3M (MMM) 10-Q 2006 Q2 Quarterly report

EXHIBIT 12

3M COMPANY

AND SUBSIDIARIES

CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES

(Millions)

	Six months
	ended
	June 30,		Year		Year		Year		Year		Year
	2006		2005		2004		2003		2002		2001
EARNINGS
Income before income taxes, minority interest, and cumulative effect of accounting change*	$	2,519	$	4,828	$	4,303	$	3,448	$	2,775	$	1,988
Add:
Interest expense	55		101		88		103		100		143
Interest component of the ESOP benefit expense	4		10		12		14		16		18
Portion of rent under operating leases representative of the interest component	34		64		60		53		45		39
Less:
Equity in undistributed income of 20-50% owned companies	2		4		6		7		10		5
TOTAL EARNINGS AVAILABLE FOR FIXED CHARGES	$	2,610	$	4,999	$	4,457	$	3,611	$	2,926	$	2,183
FIXED CHARGES
Interest on debt	53		94		78		93		100		150
Interest component of the ESOP benefit expense	4		10		12		14		16		18
Portion of rent under operating leases representative of the interest component	34		64		60		53		45		39
TOTAL FIXED CHARGES	$	91	$	168	$	150	$	160	$	161	$	207
RATIO OF EARNINGS TO FIXED CHARGES	28.7		29.8		29.7		22.6		18.2		10.5

*As discussed in Note 1 to the Consolidated Financial Statements, effective January 1, 2006, 3M adopted SFAS No.123R. Since 3M elected to use the modified retrospective method prior periods have been restated, resulting in a reduction in earnings and in the ratio of earnings to fixed charges. 2006 includes net pre-tax losses which combined totaled $49 million for settlement costs of a previously disclosed antitrust class action and costs related to the Company’s current efforts to seek strategic alternatives for its branded pharmaceuticals business. 2003 includes a $93 million pre-tax loss related to an adverse ruling associated with a lawsuit filed by LePage’s Inc. 2002 and 2001 include net pre-tax losses of $202 million and $504 million, respectively, primarily related to the 2001/2002 corporate restructuring program.