Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

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

For	the	fiscal	year	ended	December	31,	2015

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:

Name	of	each	exchange

Title	of	each	class

Common	Stock,	Par	Value	$.01	Per	Share

on	which	registered

New	York	Stock	Exchange,	Inc. Chicago	Stock	Exchange,	Inc. New	York	Stock	Exchange,	Inc. New	York	Stock	Exchange,	Inc. New	York	Stock	Exchange,	Inc. New	York	Stock	Exchange,	Inc. New	York	Stock	Exchange,	Inc.

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		☒				No		☐

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		☐				No		☒

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		☒				No		☐

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		☒				No		☐

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	☒

													Non-accelerated	filer	☐ Smaller	reporting	company	☐

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

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	$91.4	billion	as	of	January	31,	2016	(approximately	$96.4	billion	as	of	June	30,	2015,	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,	2015)	for	its	annual	meeting	to	be	held	on	May	10,	2016,	are	incorporated	by	reference	in	this	Form	10-K	in	response	to	Part	III,	Items	10,	11,	12, 13	and	14.

| ITEM	1 | Business | 3 |
| :--- | :--- | :--- |
| ITEM\t1A | Risk\tFactors | 9 |
| ITEM\t1B | Unresolved\tStaff\tComments | 12 |
| ITEM\t2 | Properties | 12 |
| ITEM\t3 | Legal\tProceedings | 12 |
| ITEM\t4 | Mine\tSafety\tDisclosures | 12 |
| PART\tII |  |  |
| ITEM\t5 | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof |  |
|  | Equity\tSecurities | 13 |
| ITEM\t6 | Selected\tFinancial\tData | 15 |
| ITEM\t7 | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 16 |
| ITEM\t7A | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 45 |
| ITEM\t8 | Financial\tStatements\tand\tSupplementary\tData | 47 |
|  | Index\tto\tFinancial\tStatements | 47 |
| 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 |  |
|  | Matters | 119 |
| ITEM\t13 | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 120 |
| ITEM\t14 | Principal\tAccounting\tFees\tand\tServices | 120 |
| PART\tIV\nITEM\t15 | Exhibits,\tFinancial\tStatement\tSchedules | 121 |

# ANNUAL	REPORT	ON	FORM	10-K

# PART	I

# 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	18,	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;	Health Care;	Electronics	and	Energy;	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,	2015,	the	Company	employed	89,446	people	(full-time	equivalents),	with	35,973	employed	in	the	United	States	and 53,473	employed	internationally.

# Business	Segments

As	described	in	Note	16,	effective	in	the	third	quarter	of	2015,	within	the	Health	Care	business	segment,	the	Company	formed	the Oral	Care	Solutions	Division,	which	combined	the	former	3M	ESPE	and	3M	Unitek	divisions.

3M	manages	its	operations	in	five	business	segments:	Industrial;	Safety	and	Graphics;	Health	Care;	Electronics	and	Energy;	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.	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	(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.	3M	is	also	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.	3M	develops	and	produces	advanced	technical	ceramics	for	demanding	applications	in	the automotive,	oil	and	gas,	solar,	industrial,	electronics	and	defense	industries.	In	August	2015,	3M	acquired	assets	and	liabilities associated	with	Polypore	International,	Inc.'s	Separations	Media	business,	a	leading	provider	of	microporous	membranes	and	modules for	filtration	in	the	life	sciences,	industrial	and	specialty	segments.

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	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	cabin noise	reduction	and	catalytic	converters;	functional	and	decorative	graphics;	abrasion-resistant	films;	adhesives;	sealants;	masking tapes;	fasteners	and	tapes	for	attaching	nameplates,	trim,	moldings,	interior	panels	and	carpeting;	coated,	nonwoven	and microstructured	finishing	and	grinding	abrasives;	structural	adhesives;	and	other	specialty	materials.	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	solutions,	including	commercial	graphics	sheeting	and	systems, architectural	design	solutions	for	surfaces,	and	cleaning	and	protection	products	for	commercial	establishments;	and	roofing	granules for	asphalt	shingles.	In	August	2015,	3M	acquired	Capital	Safety	Group	S.A.R.L.,	a	leading	global	provider	of	fall	protection equipment.

This	segment's	products	include	personal	protection	products,	such	as	certain	disposable	and	reusable	respirators,	personal	protective equipment,	head	and	face	protection,	body	protection,	hearing	protection	and	protective	eyewear,	plus	reflective	materials	that	are widely	used	on	apparel,	footwear	and	accessories,	enhancing	visibility	in	low-light	situations.	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,	and	films	that	protect	against counterfeiting.	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,	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;	natural	and	color-coated	mineral	granules	for	asphalt	shingles;	plus	fall	protection equipment.

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,	oral	care	solutions	(dental	and	orthodontic	products),	health	information	systems,	and	food	safety	products.	In April	2014,	3M	purchased	all	of	the	outstanding	equity	interests	of	Treo	Solutions	LLC,	headquartered	in	Troy,	New	York.	Treo Solutions	LLC	is	a	provider	of	data	analytics	and	business	intelligence	to	healthcare	payers	and	providers.	In	March	2015,	3M acquired	Ivera	Medical	Corp.,	a	manufacturer	of	health	care	products	that	disinfect	and	protect	devices	used	for	access	into	a	patient's bloodstream.

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.	Oral	care	solutions	include	restoratives,	adhesives,	finishing	and	polishing	products,	crowns,	impression	materials, preventive	sealants,	professional	tooth	whiteners,	prophylaxis	and	orthodontic	appliances,	as	well	as	digital	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.

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

This	segment's	electronics	solutions	include	the	display	materials	and	systems	business,	which	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.	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.	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	products,	including	touch	screens,	touch	monitors,	and	touch	sensor	components.

This	segment's	energy	solutions	include	electrical	products,	including	infrastructure	protection,	telecommunications,	and	renewable energy.	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.

Consumer	Business:	The	Consumer	segment	serves	markets	that	include	consumer	retail,	office	retail,	office	business	to	business, home	improvement,	drug	and	pharmacy	retail,	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	and profit	growth.	Research,	development	and	related	expenses	totaled	$1.763	billion	in	2015,	$1.770	billion	in	2014	and	$1.715	billion	in 2013.	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	$1.223	billion	in	2015,	$1.193	billion	in	2014	and	$1.150	billion	in	2013.	Related expenses	primarily	include	technical	support;	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	2015,	the	Company	experienced	declining	costs	for	most	raw	material	categories	and	transportation	fuel,	due	largely	to	the significant	price	decreases	in	crude	oil.	This	in	turn	drove	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	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	14, 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,	the	Company's	commitment	to	a	plan of	action,	or	approval	by	regulatory	agencies.	Environmental	expenditures	for	capital

projects	that	contribute	to	current	or	future	operations	generally	are	capitalized	and	depreciated	over	their	estimated	useful	lives.

In	2015,	3M	expended	about	$26	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	emphasis	on	environmental responsibility,	capital	expenditures	(other	than	for	remediation	projects)	for	known	projects	are	presently	expected	to	be	about	$51 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	11,	2016).

Joaquin	Delgado 56 Executive	Vice	President,	Health	Care Business	Group 2012 Executive	Vice	President,	Electro	and	Communications Business,	2009-2012

Ivan	K.	Fong 54 Senior	Vice	President,	Legal	Affairs	and General	Counsel 2012 General	Counsel,	U.S.	Department	of	Homeland Security,	2009-2012

Senior	Vice	President	and	Chief Financial	Officer 2014

Vice	President,	Corporate	Controller	and	Chief Accounting	Officer,	2011-2014 Director,	Corporate	Accounting,	2007-2011

# Executive	Officers	(continued)

Technical	Director,	Industrial	and	Transportation

Business,	Asia	Pacific,	2011

Michael	F.	Roman 56 Executive	Vice	President,	Industrial Business	Group 2014 Senior	Vice	President,	Business	Development,	2013- 2014 Vice	President	and	General	Manager,	Industrial Adhesives	and	Tapes	Division,	2011-2013 Vice	President	and	General	Manager,	Renewable Energy	Division,	2009-2011

Hak	Cheol	Shin 58 Executive	Vice	President,	International Operations 2011 Executive	Vice	President,	Industrial	and	Transportation Business,	2006-2011 Jesse	G.	Singh 50 Senior	Vice	President,	Supply	Chain Transformation 2016 President,	Health	Information	Systems,	2015-2016 Senior	Vice	President,	Marketing	and	Sales,	2014-2015 Vice	President	and	General	Manager,	Stationery	and Office	Supplies	Division,	2012-2013 President,	Sumitomo	3M	Limited,	2007-2012

Executive	Vice	President,	Consumer Business	Group 2012

Executive	Vice	President,	Consumer	and	Office Business,	2011-2012 Managing	Director,	3M	Brazil,	2009-2011

# 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,"	"forecast"		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	or	climate	change	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,

· future	availability	of	and	access	to	credit	markets,

· 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,"	"Financial	Condition	and	Liquidity"	and	annually	in	"Critical	Accounting	Estimates."		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,	political,	and	capital	markets	conditions.	The Company	operates	in	more	than	70	countries	and	derives	approximately	60	percent	of	its	revenues	from	outside	the	United	States.	The Company's	business	is	subject	to	global	competition	and	geopolitical	risks	and	may	be	adversely	affected	by	factors	in	the	United States	and	other	countries	that	are	beyond	its	control,	such	as	slower	economic	growth,	disruptions	in	financial	markets,	economic downturns	in	the	form	of	either	contained	or	widespread	recessionary

conditions,	inflation,	elevated	unemployment	levels,	sluggish	or	uneven	recovery,	government	deficit	reduction	and	other	austerity measures	in	specific	countries	or	regions,	or	in	the	various	industries	in	which	the	Company	operates;	social,	political	or	labor conditions	in	specific	countries	or	regions;	natural	and	other	disasters	or	climate	change	affecting	the	operations	of	the	Company	or	its customers	and	suppliers;	or	adverse	changes	in	the	availability	and	cost	of	capital,	interest	rates,	tax	rates,	tax	laws,	or	exchange control,	ability	to	expatriate	earnings	and	other	regulations	in	the	jurisdictions	in	which	the	Company	operates.

*	Change	in	the	Company's	credit	ratings	could	increase	cost	of	funding.	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	has an	AA-	credit	rating,	with	a	stable	outlook,	from	Standard	&	Poor's	and	an	Aa3	credit	rating,	with	a	negative	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	credit	ratings	have	served	to	lower 3M's	borrowing	costs	and	facilitate	access	to	a	variety	of	lenders.	The	Company's	ongoing	transition	to	a	more	optimized	capital structure,	financed	with	additional	low-cost	debt,	could	impact	3M's	credit	rating	in	the	future.	Failure	to	maintain	strong	investment grade	ratings	would	adversely	affect	the	Company's	cost	of	funding	and	could	adversely	affect	liquidity	and	access	to	capital	markets.

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

*	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,	and	engages	in	ongoing	global	business	transformation.	Business transformation	is	defined	as	changes	in	processes	and	internal/external	service	delivery	across	3M	to	move	to	more	efficient	business models	to	improve	operational	efficiency	and	productivity,	while	allowing	3M	to	serve	customers	with	greater	speed	and	efficiency. This	is	enabled	by	the	ongoing	multi-year	phased	implementation	of	an	enterprise	resource	planning	(ERP)	system	on	a	worldwide basis.	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	ERP system	as	part	of	business	transformation	on	a	worldwide	basis	over	the	next	several	years.	Security	breaches	and	other	disruptions to	the	Company's	information	technology	infrastructure	could	interfere	with	the	Company's	operations,	compromise	information belonging	to	the	Company	and	its	customers,		suppliers,	and	employees,	exposing	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,	service	providers	including	cloud	services,	natural	disasters	or	other catastrophic	events.	It	is	possible	for	such	vulnerabilities	to	remain	undetected	for	an	extended	period,	up	to	and	including	several years.	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.	Although	the	Company	maintains	insurance	coverage	for	various cybersecurity	risks,	there	can	be	no	guarantee	that	all	costs	or	losses	incurred	will	be	fully	insured.

*	The	Company's	defined	benefit	pension	and	postretirement	plans	are	subject	to	financial	market	risks	that	could	adversely	impact our	results.	The	performance	of	financial	markets	and	discount	rates	impact	the	Company's	funding	obligations	under	its	defined benefit	plans.	Significant	changes	in	market	interest	rates,	decreases	in	the	fair	value	of	plan	assets	and	investment	losses	on	plan assets,	and	relevant	legislative	or	regulatory	changes	relating	to	defined	benefit	plan	funding	may	increase	the	Company's	funding obligations	and	adversely	impact	its	results	of	operations	and	cash	flows.

*	The	Company's	future	results	may	be	affected	by	various	legal	and	regulatory	proceedings	and	legal	compliance	risks,	including those	involving	product	liability,	antitrust,	intellectual	property,	environmental,	the	U.S.	Foreign	Corrupt	Practices	Act	and	other 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	14	"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	88	manufacturing	facilities	in	29	states.	The	Company	operates	127	manufacturing	and	converting	facilities	in	37 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	14,	"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	2015,	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,	2016,	there	were	84,607	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.	Cash	dividends	declared	and	paid	totaled	$1.025	per share	for	each	of	the	second,	third,	and	fourth	quarters	of	2015.	Cash	dividends	declared	in	the	fourth	quarter	of	2014	included	a dividend	paid	in	November	2014	of	$0.855	per	share	and	a	dividend	paid	in	March	2015	of	$1.025	per	share.	Cash	dividends declared	and	paid	totaled	$0.855	per	share	for	each	of	the	second	and	third	quarters	of	2014.		Cash	dividends	declared	in	the	fourth quarter	of	2013	include	a	dividend	paid	in	March	2014	of	$0.855	per	share.	Stock	price	comparisons	follow:

# Stock	price	comparisons	(NYSE	composite	transactions)

| (Per	share	amounts) | First	Quarter | Quarter | Third	Quarter | Fourth	Quarter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| 2015\tHigh | $170.50 | $167.70 | $157.94 | $160.09 | $170.50 |
| 2015\tLow | 157.74 | 153.92 | 134.00 | 138.57 | 134.00 |
| 2014\tHigh | $139.29 | $145.53 | $147.87 | $168.16 | $168.16 |
| 2014\tLow | 123.61 | 132.02 | 138.43 | 130.60 | 123.61 |

# 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	2014,	3M's	Board	of	Directors	authorized	the	repurchase	of	up	to	$12	billion	of	3M's	outstanding common	stock,	with	no	pre-established	end	date.	In	February	2016,	3M's	Board	of	Directors	replaced	the	Company's	February	2014 repurchase	program	with	a	new	repurchase	program.	This	new	program	authorizes	the	repurchase	of	up	to	$10	billion	of	3M's outstanding	common	stock,	with	no	pre-established	end	date.

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

|  |  |  |  | Maximum |
| :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | Approximate |
|  |  |  |  | Dollar\tValue\tof |
|  |  |  | Total\tNumber\tof | Shares\tthat\tMay |
|  |  |  | 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,\t2015 | 1,628,420 | $161.61 | 1,628,420 | $6,440 |
| February\t1-28,\t2015 | 1,451,986 | $166.64 | 1,449,538 | $6,198 |
| March\t1-31,\t2015 | 2,001,351 | $164.58 | 2,000,848 | $5,869 |
| Total\tJanuary\t1-March\t31,\t2015 | 5,081,757 | $164.22 | 5,078,806 | $5,869 |
| April\t1-30,\t2015 | 2,937,143 | $160.60 | 2,934,726 | $5,398 |
| May\t1-31,\t2015 | 3,966,294 | $160.30 | 3,966,100 | $4,762 |
| June\t1-30,\t2015 | 4,294,763 | $157.50 | 4,294,763 | $4,085 |
| Total\tApril\t1-June\t30,\t2015 | 11,198,200 | $159.30 | 11,195,589 | $4,085 |
| July\t1-31,\t2015 | 4,943,483 | $154.28 | 4,943,483 | $3,323 |
| August\t1-31,\t2015 | 2,428,004 | $144.75 | 2,428,004 | $2,971 |
| September\t1-30,\t2015 | 2,371,046 | $140.13 | 2,369,922 | $2,639 |
| Total\tJuly\t1-September\t30,\t2015 | 9,742,533 | $148.46 | 9,741,409 | $2,639 |
| October\t1-31,\t2015 | 1,922,628 | $151.09 | 1,922,628 | $2,349 |
| November\t1-30,\t2015 | 2,052,151 | $157.89 | 2,051,444 | $2,025 |
| December\t1-31,\t2015 | 3,669,029 | $152.01 | 3,669,029 | $1,467 |
| Total\tOctober\t1-December\t31,\t2015 | 7,643,808 | $153.36 | 7,643,101 | $1,467 |
| Total\tJanuary\t1-December\t31,\t2015 | 33,666,298 | $155.56 | 33,658,905 | $1,467 |

(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) | 2015 | 2014 | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Years\tended\tDecember\t31: |  |  |  |  |  |
| Net\tsales | $30,274 | $31,821 | $30,871 | $29,904 | $29,611 |
| Net\tincome\tattributable\tto\t3M | 4,833 | 4,956 | 4,659 | 4,444 | 4,283 |
| Per\tshare\tof\t3M\tcommon\tstock: |  |  |  |  |  |
| Net\tincome\tattributable\tto\t3M\t—\tbasic | 7.72 | 7.63 | 6.83 | 6.40 | 6.05 |
| Net\tincome\tattributable\tto\t3M\t—\tdiluted | 7.58 | 7.49 | 6.72 | 6.32 | 5.96 |
| Cash\tdividends\tdeclared\tper\t3M\tcommon\tshare | 3.075 | 3.59 | 3.395 | 2.36 | 2.20 |
| Cash\tdividends\tpaid\tper\t3M\tcommon\tshare | 4.10 | 3.42 | 2.54 | 2.36 | 2.20 |
| At\tDecember\t31: |  |  |  |  |  |
| Total\tassets | $32,718 | $31,209 | $33,304 | $33,841 | $31,584 |
| Long-term\tdebt\t(excluding\tportion\tdue\twithin\tone\tyear)\tand |  |  |  |  |  |
| long-term\tcapital\tlease\tobligations | 8,799 | 6,764 | 4,367 | 4,970 | 4,549 |

In	2015,	3M's	Board	of	Directors	declared	a	second,	third,	and	fourth	quarter	dividend	of	$1.025	per	share,	which	resulted	in	total year	2015	declared	dividends	of	$3.075	per	share.	In	December	2014,	3M's	Board	of	Directors	declared	a	first-quarter	2015	dividend of	$1.025	per	share	(paid	in	March	2015),	which	when	added	to	second,	third,	and	fourth	quarter	2014	declared	dividends	of	$0.855 per	share,	resulted	in	total	year	2014	declared	dividends	of	$3.59	per	share.	In	December	2013,	3M's	Board	of	Directors	declared	a first-quarter	2014	dividend	of	$0.855	per	share	(paid	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	paid	in	March	2014.

# 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:

· Results	of	Operations

· New	Accounting	Pronouncements

· Financial	Condition	and	Liquidity

· Financial	Instruments

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).

# OVERVIEW

3M	is	a	diversified	global	manufacturer,	technology	innovator	and	marketer	of	a	wide	variety	of	products	and	services.	As	described	in Note	16,		effective	in	the	third	quarter	of	2015,	within	the	Health	Care	business	segment,	the	Company	formed	the	Oral	Care	Solutions Division,	which	combined	the	former	3M	ESPE	and	3M	Unitek	divisions.	3M	manages	its	operations	in	five	operating	business segments:	Industrial;	Safety	and	Graphics;	Health	Care;	Electronics	and	Energy;	and	Consumer.	From	a	geographic	perspective,	any references	to	EMEA	refer	to	Europe,	Middle	East	and	Africa	on	a	combined	basis.

# Restructuring	actions:

During	the	fourth	quarter	of	2015,	management	approved	and	committed	to	undertake	certain	restructuring	actions	primarily	focused on	structural	overhead,	largely	in	the	U.S.,	and	slower-growing	markets,	with	particular	emphasis	on	EMEA	and	Latin	America.	This impacted	approximately	1,700	positions	worldwide	and	resulted	in	a	fourth-quarter	2015	pre-tax	charge	of	$114	million,	$88	million after-tax	or	$0.14	per	diluted	share.

# Earnings	per	share	attributable	to	3M	common	shareholders	–	diluted:

The	following	table	provides	the	increase	(decrease)	in	diluted	earnings	per	share	for	2015	compared	to	2014,	and	2014	compared	to 2013.

|  | Year	ended |  |
| :--- | :--- | :--- |
|  | December\t31, |  |
| (Earnings\tper\tdiluted\tshare) | 2015 | 2014 |
| Same\tperiod\tlast\tyear | $7.49 | $6.72 |
| Increase/(decrease)\tin\tearnings\tper\tshare\t-\tdiluted,\tdue\tto: |  |  |
| Operational\tbenefits | 0.40 | 0.66 |
| Restructuring\tcharges | (0.14) | \t— |
| Acquisitions\tand\tdivestitures | (0.02) | \t— |
| Foreign\texchange\timpacts | (0.43) | (0.15) |
| Income\ttax\trate | \t— | (0.08) |
| Shares\tof\tcommon\tstock\toutstanding | 0.28 | 0.34 |
| Current\tperiod | $7.58 | \t$7.49 |

For	total	year	2015,	net	income	attributable	to	3M	was	$4.833	billion,	or	$7.58	per	diluted	share,	compared	to	$4.956	billion,	or	$7.49 per	diluted	share,	in	2014,	an	increase	of	1.2	percent	on	a	per	diluted	share	basis.	Operational	benefits	include	the	combination	of selling	price	increases	and	raw	material	cost	decreases,	partially	offset	by	higher	pension/postretirement	benefit	costs.	Restructuring actions	(discussed	above)	resulted	in	an	after-tax	charge	of	14	cents	per	diluted	share.	Acquisition	and	divestiture	impacts	primarily relate	to	the	Capital	Safety	and	Polypore	Separations	Media	acquisitions,	and	the	divestitures	of	the	license	plate	converting	business in	France	and	substantially	all	of	the	library	systems	business.	Foreign	exchange	impacts	decreased	earnings	per	diluted	share	by approximately	43	cents	year-on-year,	driven	by	average	year-on-year	changes	in	foreign	exchange	rates	in	the	Euro	of	17	percent,	Yen of	12	percent,	and	Brazil	Real	of	30	percent.	The	income	tax	rate	was	largely	unchanged	year-on-year.	Weighted-average	diluted shares	outstanding	in	2015	declined	3.7	percent	year-on-year	to	637.2	million,	which	increased	earnings	per	diluted	share	by approximately	28	cents.	Refer	to	the	section	entitled	"Results	of	Operations"	for	further	discussion.

For	total	year	2014,	net	income	attributable	to	3M	was	$4.956	billion,	or	$7.49	per	diluted	share,	compared	to	$4.659	billion,	or	$6.72 per	diluted	share,	in	2013,	an	increase	of	11.5	percent	on	a	per	diluted	share	basis.	Operational	benefits	include	a	significant	benefit from	the	combination	of	selling	price	increases	and	raw	material	cost	decreases,	plus	profit	leverage	on	organic	volume	growth. Foreign	exchange	impacts	decreased	earnings	per	diluted	share	by	approximately	15	cents	per	diluted	share.	The	income	tax	rate	was 28.9	percent	in	2014,	up	0.8	percentage	points	versus	2013,	which	decreased	earnings	per	diluted	share	by	approximately	8	cents. Weighted-average	diluted	shares	outstanding	in	2014	declined	4.6	percent	year-on-year	to	662.0	million,	which	increased	earnings	per diluted	share	by	approximately	34	cents.

# Fourth-quarter	2015	sales	and	operating	income	results:

Fourth-quarter	2015	net	income	attributable	to	3M	was	$1.038	billion,	or	$1.66	per	diluted	share,	compared	to	$1.179	billion,	or	$1.81 per	diluted	share,	in	the	fourth	quarter	of	2014.	Fourth-quarter	2015	sales	totaled	$7.3	billion,	a	decrease	of	5.4	percent	from	the	fourth quarter	of	2014.	3M	achieved	organic	local-currency	sales	growth	(which	includes	organic	volume	and	selling	price	impacts)	in	Health Care,	and	Consumer,	with	declines	in	Industrial,	Safety	and	Graphics,	and	Electronics	and	Energy.	Organic	local-currency	sales increased	4.5	percent	in	Health	Care,	led	by	health	information	systems,	food	safety,	oral	care,	drug	delivery	systems,	and	critical	and chronic	care.	Organic	local-currency	sales	increased	2.7	percent	in	the	Consumer	business	segment,	with	positive	growth	in	the construction	and	home	improvement	business,	stationery	and	office	supplies,	and	home	care,	while	consumer	health	care	declined. Organic	local-currency	sales	declined	1.8	percent	in	Industrial,	with	sales	growth	in	3M	purification	and	automotive	OEM	more	than offset	by	declines	in	industrial	adhesives	and	tapes,	abrasives,	and	advanced	materials.	Organic	local-currency	sales	declined	2.5 percent	in	Safety	and	Graphics,	with	sales	declines	in	personal	safety	partially	offset	by	sales	growth	in	roofing	granules,	and commercial	solutions,	while	traffic	safety	and	security	was	flat.	Electronics	and	Energy	organic	local-currency	sales	growth declined	7.7	percent,	with	decreases	in	electronic-related	sales	in	both	electronics	materials	solutions,	and	display	materials	and systems.	Energy-related	organic	local-currency	sales	declined	in	renewable	energy,	communications	markets,	and	electrical	markets. For	the	Company	in	total,	organic-local	currency	sales	declined	1.1	percent,	with	organic	volume	declines	of	2.3	percent	partially offset	by	higher	selling	prices	which	added	1.2	percent.	Acquisitions	added	1.9	percent	to	sales,	which	related	to	the	March	2015 acquisition	of	Ivera	Medical	Corp.	(Ivera),	the	August	2015	acquisition	of	Capital	Safety	Group	S.A.R.L.	(Capital	Safety),	and	the August	2015	acquisition	of	Polypore	International	Inc.'s	Separations	Media	business	(Polypore).		Divestitures	reduced	sales	by	0.4 percent,	related	to	the	January	2015	sale	of	the	global	static	business,	and	the	fourth	quarter	sale	of	the	license	converting	business	in France,	along	with	substantially	all	of	the	library	systems	business.	Foreign	currency	translation	reduced	sales	by	5.8	percent	year-on- year.

From	a	geographic	area	perspective,	fourth-quarter	2015	organic	local-currency	sales	grew	1.1	percent	in	EMEA.	Organic	local- currency	sales	declined	0.4	percent	in	the	United	States,	0.6	percent	in	Latin	America/Canada,	and	2.7	percent	in	Asia	Pacific.	In EMEA,	Central/East	Europe	showed	solid	local-currency	sales	growth	in	the	quarter,	while	West	Europe	was	up	slightly,	and	Middle East/Africa	declined.	Organic	local-currency	sales	in	the	United	States	declined,	as	3M	experienced	weak	end-market	demand	in	its industrial-related	businesses.	The	consumer-oriented	businesses	(Health	Care	and	Consumer)	continued	to	deliver	positive	organic growth.	Organic	local-currency	sales	in	Latin	America/Canada	declined.	In	Latin	America,	Mexico	continued	its	trend	of	strong organic	growth,	increasing	7	percent,	while	Brazil	declined	6	percent.	Organic	local-currency	sales	in	Asia	Pacific	declined	2.7 percent.	Three	of	five

business	groups	posted	positive	growth	in	the	Asia	Pacific	region,	led	by	Health	Care	and	Consumer,	while	Electronics	and	Energy declined.	Within	Asia	Pacific,	organic	local-currency	sales	declined	by	3	percent	in	both	Japan	and	China/Hong	Kong.

Operating	income	in	the	fourth	quarter	of	2015	was	20.5	percent	of	sales,	compared	to	21.5	percent	of	sales	in	the	fourth	quarter	of 2014,	a	decrease	of	1.0	percentage	points.	Restructuring	charges	reduced	operating	income	margins	by	1.6	percentage	points.	In addition,	higher	pension/postretirement	benefit	costs	reduced	margins.	These	impacts	were	partially	offset	by	a	benefit	from	the combination	of	selling	price	increases	and	raw	material	cost	decreases.

# Year	2015	sales	and	operating	income	results:

Sales	totaled	$30.3	billion,	a	decrease	of	4.9	percent	from	2014.	From	a	business	segment	perspective,	organic	local-currency	sales increased	3.7	percent	in	Health	Care,	3.4	percent	in	Consumer,	2.4	percent	in	Safety	and	Graphics,	and	0.7	percent	in	Industrial,	while sales	declined	1.9	percent	in	Electronics	and	Energy.	From	a	geographic	area	perspective,	2015	organic	local-currency	sales	grew	2.1 percent	in	the	United	States,	1.5	percent	in	Latin	America/Canada,	0.9	percent	in	Asia	Pacific,	and	0.8	percent	in	EMEA.	For	the Company	in	total,	organic	local-currency	sales	grew	1.3	percent,	with	higher	organic	volumes	contributing	0.2	percent	and	selling price	increases	contributing	1.1	percent.	Acquisitions	added	0.8	percent	to	sales,	while	divestitures	reduced	sales	by	0.2	percent. Foreign	currency	translation	reduced	sales	by	6.8	percent	year-on-year.	Refer	to	the	sections	entitled	"Performance	by	Business Segment"	and	"Performance	by	Geographic	Area"	for	additional	detail.

Operating	income	in	2015	was	22.9	percent	of	sales,	compared	to	22.4	percent	of	sales	in	2014,	an	increase	of	0.5	percentage	points. These	results	included	a	benefit	from	the	combination	of	selling	price	increases	and	raw	material	cost	decreases,	partially	offset	by higher	pension/postretirement	benefit	costs.	Refer	to	the	section	entitled	"Results	of	Operations"	for	further	discussion.

For	total	year	2014,	net	income	attributable	to	3M	was	$4.956	billion,	or	$7.49	per	diluted	share,	compared	to	$4.659	billion,	or	$6.72 per	diluted	share,	in	2013,	an	increase	of	11.5	percent	on	a	per	diluted	share	basis.	Sales	totaled	$31.8	billion,	an	increase	of	3.1 percent	from	2013.	From	a	business	segment	perspective,	organic	local-currency	sales	grew	5.8	percent	in	Health	Care,	5.4	percent	in Safety	and	Graphics,	5.2	percent	in	Electronics	and	Energy,	4.9	percent	in	Industrial,	and	3.9	percent	in	Consumer.	From	a	geographic area	perspective,	2014	organic	local-currency	sales	grew	6.3	percent	in	Asia	Pacific,	4.9	percent	in	the	United	States,	4.5	percent	in Latin	America/Canada,	and	3.2	percent	in	EMEA.	For	the	Company	in	total,	organic	local-currency	sales	grew	4.9	percent,	with higher	organic	volumes	contributing	3.9	percent	and	selling	price	increases	contributing	1.0	percent.	Acquisitions	added	0.1	percent	to sales,	driven	by	the	Treo	acquisition.	Foreign	currency	translation	reduced	sales	by	1.9	percent	year-on-year.

Operating	income	in	2014	was	22.4	percent	of	sales,	compared	to	21.6	percent	of	sales	in	2013,	an	increase	of	0.8	percentage	points. These	results	included	a	benefit	from	the	combination	of	selling	price	increases	and	raw	material	cost	decreases,	lower pension/postretirement	benefit	costs,	and	profit	leverage	on	organic	volume	growth.	These	factors	were	partially	offset	by	strategic investments	and	other	factors.	Refer	to	the	section	entitled	"Results	of	Operations"	for	further	discussion.

# Sales	and	operating	income	by	business	segment:

The	following	table	contains	sales	and	operating	income	results	by	business	segment	for	the	years	ended	December	31,	2015	and 2014.	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	16	for	additional	information	on	business	segments, including	Elimination	of	Dual	Credit.

|  |  |  |  |  |  |  | 2015	vs	2014 | 2015	vs	2014 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | 2015 |  |  | 2014 |  | %\tchange |  |
|  | Net | \t\t\t\t %\tof | Oper. | Net | \t\t\t\t %\tof | Oper. | Net | Oper. |
| (Dollars\tin\tmillions) | Sales | Total | Income | Sales | Total | Income | Sales | Income |
| Business\tSegments |  |  |  |  |  |  |  |  |
| Industrial | $10,328 | 34.1 %\t\t$ | 2,263 | $10,990 | 34.5 %\t\t$ | 2,389 | (6.0)% | (5.3)% |
| Safety\tand\tGraphics | 5,515 | 18.2 % | 1,305 | 5,732 | 18.0 % | 1,296 | (3.8)% | 0.7 % |
| Health\tCare | 5,420 | 17.9 % | 1,724 | 5,572 | 17.5 % | 1,724 | (2.7)% | \t— % |
| Electronics\tand\tEnergy | 5,220 | 17.2 % | 1,102 | 5,604 | 17.6 % | 1,115 | (6.8)% | (1.1)% |
| Consumer | 4,422 | 14.6 % | 1,046 | 4,523 | 14.2 % | 995 | (2.2)% | 5.2 % |
| Corporate\tand\tUnallocated | 1 | — % | (355) | 4 | — % | (251) | — | — |
| Elimination\tof\tDual\tCredit | (632) | (2.0)% | (139) | (604) | (1.8)% | (133) | — | — |
| Total\tCompany | $30,274 | 100.0 %\t\t$ | 6,946 | $31,821 | 100.0 %\t\t$ | 7,135 | (4.9)% | (2.6)% |

Sales	in	2015	decreased	4.9	percent,	substantially	impacted	by	foreign	currency	translation,	which	reduced	sales	by	6.8	percent.	Sales in	U.S.	dollars	declined	in	Consumer	by	2.2	percent,	Health	Care	by	2.7	percent,	Safety	and	Graphics	by	3.8	percent,	Industrial	by	6.0 percent,	and	Electronics	and	Energy	by	6.8	percent.	Total	company	organic	local-currency	sales	growth	(which	includes	organic volume	and	selling	price	impacts)	was	1.3	percent,	acquisitions	added	0.8	percent,	divestitures	reduced	sales	by	0.2	percent,	and foreign	currency	translation	reduced	sales	by	6.8	percent.	All	of	3M's	five	business	segments	posted	operating	income	margins	of approximately	21	percent	or	more	in	2015.	Worldwide	operating	income	margins	for	2015	were	22.9	percent,	compared	to	22.4 percent	for	2014.

Sales	in	2014	increased	3.1	percent,	led	by	Health	Care	at	4.5	percent,	Electronics	and	Energy	at	3.9	percent,	Industrial	at	3.1	percent, Safety	and	Graphics	at	2.7	percent,	and	Consumer	at	2.0	percent.	Total	company	organic	local-currency	sales	growth	(which	includes organic	volume	and	selling	price	impacts)	was	4.9	percent,	acquisitions	added	0.1	percent,	and	foreign	currency	translation	reduced sales	by	1.9	percent.	All	of	3M's	five	business	segments	posted	operating	income	margins	of	approximately	20	percent	or	more	in 2014.	Worldwide	operating	income	margins	for	2014	were	22.4	percent,	compared	to	21.6	percent	for	2013.

# Financial	condition:

3M	generated	$6.4	billion	of	operating	cash	flow	in	2015,	a	decrease	of	$206	million	when	compared	to	2014.	This	followed	an increase	of	$809	million	when	comparing	2014	to	2013.	Refer	to	the	section	entitled	"Financial	Condition	and	Liquidity"	later	in MD&A	for	a	discussion	of	items	impacting	cash	flows.	In	February	2016,	3M's	Board	of	Directors	authorized	the	repurchase	of	up	to $10	billion	of	3M's	outstanding	common	stock,	which	replaced	the	Company's	February	2014	repurchase	program.	This	new program	has	no	pre-established	end	date.	In	2015,		2014,	and	2013,	the	Company	purchased	more	than	$5	billion	of	its	own	stock	each year.	The	Company	expects	to	purchase	$4	billion	to	$6	billion	of	its	own	stock	in	2016.	In	February	2016,	3M's	Board	of	Directors declared	a	first-quarter	2016	dividend	of	$1.11	per	share,	an	increase	of	8	percent.	This	marked	the	58th	consecutive	year	of	dividend increases	for	3M.	3M's	debt	to	total	capital	ratio	(total	capital	defined	as	debt	plus	equity)	was	48	percent	at	December	31,	2015,		34 percent	at	December	31,	2014,	and	25	percent	at	December	31,	2013.		The	Company	has	an	AA-	credit	rating,	with	a	stable	outlook, from	Standard	&	Poor's	and	an	Aa3	credit	rating,	with	a	negative	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.

# Pension	and	postretirement	defined	benefit/contribution	plans:

On	a	worldwide	basis,	3M's	pension	and	postretirement	plans	were	86	percent	funded	at	year-end	2015.	The	primary	U.S.	qualified pension	plan,	which	is	approximately	69	percent	of	the	worldwide	pension	obligation,	was	91	percent	funded	and	the	international pension	plans	were	90	percent	funded.	The	U.S.	non-qualified	pension	plan	is	not	funded	due	to	tax	considerations	and	other	factors. Asset	returns	in	2015	for	the	primary	U.S.	qualified	pension	plan	was	0.7%,	as	3M	strategically	invests	in	both	growth	assets	and	fixed income	matching	assets	to	manage	its	funded	status.	For	the	primary	U.S.	qualified	pension	plan,	the	expected	long-term	rate	of	return on	an	annualized	basis	for	2016	is	7.50%,	down	0.25%	from	2015.	The	primary	U.S.	qualified	pension	plan	year-end	2015	discount rate	was	4.47%,	up	0.37	percentage	points	from	the	year-end	2014	discount	rate	of	4.10%.	The	increase	in	U.S.	discount	rates	resulted in	a	decreased	valuation	of	the	projected	benefit	obligation	(PBO),	however	the	plan's	funded	status	decreased	slightly	in	2015	as	the growth	in	the	PBO	increased	at	a	greater	rate	than	the	plan	assets	returned	in	2015.	Additional	detail	and	discussion	of	international plan	asset	returns	and	discount	rates	is	provided	in	Note	11	(Pension	and	Postretirement	Benefit	Plans).

