EX-12 3 a06-15152_1ex12.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)

 

2006

 

2005

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes (1)

 

$

5,330

 

$

4,750

 

 

 

 

 

 

 

Add: Fixed charges, excluding capitalized interest

 

675

 

609

 

 

 

 

 

 

 

Income as adjusted before income taxes

 

$

6,005

 

$

5,359

 

 

 

 

 

 

 

Fixed charges:

 

 

 

 

 

Interest expense

 

$

453

 

$

379

 

Capitalized interest

 

6

 

6

 

Portion of rental expense representative of interest

 

222

 

230

 

 

 

 

 

 

 

Total fixed charges

 

$

681

 

$

615

 

 

 

 

 

 

 

Ratio of income from continuing operations to fixed charges

 

8.82

 

8.71

 

(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.

 

77


 

(This page is intentionally left blank.)

 

 

78


 

SEGMENT INFORMATION - ON CONTINUING OPERATIONS BASIS

(UNAUDITED)

 

 

 

Global Services

 

 

 

 

 

Global

 

Global

 

Systems and

 

 

 

Technology

 

Business

 

Technology

 

(Dollars in millions)

 

Services

 

Services

 

Group

 

Three Months Ended June 30, 2006:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

7,955

 

$

3,939

 

$

5,014

 

Internal revenue

 

449

 

351

 

271

 

Total revenue

 

$

8,404

 

$

4,290

 

$

5,286

 

Pre-tax income

 

$

787

 

$

407

 

$

187

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

0.0

%

(4.7

)%

3.5

%

Pre-tax income year-to-year change

 

nm

 

nm

 

(30.4

)%

Pre-tax income margin

 

9.4

%

9.5

%

3.5

%

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

7,872

 

$

4,129

 

$

4,855

 

Internal revenue

 

535

 

374

 

254

 

Total revenue

 

$

8,407

 

$

4,503

 

$

5,109

 

Pre-tax income (loss)

 

$

(16

)

$

(68

)

$

269

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

(0.2

)%

(1.5

)%

5.3

%

 

Reconciliations to IBM as Reported:

 

 

 

Three Months Ended

 

Three Months Ended

 

(Dollars in millions)

 

June 30, 2006

 

June 30, 2005

 

Total reportable segments

 

$

23,677

 

$

24,008

 

Eliminations/other

 

(1,787

)

(1,737

)

Total IBM Consolidated

 

$

21,890

 

$

22,270

 

Pre-tax income:

 

 

 

 

 

Total reportable segments

 

$

2,856

 

$

1,283

 

Eliminations/other

 

32

 

1,449

*

Total IBM Consolidated

 

$

2,889

 

$

2,733

 

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

nm - not meaningful

 

79


 

 

 

Personal

 

 

 

 

 

Global

 

Computing

 

Total

 

 

 

Software

 

Financing

 

Division

 

Segments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

4,241

 

$

576

 

$

—

 

$

21,725

 

543

 

338

 

—

 

1,952

 

$

4,784

 

$

914

 

$

—

 

$

23,677

 

$

1,156

 

$

319

 

$

—

 

$

2,856

 

 

 

 

 

 

 

 

 

 

 

 

 

5.6

%

2.1

%

nm

 

(1.4

)%

27.1

%

(5.7

)%

nm

 

122.5

%

24.2

%

34.9

%

nm

 

12.1

%

 

 

 

 

 

 

 

 

$

4,056

 

$

620

 

$

557

 

$

22,089

 

474

 

275

 

7

 

1,919

 

$

4,530

 

$

895

 

$

564

 

$

24,008

 

$

909

 

$

338

 

$

(149

)

$

1,283

 

 

 

 

 

 

 

 

 

 

 

 

 

20.1

%

37.8

%

(26.4

)%

5.3

%

nm - not meaningful

 

80


 

SEGMENT INFORMATION - ON CONTINUING OPERATIONS BASIS

(UNAUDITED)

 

 

 

Global Services

 

 

 

 

 

Global

 

Global

 

Systems and

 

 

 

Technology

 

Business

 

Technology

 

(Dollars in millions)

 

Services

 

Services

 

Group

 

Six Months Ended June 30, 2006:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

15,674

 

$

7,787

 

$

9,433

 

Internal revenue

 

900

 

687

 

552

 

Total revenue

 

$

16,575

 

$

8,474

 

$

9,985

 

Pre-tax income

 

$

1,631

 

$

763

 

$

169

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

(1.4

)%

(2.7

)%

3.6

%

Pre-tax income year-to-year change

 

153.2

%

nm

 

(45.3

)%

Pre-tax income margin

 

9.8

%

9.0

%

1.7

%

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

15,694

 

$

8,016

 

$

9,144

 

Internal revenue

 

1,109

 

697

 

495

 

Total revenue

 

$

16,803

 

$

8,713

 

$

9,639

 

Pre-tax income (loss)

 

$

644

 

$

92

 

$

309

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

3.8

%

1.1

%

3.2

%

 

 

Reconciliations to IBM as Reported:

 

 

 

Six Months Ended

 

Six Months Ended

 

(Dollars in millions)

 

June 30, 2006

 

June 30, 2005

 

Revenue:

 

 

 

 

 

Total reportable segments

 

$

46,098

 

$

48,794

 

Eliminations/other

 

(3,549

)

(3,616

)

Total IBM Consolidated

 

$

42,549

 

$

45,178

 

 

 

 

 

 

 

Pre-tax income:

 

 

 

 

 

Total reportable segments

 

$

5,473

 

$

3,323

 

Eliminations/other

 

(145

)

1,419

*

Total IBM Consolidated

 

$

5,328

 

$

4,743

 

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

 

nm - not meaningful

 

81


 

 

 

 

 

Personal

 

 

 

 

 

Global

 

Computing

 

Total

 

Software

 

Financing

 

Division

 

Segments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

8,147

 

$

1,158

 

$

—

 

$

42,200

 

1,057

 

702

 

—

 

3,898

 

$

9,205

 

$

1,860

 

$

—

 

$

46,098

 

$

2,177

 

$

733

 

$

—

 

$

5,473

 

 

 

 

 

 

 

 

 

4.5

%

(3.3

)%

nm

 

(5.5

)%

27.0

%

0.5

%

nm

 

64.7

%

23.6

%

39.4

%

nm

 

11.9

%

 

 

 

 

 

 

 

 

$

7,871

 

$

1,199

 

$

2,876

 

$

44,799

 

937

 

724

 

33

 

3,995

 

$

8,807

 

$

1,923

 

$

2,909

 

$

48,794

 

$

1,714

 

$

729

 

$

(165

)

$

3,323

 

 

 

 

 

 

 

 

 

19.5

%

37.9

%

(5.7

)%

6.8

%

nm - not meaningful

 

82