EXHIBIT 12
COMPUTATION OF RATIO OF INCOME FROM
CONTINUING OPERATIONS TO FIXED CHARGES
FOR NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
(Dollars in millions) |
| 2007 |
| 2006 |
| ||
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| ||
Income from continuing operations before income taxes (1) |
| $ | 9,010 |
| $ | 8,508 |
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|
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Add: Fixed charges, excluding capitalized interest |
| 1,314 |
| 1,049 |
| ||
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|
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Income as adjusted before income taxes |
| $ | 10,324 |
| $ | 9,557 |
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|
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Fixed charges: |
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|
|
|
| ||
Interest expense |
| $ | 989 |
| $ | 716 |
|
Capitalized interest |
| 6 |
| 9 |
| ||
Portion of rental expense representative of interest |
| 325 |
| 333 |
| ||
|
|
|
|
|
| ||
Total fixed charges |
| $ | 1,320 |
| $ | 1,058 |
|
|
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|
|
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Ratio of income from continuing operations to fixed charges |
| 7.82 |
| 9.03 |
|
(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)
|
| Global Services |
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|
| Global |
| Global |
| Systems |
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| Global |
| Total |
| ||||||
(Dollars in millions) |
| Services |
| Services |
| Technology |
| Software |
| Financing |
| Segments |
| ||||||
Three Months Ended September 30, 2007: |
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External revenue |
| $ | 9,093 |
| $ | 4,586 |
| $ | 4,898 |
| $ | 4,694 |
| $ | 623 |
| $ | 23,894 |
|
Internal revenue |
| 408 |
| 276 |
| 236 |
| 571 |
| 348 |
| 1,838 |
| ||||||
Total revenue |
| $ | 9,501 |
| $ | 4,862 |
| $ | 5,134 |
| $ | 5,265 |
| $ | 970 |
| $ | 25,732 |
|
Pre-tax income |
| $ | 1,028 |
| $ | 521 |
| $ | 361 |
| $ | 1,283 |
| $ | 339 |
| $ | 3,532 |
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|
|
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Revenue year-to-year change |
| 12.0 | % | 13.2 | % | (10.3 | )% | 6.0 | % | 5.1 | % | 5.5 | % | ||||||
Pre-tax income year-to-year change |
| 26.3 | % | 28.6 | % | (12.4 | )% | (1.5 | )% | 1.1 | % | 8.1 | % | ||||||
Pre-tax income margin |
| 10.8 | % | 10.7 | % | 7.0 | % | 24.4 | % | 34.9 | % | 13.7 | % | ||||||
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Three Months Ended September 30, 2006: |
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External revenue |
| $ | 8,058 |
| $ | 3,959 |
| $ | 5,466 |
| $ | 4,406 |
| $ | 587 |
| $ | 22,476 |
|
Internal revenue |
| 428 |
| 337 |
| 255 |
| 559 |
| 337 |
| 1,916 |
| ||||||
Total revenue |
| $ | 8,486 |
| $ | 4,295 |
| $ | 5,721 |
| $ | 4,965 |
| $ | 924 |
| $ | 24,391 |
|
Pre-tax income |
| $ | 814 |
| $ | 405 |
| $ | 413 |
| $ | 1,302 |
| $ | 335 |
| $ | 3,268 |
|
|
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Pre-tax income margin |
| 9.6 | % | 9.4 | % | 7.2 | % | 26.2 | % | 36.2 | % | 13.4 | % |
Reconciliations to IBM as Reported:
|
| Three Months Ended |
| Three Months Ended |
| ||
(Dollars in millions) |
| September 30, 2007 |
| September 30, 2006 |
| ||
Revenue: |
|
|
|
|
| ||
Total reportable segments |
| $ | 25,732 |
| $ | 24,391 |
|
Eliminations/other |
| (1,613 | ) | (1,774 | ) | ||
Total IBM Consolidated |
| $ | 24,119 |
| $ | 22,617 |
|
|
|
|
|
|
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Pre-tax income: |
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|
|
|
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Total reportable segments |
| $ | 3,532 |
| $ | 3,268 |
|
Eliminations/other |
| (252 | )* | (94 | ) | ||
Total IBM Consolidated |
| $ | 3,280 |
| $ | 3,174 |
|
* Includes interest expense associated with the debt to support the company’s accelerated share repurchase.