3M	expects	to	contribute	approximately	$100	million	to	$200	million	of	cash	to	its	global	defined	benefit	pension	and	postretirement plans	in	2016.	The	Company	does	not	have	a	required	minimum	cash	pension	contribution	obligation	for	its	U.S.	plans	in	2016.	3M expects	global	defined	benefit	pension	and	postretirement	expense	in	2016	(before	settlements,	curtailments,	special	termination benefits	and	other)	to	decrease	by	approximately	$320	million	pre-tax	when	compared	to	2015.	Refer	to	"Critical	Accounting Estimates"	within	MD&A	and	Note	11	(Pension	and	Postretirement	Benefit	Plans)	for	additional	information	concerning	3M's pension	and	post-retirement	plans.

Beginning	on	January	1,	2016,	with	respect	to	defined	contribution	plans,	the	Company	reduced	its	match	on	employee 401(k)	contributions	for	U.S.	employees.	Previously,	based	on	the	date	the	employee	was	hired,	up	to	6%	of	eligible	compensation	was matched	in	cash	at	rates	of	60%,	75%	or	100%.	Beginning	in	2016,	5%	of	eligible	compensation	will	be	matched	at	rates	of	45%,	60% or	100%,	respectively.	The	reduction	in	the	company's	match	is	anticipated	to	reduce	2016	defined	contribution	pension	expense	by approximately	$35	million.

# Net	Sales:

|  |  | 2015 |  |  | 2014 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | U.S. | Intl. | Worldwide | U.S. | Intl. | Worldwide |
| Net\tsales\t(millions) | $12,049 | $18,225 | $30,274 | $11,714 | $20,107 | $31,821 |
| %\tof\tworldwide\tsales | 39.8 % | 60.2 % |  | 36.8 % | 63.2 % |  |
| Components\tof\tnet\tsales\tchange: |  |  |  |  |  |  |
| Volume\t—\torganic | 1.7 % | (0.5)% | 0.2 % | 4.4 % | 3.8 % | 3.9 % |
| Price | 0.4 | 1.4 | 1.1 | 0.5 | 1.2 | 1.0 |
| Organic\tlocal-currency\tsales | 2.1 | 0.9 | 1.3 | 4.9 | 5.0 | 4.9 |
| Acquisitions | 1.2 | 0.5 | 0.8 | 0.2 | \t— | 0.1 |
| Divestitures | (0.4) | (0.1) | (0.2) | (0.1) | — | — |
| Translation | — | (10.7) | (6.8) | — | (3.0) | (1.9) |
| Total\tsales\tchange | 2.9 % | (9.4)% | (4.9)% | 5.0 % | 2.0 % | 3.1 % |

In	2015,	organic	local-currency	sales	grew	1.3	percent,	with	increases	of	2.1	percent	in	the	United	States,	1.5	percent	in	Latin America/Canada,	0.9	percent	in	Asia	Pacific,	and	0.8	percent	in	EMEA.	Organic	local-currency	sales	growth	was	1.6	percent	across developing	markets,	and	1.2	percent	in	developed	markets.	Worldwide	organic	local-currency	sales	grew	3.7	percent	in	Health	Care, 3.4	percent	in	Consumer,	2.4	percent	in	Safety	and	Graphics,	and	0.7	percent	in	Industrial,	while	sales	declined	1.9	percent	in Electronics	and	Energy.	Acquisitions	added	0.8	percent	to	worldwide	growth,	while	divestitures	reduced	worldwide	growth	by	0.2 percent.	Foreign	currency	translation	reduced	worldwide	sales	growth	by	6.8	percent.

Worldwide	selling	prices	rose	1.1	percent	in	2015.	Selling	prices	continue	to	be	supported	by	technology	innovation,	which	is	a	key fundamental	strength	of	the	Company,	helping	to	drive	unique	customer	solutions	and	an	increasing	flow	of	new	products.

In	2014,	organic	local-currency	sales	grew	4.9	percent,	with	increases	of	6.3	percent	in	Asia	Pacific,	4.9	percent	in	the	United	States, 4.5	percent	in	Latin	America/Canada,	and	3.2	percent	in	EMEA.	Organic	local-currency	sales	grew	5.6	percent	across	developing markets,	and	4.5	percent	in	developed	markets.	Worldwide	organic	local-currency	sales	grew	5.8	percent	in	Health	Care,	5.4	percent	in Safety	and	Graphics,	5.2	percent	in	Electronics	and	Energy,	4.9	percent	in	Industrial,	and	3.9	percent	in	Consumer.	Acquisitions	added 0.1	percent	to	worldwide	growth	and	foreign	currency	translation	reduced	worldwide	sales	growth	by	1.9	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:

|  |  |  |  | 2015	versus | 2014	versus |
| :--- | :--- | :--- | :--- | :--- | :--- |
| (Percent\tof\tnet\tsales) | 2015 | 2014 | 2013 | 2014 | 2013 |
| Cost\tof\tsales | 50.9 % | 51.7 % | 52.1 % | (0.8)% | (0.4)% |
| Selling,\tgeneral\tand\tadministrative\texpenses | 20.4 | 20.3 | 20.7 | 0.1 | (0.4) |
| Research,\tdevelopment\tand\trelated\texpenses | 5.8 | 5.6 | 5.6 | 0.2 | \t— |
| Operating\tincome | 22.9 % | 22.4 % | 21.6 % | 0.5 % | 0.8 % |

Pension	and	postretirement	expense	increased	$165	million	in	2015	compared	to	2014,	compared	to	a	decrease	of	$162	million	in	2014 compared	to	2013.	Year	2015	includes	the	impact	of	a	first-quarter	2015	Japan	pension	curtailment	gain	of	$17	million.	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	11	(Pension	and	Postretirement	Plans)	for	components	of	net	periodic	benefit	cost	and	the assumptions	used	to	determine	net	cost.

The	Company	is	investing	in	business	transformation.	Business	transformation	is	defined	as	changes	in	processes	and	internal/external service	delivery	across	3M	to	move	to	more	efficient	business	models	to	improve	operational	efficiency	and	productivity,	while allowing	3M	to	serve	customers	with	greater	speed	and	efficiency.	This	is	enabled	by	the	ongoing	multi-year	phased	implementation of	an	enterprise	resource	planning	(ERP)	system	on	a	worldwide	basis.

In	the	fourth	quarter	of	2015,	as	discussed	within	the	Overview	section	above,	3M	incurred	restructuring	charges	impacting	operating expenses	as	follows:

# Cost	of	Sales:

Cost	of	sales	includes	manufacturing,	engineering	and	freight	costs.

Cost	of	sales,	measured	as	a	percent	of	net	sales,	was	50.9	percent	in	2015,	a	decrease	of	0.8	percentage	points	from	2014.	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 increased	net	sales	by	1.1	percent	and	raw	material	cost	deflation	was	favorable	by	approximately	3.5	percent	year-on-year.	In addition,	higher	pension	and	postretirement	costs	(of	which	a	portion	impacts	cost	of	sales)	and	fourth	quarter	2015	restructuring charges,	increased	cost	of	sales	as	a	percent	of	sales.

Cost	of	sales,	measured	as	a	percent	of	net	sales,	was	51.7	percent	in	2014,	a	decrease	of	0.4	percentage	points	from	2013.	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 increased	net	sales	by	1.0	percent	and	raw	material	cost	deflation	was	favorable	by	approximately	1.5	percent	year-on-year.	In addition,	lower	pension	and	postretirement	costs	(of	which	a	portion	impacts	cost	of	sales),	along	with	organic	volume	leverage, decreased	cost	of	sales	as	a	percent	of	sales.

# Selling,	General	and	Administrative	Expenses:

Selling,	general	and	administrative	expenses	(SG&A)	decreased	$287	million,	or	4.4	percent,	in	2015	when	compared	to	2014.	The translation	of	foreign	currencies	into	U.S.	dollars	reduced	SG&A	expense,	as	evidenced	by	our	foreign	currency	translation	impact which	reduced	worldwide	sales	by	6.8	percent.	This	foreign	currency	translation	benefit	was	partially	offset	by	higher	pension	and postretirement	expense	and	fourth	quarter	2015	restructuring	charges.	SG&A,	measured	as	a	percent	of	sales,	increased	0.1	percentage points	to	20.4	percent	in	2015,	compared	to	20.3	percent	of	sales	in	2014.

Selling,	general	and	administrative	expenses	(SG&A)	increased	$85	million,	or	1.3	percent,	in	2014	when	compared	to	2013.	Year 2014	included	strategic	investments	in	business	transformation,	while	lower	pension	and	postretirement	expense	benefitted	SG&A. SG&A,	measured	as	a	percent	of	sales,	decreased	0.4	percentage	points	to	20.3	percent	in	2014,	compared	to	20.7	percent	of	sales	in 2013.

# Research,	Development	and	Related	Expenses:

Research,	development	and	related	expenses	(R&D)	decreased	$7	million,	or	0.4	percent,	in	2015	compared	to	2014.	R&D	increased 3.2	percent	in	2014	compared	to	2013.	3M	continued	to	support	its	key	growth	initiatives,	including	more	R&D	aimed	at	disruptive innovation,	which	refers	to	innovation	which	has	the	potential	to	create	new	markets	and	disrupt	existing	markets.	In	2015,	like SG&A,	R&D	spending	in	U.S.	dollars	was	reduced	due	to	the	translation	of	foreign	currencies	into	U.S.	dollars.	These	2015 translation	benefits	were	partially	offset	by	higher	pension	and	postretirement	expense	in	2015	when	compared	to	2014.	In	2014, increases	in	R&D,	when	compared	to	2013,	were	partially	offset	by	lower	pension	and	postretirement	expense.	R&D,	measured	as	a percent	of	sales,	was	5.8	percent	in	2015,	compared	to	5.6	percent	in	both	2014	and	2013.

# Operating	Income:

3M	uses	operating	income	as	one	of	its	primary	business	segment	performance	measurement	tools.	Refer	to	the	table	below	for	a reconciliation	of	operating	income	margins	for	2015	versus	2014,	and	2014	versus	2013.

# Operating	income	margin:

|  | Year	ended |  |
| :--- | :--- | :--- |
|  | December\t31, |  |
| (Percent\tof\tnet\tsales) | 2015 | 2014 |
| Same\tperiod\tlast\tyear | 22.4 % | 21.6 % |
| Increase/(decrease)\tin\toperating\tincome\tmargin,\tdue\tto: |  |  |
| Selling\tprice\tand\traw\tmaterial\timpacts | 1.6 | 1.0 |
| Organic\tvolume\tgrowth | \t— | 0.3 |
| Pension\tand\tpostretirement\tbenefit\tcosts | (0.5) | 0.5 |
| Acquisitions\tand\tdivestitures | (0.2) | (0.1) |
| Strategic\tinvestments | (0.3) | (0.6) |
| Foreign\texchange\timpacts | \t— | (0.3) |
| Restructuring\tcharges | (0.4) | \t— |
| Productivity\tand\tother | 0.3 | \t— |
| Current\tperiod | 22.9 % | 22.4 % |

Operating	income	margins	were	22.9	percent	in	2015	compared	to	22.4	percent	in	2014,	an	increase	of	0.5	percentage	points.	These results	included	a	significant	benefit	from	the	combination	of	higher	selling	prices	and	lower	raw	material	costs,	and	a	benefit	from productivity	and	other	items.	These	benefits	were	partially	offset	by	higher	pension	and	postretirement	benefit	costs,	2015 restructuring	charges,	higher	strategic	investments,	and	acquisition	and	divestiture	impacts.	Strategic	investments	include	incremental programs	around	disruptive	R&D	and	business	transformation.	Acquisition	and	divestiture	impacts	primarily	relate	to	the	Capital Safety	and	Polypore	Separations	Media	acquisitions,	and	the	divestitures	of	substantially	all	of	the	library	systems	business,	along	with the	license	plate	converting	business	in	France.

Operating	income	margins	were	22.4	percent	in	2014	compared	to	21.6	percent	in	2013,	an	increase	of	0.8	percentage	points.	These results	included	a	significant	benefit	from	the	combination	of	higher	selling	prices	and	lower	raw	material	costs.	In	addition,	lower year-on-year	pension	and	postretirement	benefit	costs	and	profit	leverage	on	organic	volume	growth	provided	benefits.	Items	that reduced	operating	income	margins	included	strategic	investments,	which	included	investments	in	disruptive	R&D,	business transformation,	the	supply	chain	center	of	expertise	in	Europe,	and	portfolio	management	actions.	The	Company	invested	$90	million in	2014	in	portfolio	management	actions	to	position	3M	for	greater	success.	Foreign	currency	effects	and	acquisition	impacts	(Treo) reduced	operating	income	margins.

# Interest	Expense	and	Income:

| (Millions) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Interest\texpense | $149 | $142 | $145 |
| Interest\tincome | (26) | (33) | (41) |
| Total | $123 | $109 | $104 |

Interest	Expense:		Interest	expense	increased	slightly	in	2015	compared	to	2014,	despite	significantly	higher	debt	levels,	helped	by lower	average	interest	rates.	Interest	expense	decreased	in	2014	compared	to	2013,	again	despite	higher	debt	levels,	primarily	due	to lower	U.S.	borrowing	costs	as	debt	maturities	were	replaced	with	lower	cost	financing	from	commercial	paper	and	lower	interest	rates on	new	debt	issuances.

Capitalized	interest	related	to	property,	plant	and	equipment	construction	in	progress	is	recorded	as	a	reduction	to	interest	expense.	The amounts	shown	in	the	table	above	for	interest	expense	are	net	of	capitalized	interest	amounts	of	$13	million,	$15	million,	and	$21 million,	in	2015,	2014	and	2013,	respectively.

Interest	Income:	Interest	income	in	2015	was	lower	when	compared	to	2014	due	to	lower	average	cash/marketable	securities	balances.

Interest	income	in	2014	was	lower	when	compared	to	2013	due	to	lower	cash	balances.

# Provision	for	Income	Taxes:

| (Percent	of	pre-tax	income) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Effective\ttax\trate | 29.1 % | 28.9 % | 28.1 % |

The	effective	tax	rate	for	2015	was	29.1	percent,	compared	to	28.9	percent	in	2014,	an	increase	of	0.2	percentage	points.		The effective	tax	rate	for	2014	was	28.9	percent,	compared	to	28.1	percent	in	2013,	an	increase	of	0.8	percentage	points.		The	changes	in the	rates	between	years	are	impacted	by	many	factors,	as	described	further	in	Note	8.

The	Company	currently	expects	that	its	effective	tax	rate	for	2016	will	be	approximately	29.5	to	30.5	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	8	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	have	largely	related	to	Sumitomo	3M	Limited (Japan),	which	was	3M's	most	significant	consolidated	entity	with	non-3M	ownership	interests.	As	discussed	in	Note	6,	on September	1,	2014,	3M	purchased	the	remaining	25	percent	ownership	in	Sumitomo	3M	Limited,	bringing	3M's	ownership	to	100 percent.	Thus,	effective	September	1,	2014,	net	income	attributable	to	noncontrolling	interest	was	significantly	reduced.	The	primary remaining	noncontrolling	interest	relates	to	3M	India	Limited,	of	which	3M's	effective	ownership	is	75	percent.

# Currency	Effects:

3M	estimates	that	year-on-year	currency	effects,	including	hedging	impacts,	decreased	pre-tax	income	by	approximately	$390	million and	$100	million	in	2015	and	2014,	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	increased	pre-tax	income	by	approximately	$180	million	and	$10	million	in	2015	and	2014,	respectively.	Refer	to	Note	12	in the	Consolidated	Financial	Statements	for	additional	information	concerning	3M's	hedging	activities.

# 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	described	in	Note	16,	effective	in	the	third	quarter of	2015,	within	the	Health	Care	business	segment,	the	Company	formed	the	Oral	Care	Solutions	Division,	which	combined	the	former 3M	ESPE	and	3M	Unitek	divisions.	3M	manages	its	operations	in	five	business	segments.	The	reportable	segments	are	Industrial; Safety	and	Graphics;	Electronics	and	Energy;	Health	Care;	and	Consumer.

# Corporate	and	Unallocated:

In	addition	to	these	five	business	segments,	3M	assigns	certain	costs	to	"Corporate	and	Unallocated,"	which	is	presented	separately	in the	preceding	business	segments	table	and	in	Note	16.	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	determines	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	increased	by	$104	million	in	2015	when	compared	to	2014.	This	increase	was	driven	by higher	pension	and	postretirement	benefit	expenses,	which	increased	in	total	by	$165	million.	Of	this	increase,	$153	million	was allocated	to	Corporate	and	Unallocated.	Increases	were	also	driven	by	fourth	quarter	2015	restructuring	charges	of	$37	million,	as indicated	in	the	below	table.	Items	which	partially	offset	these	increases	within	Corporate	and	Unallocated	included	higher administrative	and	R&D	cost	absorption	by	the	five	business	segments,	resulting	in	less	under-absorbed	expense	being	allocated	to Corporate.

Corporate	and	Unallocated	operating	expenses	decreased	by	$70	million	in	2014	when	compared	to	2013.	This	decrease	was	driven	by lower	pension	and	postretirement	benefit	expenses,	which	declined	year-on-year	by	$162	million.	Of	this	reduction,	$116	million	was allocated	to	Corporate	and	Unallocated.	This	was	partially	offset	by	higher	Corporate	and	Unallocated	expenses	related	to	year-on- year	increases	in	annual	incentive	plan	expenses	and	legal	accruals.

# Restructuring	Pre-Tax	Charge	by	Business	Segment:

| (Millions) | 2015 |
| :--- | :--- |
| Industrial | 42 |
| Safety\tand\tGraphics | 11 |
| Health\tCare | 9 |
| Electronics\tand\tEnergy | 12 |
| Consumer | 3 |
| Corporate\tand\tUnallocated | 37 |
| Total | $114 |

# Operating	Business	Segments:

Each	of	3M's	business	segments	incurred	restructuring	charges	in	the	fourth	quarter	of	2015,	as	indicated	in	the	preceding	table.	In 2014,	each	business	segment	absorbed	additional	cost	related	to	incremental	investments	related	to	business	transformation,	enabled by	3M's	global	ERP	implementation,	which	impacted	each	of	the	five	business	segments	2014	annual	operating	income	margins	by approximately	0.2	percentage	points	when	compared	to	2013.

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.

The	following	discusses	total	year	results	for	2015	compared	to	2014,	and	also	discusses	2014	compared	to	2013,	for	each	business segment.

# Industrial	Business	(34.1%	of	consolidated	sales):

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Sales\t(millions) | $10,328 | $10,990 | $10,657 |
| Sales\tchange\tanalysis: |  |  |  |
| Organic\tlocal\tcurrency | 0.7 % | 4.9 % | 4.6 % |
| Acquisitions | 0.6 | \t— | 3.6 |
| Translation | (7.3) | (1.8) | (1.7) |
| Total\tsales\tchange | (6.0)% | 3.1 % | 6.5 % |
| Operating\tincome\t(millions) | $2,263 | $2,389 | $2,307 |
| Percent\tchange | (5.3)% | 3.6 % | 2.8 % |
| Percent\tof\tsales | 21.9 % | 21.7 % | 21.6 % |

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

Sales	in	Industrial	totaled	$10.3	billion,	down	6.0	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	0.7	percent, acquisitions	added	0.6	percent,	and	foreign	currency	translation	reduced	sales	by	7.3	percent.

On	an	organic	local-currency	sales	basis:

· Sales	growth	was	led	by	3M	purification,	automotive	OEM,	and	aerospace	and	commercial	transportation,	while	both automotive	aftermarket,	and	industrial	adhesives	and	tapes	sales	increased	slightly.

· Sales	in	advanced	materials	declined,	primarily	due	to	weakness	in	the	oil	and	gas	market.	Sales	in	abrasive	systems	also declined.

· Geographically,	sales	increased	4	percent	in	Latin	America/Canada,	1	percent	in	Asia	Pacific,	and	were	flat	in	both	EMEA and	the	United	States.

# Acquisitions:

· Acquisition	sales	growth	related	to	the	late	August	2015	acquisition	of	Polypore's	Separations	Media	business.

· This	business	is	a	provider	of	microporous	membranes	and	modules	for	filtration	in	the	life	sciences,	industrial,	and	specialty segments.	This	acquisition	enhances	3M's	core	filtration	platform	and	will	help	generate	new	growth	opportunities	across the	company.

· Operating	income	margins	increased	by	0.2	percentage	points	to	21.9	percent,	helped	by	the	combination	of	lower	raw material	costs	and	selective	selling	price	increases.

· Operating	income	margins	were	negatively	impacted	by	0.4	percentage	points	due	to	the	$42	million	restructuring	charge, plus	an	additional	0.3	percentage	points	penalty	due	to	the	Polypore	Separations	Media	acquisition.

Sales	in	Industrial	totaled	$11.0	billion,	up	3.1	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	4.9	percent,	and	foreign currency	translation	reduced	sales	by	1.8	percent.

· Sales	growth	was	positive	across	all	businesses,	led	by	aerospace	and	commercial	transportation,	automotive	OEM,	3M purification,	advanced	materials,	and	abrasive	systems.

· Geographically,	organic	local-currency	sales	increased	6	percent	in	the	United	States,	5	percent	in	Asia	Pacific,	and	3	percent in	both	EMEA	and	Latin	America/Canada.

· Operating	income	margins	increased	by	0.1	percentage	points	to	21.7	percent.

· Operating	income	margins	improved	due	to	sales	volume	leverage,	plus	the	combination	of	selling	price	increases	and	raw material	cost	decreases,	partially	offset	by	incremental	investments	related	to	business	transformation,	enabled	by	3M's global	ERP	implementation.

# Safety	and	Graphics	Business	(18.2%	of	consolidated	sales):

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Sales\t(millions) | $5,515 | $5,732 | $5,584 |
| Sales\tchange\tanalysis: |  |  |  |
| Organic\tlocal\tcurrency | 2.4 % | 5.4 % | 4.1 % |
| Acquisitions | 2.6 | \t— | 1.3 |
| Divestitures | (0.4) | \t— | \t— |
| Translation | (8.4) | (2.7) | (2.1) |
| Total\tsales\tchange | (3.8)% | 2.7 % | 3.3 % |
| Operating\tincome\t(millions) | $1,305 | $1,296 | $1,227 |
| Percent\tchange | 0.7 % | 5.6 % | 1.4 % |
| Percent\tof\tsales | 23.7 % | 22.6 % | 22.0 % |

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	solutions,	including	commercial	graphics	sheeting	and	systems,	architectural	design solutions	for	surfaces,	and	cleaning	and	protection	products	for	commercial	establishments;	roofing	granules	for	asphalt	shingles;	plus fall	protection	equipment.

Sales	in	Safety	and	Graphics	totaled	$5.5	billion,	down	3.8	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	2.4	percent, and	foreign	currency	translation	reduced	sales	by	8.4	percent.	Acquisitions	added	2.6	percent,	while	divestitures	reduced	sales	by	0.4 percent.

· Sales	growth	was	led	by	roofing	granules,	commercial	solutions,	and	personal	safety,	while	sales	were	flat	in	traffic	safety and	security.

· Sales	increased	6	percent	in	Asia	Pacific,	3	percent	in	the	United	States,	and	2	percent	in	EMEA,	while	sales	declined	1 percent	in	Latin	America/Canada.

Acquisitions	and	divestitures:

· Acquisition	sales	growth	reflects	the	acquisition	of	Capital	Safety	in	early	August	2015.	Capital	Safety	is	a	leading	global provider	of	fall	protection	equipment.

· In	the	fourth	quarter	of	2015,	3M	divested	its	license	plate	converting	business	in	France	and	substantially	all	of	its	library systems	business	as	discussed	in	Note	2.

· Operating	income	margins	were	23.7	percent	of	sales,	compared	to	22.6	percent	in	2014.

· Operating	income	margin	improvements	were	driven	by	higher	selling	prices	and	lower	raw	material	costs,	along	with productivity.

· Operating	income	margins	penalty	from	acquisitions	was	partially	offset	by	a	benefit	from	divestitures,	which	resulted	in	a net	margin	penalty	of	0.2	percentage	points.

Sales	in	Safety	and	Graphics	totaled	$5.7	billion,	up	2.7	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	5.4	percent, and	foreign	currency	translation	reduced	sales	by	2.7	percent.

· Sales	growth	was	led	by	personal	safety.	3M	also	saw	positive	organic	local-currency	sales	growth	in	commercial	solutions, and	traffic	safety	and	security.

· Sales	in	the	roofing	granules	business	declined	year-on-year.

· Organic	local-currency	sales	increased	6	percent	in	EMEA,	and	increased	5	percent	in	the	United	States,	Asia	Pacific,	and Latin	America/Canada.

· Operating	income	margins	were	22.6	percent	of	sales,	compared	to	22.0	percent	in	2013.

· Operating	income	margins	benefited	from	organic	volume	leverage	plus	selling	price	increases,	partially	offset	by incremental	investments	related	to	business	transformation,	enabled	by	3M's	global	ERP	implementation,	plus	certain portfolio	management	actions.

# Health	Care	Business	(17.9%	of	consolidated	sales):

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Sales\t(millions) | $5,420 | $5,572 | $5,334 |
| Sales\tchange\tanalysis: |  |  |  |
| Organic\tlocal\tcurrency | 3.7 % | 5.8 % | 5.0 % |
| Acquisitions | 0.8 | 0.4 | 0.1 |
| Translation | (7.2) | (1.7) | (1.3) |
| Total\tsales\tchange | (2.7)% | 4.5 % | 3.8 % |
| Operating\tincome\t(millions) | $1,724 | $1,724 | $1,672 |
| Percent\tchange | \t— % | 3.1 % | 1.9 % |
| Percent\tof\tsales | 31.8 % | 30.9 % | 31.3 % |

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,	oral	care	solutions	(dental	and	orthodontic	products),	health	information	systems,	and	food	safety	products.	Effective	in	the third	quarter	of	2015,	within	the	Health	Care	business	segment,	the	Company	formed	the	Oral	Care	Solutions	Division,	which combined	the	former	3M	ESPE	and	3M	Unitek	divisions.

Health	Care	sales	totaled	$5.4	billion,	a	decrease	of	2.7	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	3.7	percent, acquisitions	added	0.8	percent,	and	foreign	currency	translation	reduced	sales	by	7.2	percent.

· Sales	growth	was	broad-based	across	much	of	the	Health	Care	portfolio,	including	food	safety,	health	information	systems, critical	and	chronic	care,	oral	care	solutions,	and	infection	prevention.

· Sales	declined	in	drug	delivery	systems.

· On	a	geographic	basis,	sales	increased	8	percent	in	Asia	Pacific,	6	percent	in	Latin	America/Canada,	4	percent	in	the	United States,	and	1	percent	in	EMEA.

· In	developing	markets,	Health	Care	organic	local-currency	sales	grew	8	percent.

· Acquisition	sales	growth	related	to	the	March	2015	purchase	of	Ivera	Medical	Corp.	Ivera	is	a	manufacturer	of	health	care products	that	disinfect	and	protect	devices	used	for	access	into	a	patient's	bloodstream.	In	addition,	Treo	Solutions	LLC,

acquired	in	April	2014,	provided	a	year-on-year	benefit	(discussed	further	in	Year	2014	results	below).

· Operating	income	was	flat	in	dollars	at	$1.7	billion.

· Operating	income	margins	were	31.8	percent	in	2015,	compared	to	30.9	percent	in	2014,		helped	by	portfolio	management actions	that	are	contributing	to	higher	productivity	and	margins.

· Acquisition	impacts	reduced	operating	income	margins	by	0.2	percentage	points.

In	September	2015,	3M	announced	that	it	would	explore	strategic	alternatives	for	its	Health	Information	Systems	Division	(HIS), which	included	spinning-off,	selling,	or	retaining	the	business.	In	February	2016,	following	an	in-depth	exploration	of	strategic alternatives,	the	Company	announced	that	it	made	the	decision	to	retain	and	further	invest	in	HIS.

Health	Care	sales	totaled	$5.6	billion,	an	increase	of	4.5	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	5.8	percent, acquisitions	added	0.4	percent,	and	foreign	currency	translation	reduced	sales	by	1.7	percent.

· Sales	grew	in	all	businesses,	with	the	strongest	growth	in	health	information	systems,	drug	delivery	systems,	food	safety, critical	and	chronic	care,	and	infection	prevention.

· On	a	geographic	basis,	organic	local-currency	sales	increased	9	percent	in	Latin	America/Canada,	8	percent	in	Asia	Pacific,	6 percent	in	the	United	States,	and	3	percent	in	EMEA.

· Acquisition	sales	growth	related	to	the	April	2014	purchase	of	Treo	Solutions	LLC.	Treo	is	a	provider	of	data	analytics	and business	intelligence	to	healthcare	payers	and	providers.

· Operating	income	increased	3.1	percent	to	$1.7	billion.

· Operating	income	margins	were	30.9	percent	in	2014,	compared	to	31.3	percent	in	2013,	with	acquisition	impacts	reducing operating	income	margins	by	0.3	percentage	points.

· The	gain	from	sale	of	a	non-strategic	equity	method	investment	benefited	total	year	2013	operating	income	margins	by	0.3 percentage	points.

# Electronics	and	Energy	Business	(17.2%	of	consolidated	sales):

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Sales\t(millions) | $5,220 | $5,604 | $5,393 |
| Sales\tchange\tanalysis: |  |  |  |
| Organic\tlocal\tcurrency | (1.9)% | 5.2 % | \t— % |
| Divestitures | (0.8) | \t— | \t— |
| Translation | (4.1) | (1.3) | (1.2) |
| Total\tsales\tchange | (6.8)% | 3.9 % | (1.2)% |
| Operating\tincome\t(millions) | $1,102 | $1,115 | $954 |
| Percent\tchange | (1.1)% | 16.8 % | (7.0)% |
| Percent\tof\tsales | 21.1 % | 19.9 % | 17.7 % |

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

The	display	materials	and	systems	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	display	materials	and	systems 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	$5.2	billion,	down	6.8	percent	in	U.S.	dollars.	Organic	local-currency	sales	declined	1.9	percent, divestitures	reduced	sales	by	0.8	percent,	and	foreign	currency	translation	reduced	sales	by	4.1	percent.

· Sales	decreased	approximately	1	percent	in	3M's	electronics-related	businesses,	with	growth	in	electronics	materials solutions	more	than	offset	by	a	decline	in	display	materials	and	systems,	as	3M	experienced	softer	conditions	in	the electronics	markets.

· Sales	decreased	approximately	4	percent	in	3M's	energy-related	businesses,	as	telecommunications,	electrical	markets,	and renewable	energy	all	declined.

· On	a	geographic	basis,	sales	increased	1	percent	in	Europe,	were	flat	in	the	United	States,	and	declined	3	percent	in	both Latin	America/Canada	and	Asia	Pacific.

Divestitures:

· 3M	completed	the	sale	of	its	static	control	business	in	January	2015	(discussed	in	Note	2).

· Operating	income	margins	were	21.1	percent	compared	to	19.9	percent	in	2014,	helped	by	prior	year	portfolio	management actions	that	are	contributing	to	higher	productivity.

· Portfolio	management	actions	in	2015	related	to	renewable	energy,	plus	fourth	quarter	2015	restructuring	charges,	which combined	reduced	operating	income	margins	by	0.8	percentage	points.

Electronics	and	Energy	sales	totaled	$5.6	billion,	up	3.9	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	5.2	percent, and	foreign	currency	translation	reduced	sales	by	1.3	percent.

· Sales	increased	approximately	8	percent	in	3M's	electronics-related	businesses,	with	growth	led	by	display	materials	and systems.

· In	3M's	energy-related	businesses,	organic	local-currency	sales	increased	approximately	1	percent,	with	growth	in	electrical markets	and	telecommunications,	partially	offset	by	reductions	in	renewable	energy.

· On	a	geographic	basis,	organic	local-currency	sales	increased	8	percent	in	Latin	America/Canada,	7	percent	in	Asia	Pacific, and	1	percent	in	EMEA,	while	sales	in	the	United	States	were	flat.

· Operating	income	margins	were	19.9	percent	compared	to	17.7	percent	in	2013,	helped	by	sales	volume	leverage.

· In	addition,	prior	portfolio	management	actions	enhanced	3M's	relevance	with	customers	and	generated	operational efficiencies,	which	also	contributed	to	the	operating	income	margin	improvement	in	2014.

# Consumer	Business	(14.6%	of	consolidated	sales):

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Sales\t(millions) | $4,422 | $4,523 | $4,435 |
| Sales\tchange\tanalysis: |  |  |  |
| Organic\tlocal\tcurrency | 3.4 % | 3.9 % | 3.0 % |
| Divestitures | \t— | (0.1) | (0.1) |
| Translation | (5.6) | (1.8) | (1.8) |
| Total\tsales\tchange | (2.2)% | 2.0 % | 1.1 % |
| Operating\tincome\t(millions) | $1,046 | $995 | $945 |
| Percent\tchange | 5.2 % | 5.3 % | 0.2 % |
| Percent\tof\tsales | 23.7 % | 22.0 % | 21.3 % |

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

Consumer	sales	totaled	$4.4	billion,	down	2.2	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	3.4	percent,	and	foreign currency	translation	reduced	sales	by	5.6	percent.

· Sales	growth	was	led	by	construction	and	home	improvement,	stationery	and	office	supplies,	and	home	care.	3M	also	posted positive	growth	in	its	consumer	health	care	business.

· On	a	geographic	basis,	organic	local-currency	sales	increased	5	percent	in	the	United	States	and	3	percent	in	Asia	Pacific, while	sales	in	both	EMEA	and	Latin	America/Canada	were	flat.

· In	developing	markets,	sales	growth	was	3	percent.

· The	combination	of	strong	organic	growth	and	productivity	continued	to	drive	efficiencies	across	this	business.

Consumer	sales	totaled	$4.5	billion,	up	2.0	percent	in	U.S.	dollars.	Organic	local-currency	sales	increased	3.9	percent,	divestitures reduced	sales	by	0.1	percent,	and	foreign	currency	translation	reduced	sales	by	1.8	percent.

· Sales	growth	was	led	by	construction	and	home	improvement.	3M	also	posted	positive	growth	in	the	consumer	health	care and	home	care	businesses.	Sales	in	the	stationery	and	office	supplies	business	were	flat.

· On	a	geographic	basis,	organic	local-currency	sales	increased	6	percent	in	Asia	Pacific,	4	percent	in	the	United	States,	3 percent	in	Latin	America/Canada,	and	1	percent	in	EMEA.

· The	combination	of	strong	organic	growth,	productivity,	and	portfolio	prioritization	continued	to	drive	efficiencies	across this	business.

# 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	17.

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) | $12,049 | $9,041 | $6,228 | $2,982 | $(26) | $30,274 |
| %\tof\tworldwide\tsales | 39.8 % | 29.9 % | 20.5 % | 9.8 % | — | 100.0 % |
| Components\tof\tnet\tsales\tchange: |  |  |  |  |  |  |
| Volume\t—\torganic | 1.7 % | 0.9 % | (1.0)% | (3.1)% | — | 0.2 % |
| Price | 0.4 | \t— | 1.8 | 4.6 | — | 1.1 |
| Organic\tlocal-currency\tsales | 2.1 | 0.9 | 0.8 | 1.5 | — | 1.3 |
| Acquisitions | 1.2 | 0.4 | 0.7 | 0.7 | — | 0.8 |
| Divestitures | (0.4) | (0.1) | (0.1) | (0.2) | — | (0.2) |
| Translation | — | (5.2) | (14.9) | (16.9) | — | (6.8) |
| Total\tsales\tchange | 2.9 % | (4.0)% | (13.5)% | (14.9)% | — | (4.9)% |
| Operating\tincome\t(millions) | $2,647 | $2,580 | $1,017 | $706 | $(4) | $6,946 |
| Percent\tchange | 4.2 % | 3.8 % | (17.5)% | (18.5)% | — | (2.6)% |

For	total	year	2015,	as	shown	in	the	preceding	table,	sales	declined	4.9	percent,	with	organic	volume	increases	of	0.2	percent	and selling	price	increases	of	1.1	percent.	Acquisitions	added	0.8	percent,	while	divestitures	reduced	sales	by	0.2	percent.	Foreign currency	translation	reduced	sales	by	6.8	percent.	Organic	local-currency	sales	increased,	2.1	percent	in	the	United	States,	1.5	percent in	Latin	America/Canada,	0.9	percent	in	Asia	Pacific,	and	0.8	percent	in	EMEA.	For	2015,	international	operations	represented	60.2 percent	of	3M's	sales.

|  |  |  | Europe, | Latin |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | United | Asia | Middle\tEast | America/ | Other |  |
|  | States | Pacific | &\tAfrica | Canada | Unallocated | Worldwide |
| Net\tsales\t(millions) | $11,714 | $9,418 | $7,198 | $3,504 | $(13) | $31,821 |
| %\tof\tworldwide\tsales | 36.8 % | 29.6 % | 22.6 % | 11.0 % | — | 100.0 % |
| Components\tof\tnet\tsales\tchange: |  |  |  |  |  |  |
| Volume\t—\torganic | 4.4 % | 6.2 % | 2.1 % | 0.2 % | — | 3.9 % |
| Price | 0.5 | 0.1 | 1.1 | 4.3 | — | 1.0 |
| Organic\tlocal-currency\tsales | 4.9 | 6.3 | 3.2 | 4.5 | — | 4.9 |
| Acquisitions | 0.2 | \t— | \t— | \t— | — | 0.1 |
| Divestitures | (0.1) | — | — | — | — | — |
| Translation | — | (2.2) | (1.6) | (7.5) | — | (1.9) |
| Total\tsales\tchange | 5.0 % | 4.1 % | 1.6 % | (3.0)% | — | 3.1 % |
| Operating\tincome\t(millions) | $2,540 | $2,487 | $1,234 | $867 | $7 | $7,135 |
| Percent\tchange | 14.9 % | 4.2 % | 5.7 % | (4.5)% | — | 7.0 % |

For	total	year	2014,	as	shown	in	the	preceding	table,	sales	rose	3.1	percent,	with	organic	volume	increases	of	3.9	percent	and	selling price	increases	of	1.0	percent.	Acquisitions	added	0.1	percent,	while	foreign	currency	translation	reduced	sales	by	1.9	percent.	Organic local-currency	sales	increased	6.3	percent	in	Asia	Pacific,	4.9	percent	in	the	United	States,	4.5	percent	in	Latin	America/Canada,	and 3.2	percent	in	EMEA.	For	2014,	international	operations	represented	63.2	percent	of	3M's	sales.

