for	the	District	of	New	Jersey,	seeking	a	declaration	of	invalidity and	non-infringement	of	3M's	patents,	and	further	alleging	that	3M	waited	too	long	to	enforce	its	rights.	TransWeb	also	alleged	3M	obtained	the	patents	through inequitable	conduct	and	that	3M's	attempt	to	enforce	the	patents	constitutes	a	violation	of	the	antitrust	laws.	In	November	2012,	a	jury	returned	a	verdict	in	favor	of TransWeb	on	all	but	one	count,	including	findings	that	3M's	patents	were	invalid	and	not	infringed,	and	that	3M	had	committed	an	antitrust	violation	by	seeking	to enforce	a	patent	it	had	obtained	fraudulently.	The	jury	also	recommended	that	the	court	find	3M	had	committed	inequitable	conduct	in	obtaining	the	patents,	and	that	the patents	were	therefore	unenforceable.	Since	the	vast	majority	of	TransWeb's	claim	for	treble	antitrust	damages	is	in	the	form	of	its	attorneys'	fees	and	expenses	in connection	with	the	defense	of	the	patent	case,	the	parties	agreed	that	the	measure	of	damages	would	not	go	to	the	jury,	but	rather	would	be	submitted	to	a	special	master after	the	trial.	The	special	master's	recommendations	were	forwarded	to	the	court	in	September	2013.	The	court	has	not	yet	ruled	on	those	recommendations	or	on	3M's pending	motions	seeking	judgment	in	its	favor	on	its	claims	and	those	of	TransWeb.	3M	intends	to	appeal	if	the	court	enters	final	judgment	against	3M.

In	December	2010,	Meda	AB,	the	Swedish-based	acquirer	of	3M's	European	pharmaceutical	business,	filed	a	lawsuit	against	3M,	and	its	subsidiaries,	3M	Innovative

Properties	Company,	and	Riker	Laboratories,	Inc.	(collectively,	"3M").	Meda	initially	asserted	claims	against	3M	for	breach	of	contract	and	breach	of	the	implied covenant	of	good	faith	and	fair	dealing.	In	October	2011,	Meda	amended	its	pleading	to	assert	a	claim	for	fraud.	All	three	claims	are	based	on	allegations	that	3M	did not	inform	Meda	about	certain	information	relating	to	the	pricing	of	a	particular	drug	in	France	prior	to	the	acquisition.	Meda	sought	compensatory	damages	in	excess	of $300	million	(including	prejudgment	interest),	punitive	damages,	and	attorneys'	fees.	A	non-jury	trial	occurred	in	the	U.S.	District	Court	for	the	Southern	District	of New	York	in	January	2013.	In	September	2013,	the	Court	issued	a	decision	in	3M's	favor,	rejecting	all	of	Meda's	claims.	In	October	2013,	3M	filed	a	motion	seeking attorneys'	fees	and	costs.	Also	in	October,	Meda	filed	an	appeal	to	the	U.S.	Court	of	Appeals	for	the	Second	Circuit.	In	December	2013,	Meda	agreed	to	dismiss	its appeal	and	3M	agreed	to	dismiss	its	motion	for	fees	and	costs.

Shurtape	Technologies,	LLC	sued	3M	in	the	U.S.	District	Court	for	the	Western	District	of	North	Carolina,	alleging	that	3M's	ScotchBlue™	Painter's	Masking	Tape with	Edge-Lock™	Paint	Line	Protector,	which	was	introduced	in	late	2009,	infringes	Shurtape's	U.S.	patent	describing	masking	tape	having	an	absorbent	coating applied	to	the	edge	of	the	tape	and	several	of	Shurtape's	trademarks.	3M	challenged	both	Shurtape's	allegations	of	infringement	and	the	validity	of	the	patent.	In September	2013,	the	parties	finalized	a	settlement	of	this	matter	for	an	amount	that	is	not	material	to	the	Company.

For	commercial	litigation	matters	described	in	this	section	for	which	a	liability,	if	any,	has	been	recorded,	the	Company	believes	the	amount	recorded,	as	well	as	the possible	loss	or	range	of	loss	in	excess	of	the	established	accrual	is	not	material	to	the	Company's	consolidated	results	of	operations	or	financial	condition.	For	those matters	for	which	a	liability	has	not	been	recorded,	the	Company	believes	that	such	liability	is	not	probable	and	estimable	and	the	Company	is	not	able	to	estimate	a possible	loss	or	range	of	loss	at	this	time.

# Product	Liability	Litigation

Électricité	de	France	(EDF)	filed	a	lawsuit	against	3M	France	in	the	French	courts	in	2006	claiming	commercial	loss	and	property	damage	after	experiencing	electrical network	failures	which	EDF	claims	were	caused	by	allegedly	defective	3M	transition	splices.	The	French	Court	of	Appeals	at	Versailles	affirmed	the	commercial	trial court's	decision	that	the	transition	splices	conformed	to	contract	specifications	which	were	thoroughly	analyzed	and	tested	by	EDF	before	purchase	and	installation.	The Court	of	Appeals,	however,	ordered	a	court-appointed	expert	to	study	the	problem	and	issue	a	technical	opinion	on	the	cause	of	the	network	failures.	The	court-appointed expert	is	expected	to	submit	his	report	to	the	commercial	court	by	April	2014.	Thereafter,	the	commercial	court	may	take	from	six	months	to	one	year	to	render	its decision.

One	customer	obtained	an	order	in	the	French	courts	against	3M	Purification	SAS	(a	French	subsidiary)	in	October	2011	appointing	an	expert	to	determine	the	amount of	commercial	loss	and	property	damage	allegedly	caused	by	allegedly	defective	3M	filters	used	in	the	customer's	manufacturing	process.	An	Austrian	subsidiary	of	this same	customer	also	filed	a	claim	against	3M	Austria	GmbH	(an	Austrian	subsidiary)	and	3M	Purification	SAS	in	the	Austrian	courts	in	September	2012	seeking damages	for	the	same	issue.	Another	customer	filed	a	lawsuit	against	3M	Deutschland	GmbH	(a	German	subsidiary)	in	the	German	courts	in	March	2012	seeking commercial	loss	and	property	damage	allegedly	caused	by	the	same	3M	filters	used	in	that	customer's	manufacturing	process.	The	Company	has	resolved	on	an amicable	basis	claims	of	two	other	customers	arising	out	of	the	same	issue.

For	product	liability	litigation	matters	described	in	this	section	for	which	a	liability	has	been	recorded,	the	Company	believes	the	amount	recorded	is	not	material	to	the Company's	consolidated	results	of	operations	or	financial	condition.	In	addition,	the	Company	is	not	able	to	estimate	a	possible	loss	or	range	of	loss	in	excess	of	the established	accruals	at	this	time.

