EXHIBIT 12
COMPUTATION OF RATIO OF INCOME FROM
CONTINUING OPERATIONS TO FIXED CHARGES
FOR THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
(Dollars in millions) |
| 2006 |
| 2005 |
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Income from continuing operations before income taxes (1) |
| $ | 2,442 |
| $ | 2,010 |
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Add: Fixed charges, excluding capitalized interest |
| 330 |
| 291 |
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Income as adjusted before income taxes |
| $ | 2,772 |
| $ | 2,301 |
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Fixed charges: |
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Interest expense |
| $ | 220 |
| $ | 176 |
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Capitalized interest |
| 5 |
| 3 |
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Portion of rental expense representative of interest |
| 111 |
| 115 |
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Total fixed charges |
| $ | 335 |
| $ | 294 |
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Ratio of income from continuing operations to fixed charges |
| 8.27 |
| 7.83 |
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(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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SEGMENT INFORMATION - ON CONTINUING OPERATIONS BASIS
(UNAUDITED)
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| Global Services |
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| Global |
| Global |
| Systems and |
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| Personal |
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| Technology |
| Business |
| Technology |
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| Global |
| Computing |
| Total |
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(Dollars in millions) |
| Services |
| Services |
| Group |
| Software |
| Financing |
| Division |
| Segments |
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Quarter Ended March 31, 2006: |
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External revenue |
| $ | 7,719 |
| $ | 3,848 |
| $ | 4,419 |
| $ | 3,907 |
| $ | 582 |
| $ | — |
| $ | 20,475 |
|
Internal revenue |
| 451 |
| 336 |
| 280 |
| 514 |
| 364 |
| — |
| 1,946 |
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Total revenue |
| $ | 8,171 |
| $ | 4,184 |
| $ | 4,699 |
| $ | 4,421 |
| $ | 946 |
| $ | — |
| $ | 22,421 |
|
Pre-tax income (loss) |
| $ | 844 |
| $ | 356 |
| $ | (18 | ) | $ | 1,021 |
| $ | 414 |
| $ | — |
| $ | 2,616 |
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Revenue year-to-year change |
| (2.7 | )% | (0.6 | )% | 3.7 | % | 3.3 | % | (8.0 | )% | nm |
| (9.5 | )% | |||||||
Pre-tax income year-to-year change |
| 27.9 | % | 122.6 | % | nm |
| 26.9 |
| 5.9 | % | nm |
| 28.3 | % | |||||||
Pre-tax income margin |
| 10.3 | % | 8.5 | % | (0.4 | )% | 23.1 | % | 43.8 | % | nm |
| 11.7 | % | |||||||
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Quarter Ended March 31, 2005: |
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External revenue |
| $ | 7,822 |
| $ | 3,887 |
| $ | 4,289 |
| $ | 3,814 |
| $ | 579 |
| $ | 2,319 |
| $ | 22,710 |
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Internal revenue |
| 574 |
| 323 |
| 241 |
| 463 |
| 449 |
| 26 |
| 2,076 |
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Total revenue |
| $ | 8,396 |
| $ | 4,210 |
| $ | 4,530 |
| $ | 4,277 |
| $ | 1,028 |
| $ | 2,345 |
| $ | 24,786 |
|
Pre-tax income (loss) |
| $ | 660 |
| $ | 160 |
| $ | 40 |
| $ | 805 |
| $ | 391 |
| $ | (16 | ) | $ | 2,040 |
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Pre-tax income margin |
| 7.9 | % | 3.8 | % | 0.9 | % | 18.8 | % | 38.0 | % | (0.7 | )% | 8.2 | % | |||||||
nm - not meaningful |
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Reconciliations to IBM as Reported:
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| Quarter Ended |
| Quarter Ended |
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(Dollars in millions) |
| March 31, 2006 |
| March 31, 2005 |
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Revenue: |
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Total reportable segments |
| $ | 22,421 |
| $ | 24,786 |
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Eliminations/other |
| (1,762 | ) | (1,878 | ) | ||
Total IBM Consolidated |
| $ | 20,659 |
| $ | 22,908 |
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Pretax income: |
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Total reportable segments |
| $ | 2,616 |
| $ | 2,040 |
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Eliminations/other |
| (177 | ) | (30 | ) | ||
Total IBM Consolidated |
| $ | 2,440 |
| $ | 2,010 |
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