EX-12 3 a05-12302_4ex12.htm EX-12

EXHIBIT 12

 

COMPUTATION OF RATIO OF INCOME FROM

CONTINUING OPERATIONS TO FIXED CHARGES

FOR SIX MONTHS ENDED JUNE 30,

(UNAUDITED)

 

(Dollars in millions)

 

2005

 

2004

 

 

 

 

 

 

 

Income from continuing operations before income taxes (1)

 

$

4,750

 

$

4,430

 

 

 

 

 

 

 

Add: Fixed charges, excluding capitalized interest

 

609

 

514

 

 

 

 

 

 

 

Income as adjusted before income taxes

 

$

5,359

 

$

4,944

 

 

 

 

 

 

 

Fixed charges:

 

 

 

 

 

Interest expense

 

$

379

 

$

281

 

Capitalized interest

 

6

 

3

 

Portion of rental expense representative of interest

 

230

 

233

 

 

 

 

 

 

 

Total fixed charges

 

$

615

 

$

517

 

 

 

 

 

 

 

Ratio of income from continuing operations to fixed charges

 

8.71

 

9.56

 

 

(1) Income from continuing operations before income taxes excludes (a) amortization of capitalized interest and (b) the company’s share in the income and losses of less-than-fifty percent-owned affiliates.

 

73


 

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74


 

SEGMENT INFORMATION - ON CONTINUING OPERATIONS BASIS

(UNAUDITED)

 

 

 

 

 

Systems and

 

 

 

 

 

Global

 

Technology

 

 

 

(Dollars in millions)

 

Services

 

Group

 

Software

 

Three Months Ended June 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

11,985

 

$

4,855

 

$

3,821

 

Internal revenue

 

775

 

254

 

471

 

Total revenue

 

$

12,760

 

$

5,109

 

$

4,292

 

Pre-tax (loss)/income

 

$

(93

)

$

290

 

$

953

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

6.1

%

3.7

%

9.6

%

Pre-tax income year-to-year change

 

(110.1

)%

(48.4

)%

11.9

%

Pre-tax income margin

 

(0.7

)%

5.7

%

22.2

%

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

11,272

 

$

4,640

 

$

3,458

 

Internal revenue

 

759

 

285

 

457

 

Total revenue

 

$

12,031

 

$

4,925

 

$

3,915

 

Pre-tax income (loss)

 

$

921

 

$

562

 

$

852

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

7.7

%

11.4

%

21.8

%

 

Reconciliations to IBM as Reported:

 

 

 

Three Months Ended

 

Three Months Ended

 

(Dollars in millions)

 

June 30, 2005

 

June 30, 2004

 

Revenue:

 

 

 

 

 

Total reportable segments

 

$

23,884

 

$

24,790

 

Eliminations/other

 

(1,614

)

(1,692

)

Total IBM Consolidated

 

$

22,270

 

$

23,098

 

 

 

 

 

 

 

Pre-tax income:

 

 

 

 

 

Total reportable segments

 

$

1,281

 

$

2,615

 

Eliminations/other*

 

1,452

 

(129

)

Total IBM Consolidated

 

$

2,733

 

$

2,486

 

 

*            Includes the gain from the sale of the company’s Personal Computing business to Lenovo, the impact of the legal settlement with the Microsoft Corporation, and unallocated charges related to the company’s incremental restructuring actions in the second quarter of 2005.