# NOTE	14.	Stock-Based	Compensation

The	3M	2008	Long-Term	Incentive	Plan	provides	for	the	issuance	or	delivery	of	up	to	100	million	shares	of	3M	common	stock	(including	additional	shareholder approvals	subsequent	to	2008)	pursuant	to	awards	granted	under	the	plan.	Awards	under	this	plan	may	be	issued	in	the	form	of	Incentive	Stock	Options,	Nonqualified Stock	Options,	Progressive	Stock	Options,	Stock	Appreciation	Rights,	Restricted	Stock,	Restricted	Stock	Units,	Other	Stock	Awards,	and	Performance	Units	and Performance	Shares.	Awards	denominated	in	shares	of	common	stock	other	than	options	and	Stock	Appreciation	Rights,	per	the	2008	Plan,	count	against	the	100 million	share	limit	as	3.38	shares	for	every	one	share	covered	by	such	award	(for	full	value	awards	with	grant	dates	prior	to	May	11,	2010),	as	2.87	shares	for	every	one share	covered	by	such	award	(for	full	value	awards	with	grant	dates	on	or	after	May	11,	2010	and	prior	to	May	8,	2012),	or	as	3.50	shares	for	every	one	share	covered	by such	award	(for	full	value	awards	with	grant	dates	of	May	8,	2012	or	later).	The	remaining	total	shares	available	for	grant	under	the	2008	Long	Term	Incentive	Plan Program	are	38,355,501	as	of	December	31,	2013.	There	were	approximately	10,109	participants	with	outstanding	options,	restricted	stock,	or	restricted	stock	units	at December	31,	2013.

The	Company's	annual	stock	option	and	restricted	stock	unit	grant	is	made	in	February	to	provide	a	strong	and	immediate	link	between	the	performance	of	individuals during	the	preceding	year	and	the	size	of	their	annual	stock	compensation	grants.	The	grant	to	eligible	employees	uses	the	closing	stock	price	on	the	grant	date. Accounting	rules	require	recognition	of	expense	under	a	non-substantive	vesting	period	approach,	requiring	compensation	expense	recognition	when	an	employee	is eligible	to	retire.	Employees	are	considered	eligible	to	retire	at	age	55	and	after	having	completed	five	years	of	service.	This	retiree-eligible	population	represents	32 percent	of	the	2013	annual	stock-based	compensation	award	expense	dollars;	therefore,	higher	stock-based	compensation	expense	is	recognized	in	the	first	quarter.	3M also	has	granted	progressive	(reload)	options.	These	options	are	nonqualified	stock	options	that	were	granted	to	certain	participants	under	the	1997	or	2002	Management Stock	Ownership	Program,	but	for	which	the	reload	feature	was	eliminated	in	2005	(on	a	prospective	basis	only).	Participants	who	had	options	granted	prior	to	this effective	date	may	still	qualify	to	receive	new	progressive	(reload)	stock	options.

In	addition	to	the	annual	grants,	the	Company	makes	other	minor	grants	of	stock	options,	restricted	stock	units	and	other	stock-based	grants.	The	Company	issues	cash settled	Restricted	Stock	Units	and	Stock	Appreciation	Rights	in	certain	countries.	These	grants	do	not	result	in	the	issuance	of	Common	Stock	and	are	considered immaterial	by	the	Company.

Amounts	recognized	in	the	financial	statements	with	respect	to	stock-based	compensation	programs,	which	include	stock	options,	restricted	stock,	restricted	stock	units, performance	shares,	and	the	General	Employees'	Stock	Purchase	Plan	(GESPP),	are	provided	in	the	following	table.	Capitalized	stock-based	compensation	amounts were	not	material	for	the	years	ended	2013,	2012	and	2011.

# Stock-Based	Compensation	Expense

| (Millions) | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Cost\tof\tsales | $27 | $27 | $29 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 183 | 167 | 192 |
| Research,\tdevelopment\tand\trelated\texpenses | 30 | 29 | 32 |

| Stock-based	compensation	expenses | $240 | $223 | $253 |
| :--- | :--- | :--- | :--- |
| Income\ttax\tbenefits | $(71) | $(67) | $(80) |
| Stock-based\tcompensation\texpenses,\tnet\tof\ttax | $169 | $156 | $173 |

# Stock	Option	Program

The	following	table	summarizes	stock	option	activity	for	the	years	ended	December	31:

|  | Number	of<br>Options | Weighted<br>Average<br>Exercise	Price | Number	of<br>Options | Weighted<br>Average<br>Exercise	Price | Number	of<br>Options | Weighted<br>Average<br>Exercise	Price |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Under\toption\t— |  |  |  |  |  |  |
| January\t1 | 56,565,030 | $80.33 | 64,148,415 | $77.28 | 70,335,044 | $74.80 |
| Granted: |  |  |  |  |  |  |
| Annual | 6,220,810 | 101.55 | 5,770,190 | 87.91 | 5,514,500 | 89.46 |
| Progressive\t(Reload) | 140,447 | 109.83 | 110,065 | 89.65 | 237,839 | 94.02 |
| Other | 191 | 119.62 | 51,661 | 89.25 | 8,953 | 86.71 |
| Exercised | (18,825,218) | 79.25 | (13,123,617) | 68.78 | (11,625,863) | 68.47 |
| Canceled | (162,482) | 89.92 | (391,684) | 83.65 | (322,058) | 75.09 |
| December\t31 | 43,938,778 | $83.84 | 56,565,030 | $80.33 | 64,148,415 | $77.28 |
| Options\texercisable |  |  |  |  |  |  |
| December\t31 | 32,038,228 | $79.58 | 45,207,143 | $78.78 | 52,644,364 | $76.90 |

Stock	options	vest	over	a	period	from	one	to	three	years	with	the	expiration	date	at	10	years	from	date	of	grant.	Outstanding	options	under	grant	include	grants	from previous	plans.	As	of	December	31,	2013,	there	was	$51	million	of	compensation	expense	that	has	yet	to	be	recognized	related	to	non-vested	stock	option	based	awards. This	expense	is	expected	to	be	recognized	over	the	remaining	weighted-average	vesting	period	of	21	months.	For	options	outstanding	at	December	31,	2013,	the weighted-average	remaining	contractual	life	was	62	months	and	the	aggregate	intrinsic	value	was	$2.478	billion.	For	options	exercisable	at	December	31,	2013,	the weighted-average	remaining	contractual	life	was	47	months	and	the	aggregate	intrinsic	value	was	$1.944	billion.

The	total	intrinsic	values	of	stock	options	exercised	during	2013,	2012	and	2011	was	$562	million,	$282	million	and	$287	million,	respectively.	Cash	received	from options	exercised	during	2013,	2012	and	2011	was	$1.492	billion,	$903	million	and	$796	million,	respectively.	The	Company's	actual	tax	benefits	realized	for	the	tax deductions	related	to	the	exercise	of	employee	stock	options	for	2013,	2012	and	2011	was	$208	million,	$98	million	and	$96	million,	respectively.

