EX-12 3 a05-17893_1ex12.htm EX-12

EXHIBIT 12

 

COMPUTATION OF RATIO OF INCOME FROM

CONTINUING OPERATIONS TO FIXED CHARGES

FOR NINE MONTHS ENDED SEPTEMBER 30,

(UNAUDITED)

 

(Dollars in millions)

 

2005

 

2004

 

 

 

 

 

 

 

Income from continuing operations before income taxes (1)

 

$

7,668

 

$

6,557

 

 

 

 

 

 

 

Add: Fixed charges, excluding capitalized interest

 

907

 

767

 

 

 

 

 

 

 

Income as adjusted before income taxes

 

$

8,575

 

$

7,324

 

 

 

 

 

 

 

Fixed charges:

 

 

 

 

 

Interest expense

 

$

562

 

$

417

 

Capitalized interest

 

10

 

8

 

Portion of rental expense representative of interest

 

345

 

350

 

 

 

 

 

 

 

Total fixed charges

 

$

917

 

$

775

 

 

 

 

 

 

 

Ratio of income from continuing operations to fixed charges

 

9.35

 

9.45

 

 

(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.

 

75


 

(This page is intentionally left blank.)

 

76


 

SEGMENT INFORMATION - ON CONTINUING OPERATIONS BASIS

(UNAUDITED)

 

(Dollars in millions)

 

Global
Services

 

Systems and
Technology
Group

 

Software

 

Three Months Ended September 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

11,687

 

$

4,988

 

$

3,819

 

Internal revenue

 

724

 

268

 

484

 

Total revenue

 

$

12,411

 

$

5,256

 

$

4,303

 

Pre-tax income/(loss)

 

$

1,153

 

$

385

 

$

1,173

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

2.5

%

6.4

%

6.1

%

Pre-tax income year-to-year change

 

15.9

%

(2.3

)%

29.3

%

Pre-tax income margin

 

9.3

%

7.3

%

27.3

%

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

11,312

 

$

4,665

 

$

3,621

 

Internal revenue

 

791

 

276

 

433

 

Total revenue

 

$

12,103

 

$

4,941

 

$

4,054

 

Pre-tax income/(loss)

 

$

995

 

$

394

 

$

907

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

8.2

%

8.0

%

22.4

%

 

Reconciliations to IBM as Reported:

 

(Dollars in millions)

 

Three Months Ended
September 30, 2005

 

Three Months Ended
September 30, 2004

 

Revenue:

 

 

 

 

 

Total reportable segments

 

$

23,144

 

$

25,054

 

Eliminations/other

 

(1,615

)

(1,705

)

Total IBM Consolidated

 

$

21,529

 

$

23,349

 

 

 

 

 

 

 

Pre-tax income:

 

 

 

 

 

Total reportable segments

 

$

3,035

 

$

2,581

 

Eliminations/other

 

(120

)

(396

)

Total IBM Consolidated

 

$

2,915

 

$

2,185

 

 

77


 

(Dollars in millions)

 

Global
Financing

 

Enterprise
Investments

 

Personal
Computing
Division

 

Total
Segments

 

Three Months Ended September 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

599

 

$

284

 

$

—

 

$

21,377

 

Internal revenue

 

289

 

2

 

—

 

1,767

 

Total revenue

 

$

888

 

$

286

 

$

—

 

$

23,144

 

Pre-tax income/(loss)

 

$

363

 

$

(39

)

$

—

 

$

3,035

 

 

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

(5.8

)%

10.4

%

nm

 

(7.6

)%

Pre-tax income year-to-year change

 

6.5

%

32.8

%

nm

 

17.6

%

Pre-tax income margin

 

40.9

%

(13.6

)%

nm

 

13.1

%

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

634

 

$

257

 

$

2,713

 

$

23,202

 

Internal revenue

 

309

 

2

 

41

 

1,852

 

Total revenue

 

$

943

 

$

259

 

$

2,754

 

$

25,054

 

Pre-tax income/(loss)

 

$

341

 

$

(58

)

$

2

 

$

2,581

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

36.2

%

(22.4

)%

0.1

%

10.3

%

 

78


 

(Dollars in millions)

 

Global
Services

 

Systems and
Technology
Group

 

Software

 

Nine Months Ended September 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

35,368

 

$

14,132

 

$

11,191

 

Internal revenue

 

2,244

 

763

 

1,416

 

Total revenue

 

$

37,612

 

$

14,895

 

$

12,607

 

Pre-tax income/(loss)

 

$

1,876

 

$

737

 

$

2,948

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

4.7

%

3.9

%

6.5

%

Pre-tax income year-to-year change

 

(31.7

)%

(31.8

)%

17.4

%

Pre-tax income margin

 

5.0

%

4.9

%

23.4

%

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

33,608

 

$

13,530

 

$

10,545

 

Internal revenue

 

2,312

 

801

 

1,291

 

Total revenue

 

$

35,920

 

$

14,331

 

$

11,836

 

Pre-tax income/(loss)

 

$

2,747

 

$

1,081

 

$

2,512

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

7.6

%

7.5

%

21.2

%

 

Reconciliations to IBM as Reported:

 

(Dollars in millions)

 

Nine Months Ended
September 30, 2005

 

Nine Months Ended
September 30, 2004

 
 

Revenue:

 

 

 

 

 

Total reportable segments

 

$

71,678

 

$

73,580

 

Eliminations/other

 

(4,971

)

(4,958

)

Total IBM Consolidated

 

$

66,707

 

$

68,622

 

 

 

 

 

 

 

Pre-tax income:

 

 

 

 

 

Total reportable segments

 

$

6,357

 

$

7,176

 

Eliminations/other*

 

1,301

 

(555

)

Total IBM Consolidated

 

$

7,658

 

$

6,621

 

 

*                 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.

 

79


 

(Dollars in millions)

 

Global
Financing

 

Enterprise
Investments

 

Personal
Computing
Division

 

Total
Segments

 

Nine Months Ended September 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

1,798

 

$

837

 

$

2,876

 

$

66,202

 

Internal revenue

 

1,013

 

7

 

33

 

5,476

 

Total revenue

 

$

2,811

 

$

844

 

$

2,909

 

$

71,678

 

Pre-tax income/(loss)

 

$

1,092

 

$

(131

)

$

(165

)

$

6,357

 

 

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

(0.5

)%

4.6

%

nm

 

(2.6

)%

Pre-tax income year-to-year change

 

4.5

%

19.6

%

nm

 

(11.4

)%

Pre-tax income margin

 

38.8

%

(15.5

)%

nm

 

8.9

%

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2004:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

1,951

 

$

801

 

$

7,769

 

$

68,204

 

Internal revenue

 

875

 

6

 

91

 

5,376

 

Total revenue

 

$

2,826

 

$

807

 

$

7,860

 

$

73,580

 

Pre-tax income/(loss)

 

$

1,045

 

$

(163

)

$

(46

)

$

7,176

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

37.0

%

(20.2

)%

(0.6

)%

9.8

%

 

80