# Geographic	Area	Supplemental	Information

|  |  |  |  |  |  |  | Property,	Plant	and | Property,	Plant	and |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  |  |  |  | Equipment\t-\tnet | Equipment\t-\tnet |
|  | Employees\tas\tof\tDecember\t31, | Employees\tas\tof\tDecember\t31, | Employees\tas\tof\tDecember\t31, |  | Capital\tSpending |  | as\tof\tDecember\t31, | as\tof\tDecember\t31, |
| (Millions,\texcept\tEmployees) | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2015 | 2014 |
| United\tStates | 35,973 | 35,581 | 34,719 | $936 | $909 | $941 | $4,838 | $4,619 |
| Asia\tPacific | 17,642 | 17,854 | 18,417 | 172 | 184 | 284 | 1,647 | 1,798 |
| Europe,\tMiddle\tEast\tand\tAfrica | 20,563 | 20,506 | 20,504 | 249 | 288 | 290 | 1,531 | 1,502 |
| Latin\tAmerica\tand\tCanada | 15,268 | 15,859 | 15,027 | 104 | 112 | 150 | 499 | 570 |
| Total\tCompany | 89,446 | 89,800 | 88,667 | $1,461 | $1,493 | $1,665 | $8,515 | $8,489 |

# Employment:

Employment	decreased	by	354	positions	in	2015	and	increased	by	1,133	positions	in	2014.		The	primary	factor	that	decreased employment	in	2015	related	to	fourth-quarter	2015	restructuring	actions	that	impacted	approximately	1,700	positions	worldwide.	The 2015	acquisitions	of	Ivera	Medical	Corp.,	Polypore	International	Inc.'s	Separations	Media	business	and	Capital	Safety	Group	S.A.R.L. increased	2015	headcount	by	approximately	2,000	positions.	The	primary	factors	that	increased	employment	in	2014	was	additions	in developing	economies	to	support	growth,	plus	additions	related	to	the	Treo	Solutions	LLC	acquisition	in	2014.

# 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.	3M's	capital	spending	by	geography	has	been	led	by	the	United	States	(64%	of	spending	in 2015),	followed	by	Europe,	Middle	East	and	Africa,	Asia	Pacific,	and	Latin	America/Canada.	3M	is	continuing	to	increase	its manufacturing	and	sourcing	capability,	particularly	in	developing	economies,	in	order	to	more	closely	align	its	product	capability	with its	sales	in	major	geographic	areas.	3M	will	continue	to	make	investments	in	critical	developing	markets,	such	as	Brazil,	China, Mexico,	Panama,	Poland,	Southeast	Asia,	and	Turkey.	Capital	spending	is	discussed	in	more	detail	later	in	MD&A	in	the	section entitled	"Cash	Flows	from	Investing	Activities."

# 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	14)	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.	See	Note	11	for	additional discussion	of	actuarial	assumptions	used	in	determining	pension	and	postretirement	health	care	liabilities	and	expenses.

Pension	benefits	associated	with	these	plans	are	generally	based	primarily	on	each	participant's	years	of	service,	compensation,	and age	at	retirement	or	termination.	The	benefit	obligation	represents	the	present	value	of	the	benefits	that	employees	are	entitled	to	in	the future	for	services	already	rendered	as	of	the	measurement	date.	The	Company	measures	the	present	value	of	these	future	benefits	by projecting	benefit	payment	cash	flows	for	each	future	period	and	discounting	these	cash	flows	back	to	the	December	31	measurement date,	using	the	yields	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.	Historically,	the	single	aggregated	discount	rate	used	for	each	plan's	benefit	obligation was	also	used	for	the	calculation	of	all	net	periodic	benefit	costs,	including	the	measurement	of	the	service	and	interest	costs. Beginning	in	2016,	3M	changed	the	method	used	to	estimate	the	service	and	interest	cost	components	of	the	net	periodic	pension	and other	postretirement	benefit	costs.	The	new	method	measures	service	cost	and	interest	cost	separately	using	the	spot	yield	curve approach	applied	to	each	corresponding	obligation.	Service	costs	are	determined	based	on	duration-specific	spot	rates	applied	to	the service	cost	cash	flows.	The	interest	cost	calculation	is	determined	by	applying	duration-specific	spot	rates	to	the	year-by-year projected	benefit	payments.	The	spot	yield	curve	approach	does	not	affect	the	measurement	of	the	total	benefit	obligations	as	the change	in	service	and	interest	costs	offset	in	the	actuarial	gains	and	losses	recorded	in	other	comprehensive	income.	The	Company changed	to	the	new	method	to	provide	a	more	precise	measure	of	service	and	interest	costs	by	improving	the	correlation	between	the projected	benefit	cash	flows	and	the	discrete	spot	yield	curve	rates.	The	Company	accounted	for	this	change	as	a	change	in	estimate prospectively	beginning	in	the	first	quarter	of	2016.	As	a	result	of	the	change	to	the	spot	yield	curve	approach,	2016	defined	benefit pension	and	postretirement	net	periodic	benefit	cost	is	expected	to	decrease	by	$180	million.	Including	this	$180	million,	3M	expects global	defined	benefit	pension	and	postretirement	expense	in	2016	(before	settlements,	curtailments,	special	termination	benefits	and other)	to	decrease	by	approximately	$320	million	pre-tax	when	compared	to	2015.

Using	this	methodology,	the	Company	determined	discount	rates	for	its	plans	as	follow:

|  | U.S.	Qualified<br>Pension | International<br>Pension<br>(weighted<br>average) | U.S.<br>Postretirement<br>Medical |
| :--- | :--- | :--- | :--- |
| December\t31,\t2014\tLiability\tand\t2015\tNet\tPeriodic\tBenefit\tCost: |  |  |  |
| Single\tdiscount\trate | 4.10 % | 3.11 % | 4.07 % |
| December\t31,\t2015\tLiability: |  |  |  |
| Benefit\tobligation | 4.47 % | 3.12 % | 4.32 % |
| 2016\tNet\tPeriodic\tBenefit\tCost\tComponents: |  |  |  |
| Service\tcost | 4.72 % | 2.84 % | 4.60 % |
| Interest\tcost | 3.77 % | 2.72 % | 3.44 % |

Another	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	2016	is	7.50%,	0.25%	lower	than	2015.	Refer	to	Note	11	for information	on	how	the	2015	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	5.77%	for 2016,	compared	to	5.90%	for	2015.

For	the	year	ended	December	31,	2015,	the	Company	recognized	total	consolidated	defined	benefit	pre-tax	pension	and	postretirement expense	(after	settlements,	curtailments,	special	termination	benefits	and	other)	of	$556	million,	up	from	$391	million	in	2014. Defined	benefit	pension	and	postretirement	expense	(before	settlements,	curtailments,	special	termination	benefits	and	other)	is anticipated	to	decrease	to	approximately	$236	million	in	2016,	a	decrease	of	$320	million	compared	to	2015.

The	table	below	summarizes	the	impact	on	2016	pension	expense	for	the	U.S.	and	international	pension	plans	of	a	0.25	percentage point	increase/decrease	in	the	expected	long-term	rate	of	return	on	plan	assets	and	discount	rate	assumptions	used	to	measure	plan liabilities	and	2016	net	periodic	benefit	cost.	The	table	assumes	all	other	factors	are	held	constant,	including	the	slope	of	the	discount rate	yield	curves.

|  | Increase	(Decrease)	in	Net	Periodic	Benefit	Cost | Increase	(Decrease)	in	Net	Periodic	Benefit	Cost | Increase	(Decrease)	in	Net	Periodic	Benefit	Cost |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Discount\tRate | Discount\tRate | Expected\tReturn\ton\tAssets | Expected\tReturn\ton\tAssets |
| (Millions) | -0.25% | +0.25% | -0.25% | +0.25% |
| U.S.\tpension\tplans | $30 | $(29) | $35 | $(35) |
| International\tpension\tplans | 22 | (20) | 14 | (14) |

As	of	December	31,	2015,	net	property,	plant	and	equipment	totaled	$8.5	billion	and	net	identifiable	intangible	assets	totaled	$2.6 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	$9.2	billion	as	of	December	31,	2015.	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,	in addition	to	businesses	where	the	price/earnings	ratio	valuation	method	indicates	additional	review	is	warranted.	3M	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	described	in	Note	16,	effective	in	the	third	quarter	of	2015,	within	the	Health	Care	business	segment,	the	Company	formed	the Oral	Care	Solutions	Division,	which	combined	the	former	3M	ESPE	and	3M	Unitek	divisions.	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	third	quarter	of	2015,	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	2015	annual	impairment	test	and	is	in	the	context	of	the	reporting	unit	structure	that	existed	at	that	time.

As	of	October	1,	2015,	3M	had	26	primary	reporting	units,	with	ten	reporting	units	accounting	for	approximately	87	percent	of	the goodwill.	These	ten	reporting	units	were	comprised	of	the	following	divisions:	3M	purification	(which

includes	the	Polypore	Separations	Media	acquisition),	Advanced	Materials,	Communication	Markets,	Display	Materials	and	Systems, Health	Information	Systems,	Industrial	Adhesives	and	Tapes,	Infection	Prevention,	Oral	Care	Solutions,	Personal	Safety	(which includes	the	Capital	Safety	acquisition),	and	Traffic	Safety	and	Security.	The	estimated	fair	values	for	these	reporting	units	were	in excess	of	carrying	value	by	approximately	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.	3M's	market	value	at	both	September	30, 2015,	and	December	31,	2015,	was	significantly	in	excess	of	its	equity	of	approximately	$12	billion	at	both	December	31,	2015	and September	30,	2015.

In	2015,	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.

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	2015,	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	third	quarter	of	2015,	the	Company	completed	its	assessment	of	any potential	goodwill	impairment	for	reporting	units	impacted	by	changes	between	reporting	units	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	2016	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	8	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.

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

3M	continues	its	transition	to	a	better-optimized	capital	structure	and	is	adding	leverage	at	a	measured	pace.	The	strength	and	stability of	3M's	business	model	and	strong	free	cash	flow	capability,	together	with	proven	capital	markets	access,	enable	the	Company	to implement	this	strategy.	Investing	in	3M's	businesses	to	drive	organic	growth	remains	the	first	priority,	thus	3M	will	continue	to deploy	capital	towards	research	and	development,	capital	expenditures,	and	commercialization	capability.	Investment	in	organic growth	will	be	supplemented	by	complementary	acquisitions.	3M	will	also	continue	to	return	cash	to	shareholders	through	dividends and	share	repurchases.	Sources	for	cash	availability	in	the	United	States,	such	as	ongoing	cash	flow	from	operations	and	access	to capital	markets,	have	historically	been	sufficient	to	fund	dividend	payments	to	shareholders	and	share	repurchases,	as	well	as	funding U.S.	acquisitions	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.	See	Note	8	for	further	information	on earnings	considered	to	be	reinvested	indefinitely.

3M's	primary	short-term	liquidity	needs	are	met	through	cash	on	hand	and	U.S.	commercial	paper	issuances.	The	Company	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.

# Net	Debt:

The	Company	defines	net	debt	as	total	debt	less	the	total	of	cash,	cash	equivalents	and	marketable	securities.	3M	considers	net	debt and	its	components	to	be	an	important	indicator	of	liquidity	and	a	guiding	measure	of	capital	structure	strategy.	Net	debt	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.	The	following	table	provides	net	debt	as	of	December	31,	2015	and	2014.

| At	December	31<br>(Millions) | 2015 | 2014 |
| :--- | :--- | :--- |
| Total\tDebt | $10,797 | $6,811 |
| Less:\tCash\tand\tcash\tequivalents\tand\tmarketable\tsecurities | 1,925 | 3,351 |
| Net\tDebt | $8,872 | $3,460 |

In	2015,	net	debt	rose	by	$5.4	billion	to	a	net	debt	balance	of	$8.9	billion	(as	of	December	31,	2015),	as	3M	progressed	on	its	capital structure	strategy.	Debt	levels	were	higher	in	both	the	U.S.	and	internationally,	while	international	cash	and	marketable	securities balances	were	reduced.	Specific	actions	related	to	cash,	cash	equivalents,	and	marketable	securities,	in	addition	to	debt,	are	discussed further	below.

# Cash,	Cash	Equivalents	and	Marketable	Securities:

At	December	31,	2015,	3M	had	$1.9	billion	of	cash,	cash	equivalents	and	marketable	securities,	of	which	approximately	$1.7	billion was	held	by	the	Company's	foreign	subsidiaries	and	$200	million	was	held	by	the	United	States.	Of	the	$1.7	billion	held internationally,	U.S.	dollar-based	cash,	cash	equivalents	and	marketable	securities	totaled	$355	million,	or	21	percent,	which	was invested	in	money	market	funds,	asset-backed	securities,	agency	securities,	corporate	medium-term	note	securities	and	other	high quality	fixed	income	securities.	At	December	31,	2014,	cash,	cash	equivalents	and	marketable	securities	held	by	the	Company's foreign	subsidiaries	and	in	the	United	States	totaled	approximately	$3.3	billion	and	less	than	$100	million,	respectively.

The	Company's	total	balance	of	cash,	cash	equivalents	and	marketable	securities	was	$1.4	billion	lower	at	December	31,	2015	when compared	to	December	31,	2014.	3M	was	able	to	manage	the	business	with	lower	cash	levels	due	to	significant	ongoing	cash	flow generation	and	proven	access	to	capital	markets	funding	throughout	business	cycles.

# Total	Debt:

The	Company's	total	debt	was	$4.0	billion	higher	at	December	31,	2015	when	compared	to	December	31,	2014.	The	strength	of	3M's capital	structure	and	significant	ongoing	cash	flows	provide	3M	proven	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	Aa3	credit	rating,	with	a	negative	outlook, from	Moody's	Investors	Service.	The	Company's	ongoing	transition	to	a	better-optimized	capital	structure,	financed	with	additional low-cost	debt,	could	impact	3M's	credit	rating	in	the	future.

Effective	May	16,	2014,	the	Company	updated	its	"well-known	seasoned	issuer"	shelf	registration	statement,	which	registers	an indeterminate	amount	of	debt	or	equity	securities	for	future	sales.	This	replaced	3M's	previous	shelf	registration	dated	August	5,	2011. In	June	2014,	in	connection	with	the	May	16,	2014	shelf	registration,	3M	re-commenced	its	medium-term	notes	program	(Series	F) under	which	3M	may	issue,	from	time	to	time,	up	to	$9	billion	aggregate	principal	amount	of	notes.	Included	in	this	$9	billion	are $8.17	billion	(utilizing	the	foreign	exchange	rate	applicable	at	the	time	of	issuance	for	the	Euro	denominated	debt)	of	notes	previously issued	in	2011,	2012,	2014,	and	2015	as	part	of	Series	F.	Information	with	respect	to	long-term	debt	issuances	and	maturities	for	the periods	presented	is	included	in	Note	10.

In	August	2014,	3M	amended	and	extended	its	existing	$1.5	billion	five-year	multi-currency	revolving	credit	agreement	to	a	$2.25 billion	five-year	multi-currency	revolving	credit	agreement,	with	an	expiration	date	of	August	2019.	This	credit	agreement	includes	a provision	under	which	3M	may	request	an	increase	of	up	to	$2.25	billion,	bringing	the	total	facility	up	to	$4.5	billion	(at	the	lenders' discretion).	This	facility	was	undrawn	at	December	31,	2015.	Under	the	$2.25	billion	credit	agreement,	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,	2015,	this	ratio	was	approximately	56	to	1.	Debt	covenants	do	not	restrict	the payment	of	dividends.	Apart	from	the	committed	facilities,	an	additional	$241	million	in	stand-alone	letters	of	credit	and	$18	million in	bank	guarantees	were	also	issued	and	outstanding	at	December	31,	2015.	These	lines	of	credit	are	utilized	in	connection	with normal	business	activities.

# Balance	Sheet:

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.

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	$3.868	billion	at	December	31,	2015, compared	with	$6.339	billion	at	December	31,	2014,	a	decrease	of	$2.471	billion.	Current	asset	balance	changes	decreased	working capital	by	$1.317	billion,	driven	by	decreases	in	marketable	securities.	Current	liability	balance	changes	decreased	working	capital	by $1.154	billion,	driven	by	increases	in	short-term	debt.

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	4.9	at	December	31, 2015	compared	to	5.0	at	December	31,	2014.	Receivables	decreased	$84	million,	or	2.0	percent,	compared	with	December	31,	2014, 	as	currency	translation	impacts	decreased	accounts	receivable	by	$239	million,	partially	offset	by	2015	acquisitions	that	added	$103 million.	Inventories	decreased	$188	million,	or	5.1	percent,	compared	with	December	31,	2014.	The	inventory	decrease	was attributable	to	currency	translation,	which	decreased	inventories	by	$272	million,	partially	offset	by	2015	acquisitions	that	added	$102 million.

Accounts	payable	decreased	by	$113	million	compared	with	December	31,	2014,	as	currency	translation	impacts	reduced	accounts payable	by	$76	million.

# Return	on	Invested	Capital	(non-GAAP	measure):

The	Company	uses	non-GAAP	measures	to	focus	on	shareholder	value	creation.	3M	uses	return	on	invested	capital	(ROIC),	defined as	annualized	after-tax	operating	income	(including	interest	income)	divided	by	average	operating	capital.	Operating	capital	is	defined as	net	assets	(total	assets	less	total	liabilities)	excluding	debt.	This	measure	is	not	recognized	under	U.S.	GAAP	and	may	not	be comparable	to	similarly	titled	measures	used	by	other	companies.	ROIC	was	22.5	percent	for	2015,	and	22.0	percent	for	2014.

# Cash	Flows:

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) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Net\tincome\tincluding\tnoncontrolling\tinterest | $4,841 | $4,998 | $4,721 |
| Depreciation\tand\tamortization | 1,435 | 1,408 | 1,371 |
| Company\tpension\tcontributions | (264) | (210) | (476) |
| Company\tpostretirement\tcontributions | (3) | (5) | (6) |
| Company\tpension\texpense | 442 | 310 | 446 |
| Company\tpostretirement\texpense | 114 | 81 | 107 |
| Stock-based\tcompensation\texpense | 276 | 280 | 240 |
| Income\ttaxes\t(deferred\tand\taccrued\tincome\ttaxes) | (349) | 60 | 39 |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | (154) | (167) | (92) |
| Accounts\treceivable | (58) | (268) | (337) |
| Inventories | 3 | (113) | (86) |
| Accounts\tpayable | 9 | 75 | 16 |
| Other\t—\tnet | 128 | 177 | (126) |
| Net\tcash\tprovided\tby\toperating\tactivities | $6,420 | $6,626 | $5,817 |

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	2015,	cash	flows	provided	by	operating	activities	decreased	$206	million	compared	to	2014.	Operating	cash	flows	decreased	due	to $363	million	in	higher	cash	income	taxes	when	comparing	2015	to	2014,	plus	lower	net	income,	which	was	partially	offset	by	lower year-on-year	working	capital	requirements.	The	combination	of	accounts	receivable,	inventories	and	accounts	payable	increased working	capital	by	$46	million	in	2015,	compared	to	increases	of	$306	million	in	2014,	with	the	year-on-year	improvement	related	to lower	organic	volume	growth.	Additional	discussion	on	working	capital	changes	is	provided	earlier	in	the	"Financial	Condition	and Liquidity"	section.

In	2014,	cash	flows	provided	by	operating	activities	increased	$809	million	compared	to	2013.	Operating	cash	flows	benefited	year- on-year	from	increases	in	net	income	including	noncontrolling	interest,	lower	pension	and	postretirement	plans	contributions,	and lower	year-on-year	working	capital	requirements.	The	combination	of	accounts	receivable,	inventories	and	accounts	payable	increased working	capital	by	$306	million	in	2014,	compared	to	increases	of	$407	million	in	2013,	with	the	year-on-year	improvement	partially due	to	higher	receivable	and	inventory	turns.	Additional	discussion	on	working	capital	changes	is	provided	earlier	in	the	"Financial Condition	and	Liquidity"	section.

# Free	Cash	Flow	(non-GAAP	measure):

In	addition,	to	net	cash	provided	by	operating	activities,	3M	believes	free	cash	flow	and	free	cash	flow	conversion	are	useful	measures of	performance	and	uses	these	measures	as	an	indication	of	the	strength	of	the	Company	and	its	ability	to	generate	cash.	Free	cash flow	and	free	cash	flow	conversion	are	not	defined	under	U.S.	generally	accepted	accounting	principles	(GAAP).	Therefore,	they 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.	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).	It	should	not	be	inferred	that the	entire	free	cash	flow	amount	is	available	for	discretionary	expenditures.	3M	defines	free	cash	flow	conversion	as	free	cash	flow divided	by	net	income	attributable	to	3M.	Below	find	a	recap	of	free	cash	flow	and	free	cash	flow	conversion	for	2015,		2014	and 2013.

Investments	in	property,	plant	and	equipment	enable	growth	across	many	diverse	markets,	helping	to	meet	product	demand	and increasing	manufacturing	efficiency.	Capital	spending	was	$1.461	billion	in	2015,	compared	to	$1.493	billion	in	2014	and	$1.665 billion	in	2013.	The	Company	expects	2016	capital	spending	to	be	approximately	$1.3	billion	to	$1.5	billion	as	3M	continues	to	invest in	its	businesses.

3M	invests	in	renewable	and	maintenance	programs,	which	pertains	to	cost	reduction,	cycle	time,	maintaining	and	renewing	current capacity,	eliminating	pollution,	and	compliance.	Costs	related	to	maintenance,	ordinary	repairs,	and	certain	other	items	are	expensed. 3M	also	invests	in	growth,	which	adds	to	capacity,	driven	by	new	products,	both	through	expansion	of	current	facilities	and	new facilities,	plus	research	facilities.	Finally,	3M	also	invests	in	other	initiatives,	such	as	information	technology	(IT)	and	corporate laboratory	facilities.

In	2015,	investments	included	new	sites	and	buildings,	investments	in	IT,	continued	expansion	of	current	facilities	and	new	facilities, plus	the	sustainment	of	existing	facilities,	in	addition	to	other	initiatives.	Specific	investments	in	2015	included	a	new	state-of-the-art, four	story,	400,000	square	foot	research	facility	at	3M	Center	in	St.	Paul,	Minnesota.	In	addition,	3M	continued	its	investments	it	IT systems	and	infrastructure,	particularly	the	ongoing	multi-year	phased	implementation	of	an	ERP	system.

In	2014,	investments	in	growth	across	geographies	included	production	equipment,	new	sites	and	buildings,	capacity	investments, converting,	and	distribution,	and	other	growth	initiatives.	Other	investments	include	IT	systems	and	infrastructure,	including	an ongoing	multi-year	phased	implementation	of	an	ERP	system	on	a	worldwide	basis.	In

addition,	3M	began	a	multi-year	program	in	the	United	States	to	renew	and	upgrade	laboratory	facilities	and	administrative	buildings.

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.	In	addition,	3M	sustained	existing	facilities	through	general	maintenance,	cost	reduction,	and	compliance	efforts.

Proceeds	from	sale	of	PP&E	and	other	assets	totaled	$33	million	in	2015,	$135	million	in	2014,	and	$128	million	in	2013.	Apart	from the	normal	periodic	sales	of	PP&E,	2014	included	proceeds	of	$114	million	related	to	the	sales	of	real	estate	and	non-production equipment,	and	2013	included	proceeds	of	$79	million	related	to	non-production	equipment.

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	debt	securities	and	other	securities,	which	are	classified as	available-for-sale.	Refer	to	Note	9	for	more	details	about	3M's	diversified	marketable	securities	portfolio.	Purchases	of	investments include	additional	survivor	benefit	insurance,	plus	cost	method	and	equity	investments.

# Cash	Flows	from	Financing	Activities:

| (Millions) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Change\tin\tshort-term\tdebt\t—\tnet | $860 | $27 | $(2) |
| Repayment\tof\tdebt\t(maturities\tgreater\tthan\t90\tdays) | (800) | (1,625) | (859) |
| Proceeds\tfrom\tdebt\t(maturities\tgreater\tthan\t90\tdays) | 3,422 | 2,608 | 824 |
| Total\tcash\tchange\tin\tdebt | $3,482 | $1,010 | $(37) |
| Purchases\tof\ttreasury\tstock | (5,238) | (5,652) | (5,212) |
| Proceeds\tfrom\tissuances\tof\ttreasury\tstock\tpursuant\tto\tstock\toption\tand |  |  |  |
| benefit\tplans | 635 | 968 | 1,609 |
| Dividends\tpaid\tto\tstockholders | (2,561) | (2,216) | (1,730) |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | 154 | 167 | 92 |
| Purchase\tof\tnoncontrolling\tinterest | \t— | (861) | — |
| Other\t—\tnet | (120) | (19) | 32 |
| Net\tcash\tused\tin\tfinancing\tactivities | $(3,648) | $(6,603) | $(5,246) |

In	both	2015	and	2014,	the	change	in	short-term	debt	primarily	related	to	bank	borrowings	by	international	subsidiaries,	primarily Japan	and	Korea	in	2015.	In	2015,	repayment	of	debt	primarily	related	to	debt	assumed	(and	paid	off)	as	part	of	the	Capital	Safety acquisition	(refer	to	Note	2).	In	2014,	repayment	of	debt	primarily	includes	repayment	of	a	Eurobond	in	July	2014	totaling	1.025 billion	Euros	(approximately	$1.4	billion	carrying	value),	repayment	of	the	three-year	66	million	British	Pound	committed	credit facility	agreement	entered	into	in	December	2012,	and	repayment	of	other	international	debt.	In	2013,	repayment	of	debt	related	to	the August	2013	repayment	of	$850	million	(principal	amount)	of	medium-term	notes.

In	2015,	proceeds	from	debt	primarily	related	to	the	May	2015	issuance	of	650	million	Euros	aggregate	principal	amount	of	five-year floating	rate	medium-term	notes	due	2020,	600	million	Euros	aggregate	principal	amount	of	eight-year	fixed	rate	medium-term	notes due	2023,	and	500	million	Euros	aggregate	principal	amount	of	fifteen-year	fixed	rate	medium-

term	notes	due	2030,	which	in	the	aggregate	total	approximately	$1.9	billion	at	issue	date	exchange	rates.	In	addition,	August	2015 issuances	included	$450	million	aggregate	principal	amount	of	three-year	fixed	rate	medium-term	notes	due	2018,	$500	million aggregate	principal	amount	of	five-year	fixed	rate	medium-term	notes	due	2020,	and	$550	million	aggregate	principal	amount	of	10- year	fixed	rate	medium-term	notes	due	2025,	which	in	aggregate	total	$1.5	billion.	In	2014,	proceeds	from	debt	primarily	related	to the	June	2014	issuances	of	$625	million	aggregate	principal	amount	of	five-year	fixed	rate	medium-term	notes	due	2019	and	$325 million	aggregate	principal	amount	of	thirty-year	fixed	rate	medium-term	notes	due	2044,	as	well	as	the	November	2014	issuances	of 500	million	Euros	principal	amount	of	four-year	floating	rate	medium-term	notes	due	2018	and	750	million	Euros	principal	amount	of 12-year	fixed	rate	medium-term	notes	due	2026.	In	addition,	proceeds	from	debt	for	2014	also	include	bank	borrowings	by international	subsidiaries.	Proceeds	from	debt	in	2013	related	to	the	November	2013	issuance	of	an	eight-year	Eurobond	for	an amount	of	600	million	Euros.	Refer	to	Note	10	for	additional	discussion	of	debt.

Repurchases	of	common	stock	are	made	to	support	the	Company's	stock-based	employee	compensation	plans	and	for	other	corporate purposes.	In	February	2016,	3M's	Board	of	Directors	authorized	the	repurchase	of	up	to	$10	billion	of	3M's	outstanding	common stock,	which	replaced	the	Company's	February	2014	repurchase	program.	This	authorization	has	no	pre-established	end	date.	In	2015, 2014,	and	2013,	the	Company	purchased	more	than	$5	billion	of	its	own	stock	each	year.	The	Company	expects	full-year	2016	gross share	repurchases	will	be	in	the	range	of	$4	billion	to	$6	billion.	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.

On	September	1,	2014,	3M	purchased	(via	Sumitomo	3M	Limited)	Sumitomo	Electric	Industries,	Ltd.'s	25	percent	interest	in	3M's consolidated	Sumitomo	3M	Limited	subsidiary	for	90	billion	Japanese	Yen.	Upon	completion	of	this	transaction,	3M	owned	100 percent	of	Sumitomo	3M	Limited.	This	was	reflected	as	a	"Purchase	of	noncontrolling	interest"	in	the	financing	section	of	the consolidated	statement	of	cash	flows.	In	addition,	in	April	2014,	3M	purchased	the	remaining	noncontrolling	interest	in	a	consolidated 3M	subsidiary	for	an	immaterial	amount,	which	was	also	classified	as	a	"Purchase	of	noncontrolling	interest"	in	the	financing	section of	the	consolidated	statement	of	cash	flows.

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.

In	addition	to	the	March	2013	sale	of	noncontrolling	interest	described	above,	other	cash	flows	from	financing	activities	may	include various	other	items,	such	as	changes	in	cash	overdraft	balances,	and	principal	payments	for	capital	leases.

# Off-Balance	Sheet	Arrangements	and	Contractual	Obligations:

As	of	December	31,	2015,	the	Company	has	not	utilized	special	purpose	entities	to	facilitate	off-balance	sheet	financing	arrangements. Refer	to	the	section	entitled	"Warranties/Guarantees"	in	Note	14	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,	2015,	follows:

# Contractual	Obligations

|  |  |  |  |  |  |  | After |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) | Total | 2016 | 2017 | 2018 | 2019 | 2020 | 2020 |
| Long-term\tdebt,\tincluding\tcurrent\tportion\t(Note |  |  |  |  |  |  |  |
| 10) | $9,878 | $1,125 | $744 | $993 | $622 | $1,203 | $5,191 |
| Interest\ton\tlong-term\tdebt | 2,244 | 174 | 157 | 153 | 149 | 146 | 1,465 |
| Operating\tleases\t(Note\t14) | 943 | 234 | 191 | 134 | 86 | 72 | 226 |
| Capital\tleases\t(Note\t14) | 59 | 11 | 6 | 4 | 3 | 3 | 32 |
| Unconditional\tpurchase\tobligations\tand\tother | 1,631 | 1,228 | 160 | 102 | 54 | 56 | 31 |
| Total\tcontractual\tcash\tobligations | $14,755 | $2,772 | $1,258 | $1,386 | $914 | $1,480 | $6,945 |

Long-term	debt	payments	due	in	2016	and	2017	include	floating	rate	notes	totaling	$126	million	(classified	as	current	portion	of	long- term	debt),	and	$96	million	(included	as	a	separate	floating	rate	note	in	the	long-term	debt	table),	respectively,	as	a	result	of	put provisions	associated	with	these	debt	instruments.	Interest	projections	on	both	floating	and	fixed	rate	long-term	debt,	including	the effects	of	interest	rate	swaps,	are	based	on	effective	interest	rates	as	of	December	31,	2015.

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	2016	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	$208	million	is	excluded	from	the preceding	table.	Refer	to	Note	8	for	further	details.

As	discussed	in	Note	11,	the	Company	does	not	have	a	required	minimum	cash	pension	contribution	obligation	for	its	U.S.	plans	in 2016	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.

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	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.	3M	may	dedesignate	these	cash	flow	hedge	relationships	in	advance	of	the	occurrence	of	the	forecasted	transaction. Beginning	in	the	second	quarter	of	2014,	3M	began	extending	the	maximum	length	of	time	over	which	it	hedges	its	exposure	to	the variability	in	future	cash	flows	of	the	forecasted	transactions	from	a	previous	term	of	12	months	to	a	longer	term	of	24	months,	with certain	currencies	being	extended	further	to	36	months	starting	in	the	first	quarter	of	2015.	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	foreign	currency	forward	contracts	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 $2.8	billion	and	$5.4	billion,	respectively,	at	December	31,	2015.	As	of	December	31,	2015,	the	Company	had	974	million	Euros	and 248	billion	South	Korean	Won	in	notional	amount	of	foreign	currency	forward	contracts	designated	as	net	investment	hedges	along with	3.6	billion	Euros	in	principal	amount	of	foreign	currency	denominated	debt	designated	as	non-derivative	hedging	instruments	in certain	net	investment	hedges	as	discussed	in	Note	12	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,	2015	was	$1.8	billion.	Additional	details	about	3M's	long-term	debt	can	be	found	in	Note	10, including	references	to	information	regarding	derivatives	and/or	hedging	instruments	associated	with	the	Company's	long-term	debt.

# Commodity	Prices	Risk:

The	Company	manages	commodity	price	risks	through	negotiated	supply	contracts,	price	protection	agreements	and	forward	contracts. 3M	used	commodity	price	swaps	as	cash	flow	hedges	of	forecasted	commodity	transactions	to	manage	price	volatility,	but discontinued	this	practice	in	the	first	quarter	of	2015.	The	related	mark-to-market	gain	or	loss	on	qualifying	hedges	was	included	in other	comprehensive	income	to	the	extent	effective,	and	reclassified	into	cost	of	sales	in	the	period	during	which	the	hedged transaction	affected	earnings.

# Value	At	Risk:

The	value	at	risk	analysis	is	performed	annually	to	assess	the	Company's	sensitivity	to	changes	in	currency	rates,	interest	rates,	and commodity	prices.	A	Monte	Carlo	simulation	technique	was	used	to	test	the	impact	on	after-tax	earnings	related	to	financial instruments	(primarily	debt),	derivatives	and	underlying	exposures	outstanding	at	December	31,	2015.	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	three	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.	The	risk	of	loss	or	benefit	associated	with	exchange	rates was	higher	in	2015	due	to	a	greater	mix	of	floating	rate	debt	and	a	rising	interest	rate	environment	in	the	U.S.	Interest	rate	volatility increased	in	2015,	based	on	a	higher	mix	of	floating	rate	debt	and	the	use	of	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 | Adverse	impact	on	after-tax | Positive	impact	on	after-tax | Positive	impact	on	after-tax |
| :--- | :--- | :--- | :--- | :--- |
|  | earnings |  | earnings |  |
| (Millions) | 2015 | 2014 | 2015 | 2014 |
| Foreign\texchange\trates | $(254) | $(164) | $273 | $173 |
| Interest\trates | (13) | (4) | 9 | 3 |
| Commodity\tprices | (1) | (1) | 1 | 1 |

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	pre-tax	income:	2015	($390	million	decrease)	and	2014	($100	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	pre-tax	income:	2015	($180	million increase)	and	2014	($10	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	$70	million	per	year.	The	global	energy	exposure	is	such	that	a	ten percent	price	change	would	result	in	a	pre-tax	cost	or	savings	of	approximately	$40	million	per	year.	Global	energy	exposure	includes energy	costs	used	in	3M	production	and	other	facilities,	primarily	electricity	and	natural	gas.

# Item	8.	Financial	Statements	and	Supplementary	Data.

# Index	to	Financial	Statements

| Management's	Responsibility	for	Financial	Reporting | 48 |
| :--- | :--- |
| Management's\tReport\ton\tInternal\tControl\tOver\tFinancial\tReporting | 48 |
| Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 49 |
| Consolidated\tStatement\tof\tIncome\tfor\tthe\tyears\tended\tDecember\t31,\t2015,\t2014\tand\t2013 | 50 |
| Consolidated\tStatement\tof\tComprehensive\tIncome\tfor\tthe\tyears\tended\tDecember\t31,\t2015,\t2014\tand\t2013 | 51 |
| Consolidated\tBalance\tSheet\tat\tDecember\t31,\t2015\tand\t2014 | 52 |
| Consolidated\tStatement\tof\tChanges\tin\tEquity\tfor\tthe\tyears\tended\tDecember\t31,\t2015,\t2014\tand\t2013 | 53 |
| Consolidated\tStatement\tof\tCash\tFlows\tfor\tthe\tyears\tended\tDecember\t31,\t2015,\t2014\tand\t2013 | 54 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 55 |
| Note\t1.\tSignificant\tAccounting\tPolicies | 55 |
| Note\t2.\tAcquisitions\tand\tDivestitures | 64 |
| Note\t3.\tGoodwill\tand\tIntangible\tAssets | 67 |
| Note\t4.\tRestructuring\tActions | 68 |
| Note\t5.\tSupplemental\tBalance\tSheet\tInformation | 70 |
| Note\t6.\tSupplemental\tEquity\tand\tComprehensive\tIncome\tInformation | 71 |
| Note\t7.\tSupplemental\tCash\tFlow\tInformation | 73 |
| Note\t8.\tIncome\tTaxes | 73 |
| Note\t9.\tMarketable\tSecurities | 77 |
| Note\t10.\tLong-Term\tDebt\tand\tShort-Term\tBorrowings | 79 |
| Note\t11.\tPension\tand\tPostretirement\tBenefit\tPlans | 81 |
| Note\t12.\tDerivatives | 91 |
| Note\t13.\tFair\tValue\tMeasurements | 98 |
| Note\t14.\tCommitments\tand\tContingencies | 102 |
| Note\t15.\tStock-Based\tCompensation | 112 |
| Note\t16.\tBusiness\tSegments | 115 |
| Note\t17.\tGeographic\tAreas | 117 |
| Note\t18.\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	control	over	financial	reporting	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	over	financial	reporting	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	(2013). 	Management's	assessment	of	the	effectiveness	of	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2015 excluded	Capital	Safety	Group	S.A.R.L.	and	Polypore	International,	Inc.'s	Separation	Media	Business,	which	were	both	acquired	by the	Company	in	August	2015	in	purchase	business	combinations.	These	acquired	businesses'	total	assets	and	total	net	sales,	in	the aggregate,	represented	less	than	2	percent	and	less	than	1	percent,	respectively,	of	the	Company's	consolidated	financial	statement amounts	as	of	and	for	the	year	ended	December	31,	2015.	Companies	are	allowed	to	exclude	acquisitions	from	their	assessment	of internal	control	over	financial	reporting	during	the	first	year	of	acquisition	while	integrating	the	acquired	company	under	guidelines established	by	the	Securities	and	Exchange	Commission.	Based	on	the	assessment,	management	concluded	that,	as	of	December	31, 2015,	the	Company's	internal	control	over	financial	reporting	is	effective.