The	Company	does	not	have	a	specific	policy	to	repurchase	common	shares	to	mitigate	the	dilutive	impact	of	options;	however,	the	Company	has	historically	made adequate	discretionary	purchases,	based	on	cash	availability,	market	trends,	and	other	factors,	to	satisfy	stock	option	exercise	activity.

For	annual	and	progressive	(reload)	options,	the	weighted	average	fair	value	at	the	date	of	grant	was	calculated	using	the	Black-Scholes	option-pricing	model	and	the assumptions	that	follow.

# Stock	Option	Assumptions

|  |  | Annual |  |  | Progressive	(Reload) |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 |
| Exercise\tprice | $101.49 | $87.89 | $89.47 | $109.84 | $87.89 | $93.94 |
| Risk-free\tinterest\trate | 1.2% | 1.1% | 2.8% | 0.2% | 0.2% | 0.4% |
| Dividend\tyield | 2.7% | 2.6% | 2.6% | 2.7% | 2.6% | 2.6% |
| Volatility | 20.0% | 24.5% | 22.0% | 16.3% | 23.4% | 21.5% |
| Expected\tlife\t(months) | 75 | 74 | 72 | 12 | 19 | 15 |
| Black-Scholes\tfair\tvalue | $13.46 | $14.94 | $16.10 | $6.42 | $8.50 | $7.49 |

Expected	volatility	is	a	statistical	measure	of	the	amount	by	which	a	stock	price	is	expected	to	fluctuate	during	a	period.	For	the	2013	annual	grant	date,	the	Company estimated	the	expected	volatility	based	upon	the	average	of	the	most	recent	one	year	volatility,	the	median	of	the	term	of

the	expected	life	rolling	volatility,	the	median	of	the	most	recent	term	of	the	expected	life	volatility	of	3M	stock,	and	the	implied	volatility	on	the	grant	date.	The expected	term	assumption	is	based	on	the	weighted	average	of	historical	grants.

# Restricted	Stock	and	Restricted	Stock	Units

The	following	table	summarizes	restricted	stock	and	restricted	stock	unit	activity	for	the	years	ended	December	31:

|  | Number	of<br>Awards | Weighted<br>Average<br>Grant	Date<br>Fair	Value | Number	of<br>Awards | Weighted<br>Average<br>Grant	Date<br>Fair	Value | Number	of<br>Awards | Weighted<br>Average<br>Grant	Date<br>Fair	Value |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Nonvested\tbalance\t— |  |  |  |  |  |  |
| As\tof\tJanuary\t1 | 3,261,562 | $85.17 | 4,858,972 | $73.02 | 4,812,657 | $68.75 |
| Granted |  |  |  |  |  |  |
| Annual | 946,774 | 101.57 | 968,522 | 87.92 | 889,448 | 89.46 |
| Other | 44,401 | 111.19 | 99,337 | 85.07 | 351,624 | 87.07 |
| Vested | (1,100,095) | 79.93 | (2,594,468) | 63.51 | (1,077,816) | 72.21 |
| Forfeited | (47,281) | 90.82 | (70,801) | 82.65 | (116,941) | 72.01 |

As	of	December	31,	2013,	there	was	$77	million	of	compensation	expense	that	has	yet	to	be	recognized	related	to	non-vested	restricted	stock	and	restricted	stock	units. This	expense	is	expected	to	be	recognized	over	the	remaining	weighted-average	vesting	period	of	24	months.	The	total	fair	value	of	restricted	stock	and	restricted	stock units	that	vested	during	the	years	ended	December	31,	2013,	2012	and	2011	was	$114	million,	$228	million	and	$102	million,	respectively.	The	Company's	actual	tax benefits	realized	for	the	tax	deductions	related	to	the	vesting	of	restricted	stock	and	restricted	stock	units	for	the	years	ended	December	31,	2013,	2012	and	2011	was $43	million,	$86	million	and	$36	million,	respectively.

Restricted	stock	units	granted	under	the	3M	2008	Long-Term	Incentive	Plan	generally	vest	three	years	following	the	grant	date	assuming	continued	employment. Dividend	equivalents	equal	to	the	dividends	payable	on	the	same	number	of	shares	of	3M	common	stock	accrue	on	these	restricted	stock	units	during	the	vesting	period, although	no	dividend	equivalents	are	paid	on	any	of	these	restricted	stock	units	that	are	forfeited	prior	to	the	vesting	date.	Dividends	are	paid	out	in	cash	at	the	vest	date on	restricted	stock	units,	except	for	performance	shares	which	do	not	earn	dividends.	Since	the	rights	to	dividends	are	forfeitable,	there	is	no	impact	on	basic	earnings per	share	calculations.	Weighted	average	restricted	stock	unit	shares	outstanding	are	included	in	the	computation	of	diluted	earnings	per	share.

# Performance	Shares

Instead	of	restricted	stock	units,	the	Company	makes	annual	grants	of	performance	shares	to	members	of	its	executive	management.	The	performance	criteria	for	these performance	shares	(Organic	Sales	Volume	Growth,	Return	on	Invested	Capital	and	sales	from	new	products)	were	selected	because	the	Company	believes	that	they	are important	drivers	of	long-term	stockholder	value.	The	number	of	shares	of	3M	common	stock	that	could	actually	be	delivered	at	the	end	of	the	three-year	performance period	may	be	anywhere	from	0%	to	200%	of	each	performance	share	granted,	depending	on	the	performance	of	the	Company	during	such	performance	period.	Non- substantive	vesting	requires	that	expense	for	the	performance	shares	be	recognized	over	one	or	three	years	depending	on	when	each	individual	became	a	3M	executive. The	first	performance	shares,	which	were	granted	in	2008,	were	distributed	in	2011.	Performance	shares	do	not	accrue	dividends	during	the	performance	period. Therefore,	the	grant	date	fair	value	is	determined	by	reducing	the	closing	stock	price	on	the	date	of	grant	by	the	net	present	value	of	dividends	during	the	performance period.	As	a	result	of	the	significant	uncertainty	due	to	the	economic	crisis	of	2008-2009,	the	Company	granted	restricted	stock	units	instead	of	performance	shares	in 2009.	Therefore,	since	there	were	no	performance	shares	in	2009,	there	were	also	no	related	distributions	in	2012.	Performance	share	grants	resumed	in	2010	and continued	thereafter.

