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TableofContents
ReconciliationofEffectiveIncomeTaxRate
 2015  2014  2013
StatutoryU.S.taxrate 35.0 % 35.0 % 35.0 %
Stateincometaxes-netoffederalbenefit 1.1 0.9  0.9 
Internationalincometaxes-net  (3.8) (5.8) (6.3)
U.S.researchanddevelopmentcredit  (0.5) (0.4) (0.7)
Reservesfortaxcontingencies  (1.0) 0.6  1.2 
DomesticManufacturer’sdeduction  (1.8) (1.3) (1.6)
Allother-net 0.1  (0.1) (0.4)
Effectiveworldwidetaxrate 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.
The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.
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