The	Company's	internal	control	over	financial	reporting	as	of	December	31,	2015	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,	2015.

# 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,	2015	and	2014,	and	the	results	of	their	operations	and	their	cash flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2015	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,	2015,	based	on	criteria	established	in	Internal	Control	-	Integrated	Framework	(2013)	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.

As	discussed	in	Note	1	to	the	consolidated	financial	statements,	the	Company	changed	the	manner	in	which	it	accounts	for	marketable	securities and	deferred	tax	assets	and	liabilities	in	2015.

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.

As	described	in	Management's	Report	on	Internal	Control	over	Financial	Reporting,	management	has	excluded	Capital	Safety	Group	S.A.R.L. ("Capital	Safety")	and	Polypore	International,	Inc.'s	Separations	Media	Business	("Polypore	Separations	Media")	from	its	assessment	of	internal control	over	financial	reporting	as	of	December	31,	2015	because	these	businesses	were	acquired	by	the	Company	in	purchase	business combinations	during	2015.		We	have	also	excluded	Capital	Safety	and	Polypore	Separations	Media	from	our	audit	of	internal	control	over financial	reporting.		Capital	Safety	is	a	wholly-owned	subsidiary	of	the	Company	and	the	Company	acquired	the	assets	and	liabilities	of	Polypore Separations	Media	whose	total	assets	and	total	net	sales,	in	the	aggregate,	represent	less	than	2	percent	and	less	than	1	percent,	respectively,	of the	related	consolidated	financial	statement	amounts	as	of	and	for	the	year	ended	December	31,	2015.

	/s/	PricewaterhouseCoopers	LLP

PricewaterhouseCoopers	LLP Minneapolis,	Minnesota February	11,	2016

# Consolidated	Statement	of	Income

# 3M	Company	and	Subsidiaries

# Years	ended	December	31

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Net\tsales | \t$30,274 | $31,821 | $30,871 |
| Operating\texpenses |  |  |  |
| Cost\tof\tsales | 15,383 | 16,447 | 16,106 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 6,182 | 6,469 | 6,384 |
| Research,\tdevelopment\tand\trelated\texpenses | 1,763 | 1,770 | 1,715 |
| Total\toperating\texpenses | 23,328 | 24,686 | 24,205 |
| Operating\tincome | 6,946 | 7,135 | 6,666 |
| Interest\texpense\tand\tincome |  |  |  |
| Interest\texpense | 149 | 142 | 145 |
| Interest\tincome | (26) | (33) | (41) |
| Total\tinterest\texpense\t—\tnet | 123 | 109 | 104 |
| Income\tbefore\tincome\ttaxes | 6,823 | 7,026 | 6,562 |
| Provision\tfor\tincome\ttaxes | 1,982 | 2,028 | 1,841 |
| Net\tincome\tincluding\tnoncontrolling\tinterest | \t$4,841 | $4,998 | $4,721 |
| Less:\tNet\tincome\tattributable\tto\tnoncontrolling\tinterest | 8 | 42 | 62 |
| Net\tincome\tattributable\tto\t3M | \t$4,833 | $4,956 | $4,659 |
| Weighted\taverage\t3M\tcommon\tshares\toutstanding\t—\tbasic | 625.6 | 649.2 | 681.9 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t—\tbasic | \t$7.72 | $7.63 | $6.83 |
| Weighted\taverage\t3M\tcommon\tshares\toutstanding\t—\tdiluted | 637.2 | 662.0 | 693.6 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t—\tdiluted | \t$7.58 | $7.49 | $6.72 |
| Cash\tdividends\tpaid\tper\t3M\tcommon\tshare | \t$4.10 | $3.42 | $2.54 |

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

# Consolidated	Statement	of	Comprehensive	Income 3M	Company	and	Subsidiaries

| (Millions) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Net\tincome\tincluding\tnoncontrolling\tinterest | \t$4,841 | $4,998 | $4,721 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax: |  |  |  |
| Cumulative\ttranslation\tadjustment | (586) | (942) | (505) |
| Defined\tbenefit\tpension\tand\tpostretirement\tplans\tadjustment | 489 | (1,562) | 1,245 |
| Debt\tand\tequity\tsecurities,\tunrealized\tgain\t(loss) | \t— | 2 | \t— |
| Cash\tflow\thedging\tinstruments,\tunrealized\tgain\t(loss) | 25 | 107 | 15 |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (72) | (2,395) | 755 |
| Comprehensive\tincome\t(loss)\tincluding\tnoncontrolling\tinterest | 4,769 | 2,603 | 5,476 |
| Comprehensive\t(income)\tloss\tattributable\tto\tnoncontrolling\tinterest | (6) | (48) | 20 |
| Comprehensive\tincome\t(loss)\tattributable\tto\t3M | \t$4,763 | $2,555 | $5,496 |

# Consolidated	Balance	Sheet 3M	Company	and	Subsidiaries At	December	31

| (Dollars	in	millions,	except	per	share	amount) | 2015 | 2014 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tassets |  |  |
| Cash\tand\tcash\tequivalents | $1,798 | $1,897 |
| Marketable\tsecurities\t—\tcurrent | 118 | 1,439 |
| Accounts\treceivable\t—\tnet\tof\tallowances\tof\t$91\tand\t$94 | 4,154 | 4,238 |
| Inventories |  |  |
| Finished\tgoods | 1,655 | 1,723 |
| Work\tin\tprocess | 1,008 | 1,081 |
| Raw\tmaterials\tand\tsupplies | 855 | 902 |
| Total\tinventories | 3,518 | 3,706 |
| Other\tcurrent\tassets | 1,398 | 1,023 |
| Total\tcurrent\tassets | 10,986 | 12,303 |
| Marketable\tsecurities\t—\tnon-current | 9 | 15 |
| Investments | 117 | 102 |
| Property,\tplant\tand\tequipment | 23,098 | 22,841 |
| Less:\tAccumulated\tdepreciation | (14,583) | (14,352) |
| Property,\tplant\tand\tequipment\t—\tnet | 8,515 | 8,489 |
| Goodwill | 9,249 | 7,050 |
| Intangible\tassets\t—\tnet | 2,601 | 1,435 |
| Prepaid\tpension\tbenefits | 188 | 46 |
| Other\tassets | 1,053 | 1,769 |
| Total\tassets | $32,718 | $31,209 |
| Liabilities |  |  |
| Current\tliabilities |  |  |
| Short-term\tborrowings\tand\tcurrent\tportion\tof\tlong-term\tdebt | $2,044 | $106 |
| Accounts\tpayable | 1,694 | 1,807 |
| Accrued\tpayroll | 644 | 732 |
| Accrued\tincome\ttaxes | 332 | 435 |
| Other\tcurrent\tliabilities | 2,404 | 2,884 |
| Total\tcurrent\tliabilities | 7,118 | 5,964 |
| Long-term\tdebt | 8,753 | 6,705 |
| Pension\tand\tpostretirement\tbenefits | 3,520 | 3,843 |
| Other\tliabilities | 1,580 | 1,555 |
| Total\tliabilities | $20,971 | $18,067 |
| Commitments\tand\tcontingencies\t(Note\t14) |  |  |
| Equity |  |  |
| 3M\tCompany\tshareholders'\tequity: |  |  |
| Common\tstock,\tpar\tvalue\t$.01\tper\tshare | $9 | $9 |
| Shares\toutstanding\t-\t2015:\t609,330,124 |  |  |
| Shares\toutstanding\t-\t2014:\t635,134,594 |  |  |
| Additional\tpaid-in\tcapital | 4,791 | 4,379 |
| Retained\tearnings | 36,575 | 34,317 |
| Treasury\tstock | (23,308) | (19,307) |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | (6,359) | (6,289) |
| Total\t3M\tCompany\tshareholders'\tequity | 11,708 | 13,109 |
| Noncontrolling\tinterest | 39 | 33 |
| Total\tequity | $11,747 | $13,142 |
| Total\tliabilities\tand\tequity | $32,718 | $31,209 |

# Consolidated	Statement	of	Changes	in	Equity

|  |  | Common |  |  | Accumulated |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Stock\tand |  |  | Other |  |
|  |  | Additional |  |  | Comprehensive | Non- |
|  |  | Paid-in | \t Retained | Treasury | Income | controlling |
| (Dollars\tin\tmillions,\texcept\tper\tshare\tamounts) | Total | Capital | \t 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:\nCumulative\ttranslation\tadjustment | (505) |  |  |  | (418) | (87) |
| Defined\tbenefit\tpension\tand\tpost-retirement\tplans\tadjustment | 1,245 |  |  |  | 1,240 | 5 |
| Debt\tand\tequity\tsecurities\t-\tunrealized\tgain\t(loss) | \t— |  |  |  | \t— | \t— |
| Cash\tflow\thedging\tinstruments\t-\tunrealized\tgain\t(loss) | 15 |  |  |  | 15 | \t— |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | 755 |  |  |  |  |  |
| Dividends\tdeclared\t($3.395\tper\tshare,\tNote\t6) | (2,297) |  | (2,297) |  |  |  |
| Sale\tof\tsubsidiary\tshares | 8 | 7 |  |  |  | 1 |
| Stock-based\tcompensation,\tnet\tof\ttax\timpacts | 324 | 324 |  |  |  |  |
| Reacquired\tstock | (5,216) |  |  | (5,216) |  |  |
| Issuances\tpursuant\tto\tstock\toption\tand\tbenefit\tplans | 1,613 |  | (625) | 2,238 |  |  |
| Balance\tat\tDecember\t31,\t2013 | $17,948 | $4,384 | $32,416 | $(15,385) | $(3,913) | $446 |
| Net\tincome | 4,998 |  | 4,956 |  |  | 42 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax:\nCumulative\ttranslation\tadjustment | (942) |  |  |  | (948) | 6 |
| Defined\tbenefit\tpension\tand\tpost-retirement\tplans\tadjustment | (1,562) |  |  |  | (1,562) | \t— |
| Debt\tand\tequity\tsecurities\t-\tunrealized\tgain\t(loss) | 2 |  |  |  | 2 | \t— |
| Cash\tflow\thedging\tinstruments\t-\tunrealized\tgain\t(loss) | 107 |  |  |  | 107 | \t— |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (2,395) |  |  |  |  |  |
| Dividends\tdeclared\t($3.59\tper\tshare,\tNote\t6) | (2,297) |  | (2,297) |  |  |  |
| Purchase\tof\tsubsidiary\tshares | (870) | (434) |  |  | 25 | (461) |
| Stock-based\tcompensation,\tnet\tof\ttax\timpacts | 438 | 438 |  |  |  |  |
| Reacquired\tstock | (5,643) |  |  | (5,643) |  |  |
| Issuances\tpursuant\tto\tstock\toption\tand\tbenefit\tplans | 963 |  | (758) | 1,721 |  |  |
| Balance\tat\tDecember\t31,\t2014 | $13,142 | $4,388 | $34,317 | $(19,307) | $(6,289) | $33 |
| Net\tincome | 4,841 |  | 4,833 |  |  | 8 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax:\nCumulative\ttranslation\tadjustment | (586) |  |  |  | (584) | (2) |
| Defined\tbenefit\tpension\tand\tpost-retirement\tplans\tadjustment | 489 |  |  |  | 489 | \t— |
| Debt\tand\tequity\tsecurities\t-\tunrealized\tgain\t(loss) | \t— |  |  |  | \t— | \t— |
| Cash\tflow\thedging\tinstruments\t-\tunrealized\tgain/(loss) | 25 |  |  |  | 25 | \t— |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (72) |  |  |  |  |  |
| Dividends\tdeclared\t($3.075\tper\tshare,\tNote\t6) | (1,913) |  | (1,913) |  |  |  |
| Stock-based\tcompensation,\tnet\tof\ttax\timpacts | 412 | 412 |  |  |  |  |
| Reacquired\tstock | (5,304) |  |  | (5,304) |  |  |
| Issuances\tpursuant\tto\tstock\toption\tand\tbenefit\tplans | 641 |  | (662) | 1,303 |  |  |
| Balance\tat\tDecember\t31,\t2015 | $11,747 | $4,800 | $36,575 | $(23,308) | $(6,359) | $39 |

# Consolidated	Statement	of	Cash	Flows

| (Millions) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Cash\tFlows\tfrom\tOperating\tActivities |  |  |  |
| Net\tincome\tincluding\tnoncontrolling\tinterest | $4,841 | $4,998 | $4,721 |
| Adjustments\tto\treconcile\tnet\tincome\tincluding\tnoncontrolling\tinterest\tto\tnet |  |  |  |
| cash\tprovided\tby\toperating\tactivities |  |  |  |
| Depreciation\tand\tamortization | 1,435 | 1,408 | 1,371 |
| Company\tpension\tand\tpostretirement\tcontributions | (267) | (215) | (482) |
| Company\tpension\tand\tpostretirement\texpense | 556 | 391 | 553 |
| Stock-based\tcompensation\texpense | 276 | 280 | 240 |
| Deferred\tincome\ttaxes | 395 | (146) | (167) |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | (154) | (167) | (92) |
| Changes\tin\tassets\tand\tliabilities |  |  |  |
| Accounts\treceivable | (58) | (268) | (337) |
| Inventories | 3 | (113) | (86) |
| Accounts\tpayable | 9 | 75 | 16 |
| Accrued\tincome\ttaxes\t(current\tand\tlong-term) | (744) | 206 | 206 |
| Other\t—\tnet | 128 | 177 | (126) |
| Net\tcash\tprovided\tby\toperating\tactivities | 6,420 | 6,626 | 5,817 |
| Cash\tFlows\tfrom\tInvesting\tActivities |  |  |  |
| Purchases\tof\tproperty,\tplant\tand\tequipment\t(PP&amp;E) | (1,461) | (1,493) | (1,665) |
| Proceeds\tfrom\tsale\tof\tPP&amp;E\tand\tother\tassets | 33 | 135 | 128 |
| Acquisitions,\tnet\tof\tcash\tacquired | (2,914) | (94) | \t— |
| Purchases\tof\tmarketable\tsecurities\tand\tinvestments | (652) | (1,280) | (4,040) |
| Proceeds\tfrom\tmaturities\tand\tsale\tof\tmarketable\tsecurities\tand\tinvestments | 1,952 | 2,034 | 4,667 |
| Proceeds\tfrom\tsale\tof\tbusinesses | 123 | \t— | 8 |
| Other\tinvesting | 102 | 102 | 46 |
| Net\tcash\tused\tin\tinvesting\tactivities | (2,817) | (596) | (856) |
| Cash\tFlows\tfrom\tFinancing\tActivities |  |  |  |
| Change\tin\tshort-term\tdebt\t—\tnet | 860 | 27 | (2) |
| Repayment\tof\tdebt\t(maturities\tgreater\tthan\t90\tdays) | (800) | (1,625) | (859) |
| Proceeds\tfrom\tdebt\t(maturities\tgreater\tthan\t90\tdays) | 3,422 | 2,608 | 824 |
| Purchases\tof\ttreasury\tstock | (5,238) | (5,652) | (5,212) |
| Proceeds\tfrom\tissuance\tof\ttreasury\tstock\tpursuant\tto\tstock\toption\tand\tbenefit |  |  |  |
| plans | 635 | 968 | 1,609 |
| Dividends\tpaid\tto\tshareholders | (2,561) | (2,216) | (1,730) |
| Excess\ttax\tbenefits\tfrom\tstock-based\tcompensation | 154 | 167 | 92 |
| Purchase\tof\tnoncontrolling\tinterest | \t— | (861) | \t— |
| Other\t—\tnet | (120) | (19) | 32 |
| Net\tcash\tused\tin\tfinancing\tactivities | (3,648) | (6,603) | (5,246) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | (54) | (111) | (17) |
| Net\tincrease\t(decrease)\tin\tcash\tand\tcash\tequivalents | (99) | (684) | (302) |
| Cash\tand\tcash\tequivalents\tat\tbeginning\tof\tyear | 1,897 | 2,581 | 2,883 |
| Cash\tand\tcash\tequivalents\tat\tend\tof\tperiod | $1,798 | $1,897 | $2,581 |

# 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	intercompany	transactions	are	eliminated.	As	used	herein,	the	term	"3M"	or	"Company"	refers	to 3M	Company	and	subsidiaries	unless	the	context	indicates	otherwise.

Basis	of	presentation:	Certain	balances	relative	to	prior	periods	have	been	reclassified	to	conform	to	December	31,	2015	presentation in	connection	with	the	following,	each	of	which	is	further	discussed	in	the	indicated	section	of	Note	1:

· Change	in	method	of	classification	of	certain	marketable	securities	previously	classified	as	non-current	to	current	as	further discussed	in	the	Marketable	securities	section;	and

· Adoption	of	Accounting	Standards	Update	(ASU)	No.	2015-03,	Simplifying	the	Presentation	of	Debt	Issuance	Costs,	and

ASU	No.	2015-17,	Balance	Sheet	Classification	of	Deferred	Taxes,	in	the	fourth	quarter	of	2015	on	a	retrospective	basis	as further	discussed	in	the	New	Accounting	Pronouncements	section.

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	2015.	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	have	been	and	continue	to	be	subject	to	change.	In	January	2014,	the	Venezuelan government	announced	that	the	National	Center	for	Foreign	Commerce	(CENCOEX),	had	assumed	the	role	with	respect	to	the continuation	of	the	existing	official	exchange	rate,	significantly	expanded	the	use	of	a	second	currency	auction	exchange	mechanism called	the	Complementary	System	for	Foreign	Currency	Acquirement	(or	SICAD1),	and	issued	exchange	regulations	indicating	the SICAD1	rate	of	exchange	would	be	used	for	payments	related	to	international	investments.	In	late	March	2014,	the	Venezuelan government	launched	a	third	foreign	exchange	mechanism,	SICAD2,	which	it	later	replaced	with	another	foreign	currency	exchange platform	in	February	2015	called	the	Marginal	System	of	Foreign	Currency	(SIMADI).	The	SIMADI	rate	was	described	as	being derived	from	daily	private	bidders	and	buyers	exchanging	offers	through	authorized	agents.	This	rate	is	approved	and	published	by	the Venezuelan	Central	Bank.

The	financial	statements	of	3M's	Venezuelan	subsidiary	were	remeasured	utilizing	the	official	CENCOEX	(or	its	predecessor)	rate into	March	2014,	the	SICAD1	rate	beginning	in	late	March	2014,	the	SICAD2	rate	beginning	in	June	2014,	and	the	SIMADI	rate beginning	in	February	2015.	3M's	uses	of	these	rates	were	based	upon	evaluation	of	a	number	of	factors	including,	but	not	limited	to, the	exchange	rate	the	Company's	Venezuelan	subsidiary	may	legally	use	to	convert	currency,	settle	transactions	or	pay	dividends;	the probability	of	accessing	and	obtaining	currency	by	use	of	a	particular	rate	or	mechanism;	and	the	Company's	intent	and	ability	to	use a	particular	exchange	mechanism.	Other	factors	notwithstanding,	remeasurement	impacts	of	the	changes	in	use	of	these	exchange rates	did	not	have	material	impacts	on	3M's	consolidated	results	of	operations	or	financial	condition.

The	Company	continues	to	monitor	circumstances	relative	to	its	Venezuelan	subsidiary.	Changes	in	applicable	exchange	rates	or exchange	mechanisms	may	continue	in	the	future.	These	changes	could	impact	the	rate	of	exchange	applicable	to	remeasure	the Company's	net	monetary	assets	(liabilities)	denominated	in	Venezuelan	Bolivars	(VEF).	As	of

December	31,	2015,	the	Company	had	a	balance	of	net	monetary	liabilities	denominated	in	VEF	of	less	than	500	million	VEF	and	the CENCOEX,	SICAD	(formerly	SICAD1),	and	SIMADI	exchange	rates	were	approximately	6	VEF,	13	VEF,	and	200	VEF	per	U.S. dollar,	respectively.

A	need	to	deconsolidate	the	Company's	Venezuelan	subsidiary's	operations	may	result	from	a	lack	of	exchangeability	of	VEF- denominated	cash	coupled	with	an	acute	degradation	in	the	ability	to	make	key	operational	decisions	due	to	government	regulations	in Venezuela.	3M	monitors	factors	such	as	its	ability	to	access	various	exchange	mechanisms;	the	impact	of	government	regulations	on the	Company's	ability	to	manage	its	Venezuelan	subsidiary's	capital	structure,	purchasing,	product	pricing,	and	labor	relations;	and the	current	political	and	economic	situation	within	Venezuela.	Based	upon	such	factors	as	of	December	31,	2015,	the	Company continues	to	consolidate	its	Venezuelan	subsidiary.	As	of	December	31,	2015,	the	balance	of	intercompany	receivables	due	from	this subsidiary	and	its	equity	balance	are	not	significant.

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:	Effective	December	31,	2015,	the	Company	changed	the	method	of	classification	of	certain	securities previously	classified	as	non-current	to	current.	This	new	method	classifies	these	securities	as	current	or	non-current	based	on	the nature	of	the	securities	and	availability	for	use	in	current	operations	while	the	prior	classification	was	based	on	management's intended	holding	period,	the	security's	maturity	date	and	liquidity	considerations	based	on	market	conditions.	The	Company	believes this	method	is	preferable	because	it	is	consistent	with	how	the	Company	manages	its	capital	structure	and	liquidity.	The	prior	period balance	has	been	reclassified	to	conform	to	the	current	year	presentation:

| (Millions) | Previously	Reported | Impact | As	Adjusted |
| :--- | :--- | :--- | :--- |
| Marketable\tsecurities\t-\tcurrent | $626 | $813 | $1,439 |
| Marketable\tsecurities\t-\tnon-current | 828 | (813) | 15 |
| Total\tmarketable\tsecurities | $1,454 | $\t— | $1,454 |

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	ten	to	forty	years, with	the	majority	in	the	range	of	twenty	to	forty	years.	The	estimated	useful	lives	of	machinery	and	equipment	primarily	range	from three	to	fifteen	years,	with	the	majority	in	the	range	of	five	to	ten	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	$102 million	and	$96	million	at	December	31,	2015	and	2014,	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.	Companies	have	the	option	to	first	assess	qualitative	factors to	determine	whether	the	fair	value	of	a	reporting	unit	is	not	"more	likely	than	not"	less	than	its	carrying	amount,	which	is	commonly referred	to	as	"Step	0".	3M	has	chosen	not	to	apply	Step	0	for	2015	or	prior	period	annual	goodwill	assessments.

Intangible	assets:	Intangible	asset	types	include	customer	related,	patents,	other	technology-based,	tradenames	and	other	intangible assets	acquired	from	an	independent	party.	Intangible	assets	with	a	definite	life	are	amortized	over	a	period	ranging	from	one	to twenty	years	on	a	systematic	and	rational	basis	(generally	straight	line)	that	is	representative	of	the	asset's	use.	The	estimated	useful lives	vary	by	category,	with	customer	related	largely	between	seven	to	seventeen	years,	patents	largely	between	five	to	thirteen	years, other	technology-based	largely	between	two	to	fifteen	years,	definite	lived	tradenames	largely	between	three	and	twenty	years,	and other	intangibles	largely	between	two	to	ten	years.	Costs	related	to	internally	developed	intangible	assets,	such	as	patents,	are expensed	as	incurred,	primarily	in	"Research,	development	and	related	expenses."

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.

Intangible	assets	with	an	indefinite	life,	namely	certain	tradenames,	are	not	amortized.	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.	An	impairment	loss	generally	would	be	recognized	when	the	fair	value	is	less	than the	carrying	value	of	the	indefinite-lived	intangible	asset.

Restructuring	actions:	Restructuring	actions	generally	include	significant	actions	involving	employee-related	severance	charges, contract	termination	costs,	and	impairment	or	accelerated	depreciation/amortization	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,	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.	In	addition	to	the	preceding	conditions,	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	$368	million	in	2015,	$407 million	in	2014	and	$423	million	in	2013.

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	$1.763	billion	in	2015,	$1.770 billion	in	2014	and	$1.715	billion	in	2013.	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	$1.223	billion	in	2015,	$1.193	billion in	2014	and	$1.150	billion	in	2013.	Related	expenses	primarily	include	technical	support;	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,	the	Company's commitment	to	a	plan	of	action,	or	approval	by	regulatory	agencies.	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,	2015	and	2014,	the	Company	had	valuation	allowances	of	$31	million	and	$22	million	on	its deferred	tax	assets,	respectively.	The	increase	in	valuation	allowance	at	December	31,	2015	relates	to	current	acquisitions	in	certain international	jurisdictions.	The	Company	recognizes	and	measures	its	uncertain	tax	positions	based	on	the	rules	under	ASC	740,

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	2015,	2014	and	2013	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	(5.0	million	average	options	for	2015,	1.4

million	average	options	for	2014,	and	2.0	million	average	options	for	2013).	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) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Numerator: |  |  |  |
| Net\tincome\tattributable\tto\t3M | \t$4,833 | $4,956 | $4,659 |
| Denominator: |  |  |  |
| Denominator\tfor\tweighted\taverage\t3M\tcommon\tshares\toutstanding\t—\tbasic | 625.6 | 649.2 | 681.9 |
| Dilution\tassociated\twith\tthe\tCompany's\tstock-based\tcompensation\tplans | 11.6 | 12.8 | 11.7 |
| Denominator\tfor\tweighted\taverage\t3M\tcommon\tshares\toutstanding\t—\tdiluted | 637.2 | 662.0 | 693.6 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t—\tbasic | \t$7.72 | $7.63 | $6.83 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t—\tdiluted | \t$7.58 | $7.49 | $6.72 |

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	15	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	April	2014,	the	Financial	Accounting	Standards	Board	(FASB)	issued	ASU	No.	2014-08,	Reporting	Discontinued	Operations	and Disclosures	of	Disposals	of	Components	of	an	Entity,	which	changed	the	criteria	for	determining	which	disposals	can	be	presented	as discontinued	operations	and	modified	related	disclosure	requirements.	This	standard	has	the	impact	of	reducing	the	frequency	of disposals	reported	as	discontinued	operations,	by	requiring	such	a	disposal	to	represent	a	strategic	shift	that	has	or	will	have	a	major effect	on	an	entity's	operations	and	financial	results.	However,	existing	provisions	that	prohibited	an	entity	from	reporting	a discontinued	operation	if	it	had	certain	continuing	cash	flows	or	involvement	with	the	component	after	disposal	were	eliminated	by this	standard.	The	ASU	also	expands	the	disclosures	for	discontinued	operations	and	requires	new	disclosures	related	to	individually significant	disposals	that	do	not	qualify	as	discontinued	operations.	For	3M,	this	ASU	was	effective	prospectively	beginning January	1,	2015.	This	ASU	was	applied	to	the	2015	divestiture	information	discussed	in	Note	2	and	had	no	material	impact	on consolidated	results	of	operations	and	financial	condition.

In	May	2014,	the	FASB	issued	ASU	No.	2014-09,	Revenue	from	Contracts	with	Customers,	and	in	August	2015	issued	ASU	No. 2015-14,	which	amended	ASU	No.	2014-09	as	to	effective	date.	The	ASU,	as	amended,	provides	a	single	comprehensive	model	to	be used	in	the	accounting	for	revenue	arising	from	contracts	with	customers	and	supersedes	most	current	revenue	recognition	guidance, including	industry-specific	guidance.	The	standard's	stated	core	principle	is	that	an	entity	should	recognize	revenue	to	depict	the transfer	of	promised	goods	or	services	to	customers	in	an	amount	that	reflects	the	consideration	to	which	the	entity	expects	to	be entitled	in	exchange	for	those	goods	or	services.	To	achieve	this	core	principle	the	ASU	includes	provisions	within	a	five	step	model that	includes	identifying	the	contract	with	a	customer,	identifying	the	performance	obligations	in	the	contract,	determining	the transaction	price,	allocating	the	transaction	price	to	the	performance	obligations,	and	recognizing	revenue	when	(or	as)	an	entity satisfies	a	performance	obligation.	The	standard	also	specifies	the	accounting	for	some	costs	to	obtain	or	fulfill	a	contract	with	a customer	and	requires	expanded	disclosures	about	revenue	recognition.	The	standard	provides	for	either	full	retrospective	adoption	or a	modified	retrospective	adoption	by	which	it	is	applied	only	to	the	most	current	period	presented.	For	3M,	the	ASU,	as

amended,	is	effective	January	1,	2018.	The	Company	is	currently	assessing	this	standard's	impact	on	3M's	consolidated	results	of operations	and	financial	condition.

In	February	2015,	the	FASB	issued	ASU	No.	2015-02,	Amendments	to	the	Consolidation	Analysis,	which	changes	guidance	related	to both	the	variable	interest	entity	(VIE)	and	voting	interest	entity	(VOE)	consolidation	models.	With	respect	to	the	VIE	model,	the standard	changes,	among	other	things,	the	identification	of	variable	interests	associated	with	fees	paid	to	a	decision	maker	or	service provider,	the	VIE	characteristics	for	a	limited	partner	or	similar	entity,	and	the	primary	beneficiary	determination.	With	respect	to	the VOE	model,	the	ASU	eliminates	the	presumption	that	a	general	partner	controls	a	limited	partnership	or	similar	entity	unless	the presumption	can	otherwise	be	overcome.	Under	the	new	guidance,	a	general	partner	would	largely	not	consolidate	a	partnership	or similar	entity	under	the	VOE	model.	For	3M,	this	ASU	is	effective	January	1,	2016,	with	early	adoption	permitted.	3M	does	not	have significant	involvement	with	entities	subject	to	consolidation	considerations	impacted	by	the	VIE	model	changes	or	with	limited partnerships	potentially	impacted	by	the	VOE	model	changes.	As	a	result,	3M	does	not	expect	this	ASU	to	have	a	material	impact	on the	Company's	consolidated	results	of	operations	and	financial	condition.

In	April	2015,	the	FASB	issued	ASU	No.	2015-03,	Simplifying	the	Presentation	of	Debt	Issuance	Costs,	and	in	August	2015	issued ASU	No.	2015-15,	Presentation	and	Subsequent	Measurement	of	Debt	Issuance	Costs	Associated	with	Line-of-Credit	Arrangements. Under	ASU	2015-03,	debt	issuance	costs	reported	on	the	consolidated	balance	sheet	would	be	reflected	as	a	direct	deduction	from	the related	debt	liability	rather	than	as	an	asset.	While	ASU	2015-03	addresses	costs	related	to	term	debt,	ASU	No.	2015-15	provides clarification	regarding	costs	to	secure	revolving	lines	of	credit,	which	are,	at	the	outset,	not	associated	with	an	outstanding	borrowing. ASU	No.	2015-15	provides	commentary	that	the	SEC	staff	would	not	object	to	an	entity	deferring	and	presenting	costs	associated with	line-of-credit	arrangements	as	an	asset	and	subsequently	amortizing	them	ratably	over	the	term	of	the	revolving	debt arrangement.	For	3M,	ASU	No.	2015-03	is	effective	January	1,	2016,	with	early	adoption	permitted.	The	Company	adopted	this	ASU in	the	fourth	quarter	of	2015	with	retrospective	application	to	prior	periods.	As	a	result,	debt	issue	costs	aggregating	$26	million previously	included	within	Other	Assets	have	been	reflected	as	reductions	in	the	balances	of	Long-Term	Debt	as	of	December	31, 2014.

In	April	2015,	the	FASB	issued	ASU	No.	2015-05,	Customer's	Accounting	for	Fees	Paid	in	a	Cloud	Arrangement,	which	requires	a customer	to	determine	whether	a	cloud	computing	arrangement	contains	a	software	license.	If	the	arrangement	contains	a	software license,	the	customer	would	account	for	fees	related	to	the	software	license	element	in	a	manner	consistent	with	accounting	for	the acquisition	of	other	acquired	software	licenses.	If	the	arrangement	does	not	contain	a	software	license,	the	customer	would	account for	the	arrangement	as	a	service	contract.	An	arrangement	would	contain	a	software	license	element	if	both	(1)	the	customer	has	the contractual	right	to	take	possession	of	the	software	at	any	time	during	the	hosting	period	without	significant	penalty	and	(2)	it	is feasible	for	the	customer	to	either	run	the	software	on	its	own	hardware	or	contract	with	another	party	unrelated	to	the	vendor	to	host the	software.	For	3M,	this	ASU	is	effective	January	1,	2016,	with	early	adoption	permitted.	The	standard	provides	for	adoption	either fully	retrospectively	or	prospectively	to	arrangements	entered	into,	or	materially	modified,	after	the	effective	date.	The	Company	does not	expect	this	ASU	to	have	a	material	impact	on	3M's	consolidated	results	of	operations	and	financial	condition.

In	May	2015,	the	FASB	issued	ASU	No.	2015-07,	Disclosures	for	Investments	in	Certain	Entities	That	Calculate	Net	Asset	Value	per Share	(or	Its	Equivalent).	This	standard	modifies	existing	disclosure	requirements	such	that	investments	for	which	the	practical expedient	is	used	to	measure	their	fair	value	at	net	asset	value	(NAV)	would	be	removed	from	the	fair	value	hierarchy	disclosures. Instead,	an	entity	would	be	required	to	include	those	investments	as	a	reconciling	item	such	that	the	total	fair	value	amount	of investments	in	the	fair	value	hierarchy	disclosure	is	consistent	with	the	amount	on	the	balance	sheet.	Changes	were	also	made	to	the requirements	in	a	sponsor's	employee	benefit	plan	asset	disclosures.	For	3M,	this	standard	is	effective	January	1,	2016,	with	early adoption	permitted.	The	Company	adopted	this	ASU	in	the	fourth	quarter	of	2015	with	retrospective	application	to	prior	periods.	As	a result,	Note	11,	Pension	and	Postretirement	Benefit	Plans,	reflects	the	modified	disclosures	with	respect	to	applicable	plan	assets.	As this	ASU	only	relates	to	certain	disclosures,	it	did	not	impact	the	Company's	consolidated	results	of	operations	and	financial condition.

In	July	2015,	the	FASB	issued	ASU	No.	2015-11,	Simplifying	the	Measurement	of	Inventory,	which	modifies	existing	requirements regarding	measuring	inventory	at	the	lower	of	cost	or	market.	Under	existing	standards,	the	market	amount	requires	consideration	of replacement	cost,	net	realizable	value	(NRV),	and	NRV	less	an	approximately	normal	profit

margin.	The	new	ASU	replaces	market	with	NRV,	defined	as	estimated	selling	prices	in	the	ordinary	course	of	business,	less reasonably	predictable	costs	of	completion,	disposal	and	transportation.	This	eliminates	the	need	to	determine	and	consider replacement	cost	or	NRV	less	an	approximately	normal	profit	margin	when	measuring	inventory.	For	3M,	this	standard	is	effective prospectively	beginning	January	1,	2017,	with	early	adoption	permitted.	The	Company	is	currently	assessing	this	ASU's	impacts	on 3M's	consolidated	results	of	operations	and	financial	condition.

In	September	2015,	the	FASB	issued	ASU	No.	2015-16,	Simplifying	the	Accounting	for	Measurement-Period	Adjustments,	that eliminates	the	requirement	for	an	acquirer	in	a	business	combination	to	account	for	measurement-period	adjustments	retrospectively. Under	existing	standards,	an	acquirer	in	a	business	combination	reports	provisional	amounts	with	respect	to	acquired	assets	and liabilities	when	their	measurements	are	incomplete	as	of	the	end	of	the	reporting	period.	Prior	to	the	impact	of	this	ASU,	an	acquirer	is required	to	adjust	provisional	amounts	(and	the	related	impact	on	earnings)	by	restating	prior	period	financial	statements	during	the measurement	period	which	cannot	exceed	one	year	from	the	date	of	acquisition.	The	new	guidance	requires	that	the	cumulative impact	of	a	measurement-period	adjustment	(including	the	impact	on	prior	periods)	be	recognized	in	the	reporting	period	in	which	the adjustment	is	identified—eliminating	the	requirement	to	restate	prior	period	financial	statements.	The	new	standard	requires	disclosure of	the	nature	and	amount	of	measurement-period	adjustments	as	well	as	information	with	respect	to	the	portion	of	the	adjustments recorded	in	current-period	earnings	that	would	have	been	recorded	in	previous	reporting	periods	if	the	adjustments	to	provisional amounts	had	been	recognized	as	of	the	acquisition	date.	The	ASU	is	applied	prospectively	to	measurement-period	adjustments	that occur	after	the	effective	date.	For	3M,	this	standard	is	required	prospectively	beginning	January	1,	2016,	with	early	adoption permitted.	The	Company	adopted	this	standard	with	respect	to	measurement-period	adjustments	beginning	in	the	fourth	quarter	of 2015.	Additional	disclosure,	as	applicable,	is	included	in	Note	2,	Acquisitions	and	Divestitures.