The	following	table	summarizes	performance	share	activity	for	the	years	ended	December	31:

|  | Number	of<br>Awards | Weighted<br>Average<br>Grant	Date<br>Fair	Value | Number	of<br>Awards | Weighted<br>Average<br>Grant	Date<br>Fair	Value | Number	of<br>Awards | Weighted<br>Average<br>Grant	Date<br>Fair	Value |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Undistributed\tbalance\t— |  |  |  |  |  |  |
| As\tof\tJanuary\t1 | 1,089,084 | $79.27 | 878,872 | $78.55 | 760,645 | $73.99 |
| Granted | 353,734 | 96.87 | 467,531 | 81.55 | 415,024 | 84.58 |
| Distributed | (507,083) | 75.16 | — | — | (206,410) | 72.77 |
| Performance\tchange | (6,949) | 77.01 | (178,838) | 81.27 | (39,323) | 82.10 |
| Forfeited | (33,151) | 91.34 | (78,481) | 80.21 | (51,064) | 80.20 |
| As\tof\tDecember\t31 | 895,635 | $88.12 | 1,089,084 | $79.27 | 878,872 | $78.55 |

As	of	December	31,	2013,	there	was	$14	million	of	compensation	expense	that	has	yet	to	be	recognized	related	to	performance	shares.	This	expense	is	expected	to	be recognized	over	the	remaining	weighted-average	earnings	period	of	11	months.	During	the	years	ended	December	31,	2013	and	2011,	the	total	fair	value	of	performance shares	that	were	distributed	were	$52	million	and	$18	million,	respectively.	The	Company's	actual	tax	benefits	realized	for	the	tax	deductions	related	to	the	distribution of	performance	shares	for	the	years	ended	December	31,	2013	and	2011	was	$16	million	and	$5	million,	respectively.	There	were	no	performance	shares	distributed	or related	tax	benefits	realized	during	the	year	ended	December	31,	2012.

# General	Employees'	Stock	Purchase	Plan	(GESPP):

As	of	December	31,	2013,	shareholders	have	approved	60	million	shares	for	issuance	under	the	Company's	GESPP.	Substantially	all	employees	are	eligible	to participate	in	the	plan.	Participants	are	granted	options	at	85%	of	market	value	at	the	date	of	grant.	There	are	no	GESPP	shares	under	option	at	the	beginning	or	end	of each	year	because	options	are	granted	on	the	first	business	day	and	exercised	on	the	last	business	day	of	the	same	month.

# General	Employees'	Stock	Purchase	Plan

|  | Shares | Weighted<br>Average<br>Exercise	Price | Shares | Weighted<br>Average<br>Exercise	Price | Shares | Weighted<br>Average<br>Exercise	Price |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Options\tgranted | 1,259,247 | $93.46 | 1,455,545 | $75.32 | 1,433,609 | $73.67 |
| Options\texercised | (1,259,247) | 93.46 | (1,455,545) | 75.32 | (1,433,609) | 73.67 |
| Shares\tavailable\tfor\tgrant\t- |  |  |  |  |  |  |
| December\t31 | 30,185,960 |  | 31,445,207 |  | 2,900,751 |  |

The	weighted-average	fair	value	per	option	granted	during	2013,	2012	and	2011	was	$16.49,	$13.29	and	$13.00,	respectively.	The	fair	value	of	GESPP	options	was based	on	the	15%	purchase	price	discount.	The	Company	recognized	compensation	expense	for	GESSP	options	of	$21	million	in	2013,	$19	million	in	2012	and	$19 million	in	2011.

# NOTE	15.	Business	Segments

3M's	businesses	are	organized,	managed	and	internally	grouped	into	segments	based	on	differences	in	markets,	products,	technologies	and	services.	Effective	in	the	first quarter	of	2013	(as	discussed	below),	3M	manages	its	operations	in	five	operating	business	segments:	Industrial;	Safety	and	Graphics;	Electronics	and	Energy;	Health Care;	and	Consumer.	3M's	five	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.	These	segments	have	worldwide	responsibility	for	virtually	all	3M	product	lines.	3M	is	not	dependent	on	any

single	product/service	or	market.	Transactions	among	reportable	segments	are	recorded	at	cost.	3M	is	an	integrated	enterprise	characterized	by	substantial	intersegment cooperation,	cost	allocations	and	inventory	transfers.	Therefore,	management	does	not	represent	that	these	segments,	if	operated	independently,	would	report	the operating	income	information	shown.	The	difference	between	operating	income	and	pre-tax	income	relates	to	interest	income	and	interest	expense,	which	are	not allocated	to	business	segments.

Effective	in	the	first	quarter	of	2013,	3M	completed	a	realignment	of	its	business	groups	(segments)	to	better	serve	global	markets	and	customers.	This	realignment included:

·																		The	alignment	of	divisions	into	five	business	groups	(segments)	as	further	described	below.

·																		The	combination	of	certain	existing	divisions	into	new	divisions.	These	included	Traffic	Safety	and	Security	Division	(reflecting	the	combination	of	the	former Traffic	Safety	Systems	Division	and	Security	Systems	Division)	and	the	Optical	Systems	Division	(reflecting	the	combination	of	the	former	Optical	Systems Division	and	Mobile	Interactive	Solutions	Division).

·																		The	movement	of	certain	product	lines	between	various	divisions	within	and	across	certain	business	segments.

In	addition	to	the	above,	there	were	also	changes	to	dual	credit	amounts	as	a	result	of	the	realigned	structure.	The	new	structure	is	comprised	of	five	business	segments: Industrial,	Safety	and	Graphics,	Electronics	and	Energy,	Health	Care,	and	Consumer.

Industrial:	This	business	segment,	previously	referred	to	as	Industrial	and	Transportation,	is	largely	unchanged,	except	for	the	transfer	of	the	Renewable	Energy Division	to	the	Electronics	and	Energy	business	segment.

Safety	and	Graphics:	This	business	segment	includes	Architectural	Markets,	Building	and	Commercial	Services,	Commercial	Graphics,	Industrial	Mineral Products,	Personal	Safety,	and	Traffic	Safety	and	Security.	This	new	business	segment	also	reflects	movement	of	certain	product	lines	between	various divisions.

Electronics	and	Energy:	This	business	segment	includes	Communication	Markets,	Electrical	Markets,	Electronics	Markets	Materials,	Electronic Solutions,	Infrastructure	Protection,	Optical	Systems,	Renewable	Energy,	and	3M	Touch	Systems.	This	new	business	segment	also	reflects	the	movement	of certain	product	lines	between	various	divisions.

Health	Care:	This	business	segment	is	largely	unchanged,	except	for	the	movement	of	certain	product	lines	between	various	divisions.

Consumer:	This	business	segment,	previously	referred	to	as	Consumer	and	Office,	is	largely	unchanged,	except	for	the	movement	of	certain	product	lines between	various	divisions.

The	financial	information	presented	herein	reflects	the	impact	of	all	of	the	preceding	segment	structure	changes	for	all	periods	presented.