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|
| Global Services |
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| ||||||||
|
| Global |
| Global |
| Systems and |
|
|
| Global |
| Total |
| ||||||
(Dollars in millions) |
| Services |
| Services |
| Technology |
| Software |
| Financing |
| Segments |
| ||||||
Nine Months Ended September 30, 2007: |
|
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External revenue |
| $ | 26,106 |
| $ | 13,108 |
| $ | 14,520 |
| $ | 13,723 |
| $ | 1,834 |
| $ | 69,291 |
|
Internal revenue |
| 1,243 |
| 906 |
| 758 |
| 1,704 |
| 1,037 |
| 5,648 |
| ||||||
Total revenue |
| $ | 27,348 |
| $ | 14,014 |
| $ | 15,279 |
| $ | 15,427 |
| $ | 2,871 |
| $ | 74,939 |
|
Pre-tax income |
| $ | 2,497 |
| $ | 1,477 |
| $ | 789 |
| $ | 3,569 |
| $ | 1,045 |
| $ | 9,376 |
|
|
|
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Revenue year-to-year change |
| 9.1 | % | 9.7 | % | (2.7 | )% | 8.9 | % | 3.1 | % | 6.3 | % | ||||||
Pre-tax income year-to-year change |
| 2.1 | % | 26.4 | % | 35.7 | % | 2.6 | % | (2.2 | )% | 7.3 | % | ||||||
Pre-tax income margin |
| 9.1 | % | 10.5 | % | 5.2 | % | 23.1 | % | 36.4 | % | 12.5 | % | ||||||
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Nine Months Ended September 30, 2006: |
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External revenue |
| $ | 23,732 |
| $ | 11,746 |
| $ | 14,900 |
| $ | 12,554 |
| $ | 1,744 |
| $ | 64,676 |
|
Internal revenue |
| 1,328 |
| 1,023 |
| 807 |
| 1,616 |
| 1,039 |
| 5,814 |
| ||||||
Total revenue |
| $ | 25,061 |
| $ | 12,769 |
| $ | 15,706 |
| $ | 14,170 |
| $ | 2,784 |
| $ | 70,490 |
|
Pre-tax income |
| $ | 2,445 |
| $ | 1,168 |
| $ | 582 |
| $ | 3,478 |
| $ | 1,068 |
| $ | 8,741 |
|
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| ||||||
Pre-tax income margin |
| 9.8 | % | 9.1 | % | 3.7 | % | 24.5 | % | 38.4 | % | 12.4 | % |
Reconciliations to IBM as Reported:
|
| Nine Months Ended |
| Nine Months Ended |
| ||
(Dollars in millions) |
| September 30, 2007 |
| September 30, 2006 |
| ||
Revenue: |
|
|
|
|
| ||
Total reportable segments |
| $ | 74,939 |
| $ | 70,490 |
|
Eliminations/other |
| (5,018 | ) | (5,323 | ) | ||
Total IBM Consolidated |
| $ | 69,920 |
| $ | 65,166 |
|
|
|
|
|
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| ||
Pre-tax income: |
|
|
|
|
| ||
Total reportable segments |
| $ | 9,376 |
| $ | 8,741 |
|
Eliminations/other |
| (375 | )* | (239 | ) | ||
Total IBM Consolidated |
| $ | 9,001 |
| $ | 8,503 |
|
* Includes the gain from the divestiture of the company’s printing business and the interest expense associated with the debt to support the company’s accelerated share repurchase.
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