In	November	2015,	the	FASB	issued	ASU	No.	2015-17,	Balance	Sheet	Classification	of	Deferred	Taxes,	which	requires	entities	to present	deferred	tax	assets	(DTAs)	and	deferred	tax	liabilities	(DTLs),	along	with	any	related	valuation	allowance,	as	noncurrent	in	a balance	sheet.	This	ASU	eliminates	current	guidance	requiring	deferred	taxes	for	each	jurisdiction	to	be	presented	as	a	net	current asset	or	liability	and	a	net	noncurrent	asset	or	liability.	As	a	result,	each	jurisdiction	would	have	one	net	noncurrent	DTA	or	DTL balance.	The	ASU	does	not	change	the	existing	requirement	that	only	permits	offsetting	DTAs	and	DTLs	within	a	particular jurisdiction.	For	3M,	this	standard	is	effective	January	1,	2017,	with	early	adoption	permitted.	In	light	of	the	process	simplification provided	by	this	ASU,	the	Company	adopted	this	standard	in	the	fourth	quarter	of	2015	with	retrospective	application	to	prior	periods. As	a	result,	the	December	31,	2014	balances	of	DTAs	and	DTLs	previously	reported	were	impacted	as	follows:

| (Millions) | Previously	Reported | Impact | As	Adopted |
| :--- | :--- | :--- | :--- |
| Prepaid\texpenses\tand\tother\t(within\tother\tcurrent\tassets) | $595 | $169 | $764 |
| Other\tcurrent\ttax\tassets\t(within\tother\tcurrent\tassets) | 444 | (444) | \t— |
| Deferred\ttax\tassets\t(within\tother\tassets) | 889 | 241 | 1,130 |
| Deferred\ttax\tliabilities\t(within\tother\tcurrent\tliabilities) | 34 | (34) | \t— |

In	conjunction	with	the	adoption	of	this	ASU,	3M	reclassified	$169	million	of	remaining	other	current	tax	assets	to	prepaid	expenses and	other	to	conform	to	the	2015	presentation.

In	January	2016,	the	FASB	issued	ASU	No.	2016-01,	Recognition	and	Measurement	of	Financial	Assets	and	Financial	Liabilities, which	revises	the	accounting	related	to	(1)	the	classification	and	measurement	of	investments	in	equity	securities	and	(2)	the presentation	of	certain	fair	value	changes	for	financial	liabilities	measured	at	fair	value.	The	ASU	also	amends	certain	disclosure requirements	associated	with	the	fair	value	of	financial	instruments.	The	new	guidance	requires	the	fair	value	measurement	of investments	in	equity	securities	and	other	ownership	interests	in	an	entity,	including	investments	in	partnerships,	unincorporated	joint ventures	and	limited	liability	companies	(collectively,	equity	securities)	that	do	not	result	in	consolidation	and	are	not	accounted	for under	the	equity	method.	Entities	will	need	to	measure	these	investments	and	recognize	changes	in	fair	value	in	net	income.	Entities will	no	longer	be	able	to	recognize	unrealized	holding	gains	and	losses	on	equity	securities	they	classify	under	current	guidance	as available	for	sale	in	other	comprehensive	income	(OCI).	They	also	will	no	longer	be	able	to	use	the	cost	method	of	accounting	for equity	securities	that	do	not	have	readily	determinable	fair	values.	Instead,	for	these	types	of	equity	investments	that	do	not	otherwise qualify	for	the	net	asset	value	practical	expedient,	entities	will	be	permitted	to	elect	a	practicability	exception	and

measure	the	investment	at	cost	less	impairment	plus	or	minus	observable	price	changes	(in	orderly	transactions).	The	ASU	also establishes	an	incremental	recognition	and	disclosure	requirement	related	to	the	presentation	of	fair	value	changes	of	financial liabilities	for	which	the	fair	value	option	(FVO)	has	been	elected.	Under	this	guidance,	an	entity	would	be	required	to	separately present	in	OCI	the	portion	of	the	total	fair	value	change	attributable	to	instrument-specific	credit	risk	as	opposed	to	reflecting	the entire	amount	in	earnings.	For	derivative	liabilities	for	which	the	FVO	has	been	elected,	however,	any	changes	in	fair	value attributable	to	instrument-specific	credit	risk	would	continue	to	be	presented	in	net	income,	which	is	consistent	with	current	guidance. For	3M,	this	standard	is	effective	beginning	January	1,	2018	via	a	cumulative-effect	adjustment	to	beginning	retained	earnings,	except for	guidance	relative	to	equity	securities	without	readily	determinable	fair	values	which	is	applied	prospectively.	The	Company	is currently	assessing	this	ASU's	impacts	on	3M's	consolidated	results	of	operations	and	financial	condition.

# NOTE	2.		Acquisitions	and	Divestitures

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

The	impact	on	the	consolidated	balance	sheet	of	the	purchase	price	allocations	related	to	2015	acquisitions	and	assigned	weighted- average	intangible	asset	lives,	including	adjustments	relative	to	other	acquisitions	within	the	measurement	period,	follows.	The allocation	of	purchase	consideration	related	to	the	August	2015	Capital	Safety	and	Polypore	Separations	Media	acquisitions	is considered	preliminary,	primarily	with	respect	to	certain	tax-related	assets	and	liabilities.	3M	expects	to	finalize	the	allocation	of purchase	price	within	the	one	year	measurement-period	following	these	acquisitions.	Adjustments	to	preliminary	allocations	primarily related	to	the	identification	and	valuation	of	certain	indefinite-lived	intangible	assets	(further	discussed	below).	The	change	to provisional	amounts	resulted	in	an	immaterial	impact	to	results	of	operations	in	the	fourth	quarter	of	2015,	a	portion	of	which	relates to	earlier	quarters	in	the	measurement	period.

| (Millions) | Capital | Polypore |  |  | Weighted-<br>Average |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Asset\t(Liability) | Safety | Separations\tMedia | Other | Total | Lives\t(Years) |
| Accounts\treceivable | $66 | $30 | $7 | $103 |  |
| Inventory | 63 | 35 | 4 | 102 |  |
| Other\tcurrent\tassets | 10 | 1 | 1 | 12 |  |
| Property,\tplant,\tand\tequipment | 36 | 128 | 7 | 171 |  |
| Purchased\tfinite-lived\tintangible\tassets: |  |  |  |  |  |
| Customer\trelated\tintangible\tassets | 445 | 270 | 40 | 755 | 16 |
| Patents | 44 | 11 | 7 | 62 | 7 |
| Other\ttechnology-based\tintangible\tassets | 85 | 42 | 1 | 128 | 7 |
| Definite-lived\ttradenames | 26 | 6 | 1 | 33 | 16 |
| Other\tamortizable\tintangible\tassets | \t— | \t— | 2 | 2 | 4 |
| Purchased\tindefinite-lived\tintangible\tassets | 520 | \t— | \t— | 520 |  |
| Purchased\tgoodwill | 1,764 | 636 | 95 | 2,495 |  |
| Accounts\tpayable\tand\tother\tliabilities,\tnet\tof\tother\tassets | (105) | (122) | (5) | (232) |  |
| Interest\tbearing\tdebt | (766) | \t— | \t— | (766) |  |
| Deferred\ttax\tasset/(liability) | (464) | \t— | (7) | (471) |  |
| Net\tassets\tacquired | $1,724 | $1,037 | $153 | $2,914 |  |
| Supplemental\tinformation: |  |  |  |  |  |
| Cash\tpaid | $1,758 | $1,037 | $154 | $2,949 |  |
| Less:\tCash\tacquired | 34 | \t— | 1 | 35 |  |
| Cash\tpaid,\tnet\tof\tcash\tacquired | $1,724 | $1,037 | $153 | $2,914 |  |

3M	completed	one	acquisition	(Treo	Solutions,	LLC)	during	2014,	the	impact	of	which	on	the	consolidated	balance	sheet	was	not considered	material.	Separately,	as	discussed	in	Note	6,	during	2014,	3M	(via	Sumitomo	3M	Limited)	purchased	Sumitomo	Electric Industries,	Ltd.'s	25	percent	interest	in	3M's	consolidated	Sumitomo	3M	Limited	subsidiary	for	90	billion	Japanese	Yen.	Because	3M already	had	a	controlling	interest	in	this	consolidated	subsidiary,	this	transaction	was	separately	recorded	as	a	financing	activity	in	the statement	of	cash	flows.

# There	were	no	acquisitions	that	closed	during	2013.

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.	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.

# 2015	acquisitions:

In	March	2015,	3M	(Health	Care	Business)	purchased	all	of	the	outstanding	shares	of	Ivera	Medical	Corp.,	headquartered	in	San Diego,	California.	Ivera	Medical	Corp.	is	a	manufacturer	of	health	care	products	that	disinfect	and	protect	devices	used	for	access	into a	patient's	bloodstream.	In	addition,	in	the	first	quarter	of	2015,	3M	(Industrial	Business)	purchased	the	remaining	interest	in	a	former equity	method	investment	for	an	immaterial	amount.

In	August	2015,	3M	(Safety	and	Graphics	Business)	acquired	all	of	the	outstanding	shares	of	Capital	Safety	Group	S.A.R.L.,	with operating	headquarters	in	Bloomington,	Minnesota,	from	KKR	&	Co.	L.P.	for	$1.7	billion,	net	of	cash	acquired.	The	net	assets acquired	included	the	assumption	of	$0.8	billion	of	debt.	Capital	Safety	is	a	leading	global	provider	of	fall	protection	equipment.

In	August	2015,	3M	(Industrial	Business)	acquired	the	assets	and	liabilities	associated	with	Polypore	International,	Inc.'s	Separations Media	business,	headquartered	in	Wuppertal,	Germany,	for	$1.0	billion.	Polypore's	Separations	Media	business	is	a	leading	provider of	microporous	membranes	and	modules	for	filtration	in	the	life	sciences,	industrial	and	specialty	segments.

Purchased	identifiable	finite-lived	intangible	assets	related	to	acquisition	activity	in	2015	totaled	$1.0	billion.	The	associated	finite- lived	intangible	assets	acquired	in	2015	will	be	amortized	on	a	systematic	and	rational	basis	(generally	straight	line)	over	a	weighted- average	life	of	14	years	(lives	ranging	from	two	to	20	years).	Indefinite-lived	intangible	assets	of	$520	million	relate	to	certain tradenames	associated	with	the	Capital	Safety	acquisition	which	have	been	in	existence	for	over	55	years,	have	a	history	of	leading market-share	positions,	have	been	and	are	intended	to	be	continuously	renewed,	and	the	associated	products	of	which	are	expected	to generate	cash	flows	for	3M	for	an	indefinite	period	of	time.	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	2014,	3M	completed	one	business	combination.	The	purchase	price	paid	for	this	business	combination	(net	of	cash	acquired) and	the	impact	of	other	matters	(net)	during	2014	aggregated	to	$94	million.

In	April	2014,	3M	(Health	Care	Business)	purchased	all	of	the	outstanding	equity	interests	of	Treo	Solutions	LLC,	headquartered	in Troy,	New	York.	Treo	Solutions	LLC	is	a	provider	of	data	analytics	and	business	intelligence	to	healthcare	payers	and	providers.

Purchased	identifiable	finite-lived	intangible	assets	related	to	acquisition	activity	in	2014	totaled	$34	million.	The	associated	finite- lived	intangible	assets	acquired	in	2014	will	be	amortized	on	a	systematic	and	rational	basis	(generally	straight	line)	over	a	weighted- average	life	of	six	years	(lives	ranging	from	three	to	10	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.

3M	may	divest	certain	businesses	from	time	to	time	based	upon	review	of	the	Company's	portfolio	considering,	among	other	items, factors	relative	to	the	extent	of	strategic	and	technological	alignment	and	optimization	of	capital	deployment,	in	addition	to considering	if	selling	the	businesses	results	in	the	greatest	value	creation	for	the	Company	and	for	shareholders.

In	January	2015,	3M	(Electronics	and	Energy	Business)	completed	the	sale	of	its	global	Static	Control	business	to	Desco	Industries Inc.,	based	in	Chino,	California.	2014	sales	of	this	business	were	$46	million.	This	transaction	was	not	considered	material.

In	the	fourth	quarter	of	2015,	3M	(Safety	and	Graphics	Business)	entered	into	agreements	with	One	Equity	Partners	Capital	Advisors L.P.	(OEP)	to	sell	the	assets	of	3M's	library	systems	business.	The	sales	of	the	North	American	business	and	the	majority	of	the business	outside	of	North	America	closed	in	October	and	November	2015,	respectively.	The	sale	of	the	remainder	of	the	library systems	business	is	expected	to	close	in	the	first	quarter	of	2016.	In	December	2015,	3M	(Safety	and	Graphics	Business)	also completed	the	sale	of	Faab	Fabricauto,	a	wholly-owned	subsidiary	of	3M,	to	Hills	Numberplates	Limited.	The	library	systems business,	part	of	the	Traffic	Safety	and	Security	Division,	delivers	circulation	management	solutions	to	library	customers	with	on- premise	hardware	and	software,	maintenance	and	service,	and	an	emerging	cloud-based	digital	lending	platform.	Faab	Fabricauto,	also part	of	the	Traffic	Safety	and	Security	Division,	is	a	leading	French	manufacturer	of	license	plates	and	signage	solutions.	The aggregate	cash	proceeds	relative	to	the	2015	global	library	systems	and	Faab	Fabricauto	divestiture	transactions	was	$104	million.	The Company	recorded	a	net	pre-tax	gain	of	$40	million	(approximately	$10	million	after	tax)	in	2015	as	a	result	of	the	sale	and	any adjustment	of	carrying	value.

In	January	2016,	3M	(Industrial	Business	Group)	entered	into	an	agreement	to	sell	to	Innovative	Chemical	Products	Group,	a	portfolio company	of	Audax	Private	Equity,	the	assets	of	3M's	pressurized	polyurethane	foam	adhesives	business	(formerly	known	as Polyfoam).	This	business	is	a	provider	of	pressurized	polyurethane	foam	adhesive	formulations	and	systems	into	the	residential roofing,	commercial	roofing	and	insulation	and	industrial	foam	segments	in	the	United	States	with	annual	sales	of	approximately	$20 million.	The	transaction	is	expected	to	close	in	the	first	quarter	of	2016,	subject	to	customary	close	conditions.

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.	This	transaction	was	not	considered	material

The	aggregate	operating	income	of	these	businesses	included	in	the	Company's	operating	results	for	the	periods	presented	and	the amounts	of	major	assets	and	liabilities	of	any	associated	disposal	groups	classified	as	held-for-sale	as	of	December	31,	2015	were	not material.

# NOTE	3.		Goodwill	and	Intangible	Assets

Purchased	goodwill	from	acquisitions	totaled	$2.5	billion	in	2015,	$636	million	of	which	is	deductible	for	tax	purposes.	Purchased goodwill	from	acquisitions	totaled	$65	million	in	2014,	none	of	which	is	deductible	for	tax	purposes.	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

|  | Dec.	31, | 2014 | 2014 | Dec.	31, | 2015 | 2015 | Dec.	31, |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013 | acquisition | translation | 2014 | acquisition | translation | 2015 |
| (Millions) | Balance | activity | and\tother | Balance | activity | and\tother | Balance |
| Industrial | $2,166 | $\t— | $(129) | $2,037 | $637 | $(106) | $2,568 |
| Safety\tand\tGraphics | 1,740 | — | (90) | 1,650 | 1,764 | (72) | 3,342 |
| Health\tCare | 1,596 | 65 | (72) | 1,589 | 94 | (59) | 1,624 |
| Electronics\tand\tEnergy | 1,612 | \t— | (53) | 1,559 | \t— | (44) | 1,515 |
| Consumer | 231 | — | (16) | 215 | — | (15) | 200 |
| Total\tCompany | $7,345 | $65 | $(360) | $7,050 | $2,495 | $(296) | $9,249 |

As	described	in	Note	16,	effective	in	the	third	quarter	of	2015,	within	the	Health	Care	business	segment,	the	Company	formed	the Oral	Care	Solutions	Division,	which	combined	the	former	3M	ESPE	and	3M	Unitek	divisions.	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	third	quarter	of	2015,	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	2015	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

For	2015,	the	intangible	assets	(excluding	goodwill)	acquired	through	business	combinations	increased	the	gross	carrying	amount. Balances	are	also	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) | 2015 | 2014 |
| :--- | :--- | :--- |
| Customer\trelated\tintangible\tassets | $1,973 | $1,348 |
| Patents | 616 | 581 |
| Other\ttechnology-based\tintangible\tassets | 525 | 407 |
| Definite-lived\ttradenames | 421 | 401 |
| Other\tamortizable\tintangible\tassets | 216 | 221 |
| Total\tgross\tcarrying\tamount | $3,751 | $2,958 |
| Accumulated\tamortization\t—\tcustomer\trelated | (668) | (597) |
| Accumulated\tamortization\t—\tpatents | (481) | (472) |
| Accumulated\tamortization\t—\tother\ttechnology\tbased | (252) | (215) |
| Accumulated\tamortization\t—\tdefinite-lived\ttradenames | (215) | (195) |
| Accumulated\tamortization\t—\tother | (169) | (167) |
| Total\taccumulated\tamortization | $(1,785) | $(1,646) |
| Total\tfinite-lived\tintangible\tassets\t—\tnet | $1,966 | $1,312 |
| Non-amortizable\tintangible\tassets\t(primarily\ttradenames) | 635 | 123 |
| Total\tintangible\tassets\t—\tnet | $2,601 | $1,435 |

Certain	tradenames	acquired	by	3M	are	not	amortized	because	they	have	been	in	existence	for	over	55	years,	have	a	history	of	leading- market	share	positions,	have	been	and	are	intended	to	be	continuously	renewed,	and	the	associated	products	of	which	are	expected	to generate	cash	flows	for	3M	for	an	indefinite	period	of	time.

Amortization	expense	for	the	years	ended	December	31	follows:

Expected	amortization	expense	for	acquired	amortizable	intangible	assets	recorded	as	of	December	31,	2015	follows:

|  |  |  |  |  |  | After |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) | 2016 | 2017 | 2018 | 2019 | 2020 | 2020 |
| Amortization\texpense | $252 | $226 | $205 | $192 | $183 | $908 |

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.		Restructuring	Actions

# 2015	Restructuring	Actions:

During	the	fourth	quarter	of	2015,	management	approved	and	committed	to	undertake	certain	restructuring	actions	primarily	focused on	structural	overhead,	largely	in	the	U.S.	and	slower-growing	markets,	with	particular	emphasis	on	Europe,	Middle	East,	and	Africa (EMEA)	and	Latin	America.	This	impacted	approximately	1,700	positions	worldwide	and	resulted	in	a	fourth-quarter	2015	pre-tax charge	of	$114	million.

Components	of	these	restructuring	charges	are	summarized	by	business	segment	as	follows:

|  | Year	ended	December	31,	2015 | Year	ended	December	31,	2015 |  |
| :--- | :--- | :--- | :--- |
| (Millions) | Employee-Related | Asset-Related | Total |
| Industrial | $30 | $12 | $42 |
| Safety\tand\tGraphics | 11 | \t— | 11 |
| Health\tCare | 9 | \t— | 9 |
| Electronics\tand\tEnergy | 8 | 4 | 12 |
| Consumer | 3 | \t— | 3 |
| Corporate\tand\tUnallocated | 37 | \t— | 37 |
| Total\tExpense | $98 | $16 | $114 |

The	preceding	restructuring	charges	were	recorded	in	the	income	statement	as	follows:

Components	of	these	restructuring	actions,	including	cash	and	non-cash	impacts,	follow:

|  |  | Year	ended	December	31,	2015 |  |
| :--- | :--- | :--- | :--- |
| (Millions) | Employee-Related | Asset-Related | Total |
| Expense\tincurred | $98 | $16 | $114 |
| Non-cash\tchanges | (8) | (16) | (24) |
| Cash\tpayments | (27) | \t— | (27) |
| Accrued\t2015\trestructuring\taction\tbalances\tas\tof\tDecember\t31, |  |  |  |
| 2015 | $63 | $\t— | $63 |

Non-cash	changes	include	certain	pension	settlements	and	special	termination	benefits	recorded	in	accrued	pension	and	postretirement benefits	and	accelerated	deprecation	resulting	from	the	cessation	of	use	of	certain	long-lived	assets.	Remaining	activities	related	to	the restructuring	are	expected	to	be	completed	in	2016.

# NOTE	5.		Supplemental	Balance	Sheet	Information

Accounts	payable	(included	as	a	separate	line	item	in	the	Consolidated	Balance	Sheet)	includes	drafts	payable	on	demand	of	$79 million	at	December	31,	2015,	and	$1	million	at	December	31,	2014.	Accumulated	depreciation	for	capital	leases	totaled	$98	million and	$87	million	as	of	December	31,	2015,	and	2014,	respectively.	Additional	supplemental	balance	sheet	information	is	provided	in the	table	that	follows.

| (Millions) | 2015 | 2014 |
| :--- | :--- | :--- |
| Other\tcurrent\tassets |  |  |
| Prepaid\texpenses\tand\tother | $1,081 | $764 |
| Derivative\tassets-current | 211 | 182 |
| Insurance\trelated\treceivables,\tprepaid\texpenses\tand\tother | 106 | 77 |
| Total\tother\tcurrent\tassets | $1,398 | $1,023 |
| Investments |  |  |
| Equity\tmethod | $56 | $58 |
| Cost\tmethod | 59 | 41 |
| Other\tinvestments | 2 | 3 |
| Total\tinvestments | $117 | $102 |
| Property,\tplant\tand\tequipment\t-\tat\tcost |  |  |
| Land | $354 | $368 |
| Buildings\tand\tleasehold\timprovements | 7,120 | 6,943 |
| Machinery\tand\tequipment | 14,743 | 14,684 |
| Construction\tin\tprogress | 723 | 679 |
| Capital\tleases | 158 | 167 |
| Gross\tproperty,\tplant\tand\tequipment | 23,098 | 22,841 |
| Accumulated\tdepreciation | (14,583) | (14,352) |
| Property,\tplant\tand\tequipment\t-\tnet | $8,515 | $8,489 |
| Other\tassets |  |  |
| Deferred\tincome\ttaxes | $510 | $1,130 |
| Insurance\trelated\treceivables\tand\tother | 49 | 89 |
| Cash\tsurrender\tvalue\tof\tlife\tinsurance\tpolicies | 241 | 245 |
| Other | 253 | 305 |
| Total\tother\tassets | $1,053 | $1,769 |
| Other\tcurrent\tliabilities |  |  |
| Accrued\ttrade\tpayables | $566 | $533 |
| Deferred\tincome | 518 | 541 |
| Derivative\tliabilities | 65 | 39 |
| Dividends\tpayable | \t— | 648 |
| Employee\tbenefits\tand\twithholdings | 148 | 172 |
| Contingent\tliability\tclaims\tand\tother | 147 | 157 |
| Property\tand\tother\ttaxes | 89 | 90 |
| Pension\tand\tpostretirement\tbenefits | 60 | 60 |
| Other | 811 | 644 |
| Total\tother\tcurrent\tliabilities | $2,404 | $2,884 |
| Other\tliabilities |  |  |
| Long\tterm\tincome\ttaxes\tpayable | $154 | $519 |
| Employee\tbenefits | 254 | 262 |
| Contingent\tliability\tclaims\tand\tother | 295 | 300 |
| Capital\tlease\tobligations | 46 | 59 |
| Deferred\tincome | 19 | 21 |
| Deferred\tincome\ttaxes | 551 | 141 |
| Other | 261 | 253 |
| Total\tother\tliabilities | $1,580 | $1,555 |

# NOTE	6.		Supplemental	Equity	and	Comprehensive	Income	Information

In	2015,	3M's	Board	of	Directors	declared	a	second,	third,	and	fourth	quarter	dividend	of	$1.025	per	share,	which	resulted	in	total year	2015	declared	dividends	of	$3.075	per	share.	In	December	2014,	3M's	Board	of	Directors	declared	a	first-quarter	2015	dividend of	$1.025	per	share	(paid	in	March	2015),	which	when	added	to	second,	third	and	fourth	quarter	2014	declared	dividends	of	$0.855 per	share,	resulted	in	total	year	2014	declared	dividends	of	$3.59	per	share.	In	December	2013,	3M's	Board	of	Directors	declared	a first-quarter	2014	dividend	of	$0.855	per	share	(paid	in	March	2014).	This	resulted	in	total	year	2013	declared	dividends	of	$3.395	per share.

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

|  |  | Defined	Benefit | Debt	and | Cash	Flow | Accumulated |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Pension\tand | Equity | Hedging | Other |
|  | \t Cumulative\t Postretirement | \t Cumulative\t Postretirement | Securities, | Instruments, | \t Comprehensive |
|  | \t Translation | Plans | Unrealized | Unrealized | Income |
| (Millions) | \t Adjustment | Adjustment | Gain\t(Loss) | Gain\t(Loss) | (Loss) |
| Balance\tat\tDecember\t31,\t2012,\tnet\tof\ttax: | \t$230 | \t$(4,955)\t$ | (2)\t$ | (23)\t$ | (4,750) |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |  |  |
| Amounts\tbefore\treclassifications | (462) | 1,361 | \t— | (98) | 801 |
| Amounts\treclassified\tout | \t— | 569 | \t— | 122 | 691 |
| Total\tother\tcomprehensive\tincome\t(loss),\tbefore\ttax | (462) | 1,930 | \t— | 24 | 1,492 |
| Tax\teffect | 44 | (690) | \t— | (9) | (655) |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (418) | 1,240 | \t— | 15 | 837 |
| Balance\tat\tDecember\t31,\t2013,\tnet\tof\ttax: | \t$(188)\t$ | (3,715)\t$ | (2)\t$ | (8)\t$ | (3,913) |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |  |  |
| Amounts\tbefore\treclassifications | (856) | (2,638) | 2 | 171 | (3,321) |
| Amounts\treclassified\tout | \t— | 360 | 1 | (4) | 357 |
| Total\tother\tcomprehensive\tincome\t(loss),\tbefore\ttax | (856) | (2,278) | 3 | 167 | (2,964) |
| Tax\teffect | (92) | 716 | (1) | (60) | 563 |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (948) | (1,562) | 2 | 107 | (2,401) |
| Impact\tfrom\tpurchase\tof\tsubsidiary\tshares | 41 | (16) | \t— | \t— | 25 |
| Balance\tat\tDecember\t31,\t2014,\tnet\tof\ttax | \t$(1,095)\t$ | (5,293)\t$ | \t— \t$ | 99 \t$ | (6,289) |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |  |  |
| Amounts\tbefore\treclassifications | (447) | 367 | \t— | 212 | 132 |
| Amounts\treclassified\tout | \t— | 537 | \t— | (174) | 363 |
| Total\tother\tcomprehensive\tincome\t(loss),\tbefore\ttax | (447) | 904 | \t— | 38 | 495 |
| Tax\teffect | (137) | (415) | \t— | (13) | (565) |
| Total\tother\tcomprehensive\tincome\t(loss),\tnet\tof\ttax | (584) | 489 | \t— | 25 | (70) |
| Balance\tat\tDecember\t31,\t2015,\tnet\tof\ttax: | \t$(1,679)\t$ | (4,804)\t$ | \t— \t$ | 124 | \t$(6,359) |

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.

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

|  |  | Amounts	Reclassified	from |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Accumulated\tOther\tComprehensive\tIncome | Accumulated\tOther\tComprehensive\tIncome | Accumulated\tOther\tComprehensive\tIncome |  |
| (Millions)\nDetails\tabout\tAccumulated\tOther\nComprehensive\tIncome\tComponents | Year\tended\nDecember\t31,\n2015 | Year\tended\nDecember\t31,\n2014 | Year\tended\nDecember\t31,\n2013 | Location\ton\tIncome\nStatement |
| Gains\t(losses)\tassociated\twith,\tdefined\tbenefit\tpension\tand |  |  |  |  |
| postretirement\tplans\tamortization |  |  |  |  |
| Transition\tasset | $1 | $1 | $1 | See\tNote\t11 |
| Prior\tservice\tbenefit | 79 | 59 | 77 | See\tNote\t11 |
| Net\tactuarial\tloss | (626) | (420) | (647) | See\tNote\t11 |
| Curtailments/Settlements | 9 | \t— | \t— | See\tNote\t11 |
| Total\tbefore\ttax | (537) | (360) | (569) |  |
| Tax\teffect | 176 | 122 | 197 | Provision\tfor\tincome\ttaxes |
| Net\tof\ttax | $(361) | $(238) | $(372) |  |
| Debt\tand\tequity\tsecurity\tgains\t(losses)\nSales\tor\timpairments\tof\tsecurities | $\t— | $(1) | $\t— | Selling,\tgeneral\tand\nadministrative\texpenses |
| Total\tbefore\ttax | \t— | (1) | \t— |  |
| Tax\teffect | \t— | \t— | \t— | Provision\tfor\tincome\ttaxes |
| Net\tof\ttax | $\t— | $(1) | $\t— |  |
| Cash\tflow\thedging\tinstruments\tgains\t(losses)\nForeign\tcurrency\tforward/option\tcontracts | $178 | $3 | $(11) | Cost\tof\tsales |
| Foreign\tcurrency\tforward\tcontracts | \t— | \t— | (108) | Interest\texpense |
| Commodity\tprice\tswap\tcontracts | (2) | 2 | (2) | Cost\tof\tsales |
| Interest\trate\tswap\tcontracts | (2) | (1) | (1) | Interest\texpense |
| Total\tbefore\ttax | 174 | 4 | (122) |  |
| Tax\teffect | (63) | (1) | 45 | Provision\tfor\tincome\ttaxes |
| Net\tof\ttax | $111 | $3 | $(77) |  |
| Total\treclassifications\tfor\tthe\tperiod,\tnet\tof\ttax | $(250) | $(236) | $(449) |  |

# Purchase	and	Sale	of	Subsidiary	Shares

On	September	1,	2014,	3M	(via	Sumitomo	3M	Limited)	purchased	Sumitomo	Electric	Industries,	Ltd.'s	25	percent	interest	in	3M's consolidated	Sumitomo	3M	Limited	subsidiary	for	90	billion	Japanese	Yen.	Upon	completion	of	the	transaction,	3M	owned	100 percent	of	Sumitomo	3M	Limited.	This	transaction	was	recorded	as	a	financing	activity	(Purchase	of	noncontrolling	interest)	in	the statement	of	cash	flows.

In	April	2014,	3M	purchased	the	remaining	noncontrolling	interest	in	a	consolidated	3M	subsidiary	for	an	immaterial	amount,	which was	classified	as	a	financing	activity	(Purchase	of	noncontrolling	interest)	in	the	consolidated	statement	of	cash	flows.

The	following	table	summarizes	the	effects	of	these	2014	transactions	on	equity	attributable	to	3M	Company	shareholders:

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

sale	resulted	in	an	increase	in	3M	Company	shareholder's	equity	of	$7	million	and	an	increase	in	noncontrolling	interest	of	$1	million.

# NOTE	7.		Supplemental	Cash	Flow	Information

| (Millions) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Cash\tincome\ttax\tpayments,\tnet\tof\trefunds | $2,331 | $1,968 | $1,803 |
| Cash\tinterest\tpayments | 134 | 178 | 169 |
| Capitalized\tinterest | 13 | 15 | 21 |

Cash	interest	payments	include	interest	paid	on	debt	and	capital	lease	balances,	including	net	interest	payments/receipts	related	to accreted	debt	discounts/premiums,	payment	of	debt	issue	costs,	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	fourth	quarter	of	2014,	3M	sold	and	leased-back,	under	a	capital	lease,	certain	recently	constructed	machinery	and equipment	in	return	for	a	municipal	bond	with	the	City	of	Nevada,	Missouri	valued	at	approximately	$15	million	as	of	the transaction	date.

· 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 year	ended	December	31,	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	6,	in	the	fourth	quarter	of	2014,	3M's	Board	of	Directors	declared	a	first-quarter	2015	dividend	of $1.025	per	share	(paid	in	March	2015),	which	reduced	3M's	stockholders	equity	and	increased	other	current	liabilities	as	of December	2014	by	$648	million.	In	the	fourth	quarter	of	2013,	3M's	Board	of	Directors	declared	a	first-quarter	2014	dividend	of $0.855	per	share	(paid	in	March	2014).	This	reduced	3M's	stockholders	equity	and	increased	other	current	liabilities	as	of December	31,	2013	by	$567	million.

# NOTE	8.		Income	Taxes

# Income	Before	Income	Taxes

| (Millions) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| United\tStates | $4,399 | $3,815 | $3,194 |
| International | 2,424 | 3,211 | 3,368 |
| Total | $6,823 | $7,026 | $6,562 |

| (Millions) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Currently\tpayable |  |  |  |
| Federal | $1,338 | $1,103 | $948 |
| State | 101 | 108 | 91 |
| International | 566 | 1,008 | 901 |
| Deferred |  |  |  |
| Federal | (55) | (171) | (123) |
| State | 6 | (9) | (2) |
| International | 26 | (11) | 26 |
| Total | $1,982 | $2,028 | $1,841 |

# Components	of	Deferred	Tax	Assets	and	Liabilities

| (Millions) | 2015 | 2014 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Accruals\tnot\tcurrently\tdeductible |  |  |
| Employee\tbenefit\tcosts | $175 | $148 |
| Product\tand\tother\tclaims | 146 | 152 |
| Miscellaneous\taccruals | 114 | 137 |
| Pension\tcosts | 1,120 | 1,312 |
| Stock-based\tcompensation | 305 | 290 |
| Net\toperating/capital\tloss\tcarryforwards | 109 | 175 |
| Foreign\ttax\tcredits | 25 | 360 |
| Inventory | 46 | 52 |
| Other | \t— | 30 |
| Gross\tdeferred\ttax\tassets | 2,040 | 2,656 |
| Valuation\tallowance | (31) | (22) |
| Total\tdeferred\ttax\tassets | $2,009 | $2,634 |
| Deferred\ttax\tliabilities: |  |  |
| Product\tand\tother\tinsurance\treceivables | $(28) | $(31) |
| Accelerated\tdepreciation | (736) | (804) |
| Intangible\tamortization | (1,017) | (719) |
| Currency\ttranslation | (199) | (91) |
| Other | (70) | \t— |
| Total\tdeferred\ttax\tliabilities | $(2,050) | $(1,645) |
| Net\tdeferred\ttax\tassets\t(liabilities) | $(41) | $989 |

The	net	deferred	tax	assets	are	included	as	components	of	Other	Assets	and	Other	Liabilities	within	the	Consolidated	Balance	Sheet. See	Note	5	"Supplemental	Balance	Sheet	Information"	for	further	details.

As	of	December	31,	2015,	the	Company	had	tax	effected	operating	losses,	capital	losses,	and	tax	credit	carryovers	for	federal (approximately	$31	million),	state	(approximately	$2	million),	and	international	(approximately	$76	million),	with	all	amounts	before valuation	allowances.	The	federal	tax	attribute	carryovers	will	expire	after	15	to	20	years,	the	state	after	five	to	10	years,	and	the majority	of	international	after	four	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,	2015,	the	Company	has	provided	$31	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.

# Reconciliation	of	Effective	Income	Tax	Rate

|  | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Statutory\tU.S.\ttax\trate | 35.0 % | 35.0 % | 35.0 % |
| State\tincome\ttaxes\t-\tnet\tof\tfederal\tbenefit | 1.1 | 0.9 | 0.9 |
| International\tincome\ttaxes\t-\tnet | (3.8) | (5.8) | (6.3) |
| U.S.\tresearch\tand\tdevelopment\tcredit | (0.5) | (0.4) | (0.7) |
| Reserves\tfor\ttax\tcontingencies | (1.0) | 0.6 | 1.2 |
| Domestic\tManufacturer's\tdeduction | (1.8) | (1.3) | (1.6) |
| All\tother\t-\tnet | 0.1 | (0.1) | (0.4) |
| Effective\tworldwide\ttax\trate | 29.1 % | 28.9 % | 28.1 % |

The	effective	tax	rate	for	2015	was	29.1	percent,	compared	to	28.9	percent	in	2014,	an	increase	of	0.2	percentage	points,	impacted	by several	factors.	Factors	which	increased	the	Company's	effective	tax	rate	included	international	taxes,	which	were	impacted	by changes	in	foreign	currency	rates	and	changes	to	the	geographic	mix	of	income	before	taxes,	and	other	items.	Combined,	these	factors increased	the	Company's	effective	tax	rate	by	2.4	percentage	points.	This	increase	was	partially	offset	by	a	2.2	percentage	point decrease,	which	related	to	the	remeasurements	of	3M's	uncertain	tax	positions,	including	the	restoration	of	tax	basis	on	certain	assets for	which	depreciation	deductions	were	previously	limited,	and	increases	in	the	domestic	manufacturer's	deduction	and	U.S.	research and	development	credit	benefits.

The	effective	tax	rate	for	2014	was	28.9	percent,	compared	to	28.1	percent	in	2013,	an	increase	of	0.8	percentage	points,	impacted	by many	factors.	Factors	which	increased	the	Company's	effective	tax	rate	included	a	one-time	international	tax	impact	related	to	the establishment	of	the	supply	chain	center	of	expertise	in	Europe,	decreased	U.S.	research	and	development	credit	in	2014	compared	to 2013	due	to	two	years	inclusion	as	a	result	of	the	reinstatement	in	2013,	decreased	domestic	manufacturer's	deduction,	and	other items.	Combined,	these	factors	increased	the	Company's	effective	tax	rate	by	1.6	percentage	points.	This	increase	was	partially	offset by	a	0.8	percentage	point	decrease,	which	related	to	both	lower	3M	income	tax	reserves	for	2014	when	compared	to	2013	and international	taxes	as	a	result	of	changes	to	the	geographic	mix	of	income	before	taxes.