# Business	Segment	Products

# Business	Segment	Information

|  |  | Net	Sales |  |  | Operating	Income |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 |
| Industrial | $10,584 | $9,943 | $9,629 | $2,296 | $2,236 | $1,983 |
| Safety\tand\tGraphics | 5,657 | 5,471 | 5,458 | 1,239 | 1,217 | 1,237 |
| Electronics\tand\tEnergy | 5,393 | 5,458 | 5,732 | 954 | 1,026 | 1,140 |
| Health\tCare | 5,334 | 5,138 | 5,011 | 1,672 | 1,641 | 1,484 |
| Consumer | 4,435 | 4,386 | 4,230 | 945 | 943 | 855 |
| Corporate\tand\tUnallocated | 8 | 4 | 9 | (322) | (471) | (420) |
| Elimination\tof\tDual\tCredit | (540) | (496) | (458) | (118) | (109) | (101) |
| Total\tCompany | $30,871 | $29,904 | $29,611 | $6,666 | $6,483 | $6,178 |

|  |  | Assets |  | Depreciation	&amp;	Amortization | Depreciation	&amp;	Amortization | Depreciation	&amp;	Amortization |  | Capital	Expenditures |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 |
| Industrial | $8,803 | $8,587 | $7,553 | $372 | $323 | $337 | $510 | $415 | $383 |
| Safety\tand\tGraphics | 5,153 | 5,111 | 4,975 | 256 | 238 | 251 | 209 | 190 | 204 |
| Electronics\tand\tEnergy | 5,336 | 5,512 | 5,296 | 260 | 266 | 255 | 261 | 350 | 274 |
| Health\tCare | 4,329 | 4,296 | 4,190 | 171 | 169 | 199 | 120 | 113 | 159 |
| Consumer | 2,516 | 2,445 | 2,423 | 106 | 110 | 102 | 128 | 105 | 98 |
| Corporate\tand\tUnallocated | 7,413 | 7,925 | 7,179 | 206 | 182 | 92 | 437 | 311 | 261 |
| Total\tCompany | $33,550 | $33,876 | $31,616 | $1,371 | $1,288 | $1,236 | $1,665 | $1,484 | $1,379 |

Corporate	and	unallocated	operating	income	includes	a	variety	of	miscellaneous	items,	such	as	corporate	investment	gains	and	losses,	certain	derivative	gains	and losses,	certain	insurance-related	gains	and	losses,	certain	litigation	and	environmental	expenses,	corporate	restructuring	charges	and	certain	under-	or	over-absorbed costs	(e.g.	pension,	stock-based	compensation)	that	the	Company	may	choose	not	to	allocate	directly	to	its	business	segments.	Because	this	category	includes	a	variety of	miscellaneous	items,	it	is	subject	to	fluctuation	on	a	quarterly	and	annual	basis.

3M	business	segment	reporting	measures	include	dual	credit	to	business	segments	for	certain	U.S.	sales	and	related	operating	income.	Management	evaluates	each	of	its five	operating	business	segments	based	on	net	sales	and	operating	income	performance,	including	dual	credit	U.S.	reporting	to	further	incentivize	U.S.	sales	growth.	As	a

result,	3M	provides	additional	("dual")	credit	to	those	business	segments	selling	products	in	the	U.S.	to	an	external	customer	when	that	segment	is	not	the	primary	seller of	the	product.	For	example,	certain	respirators	are	primarily	sold	by	the	Personal	Safety	Division	within	the	Safety	and	Graphics	business	segment;	however,	the Industrial	business	segment	also	sells	this

product	to	certain	customers	in	its	U.S.	markets.	In	this	example,	the	non-primary	selling	segment	(Industrial)	would	also	receive	credit	for	the	associated	net	sales	it initiated	and	the	related	approximate	operating	income.	The	assigned	operating	income	related	to	dual	credit	activity	may	differ	from	operating	income	that	would	result from	actual	costs	associated	with	such	sales.	The	offset	to	the	dual	credit	business	segment	reporting	is	reflected	as	a	reconciling	item	entitled	"Elimination	of	Dual Credit,"	such	that	sales	and	operating	income	for	the	U.S.	in	total	are	unchanged.

# NOTE	16.		Geographic	Areas

Geographic	area	information	is	used	by	the	Company	as	a	secondary	performance	measure	to	manage	its	businesses.	Export	sales	and	certain	income	and	expense	items are	generally	reported	within	the	geographic	area	where	the	final	sales	to	3M	customers	are	made.	During	the	first	quarter	of	2013,	3M	realigned	its	geographic	area reporting	to	include	Puerto	Rico	in	the	United	States,	rather	than	in	the	Latin	America/Canada	region.	The	financial	information	presented	herein	reflects	this geographic	area	change	for	all	periods	presented.

|  |  |  |  |  |  |  | Property,	Plant	and |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Net\tSales |  |  | Operating\tIncome |  | Equipment\t-\tnet |  |
| (Millions) | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 |
| United\tStates | $11,151 | $10,571 | $10,071 | $2,210 | $1,938 | $1,639 | $4,478 | $4,279 |
| Asia\tPacific | 9,047 | 9,092 | 9,108 | 2,386 | 2,450 | 2,523 | 1,943 | 2,029 |
| Europe,\tMiddle\tEast\tand\tAfrica | 7,085 | 6,730 | 7,076 | 1,168 | 1,163 | 1,150 | 1,636 | 1,499 |
| Latin\tAmerica\tand\tCanada | 3,611 | 3,529 | 3,368 | 908 | 936 | 886 | 595 | 571 |
| Other\tUnallocated | (23) | (18) | (12) | (6) | (4) | (20) | — | — |
| Total\tCompany | $30,871 | $29,904 | $29,611 | $6,666 | $6,483 | $6,178 | $8,652 | $8,378 |

# NOTE	17.		Quarterly	Data	(Unaudited)

# Item	9.	Changes	in	and	Disagreements	With	Accountants	on	Accounting	and	Financial	Disclosure.

# Item	9A.	Controls	and	Procedures.

a.	The	Company	carried	out	an	evaluation,	under	the	supervision	and	with	the	participation	of	its	management,	including	the	Chief	Executive	Officer	and	Chief Financial	Officer,	of	the	effectiveness	of	the	design	and	operation	of	the	Company's	"disclosure	controls	and	procedures"	(as	defined	in	the	Exchange	Act	Rule	13a- 15(e))	as	of	the	end	of	the	period	covered	by	this	report.	Based	upon	that	evaluation,	the	Chief	Executive	Officer	and	Chief	Financial	Officer	concluded	that	the Company's	disclosure	controls	and	procedures	are	effective.

b.	The	Company's	management	is	responsible	for	establishing	and	maintaining	an	adequate	system	of	internal	control	over	financial	reporting,	as	defined	in	the Exchange	Act	Rule	13a-15(f).	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	Internal	Control	—	Integrated	Framework	(1992).	Based	on	the	assessment,	management concluded	that,	as	of	December	31,	2013,	the	Company's	internal	control	over	financial	reporting	is	effective.	The	Company's	internal	control	over	financial	reporting	as of	December	31,	2013	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,	2013.

c.	There	was	no	change	in	the	Company's	internal	control	over	financial	reporting	that	occurred	during	the	Company's	most	recently	completed	fiscal	quarter	that	has materially	affected,	or	is	reasonably	likely	to	materially	affect,	the	Company's	internal	control	over	financial	reporting.