 

75


 

 

 

 

 

 

 

Personal

 

 

 

 

 

Global

 

Enterprise

 

Computing

 

Total

 

(Dollars in millions)

 

Financing

 

Investments

 

Division

 

Segments

 

Three Months Ended June 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

620

 

$

261

 

$

557

 

$

22,099

 

Internal revenue

 

275

 

3

 

7

 

1,785

 

Total revenue

 

$

895

 

$

264

 

$

564

 

$

23,884

 

Pre-tax (loss)/income

 

$

338

 

$

(58

)

$

(149

)

$

1,281

 

 

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

(4.6

)%

(2.6

)%

nm

 

(3.7

)%

Pre-tax income year-to-year change

 

(0.3

)%

(18.4

)%

nm

 

(51.0

)%

Pre-tax income margin

 

37.8

%

(22.0

)%

(26.4

)%

5.4

%

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

652

 

$

269

 

$

2,679

 

$

22,970

 

Internal revenue

 

286

 

2

 

31

 

1,820

 

Total revenue

 

$

938

 

$

271

 

$

2,710

 

$

24,790

 

Pre-tax income (loss)

 

$

339

 

$

(49

)

$

(10

)

$

2,615

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

36.1

%

(18.1

)%

(0.4

)%

10.5

%

 

76


 

 

 

 

 

Systems and

 

 

 

 

 

Global

 

Technology

 

 

 

(Dollars in millions)

 

Services

 

Group

 

Software

 

Six Months Ended June 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

23,681

 

$

9,144

 

$

7,372

 

Internal revenue

 

1,520

 

495

 

932

 

Total revenue

 

$

25,201

 

$

9,639

 

$

8,304

 

Pre-tax income (loss)

 

$

723

 

$

352

 

$

1,775

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

5.8

%

2.7

%

6.7

%

Pre-tax income year-to-year change

 

(58.7

)%

(48.8

)%

10.6

%

Pre-tax income margin

 

2.9

%

3.7

%

21.4

%

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

22,296

 

$

8,865

 

$

6,924

 

Internal revenue

 

1,521

 

525

 

858

 

Total revenue

 

$

23,817

 

$

9,390

 

$

7,782

 

Pre-tax income (loss)

 

$

1,752

 

$

687

 

$

1,605

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

7.4

%

7.3

%

20.6

%

 

Reconciliations to IBM as Reported:

 

 

 

Six Months Ended

 

Six Months Ended

 

(Dollars in millions)

 

June 30, 2005

 

June 30, 2004

 

Revenue:

 

 

 

 

 

Total reportable segments

 

$

48,534

 

$

48,526

 

Eliminations/other

 

(3,356

)

(3,253

)

Total IBM Consolidated

 

$

45,178

 

$

45,273

 

 

 

 

 

 

 

Pre-tax income:

 

 

 

 

 

Total reportable segments

 

$

3,322

 

$

4,595

 

Eliminations/other*

 

1,421

 

(159

)

Total IBM Consolidated

 

$

4,743

 

$

4,436

 

 

*            Includes the gain from the sale of the company’s Personal Computing business to Lenovo, the impact of the legal settlement with the Microsoft Corporation, and unallocated charges related to the company’s incremental restructuring actions in the second quarter of 2005.

 

77


 

 

 

 

 

 

 

Personal

 

 

 

 

 

Global

 

Enterprise

 

Computing

 

Total

 

(Dollars in millions)

 

Financing

 

Investments

 

Division

 

Segments

 

Six Months Ended June 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

1,199

 

$

553

 

$

2,876

 

$

44,825

 

Internal revenue

 

724

 

5

 

33

 

3,709

 

Total revenue

 

$

1,923

 

$

558

 

$

2,909

 

$

48,534

 

Pre-tax income (loss)

 

$

729

 

$

(92

)

$

(165

)

$

3,322

 

 

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

2.1

%

1.8

%

nm

 

0.0

%

Pre-tax income year-to-year change

 

3.6

%

12.4

%

nm

 

(27.7

)%

Pre-tax income margin

 

37.9

%

(16.5

)%

(5.7

)%

6.8

%

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

1,317

 

$

544

 

$

5,056

 

$

45,002

 

Internal revenue

 

566

 

4

 

50

 

3,524

 

Total revenue

 

$

1,883

 

$

548

 

$

5,106

 

$

48,526

 

Pre-tax income (loss)

 

$

704

 

$

(105

)

$

(48

)

$

4,595

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

37.4

%

(19.2

)%

(0.9

)%

9.5

%

 

78