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	2005.

The	IRS	has	completed	its	field	examination	of	the	Company's	U.S.	federal	income	tax	returns	for	the	years	2005	through	2013.	The Company	protested	certain	IRS	positions	within	these	tax	years	and	entered	into	the	administrative	appeals	process	with	the	IRS.	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	2014	and	2015.	It	is	anticipated	that	the	IRS	will	complete	its	examination	of	the	Company	for	2014 by	the	end	of	the	first	quarter	of	2016	and	for	2015	by	the	end	of	the	first	quarter	of	2017.	As	of	December	31,	2015,	the	IRS	has	not proposed	any	significant	adjustments	to	the	Company's	tax	positions	for	which	the	Company	is	not	adequately	reserved.

Payments	relating	to	other	proposed	assessments	arising	from	the	2005	through	2015	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	audit	activity	in	several	U.S. state	and	foreign	jurisdictions.

3M	anticipates	changes	to	the	Company's	uncertain	tax	positions	due	to	the	closing	and	resolution	of	audit	issues	for	various	audit years	mentioned	above	and	closure	of	statutes.	The	Company	is	not	currently	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) | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Gross\tUTB\tBalance\tat\tJanuary\t1 | $583 | $659 | $528 |
| Additions\tbased\ton\ttax\tpositions\trelated\tto\tthe\tcurrent\tyear | 77 | 201 | 97 |
| Additions\tfor\ttax\tpositions\tof\tprior\tyears | 140 | 30 | 158 |
| Reductions\tfor\ttax\tpositions\tof\tprior\tyears | (399) | (74) | (29) |
| Settlements | (4) | (154) | (17) |
| Reductions\tdue\tto\tlapse\tof\tapplicable\tstatute\tof\tlimitations | (16) | (79) | (78) |
| Gross\tUTB\tBalance\tat\tDecember\t31 | $381 | $583 | $659 |
| Net\tUTB\timpacting\tthe\teffective\ttax\trate\tat\tDecember\t31 | $369 | $265 | $262 |

The	total	amount	of	UTB,	if	recognized,	would	affect	the	effective	tax	rate	by	$369	million	as	of	December	31,	2015,	$265	million	as of	December	31,	2014,	and	$262	million	as	of	December	31,	2013.	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	Assets,	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	$2	million	of	expense,	$14	million	of	benefit,	and	$22	million of	expense	in	2015,	2014,	and	2013,	respectively.	The	amount	of	interest	and	penalties	recognized	may	be	an	expense	or	benefit	due to	new	or	remeasured	unrecognized	tax	benefit	accruals.	At	December	31,	2015,	and	December	31,	2014,	accrued	interest	and penalties	in	the	consolidated	balance	sheet	on	a	gross	basis	were	$45	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	certain	manufacturing	activities	in the	following	countries	is	subject	to	reduced	tax	rates	or,	in	some	cases,	is	exempt	from	tax	for	years	through	the	following:	Taiwan (2015),	China	(2016),	Korea	(2018),	Brazil	(2023),	Switzerland	(2024),	and	Singapore	(2025).	The	income	tax	benefits	attributable	to the	tax	status	of	these	subsidiaries	are	estimated	to	be	$114	million	(18	cents	per	diluted	share)	in	2015,	$99	million	(15	cents	per diluted	share)	in	2014,	and	$87	million	(13	cents	per	diluted	share)	in	2013.

The	Company	has	not	provided	deferred	taxes	on	unremitted	earnings	attributable	to	international	companies	that	have	been considered	to	be	reinvested	indefinitely,	with	the	exception	of	an	acquired	entity.	These	earnings	relate	to	ongoing	operations	and	were approximately	$12	billion	as	of	December	31,	2015.	Because	of	the	availability	of	U.S.	foreign	tax	credits,	the	multiple	avenues	in which	to	repatriate	the	earnings	to	minimize	tax	cost,	and	because	a	large	portion	of	these	earnings	are	not	liquid,	it	is	not	practical	to determine	the	income	tax	liability	that	would	be	payable	if	such	earnings	were	not	reinvested	indefinitely.

# NOTE	9.		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>2015 | December	31,<br>2014 |
| :--- | :--- | :--- |
| U.S.\tgovernment\tagency\tsecurities | $\t— | $108 |
| Foreign\tgovernment\tagency\tsecurities | 10 | 95 |
| Corporate\tdebt\tsecurities | 10 | 619 |
| Commercial\tpaper | 12 | \t— |
| Certificates\tof\tdeposit/time\tdeposits | 26 | 41 |
| U.S.\ttreasury\tsecurities | \t— | 38 |
| U.S.\tmunicipal\tsecurities | 3 | \t— |
| Asset-backed\tsecurities: |  |  |
| Automobile\tloan\trelated | 26 | 282 |
| Credit\tcard\trelated | 10 | 162 |
| Equipment\tlease\trelated | 2 | 48 |
| Other | 19 | 46 |
| Asset-backed\tsecurities\ttotal | 57 | 538 |
| Current\tmarketable\tsecurities | $118 | $1,439 |
| U.S.\tmunicipal\tsecurities | $9 | $15 |
| Non-current\tmarketable\tsecurities | $9 | $15 |
| Total\tmarketable\tsecurities | $127 | $1,454 |

Classification	of	marketable	securities	as	current	or	non-current	is	based	on	the	nature	of	the	securities	and	availability	for	use	in current	operations.	At	December	31,	2015	and	2014,	gross	unrealized	gains	and/or	losses	(pre-tax)	were	not	material.	Refer	to	Note	6 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,	2015,	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	$127	million	as	of	December	31,	2015.	Within	this	portfolio,	current	asset- backed	securities	(estimated	fair	value	of	$57	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 Investors	Service	or	AA	by	Standard	&	Poor's	or	Fitch	Ratings	or	DBRS.	Asset-backed	securities	must	be	rated	by	at	least	two	of	the aforementioned	rating	agencies,	one	of	which	must	be	Moody's	Investors	Service	or	Standard	&	Poor's.	At	December	31,	2015,	all asset-backed	security	investments	were	in	compliance	with	this	policy.	Approximately	75.8	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.	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.	3M	does	not	currently	expect	risk	related	to	its	holding	in	asset-backed securities	to	materially	impact	its	financial	condition	or	liquidity.

# NOTE	10.		Long-Term	Debt	and	Short-Term	Borrowings

The	following	debt	tables	reflect	effective	interest	rates,	which	include	the	impact	of	interest	rate	swaps,	as	of	December	31,	2015.	If the	debt	was	issued	on	a	combined	basis,	the	debt	has	been	separated	to	show	the	impact	of	the	fixed	versus	floating	effective	interest rates.	Carrying	value	includes	the	impact	of	debt	issuance	costs	and	fair	value	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/\t2015\tPrincipal\tAmount | Floating | Rate | Date | 2015 | 2014 |
| Medium-term\tnote\t($1\tbillion) | USD\tFixed | 1.62 % | 2016 | $999 | $996 |
| Medium-term\tnote\t($650\tmillion) | USD\tFixed | 1.10 % | 2017 | 648 | 647 |
| Medium-term\tnote\t(500\tmillion\tEuros) | Euro\tFloating | 0.16 % | 2018 | 545 | 606 |
| Medium-term\tnote\t($450\tmillion) | USD\tFloating | 0.44 % | 2018 | 448 | \t— |
| Medium-term\tnote\t($600\tmillion) | USD\tFloating | 0.55 % | 2019 | 597 | 592 |
| Medium-term\tnote\t($25\tmillion) | USD\tFixed | 1.74 % | 2019 | 25 | 25 |
| Medium-term\tnote\t(650\tmillion\tEuros) | Euro\tFloating | 0.15 % | 2020 | 708 | \t— |
| Medium-term\tnote\t($300\tmillion) | USD\tFloating | 0.61 % | 2020 | 297 | \t— |
| Medium-term\tnote\t($200\tmillion) | USD\tFixed | 2.12 % | 2020 | 198 | \t— |
| Eurobond\t(300\tmillion\tEuros) | Euro\tFloating | 0.21 % | 2021 | 348 | 389 |
| Eurobond\t(300\tmillion\tEuros) | Euro\tFixed | 1.97 % | 2021 | 326 | 361 |
| Medium-term\tnote\t($600\tmillion) | USD\tFixed | 2.17 % | 2022 | 592 | 591 |
| Medium-term\tnote\t(600\tmillion\tEuros) | Euro\tFixed | 1.14 % | 2023 | 644 | \t— |
| Medium-term\tnote\t($550\tmillion) | USD\tFixed | 3.04 % | 2025 | 545 | \t— |
| Medium-term\tnote\t(750\tmillion\tEuros) | Euro\tFixed | 1.71 % | 2026 | 801 | 892 |
| 30-year\tdebenture\t($330\tmillion) | USD\tFixed | 6.01 % | 2028 | 343 | 344 |
| Medium-term\tnote\t(500\tmillion\tEuros) | Euro\tFixed | 1.90 % | 2030 | 533 | \t— |
| 30-year\tbond\t($750\tmillion) | USD\tFixed | 5.73 % | 2037 | 743 | 742 |
| Floating\trate\tnote\t($96\tmillion) | USD\tFloating | 0.22 % | 2041 | 96 | 96 |
| Medium-term\tnote\t($325\tmillion) | USD\tFixed | 4.05 % | 2044 | 313 | 312 |
| Floating\trate\tnote\t($55\tmillion) | USD\tFloating | 0.16 % | 2044 | 55 | 55 |
| Other\tborrowings | Various | 0.22 % | 2016-2040 | 74 | 112 |
| Total\tlong-term\tdebt |  |  |  | $9,878 | $6,760 |
| Less:\tcurrent\tportion\tof\tlong-term\tdebt |  |  |  | 1,125 | 55 |
| Long-term\tdebt\t(excluding\tcurrent\tportion) |  |  |  | $8,753 | $6,705 |

# Post-Swap	Borrowing	(Long-Term	Debt,	Including	Current	Portion)

In	2015,	other	short-term	borrowings	primarily	consisted	of	bank	borrowings	by	international	subsidiaries,	primarily	Japan	and Korea.

# Maturities	of	Long-term	Debt

Maturities	of	long-term	debt	for	the	five	years	subsequent	of	December	31,	2015	are	as	follows	(in	millions):

| 2016 | 2017 | 2018 | 2019 | 2020 | After<br>2020 | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| $\t\t1,125 | $744 | $993 | $622 | $1,203 | $5,191 | $9,878 |

Long-term	debt	payments	due	in	2016	and	2017	include	floating	rate	notes	totaling	$126	million	(classified	as	current	portion	of	long- term	debt),	and	$96	million	(included	as	a	separate	floating	rate	note	in	the	long-term	debt	table),	respectively,	as	a	result	of	put provisions	associated	with	these	debt	instruments.

# Credit	Facilities

In	August	2014,	3M	amended	and	extended	its	existing	$1.5	billion	five-year	revolving	credit	facility	to	a	$2.25	billion	five-year agreement	expiring	in	August	2019.	This	credit	agreement	includes	a	provision	under	which	3M	may	request	an	increase	of	up	to $2.25	billion,	bringing	the	total	facility	up	to	$4.5	billion	(at	the	lender's	discretion).	This	facility	was	undrawn	at	December	31,	2015. Under	the	$2.25	billion	credit	agreement,	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,	2015,	this	ratio was	approximately	56	to	1.	Debt	covenants	do	not	restrict	the	payment	of	dividends.

# Other	Credit	Facilities

Apart	from	the	committed	revolving	facility,	an	additional	$241	million	in	stand-alone	letters	of	credit	and	$18	million	in	bank guarantees	were	also	issued	and	outstanding	at	December	31,	2015.	These	lines	of	credit	are	utilized	in	connection	with	normal business	activities.

# Long-Term	Debt	Issuances

The	principal	amounts,	interest	rates	and	maturity	dates	of	individual	long-term	debt	issuances	can	be	found	in	the	long-term	debt table	found	at	the	beginning	of	this	note.

In	May	2015,	3M	issued	1.750	billion	Euros	aggregate	principal	amount	of	medium	term	notes.	In	August	2015,	3M	issued	$1.500 billion	aggregate	principal	amount	of	medium-term	notes.	Upon	debt	issuance,	the	Company	entered	into	two	interest	rate	swaps	as fair	value	hedges	of	a	portion	of	the	fixed	interest	rate	medium-term	note	obligation.	The	first	converted	a	$450	million	three-year fixed	rate	note,	and	the	second	converted	$300	million	of	a	five-year	fixed	rate	note	included	in	this	issuance	to	an	interest	rate	based on	a	floating	three-month	LIBOR	index.

In	June	2014,	3M	issued	$950	million	aggregate	principal	amount	of	medium-term	notes.	Upon	debt	issuance,	the	Company	entered into	an	interest	rate	swap	to	convert	$600	million	of	a	$625	million	note	included	in	this	issuance	to	an	interest	rate	based	on	a	floating three-month	LIBOR	index	as	a	fair	value	hedge	of	a	portion	of	the	fixed	interest	rate	medium-term	note	obligation.	In	November 2014,	the	Company	issued	1.250	billion	Euros	aggregate	principal	amount	of	medium-term	notes.

In	November	2013,	3M	issued	a	Eurobond	for	an	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.

# Long-Term	Debt	Maturities

In	July	2014,	3M	retired	at	maturity	1.025	billion	Euros	of	seven-year	5.0%	fixed	rate	Eurobonds.	In	December	2012,	3M	entered	into a	three-year	66	million	British	Pound	(approximately	$106	million	based	on	agreement	date	exchange	rates)	committed	credit	facility agreement	with	JP	Morgan	Chase	Bank,	which	was	fully	drawn	as	of	December	31,	2012.	3M	repaid	the	balance	in	2014.

In	August	2013,	3M	repaid	$850	million	(principal	amount)	of	medium-term	notes.

# Floating	Rate	Notes

At	various	times,	3M	has	issued	floating	rate	notes	containing	put	provisions.	3M	would	be	required	to	repurchase	these	securities	at various	prices	ranging	from	99	percent	to	100	percent	of	par	value	according	to	the	reduction	schedules	for	each	security.	In December	2004,	3M	issued	a	forty-year	$60	million	floating	rate	note,	with	a	rate	based	on	a	floating	LIBOR	index.	Under	the	terms of	this	floating	rate	note	due	in	2044,	holders	have	an	annual	put	feature	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	from	the	date	of	issuance	and	each	third	anniversary	thereafter	until	final	maturity	at	prices	ranging	from	99 percent	to	100	percent	of	par	value.	In	2008	through	2015,	3M	was	required	to	repurchase	an	immaterial	amount	of	principal	on	the aforementioned	floating	rate	notes.

# NOTE	11.		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	28	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.	For	eligible	employees	hired	prior	to	January	1,	2009,	employee	401(k)	contributions	of	up to	6%	of	eligible	compensation	were	matched	in	cash	at	rates	of	60%	or	75%,	depending	on	the	plan	in	which	the	employee participates.	Employees	hired	on	or	after	January	1,	2009,	received	a	cash	match	of	100%	for	employee	401(k)	contributions	of	up	to 6%	of	eligible	compensation	and	also	received	an	employer	retirement	income	account	cash	contribution	of	3%	of	the	participant's total	eligible	compensation.	Beginning	on	January	1,	2016,	for	U.S.	employees,	the	Company	reduced	its	match	on	employee 401(k)	contributions.	For	eligible	employees	hired	prior	to	January	1,	2009,	employee	401(k)	contributions	of	up	to	5%	of	eligible compensation	will	be	matched	in	cash	at	rates	of	45%	or	60%,	depending	on	the	plan	in	which	the	employee	participates.	Employees hired	on	or	after	January	1,	2009,	will	receive	a	cash	match	of	100%	for	employee	401(k)	contributions	of	up	to	5%	of	eligible compensation	and	will	also	continue	to	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.	defined	contribution	plans	were	$165	million,	$153	million	and	$136	million	for	2015,	2014	and 2013,	respectively.	3M	subsidiaries	in	various	international	countries	also	participate	in	defined	contribution	plans.	Employer contributions	to	the	international	defined	contribution	plans	were	$77	million,	$75	million	and	$71	million	for	2015,	2014	and	2013, respectively.

The	Company	has	made	deposits	for	its	defined	benefit	plans	with	independent	trustees.	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.

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	Pension	Protection	Act	funding	requirements.

As	a	result	of	changes	made	to	its	U.S.	postretirement	health	care	benefit	plans	in	2010,	the	Company	has	transitioned	all	current	and future	retirees	to	a	savings	account	benefits-based	plan.	These	changes	became	effective	beginning	January	1,	2013,	for	all	Medicare eligible	retirees	and	their	Medicare	eligible	dependents	and	became	effective	beginning	January	1,	2016,	for	all	non-Medicare	eligible retirees	and	their	eligible	dependents.	In	August	2015,	3M	modified	the	3M	Retiree	Welfare	Benefit	Plan	postretirement	medical benefit	reducing	the	future	benefit	for	participants	not	retired	as	of	January	1,	2016.	For	participants	retiring	after	January	1,	2016,	the Retiree	Medical	Savings	Account	(RMSA)	is	no	longer	credited	with	interest	and	the	indexation	on	both	the	RMSA	and	the	Medicare Health	Reimbursement	Arrangement	is	reduced	from	3	percent	to	1.5	percent	per	year	(for	those	employees	who	are	eligible	for	these accounts).	Also	effective	January	1,	2016,	3M	no	longer	offers	3M	Retiree	Health	Care	Accounts	to	new	hires.	Due	to	these	changes the	plan	was	re-measured	in	the	third	quarter	of	2015,	resulting	in	a	decrease	to	the	projected	benefit	obligation	liability	of approximately	$233	million,	and	a	related	increase	to	shareholders'	equity,	specifically	accumulated	other	comprehensive	income.

In	the	third	quarter	of	2014,	former	U.S.	employees	who	have	a	pension	benefit	for	which	they	have	not	begun	receiving	payment (term	vested)	were	offered	a	lump	sum	payout	of	their	pension	benefit.	As	a	result	of	this	action,	the	projected	benefit	obligation (PBO)	liability	was	reduced	in	the	fourth	quarter	of	2014	by	approximately	$270	million,	with	the	actual	cash	payout	of	approximately the	same	amount	paid	from	the	plan's	assets	in	the	fourth	quarter	of	2014.	The	PBO	liability	reduction	was	34%	of	the	term	vested eligible	PBO	and	a	2%	reduction	in	the	overall	U.S.	pension	PBO	liability	based	on	the	December	31,	2013,	valuation.	There	was	no pension	expense	impact	as	a	result	of	this	action	on	3M's	consolidated	statement	of	income	in	2014.

In	the	fourth	quarter	of	2014,	3M's	Board	of	Directors	approved	an	amendment	of	the	U.S.	defined	benefit	pension	plan	to	include	a lump	sum	payment	option	for	employees	that	have	vested	retirement	benefits	who	commence	their	pension	January	1,	2015,	or	later. This	option	is	also	available	to	vested	employees	who	leave	3M	before	becoming	eligible	to	retire	at	the	time	of	termination.	This change	reduced	3M's	year-end	2014	U.S.	pension	PBO	liability	by	approximately	$266	million.

As	of	December	31,	2014,	the	Company	converted	to	the	"RP	2014	Mortality	Tables"	and	updated	the	mortality	improvement	scale	it used	for	calculating	the	year-end	2014	U.S.	defined	benefit	pension	annuitant	and	postretirement	obligations	and	2015	expense.	The impact	of	this	change	increased	the	year-end	2014	U.S.	pension	PBO	by	approximately	$820	million	and	the	U.S.	accumulated postretirement	benefit	obligation	by	approximately	$100	million.

In	March	2015,	3M	Japan	modified	the	Japan	Limited	Defined	Benefit	Corporate	Pension	Plan	(DBCPP).	Beginning	July	1,	2015, eligible	employees	receive	a	company	provided	contribution	match	of	6.12%	of	their	eligible	salary	to	their	defined	contribution	plan. Employees	no	longer	earn	additional	service	towards	their	defined	benefit	pension	plans	after	July	1,	2015,	except	for	eligible	salaries above	the	statutory	defined	contribution	limits.	As	a	result	of	this	plan	modification,	the	Company	re-measured	the	DBCPP,	which resulted	in	a	$17	million	pre-tax	curtailment	gain	for	the	year	ending	December	31,	2015.	In	March	2015,	3M	also	received	a favorable	Internal	Revenue	Service	tax	determination	letter	to	terminate	a	frozen	defined	benefit	pension	plan	of	one	of	3M's	acquired subsidiaries.	By	the	end	of	2015,	this	plan	made	final	distributions	of	$16	million	to	participants.	The	Company	also	had	other settlements,	curtailments,	special	termination	benefits	and	other	items	in	2015	aggregating	to	the	amounts	indicated	in	these components	in	the	applicable	tables	that	follow.

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.	In	the	first	quarter	of	2014,	3M	and	certain	3M	benefit	plans	filed	a	lawsuit	in	the	U.S.	District	Court for	the	District	of	Minnesota	against	five	insurers	seeking	insurance	coverage	for	the	WG	Trading	Company	claim.	In	September 2015,	the	court	ruled	in	favor	of	the	defendant	insurance	companies	on	a	motion	for	summary	judgment	and	dismissed	the	lawsuit.	In October	2015,	3M	and	the	3M	benefit	plans	filed	a	notice	of	appeal	to	the	United	States	Court	of	Appeals	for	the	Eighth	Circuit.	As	of the	2015	measurement	date,	these	holdings	represented	less	than	one	half	of	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	$35	million	as	of	December	31,	2015	and	2014.

|  | Qualified	and	Non-qualified | Qualified	and	Non-qualified | Qualified	and	Non-qualified |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Pension\tBenefits |  |  | Postretirement | Postretirement |
|  | United\tStates |  | International | International | Benefits |  |
| (Millions) | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 |
| Change\tin\tbenefit\tobligation |  |  |  |  |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $16,452 | $13,967 | $6,979 | $6,346 | $2,462 | $2,017 |
| Acquisitions/Transfers\tin | \t— | \t— | 94 | \t— | \t— | \t— |
| Service\tcost | 293 | 241 | 154 | 141 | 75 | 65 |
| Interest\tcost | 655 | 676 | 206 | 252 | 98 | 97 |
| Participant\tcontributions | \t— | \t— | 9 | 10 | 14 | 18 |
| Foreign\texchange\trate\tchanges | \t— | \t— | (589) | (663) | (22) | (11) |
| Plan\tamendments | \t— | (266) | (6) | 3 | (211) | \t— |
| Actuarial\t(gain)\tloss | (657) | 2,874 | (274) | 1,128 | (80) | 415 |
| Medicare\tPart\tD\tReimbursement | \t— | \t— | \t— | \t— | 1 | 1 |
| Benefit\tpayments | (874) | (1,039) | (232) | (235) | (122) | (140) |
| Settlements,\tcurtailments,\tspecial\ttermination\tbenefits |  |  |  |  |  |  |
| and\tother | (13) | (1) | (19) | (3) | 1 | \t— |
| Benefit\tobligation\tat\tend\tof\tyear | $15,856 | $16,452 | $6,322 | $6,979 | $2,216 | $2,462 |
| Change\tin\tplan\tassets |  |  |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof\tyear | $14,643 | $13,889 | $5,957 | $5,758 | $1,436 | $1,405 |
| Acquisitions/Transfers\tin | \t— | \t— | 8 | \t— | \t— | \t— |
| Actual\treturn\ton\tplan\tassets | 100 | 1,749 | 287 | 813 | 36 | 148 |
| Company\tcontributions | 113 | 45 | 151 | 165 | 3 | 5 |
| Participant\tcontributions | \t— | \t— | 9 | 10 | 14 | 18 |
| Foreign\texchange\trate\tchanges | \t— | \t— | (498) | (554) | \t— | \t— |
| Benefit\tpayments | (874) | (1,039) | (232) | (235) | (122) | (140) |
| Settlements,\tcurtailments,\tspecial\ttermination\tbenefits |  |  |  |  |  |  |
| and\tother | (16) | (1) | (13) | \t— | \t— | \t— |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear | $13,966 | $14,643 | $5,669 | $5,957 | $1,367 | $1,436 |
| Funded\tstatus\tat\tend\tof\tyear | $(1,890) | $(1,809) | $(653) | $(1,022) | $(849) | $(1,026) |

|  | Qualified	and	Non-qualified | Qualified	and	Non-qualified | Qualified	and	Non-qualified |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Pension\tBenefits |  |  | Postretirement | Postretirement |
|  | United\tStates |  | International | International | Benefits |  |
| (Millions) | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 |
| Amounts\trecognized\tin\tthe\tConsolidated\tBalance\tSheet |  |  |  |  |  |  |
| as\tof\tDec.\t31, |  |  |  |  |  |  |
| Non-current\tassets | $3 | $3 | $185 | $43 | $\t— | $\t— |
| Accrued\tbenefit\tcost |  |  |  |  |  |  |
| Current\tliabilities | (47) | (46) | (10) | (10) | (3) | (4) |
| Non-current\tliabilities | (1,846) | (1,766) | (828) | (1,055) | (846) | (1,022) |
| Ending\tbalance | $(1,890) | $(1,809) | $(653) | $(1,022) | $(849) | $(1,026) |

|  | Qualified	and	Non-qualified | Qualified	and	Non-qualified | Qualified	and	Non-qualified |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Pension\tBenefits |  |  | Postretirement | Postretirement |
|  | United\tStates |  | International | International | Benefits |  |
| (Millions) | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 |
| Amounts\trecognized\tin\taccumulated\tother |  |  |  |  |  |  |
| comprehensive\tincome\tas\tof\tDec.\t31, |  |  |  |  |  |  |
| Net\ttransition\tobligation\t(asset) | $\t— | $\t— | $(2) | $(3) | $\t— | $\t— |
| Net\tactuarial\tloss\t(gain) | 5,366 | 5,462 | 1,610 | 2,200 | 815 | 914 |
| Prior\tservice\tcost\t(credit) | (227) | (251) | (68) | (93) | (270) | (102) |
| Ending\tbalance | $5,139 | $5,211 | $1,540 | $2,104 | $545 | $812 |

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	$14.834	billion	and	$15.335	billion	at	December	31,	2015	and	2014,	respectively.	The accumulated	benefit	obligation	of	the	international	pension	plans	was	$5.773	billion	and	$6.401	billion	at	December	31,	2015	and 2014,	respectively.

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

|  | Qualified	and	Non-qualified	Pension	Plans | Qualified	and	Non-qualified	Pension	Plans | Qualified	and	Non-qualified	Pension	Plans |  |
| :--- | :--- | :--- | :--- | :--- |
|  | United\tStates | United\tStates | International |  |
| (Millions) | 2015 | 2014 | 2015 | 2014 |
| Projected\tbenefit\tobligation | $15,856 | $16,435 | $2,382 | $2,588 |
| Accumulated\tbenefit\tobligation | 14,834 | 15,319 | 2,149 | 2,335 |
| Fair\tvalue\tof\tplan\tassets | 13,966 | 14,623 | 1,566 | 1,636 |

# 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:

|  |  | Qualified	and	Non-qualified | Qualified	and	Non-qualified | Qualified	and	Non-qualified |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Pension\tBenefits |  |  |  | Postretirement | Postretirement |  |
|  |  | United\tStates |  |  | International |  |  | Benefits |  |
| (Millions) | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 |
| Net\tperiodic\tbenefit\tcost\t(benefit) |  |  |  |  |  |  |  |  |  |
| Service\tcost | $293 | $241 | $258 | $154 | $141 | $147 | $75 | $65 | $80 |
| Interest\tcost | 655 | 676 | 598 | 206 | 252 | 238 | 98 | 97 | 88 |
| Expected\treturn\ton\tplan\tassets | (1,069) | (1,043) | (1,046) | (308) | (312) | (291) | (91) | (90) | (90) |
| Amortization\tof\ttransition\t(asset) |  |  |  |  |  |  |  |  |  |
| obligation | \t— | \t— | \t— | (1) | (1) | (1) | \t— | \t— | \t— |
| Amortization\tof\tprior\tservice\tcost\t(benefit) | (24) | 4 | 5 | (13) | (16) | (16) | (42) | (47) | (66) |
| Amortization\tof\tnet\tactuarial\t(gain)\tloss | 409 | 243 | 399 | 144 | 121 | 153 | 73 | 56 | 95 |
| Net\tperiodic\tbenefit\tcost\t(benefit) | $264 | $121 | $214 | $182 | $185 | $230 | $113 | $81 | $107 |
| Settlements,\tcurtailments,\tspecial |  |  |  |  |  |  |  |  |  |
| termination\tbenefits\tand\tother | 2 | \t— | \t— | (6) | 4 | 2 | 1 | \t— | \t— |
| Net\tperiodic\tbenefit\tcost\t(benefit)\tafter |  |  |  |  |  |  |  |  |  |
| settlements,\tcurtailments,\tspecial |  |  |  |  |  |  |  |  |  |
| termination\tbenefits\tand\tother | $266 | $121 | $214 | $176 | $189 | $232 | $114 | $81 | $107 |
| Other\tchanges\tin\tplan\tassets\tand\tbenefit |  |  |  |  |  |  |  |  |  |
| obligations\trecognized\tin\tother |  |  |  |  |  |  |  |  |  |
| comprehensive\t(income)\tloss |  |  |  |  |  |  |  |  |  |
| Amortization\tof\ttransition\t(asset) |  |  |  |  |  |  |  |  |  |
| obligation | \t— | \t— | \t— | 1 | 1 | 1 | \t— | \t— | \t— |
| Prior\tservice\tcost\t(benefit) | \t— | (266) | \t— | 10 | 3 | 3 | (212) | \t— | (20) |
| Amortization\tof\tprior\tservice\tcost\t(benefit) | 24 | (4) | (5) | 13 | 16 | 16 | 42 | 47 | 66 |
| Net\tactuarial\t(gain)\tloss | 312 | 2,167 | (743) | (270) | 592 | (294) | (23) | 358 | (313) |
| Amortization\tof\tnet\tactuarial\t(gain)\tloss | (409) | (243) | (399) | (144) | (121) | (153) | (73) | (56) | (95) |
| Foreign\tcurrency | \t— | \t— | \t— | (174) | (215) | (47) | (1) | (1) | (2) |
| Total\trecognized\tin\tother\tcomprehensive |  |  |  |  |  |  |  |  |  |
| (income)\tloss | $(73) | $1,654 | $(1,147) | $(564) | $276 | $(474) | $(267) | $348 | $(364) |
| Total\trecognized\tin\tnet\tperiodic\tbenefit\tcost |  |  |  |  |  |  |  |  |  |
| (benefit)\tand\tother\tcomprehensive\t(income) |  |  |  |  |  |  |  |  |  |
| loss | $193 | $1,775 | $(933) | $(388) | $465 | $(242) | $(153) | $429 | $(257) |

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

|  | Qualified	and	Non-qualified | Qualified	and	Non-qualified |  |
| :--- | :--- | :--- | :--- |
|  | Pension\tBenefits | Pension\tBenefits | Postretirement |
| (Millions) | United\tStates | International | Benefits |
| Amortization\tof\ttransition\t(asset)\tobligation | $— | $(1) | $— |
| Amortization\tof\tprior\tservice\tcost\t(benefit) | (24) | (13) | (55) |
| Amortization\tof\tnet\tactuarial\t(gain)\tloss | 354 | 90 | 62 |
| Total\tamortization\texpected\tover\tthe\tnext\tfiscal\tyear | $330 | $76 | $7 |

The	Company	primarily	amortizes	amounts	recognized	as	prior	service	cost	(benefit)	over	the	average	future	service	period	of	active employees	at	the	date	of	the	amendment.

# Weighted-average	assumptions	used	to	determine	benefit	obligations	as	of	December	31

|  |  | Qualified	and	Non-qualified	Pension	Benefits | Qualified	and	Non-qualified	Pension	Benefits | Qualified	and	Non-qualified	Pension	Benefits | Qualified	and	Non-qualified	Pension	Benefits |  |  | Postretirement |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2015 | United\tStates\n2014 | 2013 | 2015 | International\n2014 | 2013 | 2015 | Benefits\n2014 | 2013 |
| Discount\trate | 4.47 % | 4.10 % | 4.98 % | 3.12 % | 3.11 % | 4.02 % | 4.48 % | 4.07 % | 4.83 % |
| Compensation\trate\tincrease | 4.10 % | 4.10 % | 4.00 % | 2.90 % | 3.33 % | 3.35 % | N/A | N/A | N/A |

|  |  | Qualified	and	Non-qualified	Pension	Benefits | Qualified	and	Non-qualified	Pension	Benefits | Qualified	and	Non-qualified	Pension	Benefits | Qualified	and	Non-qualified	Pension	Benefits |  | Postretirement | Postretirement |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2015 | United\tStates\n2014 | 2013 | 2015 | International\n2014 | 2013 | 2015 | Benefits\n2014 | 2013 |
| Discount\trate | 4.10 % | 4.98 % | 4.14 % | 3.11 % | 4.02 % | 3.78 % | 4.07 % | 4.83 % | 4.00 % |
| Expected\treturn\ton\tassets | 7.75 % | 7.75 % | 8.00 % | 5.90 % | 5.83 % | 5.87 % | 6.91 % | 7.11 % | 7.19 % |
| Compensation\trate\tincrease | 4.10 % | 4.00 % | 4.00 % | 3.33 % | 3.35 % | 3.31 % | N/A | N/A | N/A |

The	Company	is	in	the	process	of	transitioning	all	current	and	future	retirees	in	the	U.S.	postretirement	health	care	benefit	plans	to	a savings	account	benefits-based	plan.	The	contributions	provided	by	the	Company	to	the	health	savings	accounts	increase	3	percent	per year	for	employees	who	retired	prior	to	January	1,	2016	and	increase	1.5	percent	for	employees	who	retire	on	or	after	January	1,	2016. Therefore,	the	Company	no	longer	has	material	exposure	to	health	care	cost	inflation.

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	4.47%	for	pension	and 4.48%	for	postretirement	benefits	to	be	appropriate	for	its	U.S.	plans	as	of	December	31,	2015,	which	is	an	increase	of	0.37 percentage	points	and	0.41	percentage	points,	respectively,	from	the	rates	used	as	of	December	31,	2014.	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.	Beginning	in	2016,	3M	changed	the	method	used	to	estimate	the	service	and	interest	cost	components	of	the	net periodic	pension	and	other	postretirement	benefit	costs.	The	new	method	measures	service	and	interest	costs	separately	using	the	spot yield	curve	approach	applied	to	each	corresponding	obligation.	Service	costs	are	determined	based	on	duration-specific	spot	rates applied	to	the	service	cost	cash	flows.	The	interest	cost	calculation	is	determined	by	applying	duration-specific	spot	rates	to	the	year- by-year	projected	benefit	payments.	The	spot	yield	curve	approach	does	not	affect	the	measurement	of	the	total	benefit	obligations	as the	change	in	service	and	interest	costs	offset	in	the	actuarial	gains	and	losses	recorded	in	other	comprehensive	income.	The	Company changed	to	the	new	method	to	provide	a	more	precise	measure	of	service	and	interest	costs	by	improving	the	correlation	between	the projected	benefit	cash	flows	and	the	discrete	spot	yield	curve	rates.	The	Company	accounted	for	this	change	as	a	change	in	estimate prospectively	beginning	in	the	first	quarter	of	2016.

For	the	primary	U.S.	qualified	pension	plan,	the	Company's	assumption	for	the	expected	return	on	plan	assets	was	7.75%	in	2015. 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,	2015,	the	Company's	2016	expected	long-term	rate	of	return	on U.S.	plan	assets	is	7.50%,	a	decrease	of	0.25	percentage	points	from	2015.	The	expected	return	assumption	is	based	on	the	strategic asset	allocation	of	the	plan,	long	term	capital	market	return	expectations	and	expected	performance	from	active	investment management.	The	2015	expected	long-term	rate	of	return

is	based	on	an	asset	allocation	assumption	of	25%	global	equities,	18%	private	equities,	41%	fixed-income	securities,	and	16% absolute	return	investments	independent	of	traditional	performance	benchmarks,	along	with	positive	returns	from	active	investment management.	The	actual	net	rate	of	return	on	plan	assets	in	2015	was	0.7%.	In	2014	the	plan	earned	a	rate	of	return	of	13.0%	and	in 2013	earned	a	return	of	6.0%.	The	average	annual	actual	return	on	the	plan	assets	over	the	past	10	and	25	years	has	been	7.8%	and 10.0%,	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	2015,	the	Company	contributed	$264	million	to	its	U.S.	and	international	pension	plans	and	$3	million	to	its	postretirement plans.	During	2014,	the	Company	contributed	$210	million	to	its	U.S.	and	international	pension	plans	and	$5	million	to	its postretirement	plans.	In	2016,	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	2016.	Future	contributions	will	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 | Qualified	and	Non-qualified |  |
| :--- | :--- | :--- | :--- |
|  | Pension\tBenefits |  | Postretirement |
| (Millions) | \t\t\t\t United\tStates | \t\t\t\t International | Benefits |
| 2016\tBenefit\tPayments | $987 | $205 | $141 |
| 2017\tBenefit\tPayments | 997 | 215 | 156 |
| 2018\tBenefit\tPayments | 1,008 | 228 | 172 |
| 2019\tBenefit\tPayments | 1,017 | 241 | 153 |
| 2020\tBenefit\tPayments | 1,029 | 250 | 155 |
| Next\tfive\tyears | 5,187 | 1,480 | 797 |

# 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	trust	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	risk.	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	potential	need	for	additional	contributions	from	3M.	The	investment	strategy	has	used	long	duration	cash bonds	and	derivative	instruments	to	offset	a	significant	portion	of	the	interest	rate	sensitivity	of	U.S.	pension	liabilities.