The	Company	is	implementing	an	enterprise	resource	planning	("ERP")	system	on	a	worldwide	basis,	which	is	expected	to	improve	the	efficiency	of	certain	financial and	related	transaction	processes.	The	gradual	implementation	is	expected	to	occur	in	phases	over	the	next	several	years.	The	implementation	of	a	worldwide	ERP system	will	likely	affect	the	processes	that	constitute	our	internal	control	over	financial	reporting	and	will	require	testing	for	effectiveness.

The	Company	completed	implementation	with	respect	to	elements	of	certain	processes/sub-processes	in	limited	subsidiaries/locations	and	will	continue	to	roll-out	the ERP	system	over	the	next	several	years.	As	with	any	new	information	technology	application	we	implement,	this	application,	along	with	the	internal	controls	over financial	reporting	included	in	this	process,	was	appropriately	considered	within	the	testing	for	effectiveness	with	respect	to	the	implementation	in	these	instances.	We concluded,	as	part	of	our	evaluation	described	in	the	above	paragraphs,	that	the	implementation	of	ERP	in	these	circumstances	has	not	materially	affected	our	internal control	over	financial	reporting.

# Item	9B.	Other	Information.

# PART	III

In	response	to	Part	III,	Items	10,	11,	12,	13	and	14,	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,	2013)	for	its	annual	meeting	to	be	held	on	May	13,	2014,	are	incorporated	by	reference	in	this	Form	10-K.

# Item	10.	Directors,	Executive	Officers	and	Corporate	Governance.

The	information	relating	to	directors	and	nominees	of	3M	is	set	forth	under	the	caption	"Proposal	No.	1"	in	3M's	proxy	statement	for	its	annual	meeting	of	stockholders to	be	held	on	May	13,	2014	("3M	Proxy	Statement")	and	is	incorporated	by	reference	herein.	Information	about	executive	officers	is	included	in	Item	1	of	this	Annual Report	on	Form	10-K.	The	information	required	by	Items	405,	407(c)(3),	(d)(4)	and	(d)(5)	of	Regulation	S-K	is	contained	under	the	captions	"Section	16(a)	Beneficial Ownership	Reporting	Compliance,"	"Governance	of	the	Company	—	Director	Nomination	Process,"	"Board	and	Committee	Information	—	Audit	Committee"	of	the 3M	Proxy	Statement	and	such	information	is	incorporated	by	reference	herein.

Code	of	Ethics.	All	of	our	employees,	including	our	Chief	Executive	Officer,	Chief	Financial	Officer	and	Chief	Accounting	Officer	and	Controller,	are	required	to	abide by	3M's	long-standing	business	conduct	policies	to	ensure	that	our	business	is	conducted	in	a	consistently	legal	and	ethical	manner.	3M	has	posted	the	text	of	such	code of	ethics	on	its	website	(http://www.3M.com/businessconduct).	At	the	same	website,	any	future	amendments	to	the	code	of	ethics	will	also	be	posted.	Any	person	may request	a	copy	of	the	code	of	ethics,	at	no	cost,	by	writing	to	us	at	the	following	address:

Attention:	Vice	President,	Compliance	and	Business	Conduct

# Item	11.	Executive	Compensation.

The	information	required	by	Item	402	of	Regulation	S-K	is	contained	under	the	captions	"Executive	Compensation"	(excluding	the	information	under	the	caption	"— Compensation	Committee	Report")	and	"Director	Compensation	and	Stock	Ownership	Guidelines"	of	the	3M	Proxy	Statement.	Such	information	is	incorporated	by reference.

The	information	required	by	Items	407(e)(4)	and	(e)(5)	of	Regulation	S-K	is	contained	under	the	captions	"Compensation	Committee	Interlocks	and	Insider Participation"	and	"Executive	Compensation	—	Compensation	Committee	Report"	of	the	3M	Proxy	Statement.	Such	information	(other	than	the	Compensation Committee	Report,	which	shall	not	be	deemed	to	be	"filed")	is	incorporated	by	reference.

# Item	12.	Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters.

The	information	relating	to	security	ownership	of	certain	beneficial	owners	and	management	is	set	forth	under	the	designation	"Information	on	Stock	Ownership	of Directors	and	Executive	Officers"	and	"Security	Ownership	of	More	Than	5	Percent	Stockholders"	in	the	3M	Proxy	Statement	and	such	information	is	incorporated	by reference	herein.

Equity	compensation	plans	information	as	of	December	31,	2013	follows:

# Equity	Compensation	Plans	Information	(1)

| Plan	Category | A<br>Number	of<br>securities	to	be<br>issued	upon<br>exercise	of<br>outstanding<br>options,	warrants<br>and	rights | B<br>Weighted-<br>average	exercise<br>price	of<br>outstanding<br>options,<br>warrants	and<br>rights | C<br>Number	of	securities<br>remaining	available	for<br>future	issuance	under<br>equity	compensation<br>plans	(excluding<br>securities	reflected	in<br>column	(A)) |
| :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\tsecurity\tholders |  |  |  |
| Stock\toptions | 43,938,778 | $83.84 | — |
| Restricted\tstock\tunits | 3,105,361 |  | — |
| Performance\tshares | 895,635 |  | — |
| Non-employee\tdirector\tdeferred\tstock\tunits | 229,142 |  | — |
| Total | 48,168,916 |  | 38,355,501 |
| Employee\tstock\tpurchase\tplan | — |  | 30,185,960 |
| Subtotal | 48,168,916 |  | 68,541,461 |
| Total | 48,168,916 |  | 68,541,461 |

(1)	In	column	B,	the	weighted-average	exercise	price	is	only	applicable	to	stock	options.	In	column	C,	the	number	of	securities	remaining	available	for	future	issuance for	stock	options,	restricted	stock	units,	and	stock	awards	for	non-employee	directors	is	approved	in	total	and	not	individually	with	respect	to	these	items.

# Item	13.	Certain	Relationships	and	Related	Transactions,	and	Director	Independence.

With	respect	to	certain	relationships	and	related	transactions	as	set	forth	in	Item	404	of	Regulation	S-K,	no	matters	require	disclosure	with	respect	to	transactions	with related	persons.	The	information	required	by	Item	404(b)	and	Item	407(a)	of	Regulation	S-K	is	contained	under	the	captions	"Governance	of	the	Company	—	Related Person	Transaction	Policy	and	Procedures"	and	"Governance	of	the	Company	—	Director	Independence"	of	the	3M	Proxy	Statement	and	such	information	is incorporated	by	reference	herein.

# Item	14.	Principal	Accounting	Fees	and	Services.

The	information	relating	to	principal	accounting	fees	and	services	is	set	forth	under	the	designation	"Fees	of	the	Independent	Registered	Public	Accounting	Firm"	and "Audit	Committee	Policy	on	Pre-Approval	of	Audit	and	Permissible	Non-Audit	Services	of	the	Independent	Registered	Public	Accounting	Firm"	in	the	3M	Proxy Statement	and	such	information	is	incorporated	by	reference	herein.

