3M(MMM) - 2022 Q4 - Annual Report

Workforce and Employment - 3M employed approximately 92,000 people as of December 31, 2022, with 37,000 in the United States and 55,000 internationally[35]. - 3M's total number of employees decreased from 95,000 in 2021 to 92,000 in 2022, reflecting the impact of acquisitions and divestitures[183]. - 3M's total compensation includes competitive market-based pay and comprehensive benefits for employees, supporting talent attraction and retention[39]. - The company emphasizes a culture of health and well-being through various employee assistance programs and comprehensive health care benefits[36]. - The company plans to invest $50 million from 2020 to 2025 to address racial opportunity gaps through workforce development initiatives[38]. - The company focuses on diversity, equity, and inclusion initiatives to enhance its workforce and innovation culture[38]. Financial Performance - For the year ended December 31, 2022, total company net sales were$ 34,229 million, a decrease of 3.2% compared to $35,355 million in 2021[132]. - The adjusted earnings per diluted share for 2022 was$ 10.10, reflecting a decrease of 6% from $10.73 in 2021[131]. - Operating income margin for 2022 was 19.1%, down from 20.8% in 2021, while diluted earnings per share increased to$ 10.18 from $10.12[110]. - 3M's total sales decreased by 3.2% in 2022, with organic sales growth of 1.0% compared to 7.3% in 2021[161]. - The effective tax rate for 2022 was 9.6%, a decrease of 8.2 percentage points from 2021, primarily due to a tax-efficient structure associated with the Food Safety business split-off[122]. - 3M incurred approximately$ 2.3 billion in pre-tax litigation costs in 2022, including $1.3 billion related to Combat Arms Earplugs litigation and$ 355 million for PFAS-related matters[106]. Business Segments and Operations - 3M's business segments include Safety and Industrial, Transportation and Electronics, Health Care, and Consumer, each focusing on specific market trends and opportunities[14]. - The Health Care segment reported operating income of $1,815 million in 2022, a decrease of 10.9% from$ 2,037 million in 2021[132]. - Operating income for the Safety and Industrial segment was $1,199 million in 2022, down 51.4% from$ 2,466 million in 2021[132]. - Transportation and Electronics segment sales fell by 3.9%, with organic sales growth of 1.2% impacted by semiconductor supply chain constraints[168][169]. - Health Care segment sales decreased by 2.0%, with organic sales down 0.9% due to COVID-related trends and inflationary pressures[174][178]. - Consumer sales decreased by 3.9% in 2022 compared to 2021, with organic sales growth in stationery and office and home care, while home improvement saw a decline[179]. Environmental and Regulatory Matters - The company is involved in remediation actions relating to environmental matters from past operations, with reserves for anticipated remediation costs recorded when they are probable and reasonably estimable[45]. - 3M faces liabilities related to certain fluorochemicals known as PFAS, which could adversely impact its results due to increasing regulations[62]. - The company has made necessary expenditures for compliance with applicable environmental laws and regulations, emphasizing environmental responsibility[44]. - Future costs of compliance with government regulations, including environmental regulations, may materially affect 3M's capital expenditures, earnings, or competitive position[46]. - 3M plans to exit all PFAS manufacturing by the end of 2025 and discontinue the use of PFAS across its product portfolio by the same date[65]. - The company has been voluntarily cooperating with various agencies in reviewing the environmental and health effects of certain PFAS produced by it[63]. Strategic Initiatives and Changes - 3M announced its intention to spin off the Health Care business as a separate public company in July 2022[14]. - The company completed the split-off of its Food Safety Division, resulting in a pre-tax gain of $2.7 billion[106]. - 3M plans to retain a 19.9% ownership position in the Health Care business after its planned spin-off[175]. - The company is undergoing a multi-year phased implementation of an ERP system to improve operational efficiency and productivity[81]. - 3M's operational execution and ability to integrate acquisitions and strategic alliances will significantly impact future results[78]. Market and Economic Conditions - Approximately 60 percent of 3M's revenues are derived from outside the United States, making the company susceptible to global economic and geopolitical risks[56]. - The global pandemic associated with COVID-19 has significantly increased economic and demand uncertainty, impacting 3M's operations and financial performance[59]. - 3M's operations are impacted by the global pandemic, affecting demand for products and causing supply chain disruptions[105]. - The company suspended operations of its subsidiaries in Russia in March 2022 and committed to a plan to exit related net assets through an intended sale of the subsidiaries[57]. Financial Management and Capital Allocation - Cash dividends declared and paid totaled$ 1.49 per share in 2022, compared to $1.48 per share in 2021[97]. - The company has authorized a repurchase program for up to$ 10 billion of its outstanding common stock, with no pre-established end date[98]. - 3M maintains a strong liquidity profile, with a commercial paper program allowing for a maximum of $5 billion outstanding, and no commercial paper was outstanding at the end of 2022[205]. - The company plans to continue returning cash to shareholders through dividends and share repurchases while investing in organic growth and capital expenditures[204]. - 3M expects to contribute approximately$ 100 million to $200 million to its global defined benefit pension and postretirement plans in 2023[141].