Normally,	3M	does	not	buy	or	sell	any	of	its	own	securities	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	securities.	The aggregate	amount	of	3M	securities	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	13	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	and	Postretirement	Benefit	Plan	Assets

In	order	to	achieve	the	investment	objectives	in	the	U.S.	pension	plans	and	U.S.	postretirement	benefit	plans,	the	investment	policies include	a	target	strategic	asset	allocation.	The	investment	policies	allow	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	vary	from	the	target	allocation, potentially	for	long	periods	of	time.	Acceptable	ranges	have	been	designed	to	allow	for	deviation	from	strategic	targets	and	to	allow for	the	opportunity	for	tactical	over-	and	under-weights.	The	portfolios	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.		Approximately 39%	of	the	postretirement	benefit	plan	assets	are	in	a	401(h)	account.	The	401(h)	account	assets	are	in	the	same	trust	as	the	primary U.S.	pension	plan	and	invested	with	the	same	investment	objectives	as	the	primary	U.S.	pension	plan.

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	Measurements	Using	Inputs	Considered	as | 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\n2015 | 2014 | Level\t2\n2015 | 2014 | Level\t3\n2015 | \t\t\t\t 2014 | Dec.\t31,\n2015 | 2014 |
| Equities\nU.S.\tequities | $1,897 | $1,766 | $\t— | $\t— | $\t— | $\t— | $1,897 | $1,766 |
| Non-U.S.\tequities | 1,149 | 1,214 | \t— | \t— | \t— | \t— | 1,149 | 1,214 |
| Index\tand\tlong/short\tequity\tfunds* |  |  |  |  |  |  | 578 | 607 |
| Total\tEquities | $3,046 | $2,980 | $\t— | $\t— | $\t— | $\t— | $3,624 | $3,587 |
| Fixed\tIncome |  |  |  |  |  |  |  |  |
| U.S.\tgovernment\tsecurities | $1,095 | $1,032 | $456 | $590 | $\t— | $\t— | $1,551 | $1,622 |
| Non-U.S.\tgovernment\tsecurities | \t— | 7 | 126 | 381 | \t— | \t— | 126 | 388 |
| Preferred\tand\tconvertible\tsecurities | 4 | 6 | 8 | 9 | \t— | \t— | 12 | 15 |
| U.S.\tcorporate\tbonds | 9 | 8 | 2,820 | 2,889 | \t— | \t— | 2,829 | 2,897 |
| Non-U.S.\tcorporate\tbonds | \t— | \t— | 616 | 566 | \t— | \t— | 616 | 566 |
| Derivative\tinstruments | (1) | 6 | 40 | 126 | \t— | \t— | 39 | 132 |
| Other* |  |  |  |  |  |  | 11 | 32 |
| Total\tFixed\tIncome | $1,107 | $1,059 | $4,066 | $4,561 | $\t— | $\t— | $5,184 | $5,652 |
| Private\tEquity\nDerivative\tinstruments | $\t— | $\t— | $\t— | $\t— | $(106) | $(74) | $(106) | $(74) |
| Growth\tequity | 24 | 15 | \t— | \t— | \t— | \t— | 24 | 15 |
| Partnership\tinvestments* |  |  |  |  |  |  | 2,450 | 2,561 |
| Total\tPrivate\tEquity | $24 | $15 | $\t— | $\t— | $(106) | $(74) | $2,368 | $2,502 |
| Absolute\tReturn |  |  |  |  |  |  |  |  |
| Derivative\tinstruments | $\t— | $\t— | $(5) | $\t— | $\t— | $\t— | $(5) | $\t— |
| Fixed\tincome\tand\tother | 253 | 26 | 46 | 52 | \t— | \t— | 299 | 78 |
| Hedge\tfund/fund\tof\tfunds* |  |  |  |  |  |  | 1,409 | 1,807 |
| Partnership\tinvestments* |  |  |  |  |  |  | 355 | 288 |
| Total\tAbsolute\tReturn | $253 | $26 | $41 | $52 | $\t— | $\t— | $2,058 | $2,173 |
| Cash\tand\tCash\tEquivalents |  |  |  |  |  |  |  |  |
| Cash\tand\tcash\tequivalents | $102 | $287 | $6 | $86 | $\t— | $\t— | $108 | $373 |
| Cash\tand\tcash\tequivalents,\tvalued\tat\tnet\tasset\tvalue* |  |  |  |  |  |  | 783 | 531 |
| Total\tCash\tand\tCash\tEquivalents | $102 | $287 | $6 | $86 | $\t— | $\t— | $891 | $904 |
| Total | $4,532 | $4,367 | $4,113 | $4,699 | $(106) | $(74) | $14,125 | $14,818 |
| Other\titems\tto\treconcile\tto\tfair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $(159) | $(175) |
| Fair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $13,966 | $14,643 |

*	In	accordance	with	ASC	820-10,	certain	investments	that	are	measured	at	fair	value	using	the	net	asset	value	(NAV)	per	share	(or	its equivalent)	as	a	practical	expedient	have	not	been	classified	in	the	fair	value	hierarchy.	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	and	is	determined	by	the investment	manager	or	custodian	of	the	fund.	The	fair	value	amounts	presented	in	this	table	are	intended	to	permit	reconciliation	of	the fair	value	hierarchy	to	the	amounts	presented	in	the	fair	value	of	plan	assets.

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	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\n2015 | 2014 | Level\t2\n2015 | 2014 | Level\t3\n2015 | 2014 | Dec.\t31,\n2015 | 2014 |
| Equities\nU.S.\tequities | $508 | $565 | $\t— | $\t— | $\t— | $\t— | $508 | $565 |
| Non-U.S.\tequities | 59 | 56 | \t— | \t— | \t— | \t— | 59 | 56 |
| Index\tand\tlong/short\tequity\tfunds* |  |  |  |  |  |  | 49 | 55 |
| Total\tEquities | $567 | $621 | $\t— | $\t— | $\t— | $\t— | $616 | $676 |
| Fixed\tIncome |  |  |  |  |  |  |  |  |
| U.S.\tgovernment\tsecurities | $71 | $68 | $192 | $186 | $\t— | $\t— | $263 | $254 |
| Non-U.S.\tgovernment\tsecurities | \t— | \t— | 8 | 17 | \t— | \t— | 8 | 17 |
| U.S.\tcorporate\tbonds | \t— | \t— | 153 | 146 | \t— | \t— | 153 | 146 |
| Non-U.S.\tcorporate\tbonds | \t— | \t— | 35 | 34 | \t— | \t— | 35 | 34 |
| Derivative\tinstruments | \t— | \t— | 2 | 5 | \t— | \t— | 2 | 5 |
| Other* |  |  |  |  |  |  | \t— | 1 |
| Total\tFixed\tIncome | $71 | $68 | $390 | $388 | $\t— | $\t— | $461 | $457 |
| Private\tEquity |  |  |  |  |  |  |  |  |
| Derivative\tinstruments | $\t— | $\t— | $\t— | $\t— | $(4) | $(3) | $(4) | $(3) |
| Growth\tequity | 1 | 1 | \t— | \t— | \t— | \t— | 1 | 1 |
| Partnership\tinvestments* |  |  |  |  |  |  | 136 | 162 |
| Total\tPrivate\tEquity | $1 | $1 | $\t— | $\t— | $(4) | $(3) | $133 | $160 |
| Absolute\tReturn\nFixed\tincome\tand\tother | $10 | $1 | $2 | $2 | $\t— | $\t— | $12 | $3 |
| Hedge\tfund/fund\tof\tfunds* |  |  |  |  |  |  | 54 | 66 |
| Partnership\tinvestments* |  |  |  |  |  |  | 14 | 10 |
| Total\tAbsolute\tReturn | $10 | $1 | $2 | $2 | $\t— | $\t— | $80 | $79 |
| Cash\tand\tCash\tEquivalents |  |  |  |  |  |  |  |  |
| Cash\tand\tcash\tequivalents | $38 | $33 | $\t— | $3 | $\t— | $\t— | $38 | $36 |
| Cash\tand\tcash\tequivalents,\tvalued\tat\tnet\tasset\tvalue* |  |  |  |  |  |  | 30 | 20 |
| Total\tCash\tand\tCash\tEquivalents | $38 | $33 | $\t— | $3 | $\t— | $\t— | $68 | $56 |
| Total | $687 | $724 | $392 | $393 | $(4) | $(3) | $1,358 | $1,428 |
| Other\titems\tto\treconcile\tto\tfair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $9 | $8 |
| Fair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $1,367 | $1,436 |

*In	accordance	with	ASC	820-10,	certain	investments	that	are	measured	at	fair	value	using	the	net	asset	value	per	share	(or	its equivalent)	as	a	practical	expedient	have	not	been	classified	in	the	fair	value	hierarchy.	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	and	is	determined	by	the investment	manager	or	custodian	of	the	fund.	The	fair	value	amounts	presented	in	this	table	are	intended	to	permit	reconciliation	of	the fair	value	hierarchy	to	the	amounts	presented	in	the	fair	value	of	plan	assets.

Publicly	traded	equities	are	valued	at	the	closing	price	reported	in	the	active	market	in	which	the	individual	securities	are	traded.

Fixed	income	includes	derivative	instruments	such	as	credit	default	swaps,	interest	rate	swaps	and	futures	contracts.	Corporate	debt includes	bonds	and	notes,	asset	backed	securities,	collateralized	mortgage	obligations	and	private	placements.	Swaps	and	derivative instruments	are	valued	by	the	custodian	using	closing	market	swap	curves	and	market	derived	inputs.	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 utilizes	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.

The	private	equity	portfolio	is	a	diversified	mix	of	derivative	instruments,	growth	equity	and	partnership	interests.	Derivative investments	are	written	options	that	are	valued	by	independent	parties	using	market	inputs	and	valuation	models.	Growth	equity investments	are	valued	at	the	closing	price	reported	in	the	active	market	in	which	the	individual	securities	are	traded.

Absolute	return	consists	primarily	of	partnership	interests	in	hedge	funds,	hedge	fund	of	funds	or	other	private	fund	vehicles. Corporate	debt	instruments	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	utilizes	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	risk	ratings.

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	balances	of	and	changes	in	the	fair	values	of	the	U.S.	pension	plans'	and	postretirement	plans'	level	3	assets	for	the	periods	ended December	31,	2015	and	2014	were	not	material.

# 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	27	countries;	however,	there	is	significant	variation	in	asset allocation	policy	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.	The	Company	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	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\n2015 | 2014 | Level\t2\n2015 | 2014 | Level\t3\n2015 | 2014 | Dec.\t31,\n2015 | 2014 |
| Equities\nGrowth\tequities | $718 | $672 | $195 | $176 | $\t— | $\t— | $913 | $848 |
| Value\tequities | 494 | 595 | 27 | 23 | \t— | \t— | 521 | 618 |
| Core\tequities | 31 | 19 | 671 | 624 | 4 | 4 | 706 | 647 |
| Equities,\tvalued\tat\tnet\tasset\tvalue* |  |  |  |  |  |  | 17 | 18 |
| Total\tEquities | $1,243 | $1,286 | $893 | $823 | $4 | $4 | $2,157 | $2,131 |
| Fixed\tIncome\nDomestic\tgovernment | $283 | $87 | $346 | $533 | $4 | $3 | $633 | $623 |
| Foreign\tgovernment | \t— | 45 | 206 | 670 | \t— | \t— | 206 | 715 |
| Corporate\tdebt\tsecurities | 30 | 1 | 661 | 701 | 10 | 12 | 701 | 714 |
| Fixed\tincome\tsecurities,\tvalued\tat\tnet\tasset\tvalue* |  |  |  |  |  |  | 770 | 863 |
| Total\tFixed\tIncome | $313 | $133 | $1,213 | $1,904 | $14 | $15 | $2,310 | $2,915 |
| Private\tEquity\nReal\testate | $1 | $3 | $5 | $5 | $4 | $4 | $10 | $12 |
| Real\testate,\tvalued\tat\tnet\tasset\tvalue* |  |  |  |  |  |  | 126 | 119 |
| Partnership\tinvestments* |  |  |  |  |  |  | 24 | 23 |
| Total\tPrivate\tEquity | $1 | $3 | $5 | $5 | $4 | $4 | $160 | $154 |
| Absolute\tReturn |  |  |  |  |  |  |  |  |
| Derivatives | $(2) | $\t— | $15 | $(4) | $\t— | $\t— | $13 | $(4) |
| Insurance | \t— | \t— | \t— | \t— | 456 | 476 | 456 | 476 |
| Other | \t— | \t— | 4 | 10 | 3 | 3 | 7 | 13 |
| Other,\tvalued\tat\tnet\tasset\tvalue* |  |  |  |  |  |  | 1 | 3 |
| Hedge\tfunds* |  |  |  |  |  |  | 119 | 117 |
| Total\tAbsolute\tReturn | $(2) | $\t— | $19 | $6 | $459 | $479 | $596 | $605 |
| Cash\tand\tCash\tEquivalents\nCash\tand\tcash\tequivalents | $126 | $161 | $347 | $29 | $\t— | $\t— | $473 | $190 |
| Cash\tand\tcash\tequivalents,\tvalued\tat\tnet\tasset\tvalue* |  |  |  |  |  |  | 1 | 3 |
| Total\tCash\tand\tCash\tEquivalents | $126 | $161 | $347 | $29 | $\t— | $\t— | $474 | $193 |
| Total | $1,681 | $1,583 | $2,477 | $2,767 | $481 | $502 | $5,697 | $5,998 |
| Other\titems\tto\treconcile\tto\tfair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $(28) | $(41) |
| Fair\tvalue\tof\tplan\tassets |  |  |  |  |  |  | $5,669 | $5,957 |

Equities	consist	primarily	of	mandates	in	public	equity	securities	managed	to	various	public	equity	indices.	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,	and	corporate,	(including	mortgage	backed	and	other	debt) securities.	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	utilizes	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	partnership	interests	in	a	variety	of	funds.	Real	estate	consists	of	property	funds	and	REITS	(Real Estate	Investment	Trusts).	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	other	alternative	investments.	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.

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	balances	of	and	changes	in	the	fair	values	of	the	international	pension	plans'	level	3	assets	consist	primarily	of	insurance	contracts under	the	absolute	return	asset	class.		The	aggregate	of	net	purchases	and	net	unrealized	gains	increased	this	balance	by	$16	million and	$46	million	in	2015	and	2014,	respectively.		Foreign	currency	exchange	impacts	decreased	this	balance	by	$36	million	and	$62 million	in	2015	and	2014,	respectively.

# NOTE	12.		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	6.	Additional	information	with	respect	to	the	fair	value	of	derivative	instruments	is	included	in	Note 13.	References	to	information	regarding	derivatives	and/or	hedging	instruments	associated	with	the	Company's	long-term	debt	are also	made	in	Note	10.

# 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.	3M	may dedesignate	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. Beginning	in	the	second	quarter	of	2014,	3M	began	extending	the	maximum	length	of	time	over	which	it	hedges	its	exposure	to	the variability	in	future	cash	flows	of	the	forecasted	transactions	from	a	previous	term	of	12	months	to	a	longer	term	of	24	months,	with certain	currencies	being	extended	further	to	36	months	starting	in	the	first	quarter	of	2015.

Cash	Flow	Hedging	-	Commodity	Price	Management:	The	Company	manages	commodity	price	risks	through	negotiated	supply contracts,	price	protection	agreements	and	forward	contracts.	3M	discontinued	the	use	of	commodity	price	swaps	as	cash	flow	hedges of	forecasted	commodity	transactions	in	the	first	quarter	of	2015.	The	Company	used	commodity	price	swaps	as	cash	flow	hedges	of forecasted	commodity	transactions	to	manage	price	volatility.	The	related	mark-to-market	gain	or	loss	on	qualifying	hedges	was included	in	other	comprehensive	income	to	the	extent	effective,	and	reclassified	into	cost	of	sales	in	the	period	during	which	the hedged	transaction	affected	earnings.

Cash	Flow	Hedging	—	Interest	Rate	Contracts:	In	the	third	and	fourth	quarters	of	2014,	the	Company	entered	into	forward	starting interest	rate	swaps	with	notional	amounts	totaling	500	million	Euros	as	a	hedge	against	interest	rate	volatility	associated	with	the forecasted	issuance	of	fixed	rate	debt.	3M	terminated	these	interest	rate	swaps	upon	issuance	of	750	million	Euros	aggregate	principal amount	of	twelve-year	fixed	rate	notes	in	connection	with	3M's	1.250	billion	Eurobond	offering	in	November	2014.	The	termination resulted	in	a	$8	million	pre-tax	($5	million	after-tax)	loss	within	accumulated	other	comprehensive	income	that	will	be	amortized	over the	twelve-year	life	of	the	notes.

The	amortization	of	gains	and	losses	on	forward	starting	interest	rate	swaps	is	included	in	the	tables	below	as	part	of	the	gain/(loss) recognized	in	income	on	the	effective	portion	of	derivatives	as	a	result	of	reclassification	from	accumulated	other	comprehensive income.

As	of	December	31,	2015,	the	Company	had	a	balance	of	$124	million	associated	with	the	after	tax	net	unrealized	gain	associated with	cash	flow	hedging	instruments	recorded	in	accumulated	other	comprehensive	income.	This	includes	a	remaining	balance	of	$5 million	(after	tax	loss)	related	to	forward	starting	interest	rate	swaps,	which	will	be	amortized	over	the	respective	lives	of	the	notes. Based	on	exchange	rates	as	of	December	31,	2015,	3M	expects	to	reclassify	approximately	$98	million	of	the	after-tax	net	unrealized foreign	exchange	cash	flow	hedging	gains	to	earnings	in	2016,	approximately	$23	million	of	the	after-tax	net	unrealized	foreign exchange	cash	flow	hedging	gains	to	earnings	in	2017,	and	approximately	$3	million	of	the	after-tax	net	unrealized	foreign	exchange cash	flow	hedging	gains	to	earnings	after	2017	(with	the	impact	offset	by	earnings/losses	from	underlying	hedged	items).

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

# Pretax	Gain	(Loss)	Recognized	in

# Pretax	Gain	(Loss) Income	on	Effective	Portion	of Ineffective	Portion	of	Gain

|  |  | Pretax	Gain	(Loss)	Recognized	in | Pretax	Gain	(Loss)	Recognized	in |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Pretax\tGain\t(Loss) | Income\ton\tEffective\tPortion\tof | Income\ton\tEffective\tPortion\tof | Ineffective\tPortion\tof\tGain |  |
|  | Recognized\tin\tOther | Derivative\tas\ta\tResult\tof | Derivative\tas\ta\tResult\tof | (Loss)\ton\tDerivative\tand |  |
|  | Comprehensive | Reclassification\tfrom | Reclassification\tfrom | Amount\tExcluded\tfrom |  |
|  | Income\ton\tEffective | Accumulated\tOther | Accumulated\tOther | Effectiveness\tTesting |  |
| (Millions) | Portion\tof\tDerivative | Comprehensive\tIncome | Comprehensive\tIncome | Recognized\tin\tIncome |  |
| Derivatives\tin\tCash\tFlow\tHedging\tRelationships | Amount | Location | Amount | Location | Amount |
| Foreign\tcurrency\tforward/option\tcontracts | $212 | Cost\tof\tsales | $178 | Cost\tof\tsales | $— |
| Commodity\tprice\tswap\tcontracts | \t— | Cost\tof\tsales | (2) | Cost\tof\tsales | — |
| Interest\trate\tswap\tcontracts | — | Interest\texpense | (2) | Interest\texpense | — |
| Total | $212 | $174 | $174 | $\t— | $\t— |

|  |  | Pretax	Gain	(Loss)	Recognized	in | Pretax	Gain	(Loss)	Recognized	in |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Pretax\tGain\t(Loss) | Income\ton\tEffective\tPortion\tof | Income\ton\tEffective\tPortion\tof | Ineffective\tPortion\tof\tGain | Ineffective\tPortion\tof\tGain |
|  | Recognized\tin\tOther | Derivative\tas\ta\tResult\tof | Derivative\tas\ta\tResult\tof | (Loss)\ton\tDerivative\tand | (Loss)\ton\tDerivative\tand |
|  | Comprehensive | Reclassification\tfrom | Reclassification\tfrom | Amount\tExcluded\tfrom | Amount\tExcluded\tfrom |
|  | Income\ton\tEffective | Accumulated\tOther | Accumulated\tOther | Effectiveness\tTesting | Effectiveness\tTesting |
| (Millions) | Portion\tof\tDerivative | Comprehensive\tIncome | Comprehensive\tIncome | Recognized\tin\tIncome | Recognized\tin\tIncome |
| Derivatives\tin\tCash\tFlow\tHedging\tRelationships | Amount | Location | Amount | Location | Amount |
| Foreign\tcurrency\tforward/option\tcontracts | $9 | Cost\tof\tsales | $(11) | Cost\tof\tsales | $— |
| Foreign\tcurrency\tforward\tcontracts | (108) | Interest\texpense | (108) | Interest\texpense | — |
| Commodity\tprice\tswap\tcontracts | 1 | Cost\tof\tsales | (2) | Cost\tof\tsales | — |
| Interest\trate\tswap\tcontracts | \t— | Interest\texpense | (1) | Interest\texpense | — |
| Total | $(98) | $(122) | $(122) | $\t— | $\t— |

# 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.

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,	was	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 was	not	part	of	gains	on	hedged	items	recognized	in	income	in	the	tables	below.	The	remaining	interest	rate	swap	of	250	million	Euros (notional	amount)	matured	in	July	2014.

In	November	2013,	3M	issued	a	Eurobond	due	in	2021	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.

In	June	2014,	3M	issued	$950	million	aggregate	principal	amount	of	medium-term	notes.	Upon	debt	issuance,	the	Company	entered into	an	interest	rate	swap	to	convert	$600	million	of	a	$625	million	note	included	in	this	issuance	to	an	interest	rate	based	on	a	floating three-month	LIBOR	index	as	a	fair	value	hedge	of	a	portion	of	the	fixed	interest	rate	medium-term	note	obligation.

In	August	2015,	3M	issued	$1.500	billion	aggregate	principal	amount	of	medium-term	notes.	Upon	debt	issuance,	the	Company entered	into	two	interest	rate	swaps	as	fair	value	hedges	of	a	portion	of	the	fixed	interest	rate	medium-term	note	obligation.	The	first converted	a	$450	million	three-year	fixed	rate	note,	and	the	second	converted	$300	million	of	a	five-year	fixed	rate	note	included	in this	issuance	to	an	interest	rate	based	on	a	floating	three-month	LIBOR	index.

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:

# Net	Investment	Hedges:

The	Company	may	use	non-derivative	(foreign	currency	denominated	debt)	and	derivative	(foreign	exchange	forward	contracts) instruments	to	hedge	portions	of	the	Company's	investment	in	foreign	subsidiaries	and	manage	foreign	exchange	risk.	For	instruments that	are	designated	and	qualify	as	hedges	of	net	investments	in	foreign	operations	and	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.	To	the	extent	foreign	currency	denominated	debt	is	not	designated	in	or	is dedesignated	from	a	net	investment	hedge	relationship,	changes	in	value	of	that	portion	of	foreign	currency	denominated	debt	due	to exchange	rate	changes	are	recorded	in	earnings	through	their	maturity	date.

3M's	use	of	foreign	exchange	forward	contracts	designated	in	hedges	of	the	Company's	net	investment	in	foreign	subsidiaries	can vary	by	time	period	depending	on	when	foreign	currency	denominated	debt	balances	designated	in	such	relationships	are dedesignated,	matured,	or	are	newly	issued	and	designated.	Additionally,	variation	can	occur	in	connection	with	the	extent	of	the Company's	desired	foreign	exchange	risk	coverage.

At	December	31,	2015,	the	total	notional	amount	of	foreign	exchange	forward	contracts	designated	in	net	investment	hedges	was approximately	974	million	Euros	and	approximately	248	billion	South	Korean	Won,	along	with	a	principal

amount	of	long-term	debt	instruments	designated	in	net	investment	hedges	totaling	3.6	billion	Euros.	The	maturity	dates	of	these derivative	and	nonderivative	instruments	designated	in	net	investment	hedges	range	from	2016	to	2030.

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 |  |  |
|  | Cumulative\tTranslation |  |  |
|  | within\tOther | Ineffective\tPortion\tof\tGain\t(Loss)\ton | Ineffective\tPortion\tof\tGain\t(Loss)\ton |
|  | Comprehensive\tIncome | Instrument\tand\tAmount\tExcluded | Instrument\tand\tAmount\tExcluded |
| Derivative\tand\tNonderivative\tInstruments\tin\tNet\tInvestment\tHedging | on\tEffective\tPortion\tof | from\tEffectiveness\tTesting | from\tEffectiveness\tTesting |
| Relationships | Instrument | Recognized\tin\tIncome | Recognized\tin\tIncome |
| (Millions) | Amount | Location | Amount |
| Foreign\tcurrency\tdenominated\tdebt | $63 | N/A | $\t— |
| Foreign\tcurrency\tforward\tcontracts | 143 | Cost\tof\tsales | 11 |
| Total | $206 | $11 | $11 |

|  | Pretax	Gain	(Loss) |  |  |
| :--- | :--- | :--- | :--- |
|  | Recognized\tas |  |  |
|  | Cumulative\tTranslation |  |  |
|  | within\tOther | Ineffective\tPortion\tof\tGain\t(Loss)\ton | Ineffective\tPortion\tof\tGain\t(Loss)\ton |
|  | Comprehensive\tIncome | Instrument\tand\tAmount\tExcluded | Instrument\tand\tAmount\tExcluded |
| Derivative\tand\tNonderivative\tInstruments\tin\tNet\tInvestment\tHedging | on\tEffective\tPortion\tof | from\tEffectiveness\tTesting | from\tEffectiveness\tTesting |
| Relationships | Instrument | Recognized\tin\tIncome | Recognized\tin\tIncome |
| (Millions) | Amount | Location | Amount |
| Foreign\tcurrency\tdenominated\tdebt | $152 | N/A | $\t— |
| Foreign\tcurrency\tforward\tcontracts | 94 | Cost\tof\tsales | 1 |
| Total | $246 | $1 | $1 |

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	to	offset,	in	part,	the	impacts	of	certain	intercompany	activities	(primarily	associated	with intercompany	licensing	arrangements)	and	enters	into	commodity	price	swaps	to	offset,	in	part,	fluctuations	in	costs	associated	with the	use	of	certain	commodities	and	precious	metals.	These	derivative	instruments	are	not	designated	in	hedging	relationships; therefore,	fair	value	gains	and	losses	on	these	contracts	are	recorded	in	earnings.	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:

|  |  | Gain	(Loss)	on	Derivative	Recognized	in	Income | Gain	(Loss)	on	Derivative	Recognized	in	Income |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Year\tended | Year\tended | Year\tended |
|  |  | December\t31, | December\t31, | December\t31, |
| Derivatives\tNot\tDesignated\tas\tHedging\tInstruments |  | 2015 | 2014 | 2013 |
| (Millions) | Location | Amount | Amount | Amount |
| Foreign\tcurrency\tforward/option\tcontracts | Cost\tof\tsales | $5 | $10 | $20 |
| Foreign\tcurrency\tforward\tcontracts | Interest\texpense | (30) | (40) | (43) |
| Commodity\tprice\tswap\tcontracts | Cost\tof\tsales | (3) | \t— | (1) |
| Total |  | $(28) | $(30) | $(24) |

# Location	and	Fair	Value	Amount	of	Derivative	Instruments:

The	following	tables	summarize	the	fair	value	of	3M's	derivative	instruments,	excluding	nonderivative	instruments	used	as	hedging instruments,	and	their	location	in	the	consolidated	balance	sheet.	Notional	amounts	below	are	presented	at	period	end	foreign exchange	rates,	except	for	certain	interest	rate	swaps,	which	are	presented	using	the	inception	date's	foreign	exchange	rate.	Additional information	with	respect	to	the	fair	value	of	derivative	instruments	is	included	in	Note	13.

|  | Gross | Assets |  | Liabilities |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2015\n(Millions) | Notional\nAmount | Location | Fair\nValue\tAmount | Location | Fair\nValue\tAmount |
| Derivatives\tdesignated\tas |  |  |  |  |  |
| hedging\tinstruments |  |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | $2,815 | Other\tcurrent\tassets | $148 | Other\tcurrent\tliabilities | $14 |
| Foreign\tcurrency\tforward/option\tcontracts | 1,240 | Other\tassets | 61 | Other\tliabilities | 3 |
| Interest\trate\tswap\tcontracts | 1,753 | Other\tassets | 24 | Other\tliabilities | 1 |
| Total\tderivatives\tdesignated\tas\thedging |  |  |  |  |  |
| instruments |  |  | $233 |  | $18 |
| Derivatives\tnot\tdesignated\tas |  |  |  |  |  |
| hedging\tinstruments |  |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | $5,359 | Other\tcurrent\tassets | $63 | Other\tcurrent\tliabilities | $51 |
| Total\tderivatives\tnot\tdesignated\tas\thedging |  |  |  |  |  |
| instruments |  |  | $63 |  | $51 |
| Total\tderivative\tinstruments |  |  | $296 |  | $69 |

|  | Gross | Assets |  | Liabilities |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| December\t31,\t2014\n(Millions) | Notional\nAmount | Location | Fair\nValue\tAmount | Location | Fair\nValue\tAmount |
| Derivatives\tdesignated\tas |  |  |  |  |  |
| hedging\tinstruments |  |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | $1,865 | Other\tcurrent\tassets | $116 | Other\tcurrent\tliabilities | $2 |
| Foreign\tcurrency\tforward/option\tcontracts | 656 | Other\tassets | 47 | Other\tliabilities | 1 |
| Commodity\tprice\tswap\tcontracts | 20 | Other\tcurrent\tassets | \t— | Other\tcurrent\tliabilities | 4 |
| Interest\trate\tswap\tcontracts | 1,003 | Other\tassets | 27 | Other\tliabilities | 3 |
| Total\tderivatives\tdesignated\tas\thedging |  |  |  |  |  |
| instruments |  |  | $190 |  | $10 |
| Derivatives\tnot\tdesignated\tas |  |  |  |  |  |
| hedging\tinstruments |  |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | $6,582 | Other\tcurrent\tassets | $66 | Other\tcurrent\tliabilities | $33 |
| Total\tderivatives\tnot\tdesignated\tas\thedging |  |  |  |  |  |
| instruments |  |  | $66 |  | $33 |
| Total\tderivative\tinstruments |  |  | $256 |  | $43 |

# 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, 2015,	3M	has	International	Swaps	and	Derivatives	Association	(ISDA)	agreements	with	16	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	15	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	under	Master	Netting	Agreements	with	Derivative	Counterparties

| December	31,	2015 |  | 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 |  |  |  |  |
| agreements | $296 | $37 | $\t— | $259 |
| Derivatives\tnot\tsubject\tto\tmaster\tnetting |  |  |  |  |
| agreements | \t— |  |  | \t— |
| Total | $296 |  |  | $259 |

| December	31,	2014 |  | 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 |  |  |  |  |
| agreements | $256 | $20 | $\t— | $236 |
| Derivatives\tnot\tsubject\tto\tmaster\tnetting |  |  |  |  |
| agreements | \t— |  |  | \t— |
| Total | $256 |  |  | $236 |

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

# December	31,	2015 Gross	Amounts	not	Offset	in	the

# Consolidated	Balance	Sheet	that	are	Subject

| December	31,	2015 |  | 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 |  |  |  |  |
| agreements | $64 | $37 | $\t— | $27 |
| Derivatives\tnot\tsubject\tto\tmaster |  |  |  |  |
| netting\tagreements | 5 |  |  | 5 |
| Total | $69 |  |  | $32 |

| December	31,	2014 |  | 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 |  |  |  |  |
| agreements | $36 | $20 | $\t— | $16 |
| Derivatives\tnot\tsubject\tto\tmaster |  |  |  |  |
| netting\tagreements | 7 |  |  | 7 |
| Total | $43 |  |  | $23 |

# Foreign	Currency	Effects

3M	estimates	that	year-on-year	foreign	currency	transaction	effects,	including	hedging	impacts,	increased	pre-tax	income	by approximately	$180	million	and	$10	million	in	2015	and	2014,	respectively.	These	estimates	include	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.

# NOTE	13.		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	2015	and	2014.

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	certain	U.S.	municipal	securities:

Marketable	securities,	except	certain	U.S.	municipal	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	certain	U.S.	municipal	securities)	are	classified	as	level	2.	Marketable	securities	are	discussed	further in	Note	9.

# Available-for-sale	marketable	securities	—certain	U.S.	municipal	securities	only:

In	the	fourth	quarter	2014,	3M	obtained	a	municipal	bond	with	the	City	of	Nevada,	Missouri,	which	represent	3M's	only	U.S. municipal	securities	holding	as	of	December	31,	2015.	Due	to	the	nature	of	this	security,	the	valuation	method	utilized	will	include	the financial	health	of	the	City	of	Nevada,	any	recent	municipal	bond	issuances	by	Nevada,	and	macroeconomic	considerations	related	to the	direction	of	interest	rates	and	the	health	of	the	overall	municipal	bond	market,	and	as	such	will	be	classified	as	a	level	3	security.

# 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,	commodity	price	swaps,	currency	swaps,	foreign	currency	options,	interest	rate swaps	and	cross-currency	swaps	will	be	considered	level	2	measurements.	3M	uses	inputs	other	than	quoted	prices	that	are	observable for	the	asset.	These	inputs	include	foreign	currency	exchange	rates,	volatilities,	and	interest	rates.	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.

|  |  |  | Fair	Value	Measurements |  |
| :--- | :--- | :--- | :--- | :--- |
| (Millions) | Fair\tValue\tat |  | Using\tInputs\tConsidered\tas |  |
| Description | \t\t\t\t December\t31,\t2015 | Level\t1 | Level\t2 | Level\t3 |
| Assets: |  |  |  |  |
| Available-for-sale: |  |  |  |  |
| Marketable\tsecurities: |  |  |  |  |
| Foreign\tgovernment\tagency\tsecurities | $10 | $\t— | $10 | $\t— |
| Corporate\tdebt\tsecurities | 10 | \t— | 10 | \t— |
| Commercial\tpaper | 12 | \t— | 12 | \t— |
| Certificates\tof\tdeposit/time\tdeposits | 26 | \t— | 26 | \t— |
| Asset-backed\tsecurities: |  |  |  |  |
| Automobile\tloan\trelated | 26 | \t— | 26 | \t— |
| Credit\tcard\trelated | 10 | \t— | 10 | \t— |
| Equipment\tlease\trelated | 2 | \t— | 2 | \t— |
| Other | 19 | \t— | 19 | \t— |
| U.S.\tmunicipal\tsecurities | 12 | \t— | \t— | 12 |
| Derivative\tinstruments\t—\tassets: |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | 272 | \t— | 272 | \t— |
| Interest\trate\tswap\tcontracts | 24 | \t— | 24 | \t— |
| Liabilities: |  |  |  |  |
| Derivative\tinstruments\t—\tliabilities: |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | 68 | \t— | 68 | \t— |
| Interest\trate\tswap\tcontracts | 1 | \t— | 1 | \t— |

|  |  |  | Fair	Value	Measurements |  |
| :--- | :--- | :--- | :--- | :--- |
| (Millions) | Fair\tValue\tat |  | Using\tInputs\tConsidered\tas |  |
| Description | \t\t\t\t December\t31,\t2014 | Level\t1 | Level\t2 | Level\t3 |
| Assets: |  |  |  |  |
| Available-for-sale: |  |  |  |  |
| Marketable\tsecurities: |  |  |  |  |
| U.S.\tgovernment\tagency\tsecurities | $108 | $\t— | $108 | $\t— |
| Foreign\tgovernment\tagency\tsecurities | 95 | \t— | 95 | \t— |
| Corporate\tdebt\tsecurities | 619 | \t— | 619 | \t— |
| Certificates\tof\tdeposit/time\tdeposits | 41 | \t— | 41 | \t— |
| Asset-backed\tsecurities: |  |  |  |  |
| Automobile\tloan\trelated | 282 | \t— | 282 | \t— |
| Credit\tcard\trelated | 162 | \t— | 162 | \t— |
| Equipment\tlease\trelated | 48 | \t— | 48 | \t— |
| Other | 46 | \t— | 46 | \t— |
| U.S.\ttreasury\tsecurities | 38 | 38 | \t— | \t— |
| U.S.\tmunicipal\tsecurities | 15 | \t— | \t— | 15 |
| Investments | 1 | 1 | \t— | \t— |
| Derivative\tinstruments\t—\tassets: |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | 229 | \t— | 229 | \t— |
| Interest\trate\tswap\tcontracts | 27 | \t— | 27 | \t— |
| Liabilities:\nDerivative\tinstruments\t—\tliabilities: |  |  |  |  |
| Foreign\tcurrency\tforward/option\tcontracts | 36 | \t— | 36 | \t— |
| Commodity\tprice\tswap\tcontracts | 4 | \t— | 4 | \t— |
| Interest\trate\tswap\tcontracts | 3 | \t— | 3 | \t— |

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).

# (Millions)

| securities	only | 2015 | 2014 | 2013 |
| :--- | :--- | :--- | :--- |
| Beginning\tbalance | $15 | $11 | $7 |
| Total\tgains\tor\tlosses: |  |  |  |
| Included\tin\tearnings | \t— | (1) | — |
| Included\tin\tother\tcomprehensive\tincome | \t— | 2 | 4 |
| Purchases\tand\tissuances | \t— | 15 | — |
| Sales\tand\tsettlements | (3) | (12) | — |
| Transfers\tin\tand/or\tout\tof\tlevel\t3 | — | — | — |
| Ending\tbalance | 12 | 15 | 11 |
| Change\tin\tunrealized\tgains\tor\tlosses\tfor\tthe\tperiod\tincluded\tin\tearnings\tfor\nsecurities\theld\tat\tthe\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	11.