# Item	15.	Exhibits,	Financial	Statement	Schedules.

(a)	(1)	Financial	Statements.	The	consolidated	financial	statements	filed	as	part	of	this	report	are	listed	in	the	index	to	financial	statements	on	page	43	as	follows:

|  | Page	Number |
| :--- | :--- |
| Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 45 |
| Consolidated\tStatement\tof\tIncome\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 46 |
| Consolidated\tStatement\tof\tComprehensive\tIncome\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 47 |
| Consolidated\tBalance\tSheet\tat\tDecember\t31,\t2013\tand\t2012 | 48 |
| Consolidated\tStatement\tof\tChanges\tin\tEquity\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 49-50 |
| Consolidated\tStatement\tof\tCash\tFlows\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 51 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 52-117 |

(a)	(2)	Financial	Statement	Schedules.	Financial	statement	schedules	are	omitted	because	of	the	absence	of	the	conditions	under	which	they	are	required	or	because	the required	information	is	included	in	the	Consolidated	Financial	Statements	or	the	notes	thereto.	The	financial	statements	of	unconsolidated	subsidiaries	are	omitted because,	considered	in	the	aggregate,	they	would	not	constitute	a	significant	subsidiary.

(a)	(3)	Exhibits.	The	exhibits	are	either	filed	with	this	report	or	incorporated	by	reference	into	this	report.	Exhibit	numbers	10.1	through	10.39	are	management	contracts or	compensatory	plans	or	arrangements.	See	(b)	Exhibits,	which	follow.

(b)	Exhibits.

(3)			Articles	of	Incorporation	and	bylaws

(3.1) Certificate	of	incorporation,	as	amended	as	of	May	11,	2007,	is	incorporated	by	reference	from	our	Form	8-K	dated	May	14,	2007.

(4)			Instruments	defining	the	rights	of	security	holders,	including	indentures:

(4.1) Indenture,	dated	as	of	November	17,	2000,	between	3M	and	The	Bank	of	New	York	Mellon	Trust	Company,	N.A.,	as	successor	trustee,	with	respect to	3M's	senior	debt	securities,	is	incorporated	by	reference	from	our	Form	8-K	dated	December	7,	2000.

(4.2) First	Supplemental	Indenture,	dated	as	of	July	29,	2011,	to	Indenture	dated	as	of	November	17,	2000,	between	3M	and	The	Bank	of	New	York	Mellon Trust	Company,	N.A.,	as	successor	trustee,	with	respect	to	3M's	senior	debt	securities,	is	incorporated	by	reference	from	our	Form	10-Q	for	the quarter	ended	June	30,	2011.

(10)									Material	contracts	and	management	compensation	plans	and	arrangements:

(10.1) 3M	2008	Long-Term	Incentive	Plan	(including	amendments	through	February	2012)	is	incorporated	by	reference	from	our	Proxy	Statement	for	the 2012	Annual	Meeting	of	Stockholders.

(10.2) Amendment	of	the	3M	2008	Long-Term	Incentive	Plan	is	filed	herewith.

(10.3) Form	of	Agreement	for	Stock	Option	Grants	to	Executive	Officers	under	3M	2008	Long-Term	Incentive	Plan	is	incorporated	by	reference	from	our Form	8-K	dated	May	13,	2008.

(10.4) Form	of	Stock	Option	Agreement	for	options	granted	to	Executive	Officers	under	the	3M	2008	Long-Term	Incentive	Plan,	commencing	February	9, 2010,	is	incorporated	by	reference	from	our	Form	10-K	for	the	year	ended	December	31,	2009.

(10.5) Form	of	Restricted	Stock	Unit	Agreement	for	restricted	stock	units	granted	to	Executive	Officers	under	the	3M	Long-Term	Incentive	Plan,	effective February	9,	2010,	is	incorporated	by	reference	from	our	Form	10-K	for	the	year	ended	December	31,	2009.

(10.6) Form	of	3M	2010	Performance	Share	Award	under	the	3M	2008	Long-Term	Incentive	Plan	is	incorporated	by	reference	from	our	Form	8-K	dated March	4,	2010.

(10.7) Form	of	Stock	Option	Agreement	for	U.S.	Employees	under	3M	2008	Long-Term	Incentive	Plan	is	incorporated	by	reference	from	our	Form	10-K	for the	year	ended	December	31,	2008.

(10.8) Form	of	Restricted	Stock	Unit	Agreement	for	U.S.	Employees	under	3M	2008	Long-Term	Incentive	Plan	is	incorporated	by	reference	from	our Form	10-K	for	the	year	ended	December	31,	2008.

(10.9) Amendment	of	the	3M	2005	Management	Stock	Ownership	Program	and	the	3M	2008	Long-term	Incentive	Plan	—	transfer	of	stock	options	to	former spouses,	is	incorporated	by	reference	from	our	Form	10-K	for	the	year	ended	December	31,	2010.

(10.10) 3M	2005	Management	Stock	Ownership	Program	is	incorporated	by	reference	from	our	Proxy	Statement	for	the	2005	Annual	Meeting	of Stockholders.

(10.11) 3M	2002	Management	Stock	Ownership	Program	is	incorporated	by	reference	from	our	Proxy	Statement	for	the	2002	Annual	Meeting	of Stockholders.

(10.12) Amendments	of	3M	2002	and	2005	Management	Stock	Ownership	Programs	are	incorporated	by	reference	from	our	Form	8-K	dated	November	14, 2008.

(10.13) Form	of	award	agreement	for	non-qualified	stock	options	granted	under	the	2005	Management	Stock	Ownership	Program,	is	incorporated	by	reference from	our	Form	8-K	dated	May	16,	2005.

(10.14) Form	of	award	agreement	for	non-qualified	stock	options	granted	under	the	2002	Management	Stock	Ownership	Program,	is	incorporated	by	reference from	our	Form	10-K	for	the	year	ended	December	31,	2004.

(10.15) 3M	1997	General	Employees'	Stock	Purchase	Plan,	as	amended	through	November	8,	2004,	is	incorporated	by	reference	from	our	Form	10-K	for	the year	ended	December	31,	2004.

(10.16) 3M	Board	resolution	dated	May	12,	2009,	regarding	three-year	extension	of	3M	1997	General	Employees'	Stock	Purchase	Plan	is	incorporated	by reference	from	our	Form	10-Q	for	the	quarter	ended	June	30,	2009.

(10.17) Amendment	of	the	3M	1997	General	Employees	Stock	Purchase	Plan	approved	on	February	9,	2010	is	incorporated	by	reference	from	our	Form	10-K for	the	year	ended	December	31,	2009.

(10.18) 3M	Board	resolution	dated	February	7,	2012	extending	for	three	additional	one-year	periods	the	General	Employees'	Stock	Purchase	Plan,	is incorporated	by	reference	from	our	Form	10-K	for	the	year	ended	December	31,	2011.

