EX-12 3 a06-19062_7ex12.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)

 

2006

 

2005

 

Income from continuing operations before income taxes(1)

 

$

8,508

 

$

7,668

 

 

 

 

 

 

 

Add: Fixed charges, excluding capitalized interest

 

1,049

 

907

 

 

 

 

 

 

 

Income as adjusted before income taxes

 

$

9,557

 

$

8,575

 

 

 

 

 

 

 

Fixed charges:

 

 

 

 

 

Interest expense

 

$

716

 

$

562

 

Capitalized interest

 

9

 

10

 

Portion of rental expense representative of interest

 

333

 

345

 

 

 

 

 

 

 

Total fixed charges

 

$

1,058

 

$

917

 

 

 

 

 

 

 

Ratio of income from continuing operations to fixed charges

 

9.03

 

9.35

 

(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.

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80



 

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 September 30, 2006:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

8,058

 

$

3,959

 

$

5,466

 

Internal revenue

 

428

 

337

 

255

 

Total revenue

 

$

8,486

 

$

4,295

 

$

5,721

 

Pre-tax income

 

$

814

 

$

405

 

$

413

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

2.1

%

1.2

%

8.8

%

Pre-tax income year-to-year change

 

(6.4

)%

40.8

%

13.1

%

Pre-tax income margin

 

9.6

%

9.4

%

7.2

%

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

7,787

 

$

3,910

 

$

4,988

 

Internal revenue

 

526

 

335

 

268

 

Total revenue

 

$

8,313

 

$

4,245

 

$

5,256

 

Pre-tax income

 

$

871

 

$

288

 

$

365

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

10.5

%

6.8

%

6.9

%

 

Reconciliations to IBM as Reported:

 

 

Three Months Ended

 

Three Months Ended

 

(Dollars in millions)

 

September 30, 2006

 

September 30, 2005

 

Revenue:

 

 

 

 

 

Total reportable segments

 

$

24,391

 

$

23,247

 

Eliminations/other

 

(1,774

)

(1,719

)

Total IBM Consolidated

 

$

22,617

 

$

21,529

 

 

 

 

 

 

 

Pre-tax income:

 

 

 

 

 

Total reportable segments

 

$

3,268

 

$

3,017

 

Eliminations/other

 

(94

)

(101

)

Total IBM Consolidated

 

$

3,174

 

$

2,915

 

 

81



 

 

 

 

 

 

 

Personal

 

 

 

 

 

 

 

Global

 

Computing

 

Total

 

 

 

Software

 

Financing

 

Division

 

Segments

 

     

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

     

 

$

4,406

 

$

587

 

$

—

 

$

22,476

 

     

 

559

 

337

 

—

 

1,916

 

     

 

$

4,965

 

$

924

 

$

—

 

$

24,391

 

     

 

$

1,302

 

$

335

 

$

—

 

$

3,268

 

 

 

 

 

 

 

 

 

 

 

     

 

9.2

%

4.0

%

nm

 

4.9

%

     

 

15.2

%

(7.9

)%

nm

 

8.4

%

     

 

26.2

%

36.2

%

nm

 

13.4

%

     

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

     

 

$

4,059

 

$

599

 

$

—

 

$

21,343

 

     

 

486

 

289

 

—

 

1,904

 

     

 

$

4,545

 

$

888

 

$

—

 

$

23,247

 

     

 

$

1,130

 

$

363

 

$

—

 

$

3,017

 

     

 

 

 

 

 

 

 

 

 

     

 

24.9

%

40.9

%

nm

 

13.0

%

nm - not meaningful

82



SEGMENT INFORMATION - ON CONTINUING OPERATIONS BASIS
(UNAUDITED)

 

 

Global Services

 

 

 

 

 

Global

 

Global

 

Systems and

 

 

 

Technology

 

Business

 

Technology

 

(Dollars in millions)

 

Services

 

Services

 

Group

 

Nine Months Ended September 30, 2006:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

23,732

 

$

11,746

 

$

14,900

 

Internal revenue

 

1,328

 

1,023

 

807

 

Total revenue

 

$

25,061

 

$

12,769

 

$

15,706

 

Pre-tax income

 

$

2,445

 

$

1,168

 

$

582

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 

(0.2

)%

(1.5

)%

5.4

%

Pre-tax income year-to-year change

 

61.5

%

207.5

%

(13.7

)%

Pre-tax income margin

 

9.8

%

9.1

%

3.7

%

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$

23,481

 

$

11,926

 

$

14,132

 

Internal revenue

 

1,636

 

1,032

 

763

 

Total revenue

 

$

25,117

 

$

12,958

 

$

14,895

 

Pre-tax income/(loss)

 

$

1,514

 

$

380

 

$

674

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 

6.0

%

2.9

%

4.5

%

 

Reconciliations to IBM as Reported:

 

 

Nine Months Ended

 

Nine Months Ended

 

(Dollars in millions)

 

September 30, 2006

 

September 30, 2005

 

Revenue:

 

 

 

 

 

Total reportable segments

 

$

70,490

 

$

72,042

 

Eliminations/other

 

(5,323

)

(5,335

)

Total IBM Consolidated

 

$

65,166

 

$

66,707

 

 

 

 

 

 

 

Pre-tax income:

 

 

 

 

 

Total reportable segments

 

$

8,741

 

$

6,340

 

Eliminations/other

 

(239

)

1,319

*

Total IBM Consolidated

 

$

8,503

 

$

7,658

 

*                    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.

83



 

 

 

 

 

 

 

Personal

 

 

 

 

 

 

 

Global

 

Computing

 

Total

 

 

 

Software

 

Financing

 

Division

 

Segments

 

     

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

     

 

$

12,554

 

$

1,744

 

$

—

 

$

64,676

 

     

 

1,616

 

1,039

 

—

 

5,814

 

     

 

$

14,170

 

$

2,784

 

$

—

 

$

70,490

 

     

 

$

3,478

 

$

1,068

 

$

—

 

$

8,741

 

 

 

 

 

 

 

 

 

 

 

     

 

6.1

%

(1.0

)%

nm

 

(2.2

)%

     

 

22.3

%

(2.3

)%

nm

 

37.9

%

     

 

24.5

%

38.4

%

nm

 

12.4

%

     

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

     

 

$

11,930

 

$

1,798

 

$

2,876

 

$

66,143

 

     

 

1,423

 

1,013

 

33

 

5,899

 

     

 

$

13,353

 

$

2,811

 

$

2,909

 

$

72,042

 

     

 

$

2,844

 

$

1,092

 

$

(165

)

$

6,340

 

     

 

 

 

 

 

 

 

 

 

     

 

21.3

%

38.8

%

nm

 

8.8

%

nm - not meaningful

84