# 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	2015,	2014	and	2013.

# 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	medium-term	fixed	rate	notes	totaling $1	billion,	which	will	mature	in	September	2016	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,	2015 | December	31,	2015 | December	31,	2014 | December	31,	2014 |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying | Fair | Carrying | Fair |
| (Millions) | Value | Value | Value | Value |
| Medium-term\tfixed\trate\tnote\tdue\tSeptember\t2016\t(long-term\tin |  |  |  |  |
| 2014\tand\tshort-term\tin\t2015) | $999 | $1,003 | $996 | $1,014 |
| Long-term\tdebt,\texcluding\tcurrent\tportion\tand\tmedium-term\tfixed |  |  |  |  |
| rate\tnote\tdue\tSeptember\t2016 | 8,753 | 9,101 | 5,709 | 6,189 |

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,	2015	and	2014 due	to	the	low	interest	rates	and	tightening	of	3M's	credit	spreads.

# NOTE	14.		Commitments	and	Contingencies

# Capital	and	Operating	Leases:

Rental	expense	under	operating	leases	was	$316	million	in	2015,	$332	million	in	2014	and	$330	million	in	2013.	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 three	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	$50	million	at	December	31,	2015,	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.	Third,	in	the	fourth	quarter	of	2014,	3M	recorded	a	capital	lease	asset	and	obligation	of approximately	$15	million,	which	is	discussed	in	more	detail	in	Note	7.

Minimum	lease	payments	under	capital	and	operating	leases	with	non-cancelable	terms	in	excess	of	one	year	as	of	December	31, 2015,	were	as	follows:

|  |  | Operating |
| :--- | :--- | :--- |
| (Millions) | Capital\tLeases | Leases |
| 2016 | $11 | $234 |
| 2017 | 6 | 191 |
| 2018 | 4 | 134 |
| 2019 | 3 | 86 |
| 2020 | 3 | 72 |
| After\t2020 | 32 | 226 |
| Total | $59 | $943 |
| Less:\tAmounts\trepresenting\tinterest | 5 |  |
| Present\tvalue\tof\tfuture\tminimum\tlease\tpayments | 54 |  |
| Less:\tCurrent\tobligations\tunder\tcapital\tleases | 8 |  |
| Long-term\tobligations\tunder\tcapital\tleases | $46 |  |

# Unconditional	Purchase	Obligations:

Unconditional	purchase	obligations	are	defined	as	an	agreement	to	purchase	goods	or	services	that	is	enforceable	and	legally	binding (non-cancelable,	or	cancelable	only	in	certain	circumstances).	The	Company	estimates	its	total	unconditional	purchase	obligation commitment	(for	those	contracts	with	terms	in	excess	of	one	year)	as	of	December	31,	2015,	at	$596	million.	Payments	by	year	are estimated	as	follows:	2016	($193	million),	2017	($160	million),	2018	($102	million),	2019	($54	million),	2020	($56	million)	and	after 2020	($31	million).	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.	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	an	indication	of	the Company's	expected	future	cash	outflows	related	to	purchase	obligations.

# 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	$28	million	at	December	31,	2015,	and	$30	million	at	December	31,	2014.	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.

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	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.	Although	the	Company	cannot	estimate	its	exposure	to	all	legal proceedings,	it	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	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,	2015,	the	Company	is	a	named	defendant,	with	multiple	co-defendants,	in	numerous	lawsuits	in	various	courts that	purport	to	represent	approximately	2,130	individual	claimants,	compared	to	approximately	2,220	individual	claimants	with	actions pending	at	December	31,	2014.

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	it	experienced	at	the	peak	of	filings	in	2003. 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	ten	cases	taken	to	trial,	including	eight	of	the nine	cases	tried	to	verdict	(such	trials	occurred	in	1999,	2000,	2001,	2003,	2004,	2007,	and	2015),	and	an	appellate	reversal	in	2005	of the	2001	jury	verdict	adverse	to	the	Company.	The	remaining	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	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.	The	case	has	been	inactive	since	the	fourth	quarter	of	2007,	other	than	a	case management	conference	in	March	2011.	In	November	2013,	the	State	filed	a	motion	to	bifurcate	the	lawsuit	into	separate	liability	and damages	proceedings.	At	the	hearing	on	the	motion,	the	court	declined	to	bifurcate	the	lawsuit.	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.

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	cost	of	resolving	claims	of	persons	who	claim	more	serious	injuries,	including	mesothelioma	and	other malignancies,	the	Company	increased	its	accruals	in	2015	for	respirator	mask/asbestos	liabilities	by	$50	million.	In	2015,	the Company	made	payments	for	legal	fees	and	settlements	of	$46	million	related	to	the	respirator	mask/asbestos	litigation.	As	of December	31,	2015,	the	Company	had	accruals	for	respirator	mask/asbestos	liabilities	of	$144	million	(excluding	Aearo	accruals). This	accrual	represents	the	low	end	in	a	range	of	loss.	The	Company	cannot	estimate	the	amount	or	upper	end	of	the	range	of	amounts by	which	the	liability	may	exceed	the	accrual	the	Company	has	established	because	of	the	(i)	inherent	difficulty	in	projecting	the number	of	claims	that	have	not	yet	been	asserted	or	the	time	period	in	which	future	claims	may	be	asserted,	(ii)	the	complaints	nearly always	assert	claims	against	multiple	defendants	where	the	damages	alleged	are	typically	not	attributed	to	individual	defendants	so that	a	defendant's	share	of	liability	may	turn	on	the	law	of	joint	and	several	liability,	which	can	vary	by	state,	(iii)	the	multiple	factors described	above	that	the	Company	considers	in	estimating	its	liabilities,	and	(iv)	the	several	possible	developments	described	above that	may	occur	that	could	affect	the	Company's	estimate	of	liabilities.

As	of	December	31,	2015,	the	Company's	receivable	for	insurance	recoveries	related	to	the	respirator	mask/asbestos	litigation	was $39	million.	The	Company	estimates	insurance	receivables	based	on	an	analysis	of	its	policies,	including	their	exclusions,	pertinent case	law	interpreting	comparable	policies,	its	experience	with	similar	claims,	and	an	assessment	of	the	nature	of	each	claim	and remaining	coverage.	The	Company	then	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.

The	Company	has	unresolved	coverage	with	claims-made	carriers	for	respirator	mask	claims.	The	Company	is	also	seeking	coverage under	the	policies	of	certain	insolvent	insurers.	Once	those	claims	for	coverage	are	resolved,	the	Company	will	have	collected substantially	all	of	its	remaining	insurance	coverage	for	respirator	mask/asbestos	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,	2015,	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,	2015,	the	Company,	through	its	Aearo	subsidiary,	had	accruals	of	$21	million	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	respective	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. In	June	2014,	the	court	granted	Aearo's	motion	for	summary	judgment	on	all	claims.	Cabot	has	filed	a	motion	for	reconsideration,	and Aearo	filed	a	motion	for	clarification	of	the	court's	order	granting	Aearo	summary	judgment.	In	October	2014,	the	court	denied Aearo's	motion	for	clarification.	The	court	also	denied,	in	part,	Cabot's	motion	for	reconsideration	and	reaffirmed	its	ruling	that	Cabot retained	liability	for	claims	involving	exposure	to	silica	in	coal	mine	dust.	The	court	granted	Cabot's	motion,	in	part,	ruling	that	Aearo was	not	entitled	to	summary	judgment	on	Cabot's	claim	for	equitable	allocation,	and	on	whether	the	258	underlying	claims	were Cabot's	responsibility.	These	two	issues	remain	in	the	case	for	further	proceedings.	New	motions	for	summary	judgment	were	filed and	the	court	heard	oral	arguments	in	October	2015.

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	insurance	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,	federal	(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 the	end	of	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	received	from	suppliers	that	may	ultimately	degrade	to	PFOA,	PFOS,	or similar	compounds.	Upon	such	identification,	the	Company	works	to	find	alternatives	for	such	materials.

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.	As	the	database	of	studies	of	both	chemicals	has	expanded,	the	EPA	has	developed	draft	human	health	effects documents	summarizing	the	available	data	from	these	studies.	In	February	2014,	the	EPA	initiated	external	peer	review	of	its	draft human	health	effects	documents	for	PFOA	and	PFOS.	The	peer	review	panel	met	in	August	2014.	The	EPA	has	stated	that	following the	peer	review	process	it	will	revise	its	health	effects	documents	and	use	them	to	establish	lifetime	health	advisories	for	PFOS	and PFOA	in	drinking	water.	Lifetime	health	advisories,	while	not	enforceable,	serve	as	guidance	and	are	benchmarks	for	determining	if concentrations	of	chemicals	in	tap	water	from	public	utilities	are	safe	for	public	consumption.	Once	finalized,	the	EPA	stated	that	the lifetime	health	advisories	are	expected	to	supersede	the	provisional	health	advisories	for	PFOA	and	PFOS	in	drinking	water	issued	by the	EPA	in	2009	—	currently	at	0.4	micrograms	per	liter	for	PFOA	and	0.2	micrograms	per	liter	for	PFOS.	In	an	effort	to	collect exposure	information	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	supplies	to	determine	the	extent	of their	occurrence.	The	EPA	is	reporting	results	from	this	exercise	on	a	rolling	basis	that	will	continue	in	2016.	Through	year-end	2015, the	EPA	has	reported	results	for	4,764	public	water	supplies	nationwide.	None	of	these	have	reported	PFOA	above	the	provisional health	advisory	level	issued	by	the	EPA	in	2009,	and	seventeen	have	reported	PFOS	levels	above	the	2009	provisional	health advisory.

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	Decatur,	Alabama,	Cottage	Grove,	Minnesota,	and Cordova,	Illinois	plants.

As	previously	reported,	the	Company	entered	into	a	voluntary	remedial	action	agreement	with	the	Alabama	Department	of Environmental	Management	(ADEM)	to	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 and	is	expected	to	be	completed	in	2018.

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	2016.

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

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	(the	"St.	John"	case),	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	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	June	2015,	the	plaintiffs	filed	an	amended	complaint	adding additional	defendants,	including	BFI	Waste	Management	Systems	of	Alabama,	LLC;	BFI	Waste	Management	of	North	America, LLC;	the	City	of	Decatur,	Alabama;	Morgan	County,	Alabama;	Municipal	Utilities	Board	of	Decatur;	and	Morgan	County,	Alabama, d/b/a	Decatur	Utilities.	In	September	2015,	the	court	issued	a	scheduling	order	staying	discovery	pending	mediation	which	occurred in	January	2016,	but	did	not	resolve	the	case.	Discovery	relating	to	the	class	certification	will	begin,	and	the	class	certification	hearing is	scheduled	for	November	2016.

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	(the "Chandler"	case)	granted	the	Company's	motion	to	abate	the	case,	effectively	putting	the	case	on	hold	pending	the	resolution	of	class certification	issues	in	the	St.	John	case.	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	(the	"Stover"	case)	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	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	St. John	case.

In	October	2015,	West	Morgan-East	Lawrence	Water	&	Sewer	Authority	("Water	Authority")	filed	an	individual	complaint	against 3M	Company,	Dyneon,	L.L.C,	and	Daikin	America,	Inc.,	in	the	U.S.	District	Court	for	the	Northern	District	of	Alabama.		The complaint	also	includes	representative	plaintiffs	who	brought	the	complaint	on	behalf	of	themselves,	and	a	class	of	all	owners	and possessors	of	property	who	use	water	provided	by	the	Water	Authority	and	five	local	water	works	to	which	the	Water	Authority supplies	water	(collectively,	the	"Water	Utilities").		The	complaint	seeks	compensatory	and	punitive	damages	and	injunctive	relief based	on	allegations	that	the	defendants'	chemicals,	including	PFOA	and	PFOS	from	their	manufacturing	processes	in	Decatur,	have contaminated	the	water	in	the	Tennessee	River	at	the	water	intake,	and	that	the	chemicals	cannot	be	removed	by	the	water	treatment processes	utilized	by	the	Water	Authority.

In	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	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	bio	solids	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	April	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	April	2014,	the	Minnesota	Supreme	Court	affirmed	in	part,	reversed	in	part,	and remanded	the	case	to	the	district	court	for	further	proceedings.	The	district	court	took	evidence	on	the	disqualification	issues	at	a hearing	in	October	2015.	In	February	2016,	the	district	court	ruled	that	Covington	violated	the	professional	ethics	rule	against representing	a	client	(here	the	State	of	Minnesota)	in	the	same	or	substantially	related	matter	where	that	person's	interests	are materially	adverse	to	the	interests	of	a	former	client	(3M).	The	district	court,	however,	denied	3M's	motion	to	disqualify	Covington because	it	further	found	that	3M	impliedly	waived	by	delaying	to	assert	the	conflict.	3M	is	reviewing	the	district	court's	opinion	to determine	next	steps.	Other	activity	in	the	case	had	been	stayed	pending	the	outcome	of	the	disqualification	issue.	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.

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	any	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.

# Environmental	Liabilities	and	Insurance	Receivables

As	of	December	31,	2015,	the	Company	had	recorded	liabilities	of	$43	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,	2015,	the	Company	had	recorded	liabilities	of	$35	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,	2015,	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	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	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	constituted	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	was	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. 	In	April,	2014,	the	court	issued	an	order	denying	3M's	motions	to	set	aside	the	jury's	verdict.	In	addition,	the	court	found	two	3M patents	unenforceable	due	to	inequitable	conduct.	The	court	accepted	the	special	master's	recommendation	as	to	the	amount	of attorneys'	fees	to	be	awarded	as	damages,	and	entered	judgment	against	3M	in	the	amount	of	approximately	$26	million.	In	July	2014, 3M	filed	a	notice	of	appeal	of	the	judgment	to	the	U.S.	Court	of	Appeals	for	the	Federal	Circuit.	On	February	10,	2016,	the	U.S.	Court of	Appeals	for	the	Federal	Circuit	issued	its	decision	affirming	the	lower	court's	judgment.	3M	is	reviewing	the	appellate	court's decision	to	determine	next	steps.	The	impact	of	the	appellate	court's	decision	is	not	material	to	the	Company's	consolidated	results	of operations	or	financial	condition.

# 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	and	that	EDF	thoroughly	analyzed	and	tested	the	splices	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	submitted	his	report	to	the	commercial	court	in	May	2014.	The	expert	found	potential	defects	in	3M's	product and	found	that	EDF	incurred	damages	in	excess	of	100	million	Euros.	The	expert's	opinion	is	not	dispositive	of	liability	or	damages and	is	subject	to	numerous	factual	and	legal	challenges	that	will	be	raised	with	the	court.	The	parties	are	briefing	the	court	on	their respective	positions.	Once	the	briefing	is	complete,	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.	Those two	cases	are	still	pending.	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	the	claims	in	the	German	litigation.	The	Company	has	also	settled	without litigation	the	claims	of	two	other	customers	arising	out	of	the	same	issue.	The	amounts	paid	are	not	material	to	the	Company's consolidated	results	of	operations	or	financial	condition.

As	of	December	31,	2015,	the	Company	is	a	named	defendant	in	122	lawsuits,	most	of	which	are	pending	in	federal	or	state	court	in Minnesota,	in	which	the	plaintiffs	claim	they	underwent	various	joint	arthroplasty,	cardiovascular,	and	other	surgeries	and	later developed	surgical	site	infections	due	to	the	use	of	the	Bair	Hugger™	patient	warming	system.		The	U.S.	Judicial	Panel	on Multidistrict	Litigation	granted	the	plaintiffs'	motion	to	transfer	and	consolidate	all	cases	pending	in	federal	courts	to	the	U.S.	District Court	for	the	District	of	Minnesota	to	be	managed	in	a	multi-district	proceeding	during	the	pre-trial	phase	of	the	litigation.

The	Bair	Hugger™	product	line	was	acquired	by	3M	as	part	of	the	2010	acquisition	of	Arizant,	Inc.,	a	leading	manufacturer	of	patient warming	solutions	designed	to	prevent	hypothermia	and	maintain	normal	body	temperature	in	surgical	settings.	No	liability	has	been recorded	for	this	matter	because	the	Company	believes	that	any	such	liability	is	not	probable	and	estimable	at	this	time.

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	15.	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	20,328,681	as	of	December	31, 2015.	There	were	approximately	9,200	participants	with	outstanding	options,	restricted	stock,	or	restricted	stock	units	at December	31,	2015.

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 35	percent	of	the	2015	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).

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	2015,	2014	and	2013.

# Stock-Based	Compensation	Expense

|  |  | Years	ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| (Millions) | 2015 | 2014 | 2013 |
| Cost\tof\tsales | $46 | $47 | $27 |
| Selling,\tgeneral\tand\tadministrative\texpenses | 185 | 192 | 183 |
| Research,\tdevelopment\tand\trelated\texpenses | 45 | 41 | 30 |
| Stock-based\tcompensation\texpenses | $276 | $280 | $240 |
| Income\ttax\tbenefits | $(87) | $(79) | $(71) |
| Stock-based\tcompensation\texpenses,\tnet\tof\ttax | $189 | $201 | $169 |

# 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 | 39,235,557 | $90.38 | 43,938,778 | $83.84 | 56,565,030 | $80.33 |
| Granted: |  |  |  |  |  |  |
| Annual | 5,529,544 | 165.91 | 5,736,183 | 126.77 | 6,220,810 | 101.55 |
| Progressive\t(Reload) | — | — | \t— | \t— | 140,447 | 109.83 |
| Other | — | — | \t— | \t— | 191 | 119.62 |
| Exercised | (5,978,382) | 83.74 | (10,219,261) | 82.37 | (18,825,218) | 79.25 |
| Canceled | (234,274) | 128.99 | (220,143) | 105.11 | (162,482) | 89.92 |
| December\t31 | 38,552,445 | $102.01 | 39,235,557 | $90.38 | 43,938,778 | $83.84 |
| Options\texercisable |  |  |  |  |  |  |
| December\t31 | 27,262,062 | $85.97 | 27,502,208 | $81.42 | 32,038,228 | $79.58 |

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,	2015,	there	was	$69	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,	2015,	the	weighted-average	remaining contractual	life	was	66	months	and	the	aggregate	intrinsic	value	was	$1.958	billion.	For	options	exercisable	at	December	31,	2015,	the weighted-average	remaining	contractual	life	was	52	months	and	the	aggregate	intrinsic	value	was	$1.763	billion.

The	total	intrinsic	values	of	stock	options	exercised	during	2015,	2014	and	2013	was	$465	million,	$615	million	and	$562	million, respectively.	Cash	received	from	options	exercised	during	2015,	2014	and	2013	was	$501	million,	$842	million	and	$1.492	billion, respectively.	The	Company's	actual	tax	benefits	realized	for	the	tax	deductions	related	to	the	exercise	of	employee	stock	options	for 2015,	2014	and	2013	was	$172	million,	$226	million	and	$208	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.	As	discussed	earlier,	the	progressive	(reload)	feature	was	eliminated	in 2005,	resulting	in	no	activity	in	the	below	table	for	2014	and	thereafter.

# Stock	Option	Assumptions

|  |  | Annual |  | Progressive	(Reload) | Progressive	(Reload) |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 |
| Exercise\tprice | $165.94 | $126.72 | $101.49 | $ \t— | $ \t— | $109.84 |
| Risk-free\tinterest\trate | 1.5 % | 1.9 % | 1.2 % | \t— % | \t— % | 0.2 % |
| Dividend\tyield | 2.5 % | 2.6 % | 2.7 % | \t— % | \t— % | 2.7 % |
| Volatility | 20.1 % | 20.8 % | 20.0 % | \t— % | \t— % | 16.3 % |
| Expected\tlife\t(months) | 76 | 75 | 75 | \t— | \t— | 12 |
| Black-Scholes\tfair\tvalue | $23.98 | $19.63 | $13.46 | $ \t— | $ \t— | $6.42 |

Expected	volatility	is	a	statistical	measure	of	the	amount	by	which	a	stock	price	is	expected	to	fluctuate	during	a	period.	For	the	2015 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:

|  | 2015<br>Number	of<br>Awards | Weighted<br>Average<br>	 Grant	Date<br>Fair	Value | 2014<br>Number	of<br>Awards | Weighted<br>Average<br>Grant	Date<br>Fair	Value | 2013<br>Number	of<br>Awards | Weighted<br>Average<br>Grant	Date<br>Fair	Value |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Nonvested\tbalance\t— |  |  |  |  |  |  |
| As\tof\tJanuary\t1 | 2,817,786 | $104.41 | 3,105,361 | $92.31 | 3,261,562 | $85.17 |
| Granted |  |  |  |  |  |  |
| Annual | 671,204 | 165.86 | 798,615 | 126.79 | 946,774 | 101.57 |
| Other | 26,886 | 156.94 | 78,252 | 152.74 | 44,401 | 111.19 |
| Vested | (1,010,612) | 89.99 | (1,100,675) | 90.37 | (1,100,095) | 79.93 |
| Forfeited | (64,176) | 118.99 | (63,767) | 97.23 | (47,281) | 90.82 |
| As\tof\tDecember\t31 | 2,441,088 | $127.47 | 2,817,786 | $104.41 | 3,105,361 | $92.31 |

As	of	December	31,	2015,	there	was	$84	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, 2015,	2014	and	2013	was	$166	million,	$145	million	and	$114	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,	2015,	2014	and 2013	was	$62	million,	$54	million	and	$43	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	2015	performance	criteria	for	these	performance	shares	(organic	volume	growth,	return	on	invested	capital,	free	cash	flow conversion,	and	earnings	per	share	growth)	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.	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.

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

|  | 2015<br>Number	of<br>Awards | Weighted<br>Average<br>Grant	Date<br>Fair	Value | 2014<br>Number	of<br>Awards | Weighted<br>Average<br>	 Grant	Date<br>Fair	Value | 2013<br>Number	of<br>Awards | Weighted<br>Average<br>	 Grant	Date<br>Fair	Value |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Undistributed\tbalance\t— |  |  |  |  |  |  |
| As\tof\tJanuary\t1 | 1,099,752 | $102.65 | 895,635 | $88.12 | 1,089,084 | $79.27 |
| Granted | 227,798 | 158.88 | 305,225 | 124.89 | 353,734 | 96.87 |
| Distributed | (323,938) | 83.08 | (277,358) | 84.74 | (507,083) | 75.16 |
| Performance\tchange | (106,760) | 127.70 | 212,461 | 109.74 | (6,949) | 77.01 |
| Forfeited | (25,660) | 125.33 | (36,212) | 109.44 | (33,151) | 91.34 |
| As\tof\tDecember\t31 | 871,192 | $120.89 | 1,099,752 | $102.65 | 895,635 | $88.12 |

As	of	December	31,	2015,	there	was	$17	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	10	months.	During	the	years	ended December	31,	2015,	2014	and	2013,	the	total	fair	value	of	performance	shares	that	were	distributed	were	$54	million,	$35	million	and $52	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,	2015,	2014	and	2013	was	$15	million,	$11	million	and	$16	million,	respectively.

# General	Employees'	Stock	Purchase	Plan	(GESPP):

As	of	December	31,	2015,	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

|  | 2015<br>Shares | Weighted<br>Average<br>Exercise	Price | 2014<br>Shares | Weighted<br>Average<br>Exercise	Price | 2013<br>Shares | Weighted<br>Average<br>Exercise	Price |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Options\tgranted | 1,007,669 | $133.52 | 1,073,956 | $118.73 | 1,259,247 | $93.46 |
| Options\texercised | (1,007,669) | 133.52 | (1,073,956) | 118.73 | (1,259,247) | 93.46 |
| Shares\tavailable\tfor\tgrant\t- |  |  |  |  |  |  |
| December\t31 | 28,104,335 |  | 29,112,004 |  | 30,185,960 |  |

The	weighted-average	fair	value	per	option	granted	during	2015,	2014	and	2013	was	$23.56,		$20.95	and	$16.49,	respectively.	The	fair value	of	GESPP	options	was	based	on	the	15%	purchase	price	discount.	The	Company	recognized	compensation	expense	for	GESSP options	of	$24	million	in	2015,	$22	million	in	2014	and	$21	million	in	2013.

# NOTE	16.	Business	Segments

3M's	businesses	are	organized,	managed	and	internally	grouped	into	segments	based	on	differences	in	markets,	products,	technologies and	services.	3M	manages	its	operations	in	five	business	segments:	Industrial;	Safety	and	Graphics;	Health	Care;	Electronics	and Energy;	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.	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	third	quarter	of	2015,	within	the	Health	Care	business	segment,	the	Company	formed	the	Oral	Care	Solutions Division,	which	combined	the	former	3M	ESPE	and	3M	Unitek	divisions.

# Business	Segment	Products

# Business	Segment	Information

|  |  | Net	Sales |  |  | Operating	Income |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 |
| Industrial | $10,328 | $10,990 | $10,657 | $2,263 | $2,389 | $2,307 |
| Safety\tand\tGraphics | 5,515 | 5,732 | 5,584 | 1,305 | 1,296 | 1,227 |
| Health\tCare | 5,420 | 5,572 | 5,334 | 1,724 | 1,724 | 1,672 |
| Electronics\tand\tEnergy | 5,220 | 5,604 | 5,393 | 1,102 | 1,115 | 954 |
| Consumer | 4,422 | 4,523 | 4,435 | 1,046 | 995 | 945 |
| Corporate\tand\tUnallocated | 1 | 4 | 8 | (355) | (251) | (321) |
| Elimination\tof\tDual\tCredit | (632) | (604) | (540) | (139) | (133) | (118) |
| Total\tCompany | $30,274 | $31,821 | $30,871 | $6,946 | $7,135 | $6,666 |

|  |  | Assets |  | Depreciation	&amp;	Amortization | Depreciation	&amp;	Amortization | Depreciation	&amp;	Amortization | Capital	Expenditures | Capital	Expenditures | Capital	Expenditures |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| (Millions) | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 |
| Industrial | $9,203 | $8,508 | $8,833 | $374 | $383 | $373 | $317 | $395 | $511 |
| Safety\tand\tGraphics | 7,564 | 4,939 | 5,122 | 245 | 234 | 255 | 199 | 221 | 207 |
| Health\tCare | 4,403 | 4,344 | 4,329 | 179 | 181 | 171 | 168 | 169 | 120 |
| Electronics\tand\tEnergy | 4,815 | 5,116 | 5,336 | 291 | 271 | 260 | 211 | 232 | 261 |
| Consumer | 2,393 | 2,434 | 2,516 | 108 | 108 | 106 | 124 | 111 | 128 |
| Corporate\tand\tUnallocated | 4,340 | 5,868 | 7,168 | 238 | 231 | 206 | 442 | 365 | 438 |
| Total\tCompany | $32,718 | $31,209 | $33,304 | $1,435 | $1,408 | $1,371 | $1,461 | $1,493 | $1,665 |

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	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	17.		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.

|  |  |  |  |  |  |  | Property,	Plant	and | Property,	Plant	and |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Net\tSales |  |  | Operating\tIncome |  | Equipment\t-\tnet | Equipment\t-\tnet |
| (Millions) | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2015 | 2014 |
| United\tStates | $12,049 | $11,714 | $11,151 | $2,647 | $2,540 | $2,210 | $4,838 | $4,619 |
| Asia\tPacific | 9,041 | 9,418 | 9,047 | 2,580 | 2,487 | 2,386 | 1,647 | 1,798 |
| Europe,\tMiddle\tEast\tand\tAfrica | 6,228 | 7,198 | 7,085 | 1,017 | 1,234 | 1,168 | 1,531 | 1,502 |
| Latin\tAmerica\tand\tCanada | 2,982 | 3,504 | 3,611 | 706 | 867 | 908 | 499 | 570 |
| Other\tUnallocated | (26) | (13) | (23) | (4) | 7 | (6) | — | — |
| Total\tCompany | $30,274 | $31,821 | $30,871 | $6,946 | $7,135 | $6,666 | $8,515 | $8,489 |

Asia	Pacific	included	China/Hong	Kong	net	sales	to	customers	of	$2.945	billion	in	2015,	which	approached	10	percent	of consolidated	worldwide	sales.	China/Hong	Kong	net	property,	plant	and	equipment	(PP&E)	was	$584	million	at	December	31,	2015.

# NOTE	18.		Quarterly	Data	(Unaudited)

| (Millions,	except	per-share	amounts) | First | Second | Third | Fourth | Year |
| :--- | :--- | :--- | :--- | :--- | :--- |
| 2015 | Quarter | Quarter | Quarter | Quarter | 2015 |
| Net\tsales | $7,578 | $7,686 | $7,712 | $7,298 | $30,274 |
| Cost\tof\tsales | 3,821 | 3,858 | 3,877 | 3,827 | 15,383 |
| Net\tincome\tincluding\tnoncontrolling\tinterest | 1,201 | 1,303 | 1,298 | 1,039 | 4,841 |
| Net\tincome\tattributable\tto\t3M | 1,199 | 1,300 | 1,296 | 1,038 | 4,833 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t-\tbasic | 1.88 | 2.06 | 2.09 | 1.69 | 7.72 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t-\tdiluted | 1.85 | 2.02 | 2.05 | 1.66 | 7.58 |

| (Millions,	except	per-share	amounts) | First | Second | Third | Fourth | Year |
| :--- | :--- | :--- | :--- | :--- | :--- |
| 2014 | Quarter | Quarter | Quarter | Quarter | 2014 |
| Net\tsales | $7,831 | $8,134 | $8,137 | $7,719 | $31,821 |
| Cost\tof\tsales | 4,031 | 4,184 | 4,205 | 4,027 | 16,447 |
| Net\tincome\tincluding\tnoncontrolling\tinterest | 1,225 | 1,283 | 1,311 | 1,179 | 4,998 |
| Net\tincome\tattributable\tto\t3M | 1,207 | 1,267 | 1,303 | 1,179 | 4,956 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t-\tbasic | 1.83 | 1.94 | 2.02 | 1.85 | 7.63 |
| Earnings\tper\tshare\tattributable\tto\t3M\tcommon\tshareholders\t-\tdiluted | 1.79 | 1.91 | 1.98 | 1.81 | 7.49 |

Gross	profit	is	calculated	as	net	sales	minus	cost	of	sales.

Refer	to	Note	4	for	discussion	of	"Restructuring	Actions",	which	reduced	diluted	earnings	per	share	by	$0.14	in	the	fourth	quarter	of 2015.

# 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	(2013).	Based	on	the	assessment,	management	concluded	that,	as	of December	31,	2015,	the	Company's	internal	control	over	financial	reporting	is	effective.	Management's	assessment	of	the effectiveness	of	the	Company's	internal	control	over	financial	reporting	as	of	December	31,	2015	excluded	Capital	Safety	Group S.A.R.L.	and	Polypore	International,	Inc.'s	Separation	Media	Business,	which	were	both	acquired	by	the	Company	in	August	2015	in purchase	business	combinations.	These	acquired	businesses'	total	assets	and	total	net	sales,	in	the	aggregate,	represented	less	than	2 percent	and	less	than	1	percent,	respectively,	of	the	Company's	consolidated	financial	statement	amounts	as	of	and	for	the	year	ended December	31,	2015.	Companies	are	allowed	to	exclude	acquisitions	from	their	assessment	of	internal	control	over	financial	reporting during	the	first	year	of	acquisition	while	integrating	the	acquired	company	under	guidelines	established	by	the	Securities	and Exchange	Commission.	The	Company's	internal	control	over	financial	reporting	as	of	December	31,	2015	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,	2015.

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,	2015)	for	its	annual	meeting	to	be	held	on	May	10, 2016,	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	10,	2016	("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,"	"Corporate	Governance	At	3M		—	Identification,	Evaluation,	and	Selection	of	Nominees,,"	"—Nominees	Proposed	By Stockholders	For	Consideration	By	the	Committee,"		"—Stockholder	Nominations"	and	"—Role	of	the	Nominating	and	Governance Committee"		and	"Corporate	Governance	At	3M	--	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	in	the	"Executive	Compensation"	section under	the	captions	"Compensation	Committee	Report"	and	"Compensation	Committee	Interlocks	and	Insider	Participation"	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 "Security	Ownership	of	Management"	and	"Security	Ownership	of	Certain	Beneficial	Owners"	in	the	3M	Proxy	Statement	and	such information	is	incorporated	by	reference	herein.

# Equity	compensation	plans	information	as	of	December	31,	2015	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 | 38,522,445 | $102.01 | — |
| Restricted\tstock\tunits | 2,441,088 |  | — |
| Performance\tshares | 871,192 |  | — |
| Non-employee\tdirector\tdeferred\tstock\tunits | 241,156 |  | — |
| Total | 42,075,881 |  | 20,328,681 |
| Employee\tstock\tpurchase\tplan | — |  | 28,104,335 |
| Subtotal | 42,075,881 |  | 48,433,016 |
| Total | 42,075,881 |  | 48,433,016 |

(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	section	"Corporate	Governance	at	3M"	under	the	captions	"Director	Independence"	and	"Related	Person Transaction	Policy	and	Procedures"	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	in	the	section	entitled	"Audit	Committee	Matters"	under the	designation	"Audit	Committee	Policy	on	Pre-Approval	of	Audit	and	Permissible	Non-Audit	Services	of	the	Independent Accounting	Firm"	and	"Fees	of	the	Independent	Accounting	Firm"	in	the	3M	Proxy	Statement	and	such	information	is	incorporated by	reference	herein.

# PART	IV

# 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	47	as	follows:

| statements	on	page	47	as	follows: |  |
| :--- | :--- |
|  | Page\tNumber |
| Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 49 |
| Consolidated\tStatement\tof\tIncome\tfor\tthe\tyears\tended\tDecember\t31,\t2015,\t2014\tand\t2013 | 50 |
| Consolidated\tStatement\tof\tComprehensive\tIncome\tfor\tthe\tyears\tended\tDecember\t31,\t2015,\t2014\tand\t2013 | 51 |
| Consolidated\tBalance\tSheet\tat\tDecember\t31,\t2015\tand\t2014 | 52 |
| Consolidated\tStatement\tof\tChanges\tin\tEquity\tfor\tthe\tyears\tended\tDecember\t31,\t2015,\t2014\tand\t2013 | 53 |
| Consolidated\tStatement\tof\tCash\tFlows\tfor\tthe\tyears\tended\tDecember\t31,\t2015,\t2014\tand\t2013 | 54 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 55-117 |

(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	10.29	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.

(3.2) Amended	and	Restated	Bylaws,	as	adopted	as	of	November	10,	2015,	are	incorporated	by	reference	from	our	Form	8-K dated	November	10,	2015.

(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	2,	2016)	is	filed	herewith.

(10.2) 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.

(10.3) 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.

(10.4) 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.

(10.5) 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.

(10.6) 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.

(10.7) 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.

(10.8) 3M	2005	Management	Stock	Ownership	Program	(including	amendments	through	February	2,	2016)	is	filed	herewith.

(10.9) 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.

(10.10) 3M	VIP	Excess	Plan	is	incorporated	by	reference	from	our	Form	8-K	dated	November	14,	2008.

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

(10.12) 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.

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

(10.14) 3M	Deferred	Compensation	Plan,	as	amended	through	February	2008,	is	incorporated	by	reference	from	our	Form	8-K dated	February	14,	2008.

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

(10.16) 3M	Deferred	Compensation	Excess	Plan	is	incorporated	by	reference	from	our	Form	10-K	for	the	year	ended December	31,	2009.

(10.17) 3M	Performance	Awards	Deferred	Compensation	Plan	is	incorporated	by	reference	from	our	Form	10-K	for	the	year ended	December	31,	2009.

(10.18) 3M	Executive	Annual	Incentive	Plan	is	incorporated	by	reference	from	our	Form	8-K	dated	May	14,	2007.

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

(10.20) 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.

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

(10.22) 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.

(10.23) 3M	Executive	Life	Insurance	Plan,	as	amended,	is	incorporated	by	reference	from	our	Form	10-K	for	the	year	ended December	31,	2003.

(10.24) 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.

(10.25) 3M	policy	on	reimbursement	of	incentive	payments	is	incorporated	by	reference	from	our	Form	10-K	for	the	year ended	December	31,	2006.

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

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

(10.28) 3M	Nonqualified	Pension	Plan	III	is	incorporated	by	reference	from	our	Form	8-K	dated	November	14,	2008.

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

# (10.30) Amended	and	restated	five-year	credit	agreement	as	of	August	5,	2014,	is	incorporated	by	reference	from	our	Form	8- K	dated	August	8,	2014.

(10.31) 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,	if	any,	specifically	identified	above:

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

(18) Preferability	letter	regarding	change	in	accounting	principles.

(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,	2015,	filed	with	the	SEC	on	February	11,	2016,	formatted	in	Extensible	Business	Reporting	Language (XBRL):	(i)	the	Consolidated	Statement	of	Income	for	the	years	ended	December	31,	2015,	2014	and	2013,	(ii)	the Consolidated	Statement	of	Comprehensive	Income	for	the	years	ended	December	31,	2015,	2014	and	2013,	(iii)	the Consolidated	Balance	Sheet	at	December	31,	2015	and	2014,	(iv)	the	Consolidated	Statement	of	Changes	in	Equity	for the	years	ended	December	31,	2015,	2014	and	2013,	(v)	the	Consolidated	Statement	of	Cash	Flows	for	the	years	ended December	31,	2015,	2014	and	2013,	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.

By		/s/		Nicholas	C.	Gangestad

	Nicholas	C.	Gangestad,

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	11,	2016.

Nicholas	C.	Gangestad,	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.

Nicholas	C.	Gangestad,	Attorney-in-Fact


what was the ratio of the company contribution to the us qualified and non-qualified pension benefits for 2015 compared to 2014
  contribution_2015 = 264
 contribution_2014 = 210
 ratio = contribution_2015 / contribution_2014
 answer = ratio