(10.19) 3M	2012	Amended	and	Restated	General	Employees	Stock	Purchase	Plan	is	incorporated	by	reference	from	our	Proxy	Statement	for	the	2012	Annual Meeting	of	Shareholders.

(10.20) 3M	VIP	Excess	Plan	is	incorporated	by	reference	from	our	Form	8-K	dated	November	14,	2008.

(10.21) Amendment	of	3M	VIP	Excess	Plan	is	incorporated	by	reference	from	our	Form	8-K	dated	November	24,	2009.

(10.22) 3M	VIP	(Voluntary	Investment	Plan)	Plus	is	incorporated	by	reference	from	Registration	Statement	No.	333-73192	on	Form	S-8,	filed	on November	13,	2001.

(10.23) Amendment	of	3M	VIP	Plus	is	incorporated	by	reference	from	our	Form	8-K	dated	November	14,	2008.

(10.24) 3M	Deferred	Compensation	Plan,	as	amended	through	February	2008,	is	incorporated	by	reference	from	our	Form	8-K	dated	February	14,	2008.

(10.25) Amendment	of	3M	Deferred	Compensation	Plan	is	incorporated	by	reference	from	our	Form	8-K	dated	November	14,	2008.

(10.26) 3M	Deferred	Compensation	Excess	Plan	is	incorporated	by	reference	from	our	Form	10-K	for	the	year	ended	December	31,	2009.

(10.27) 3M	Performance	Awards	Deferred	Compensation	Plan	is	incorporated	by	reference	from	our	Form	10-K	for	the	year	ended	December	31,	2009.

(10.28) 3M	Executive	Annual	Incentive	Plan	is	incorporated	by	reference	from	our	Form	8-K	dated	May	14,	2007.

(10.29) Description	of	changes	to	3M	Compensation	Plan	for	Non-Employee	Directors	is	incorporated	by	reference	from	our	Form	8-K	dated	August	8,	2005.

(10.30) 3M	Compensation	Plan	for	Non-Employee	Directors,	as	amended,	through	November	8,	2004,	is	incorporated	by	reference	from	our	Form	10-K	for the	year	ended	December	31,	2004.

(10.31) Amendment	of	3M	Compensation	Plan	for	Non-Employee	Directors	is	incorporated	by	reference	from	our	Form	8-K	dated	November	14,	2008.

(10.32) Amendment	of	3M	Compensation	Plan	for	Non-Employee	Directors	as	of	August	12,	2013,	is	incorporated	by	reference	from	our	Form	10-Q	for	the quarter	ended	September	30,	2013.

(10.33) 3M	Executive	Life	Insurance	Plan,	as	amended,	is	incorporated	by	reference	from	our	Form	10-K	for	the	year	ended	December	31,	2003.

(10.34) Summary	of	Personal	Financial	Planning	Services	for	3M	Executives	is	incorporated	by	reference	from	our	Form	10-K	for	the	year	ended December	31,	2003.

(10.35) 3M	policy	on	reimbursement	of	incentive	payments	is	incorporated	by	reference	from	our	Form	10-K	for	the	year	ended	December	31,	2006.

(10.36) Amended	and	Restated	3M	Nonqualified	Pension	Plan	I	is	incorporated	by	reference	from	our	Form	8-K	dated	December	23,	2008.

(10.37) Amended	and	Restated	3M	Nonqualified	Pension	Plan	II	is	incorporated	by	reference	from	our	Form	8-K	dated	December	23,	2008.

(10.38) 3M	Nonqualified	Pension	Plan	III	is	incorporated	by	reference	from	our	Form	8-K	dated	November	14,	2008.

(10.39) Policy	on	Reimbursement	of	Incentive	Compensation	(effective	May	11,	2010)	is	incorporated	by	reference	from	our	Form	10-Q	dated	August	4,	2010.

(10.40) Amended	and	restated	five-year	credit	agreement	as	of	September	28,	2012,	is	incorporated	by	reference	from	our	Form	8-K	dated	October	3,	2012.

(10.42) Registration	Rights	Agreement	as	of	August	4,	2009,	between	3M	Company	and	State	Street	Bank	and	Trust	Company	as	Independent	Fiduciary	of	the 3M	Employee	Retirement	Income	Plan,	is	incorporated	by	reference	from	our	Form	8-K	dated	August	5,	2009.

Filed	herewith,	in	addition	to	items	specifically	identified	above:

(12) Calculation	of	ratio	of	earnings	to	fixed	charges.

(21) Subsidiaries	of	the	Registrant.

(23) Consent	of	independent	registered	public	accounting	firm.

(24) Power	of	attorney.

(31.1) Certification	of	the	Chief	Executive	Officer	pursuant	to	Section	302	of	the	Sarbanes-Oxley	Act	of	2002,	18	U.S.C.	Section	1350.

(31.2) Certification	of	the	Chief	Financial	Officer	pursuant	to	Section	302	of	the	Sarbanes-Oxley	Act	of	2002,	18	U.S.C.	Section	1350.

(95) Mine	Safety	Disclosures.

(101) The	following	financial	information	from	3M	Company's	Annual	Report	on	Form	10-K	for	the	period	ended	December	31,	2013,	filed	with	the	SEC	on February	13,	2014,	formatted	in	Extensible	Business	Reporting	Language	(XBRL):	(i)	the	Consolidated	Statement	of	Income	for	the	years	ended December	31,	2013,	2012	and	2011,	(ii)	the	Consolidated	Statement	of	Comprehensive	Income	for	the	years	ended	December	31,	2013,	2012	and 2011,	(iii)	the	Consolidated	Balance	Sheet	at	December	31,	2013	and	2012,	(iv)	the	Consolidated	Statement	of	Changes	in	Equity	for	the	years	ended December	31,	2013,	2012	and	2011,	(v)	the	Consolidated	Statement	of	Cash	Flows	for	the	years	ended	December	31,	2013,	2012	and	2011,	and (vi)	Notes	to	Consolidated	Financial	Statements.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	Registrant	has	duly	caused	this	report	to	be	signed	on	its	behalf	by	the

undersigned,	thereunto	duly	authorized.

# David	W.	Meline,

Senior	Vice	President	and	Chief	Financial	Officer

(Principal	Financial	Officer)

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	the	Registrant	and	in	the capacities	indicated	on	February	13,	2014.

David	W.	Meline,	by	signing	his	name	hereto,	does	hereby	sign	this	document	pursuant	to	powers	of	attorney	duly	executed	by	the	other	persons	named,	filed	with	the Securities	and	Exchange	Commission	on	behalf	of	such	other	persons,	all	in	the	capacities	and	on	the	date	stated,	such	persons	constituting	a	majority	of	the	directors	of the	Company.

David	W.	Meline,	Attorney-in-Fact



Question: what was the ratio of the company contribution in 2011 to the amount in 2013 to the us pension contributions
Calculation:    contribution_2011 = 517
 contribution_2013 = 476
ratio = contribution_2011 / contribution_2013
answer = ratio
Answer: 1.08