After-tax net unrealized gain (loss) anticipated to be reclassified from AOCI to the income statement within next twelve months

[Table of](#i7860c65eab2647ffbae7e3867c1cf525_7) [Contents](#i7860c65eab2647ffbae7e3867c1cf525_7)

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | Nine months ended September 30, |
|  |  | Qualified and Non-qualified Pension Benefits |  | Postretirement Benefits |
|  |  | United States | International |  |
| (Millions) |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |
| Net periodic benefit cost (benefit) |  |  |  |  |  |  |  |  |  |  |  |  |
| Operating expense |  |  |  |  |  |  |  |  |  |  |  |  |
| Service cost  |  | $ | 192  |  |  | $ | 216  |  |  | $ | 100  |  |  | $ | 125  |  |  | $ | 31  |  |  | $ | 35  |  |
| Non-operating expense |  |  |  |  |  |  |  |  |  |  |  |  |
| Interest cost  |  | 313  |  |  | 270  |  |  | 96  |  |  | 75  |  |  | 39  |  |  | 33  |  |
| Expected return on plan assets  |  | (723) |  |  | (792) |  |  | (211) |  |  | (244) |  |  | (52) |  |  | (58) |  |
| Amortization of transition asset |  | —  |  |  | —  |  |  | 1  |  |  | 2  |  |  | —  |  |  | —  |  |
| Amortization of prior service benefit |  | (18) |  |  | (18) |  |  | —  |  |  | (2) |  |  | (24) |  |  | (25) |  |
| Amortization of net actuarial loss  |  | 318  |  |  | 396  |  |  | 30  |  |  | 80  |  |  | 30  |  |  | 42  |  |
| Settlements, curtailments, special termination benefits and other  |  | —  |  |  | —  |  |  | —  |  |  | —  |  |  | 2  |  |  | 2  |  |
| Total non-operating expense (benefit) |  | (110) |  |  | (144) |  |  | (84) |  |  | (89) |  |  | (5) |  |  | (6) |  |
| Total net periodic benefit cost (benefit)  |  | $ | 82  |  |  | $ | 72  |  |  | $ | 16  |  |  | $ | 36  |  |  | $ | 26  |  |  | $ | 29  |  |

For the nine months ended September 30, 2022 contributions totaling $99 million were made to the Company’s U.S. and international pension plans and $3 million to its postretirement plans. For total year 2022, the Company expects to contribute in the range of $100 million to $200 million of cash to its global defined benefit pension and postretirement plans. The Company does not have a required minimum cash pension contribution obligation for its U.S. plans in 2022. Future contributions will depend on market conditions, interest rates and other factors. 3M’s annual measurement date for pension and postretirement assets and liabilities is December 31 each year, which is also the date used for the related annual measurement assumptions.NOTE 12. DerivativesThe Company uses interest rate swaps, currency swaps, and forward and option contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity price fluctuations. Note 14 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M's 2021 Annual Report on Form 10-K) explains the types of derivatives and financial instruments used by 3M, how and why 3M uses such instruments, and how such instruments are accounted for. It also contains information regarding previously initiated contracts or instruments.Additional information with respect to derivatives is included elsewhere as follows:•Impact on other comprehensive income of nonderivative hedging and derivative instruments is included in Note 7. •Fair value of derivative instruments is included in Note 13. •Derivatives and/or hedging instruments associated with the Company’s long-term debt are described in Note 12 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M’s 2021 Annual Report on Form 10-K).Refer to the section below titled Statement of Income Location and Impact of Cash Flow and Fair Value Derivative Instruments and Derivatives Not Designated as Hedging Instruments for details on the location within the consolidated statements of income for amounts of gains and losses related to derivative instruments designated as cash flow or fair value hedges (along with similar information relative to the hedged items) and derivatives not designated as hedging instruments. Additional information relative to cash flow hedges, fair value hedges, net investment hedges and derivatives not designated as hedging instruments is included below as applicable.Cash Flow Hedges:As of September 30, 2022, the Company had a balance of $143 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 $95 million (after-tax loss) related to the forward starting interest rate swap and treasury rate lock contracts, which will be amortized over the respective lives of the notes. Based on exchange rates as of September 30, 2022, of the total after-tax net unrealized balance as of September 30, 2022, 3M expects to reclassify approximately $166 million after-tax net unrealized gain over the next 12 months (with the impact offset by earnings/losses from underlying hedged items).21
