EXHIBIT 12
COMPUTATION OF RATIO OF INCOME FROM
CONTINUING OPERATIONS TO FIXED CHARGES
FOR NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
(Dollars in millions) | | 2008 | | 2007 | |
| | | | | |
Income from continuing operations before income taxes (1) | | $ | 10,924 | | $ | 9,010 | |
| | | | | |
Add: Fixed charges, excluding capitalized interest | | 1,372 | | 1,314 | |
| | | | | |
Income as adjusted before income taxes | | $ | 12,296 | | $ | 10,324 | |
| | | | | |
Fixed charges: | | | | | |
Interest expense | | $ | 1,067 | | $ | 989 | |
Capitalized interest | | 11 | | 6 | |
Portion of rental expense representative of interest | | 305 | | 325 | |
| | | | | |
Total fixed charges | | $ | 1,383 | | $ | 1,320 | |
| | | | | |
Ratio of income from continuing operations to fixed charges | | 8.89 | | 7.82 | |
(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 | | | | | | | | | |
| | Global | | Global | | | | | | | | | |
| | Technology | | Business | | Systems and | | | | Global | | Total | |
(Dollars in millions) | | Services | | Services | | Technology | | Software | | Financing | | Segments | |
Three Months Ended September 30, 2008: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
External revenue | | $ | 9,864 | | $ | 4,900 | | $ | 4,431 | | $ | 5,249 | | $ | 633 | | $ | 25,077 | |
Internal revenue | | 384 | | 259 | | 223 | | 655 | | 456 | | 1,978 | |
Total revenue | | $ | 10,248 | | $ | 5,160 | | $ | 4,654 | | $ | 5,904 | | $ | 1,090 | | $ | 27,055 | |
Pre-tax income | | $ | 1,189 | | $ | 724 | | $ | 283 | | $ | 1,527 | | $ | 349 | | $ | 4,072 | |
| | | | | | | | | | | | | |
Revenue year-to-year change | | 7.9 | % | 6.1 | % | (9.4 | )% | 12.1 | % | 12.3 | % | 5.1 | % |
Pre-tax income year-to-year change | | 15.6 | % | 38.9 | % | (21.7 | )% | 19.0 | % | 3.2 | % | 15.3 | % |
Pre-tax income margin | | 11.6 | % | 14.0 | % | 6.1 | % | 25.9 | % | 32.0 | % | 15.1 | % |
| | | | | | | | | | | | | |
Three Months Ended September 30, 2007: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
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 | |
| | | | | | | | | | | | | |
Pre-tax income margin | | 10.8 | % | 10.7 | % | 7.0 | % | 24.4 | % | 34.9 | % | 13.7 | % |
Reconciliations to IBM as Reported:
| | Three Months Ended | | Three Months Ended | |
(Dollars in millions) | | September 30, 2008 | | September 30, 2007 | |
Revenue: | | | | | |
Total reportable segments | | $ | 27,055 | | $ | 25,732 | |
Eliminations/other | | (1,753 | ) | (1,613 | ) |
Total IBM Consolidated | | $ | 25,302 | | $ | 24,119 | |
| | | | | |
Pre-tax income: | | | | | |
Total reportable segments | | $ | 4,072 | | $ | 3,532 | |
Eliminations/other | | (177 | )* | (252 | )** |
Total IBM Consolidated | | $ | 3,895 | | $ | 3,280 | |
* Includes interest expense associated with the debt to support the company’s accelerated share repurchase, gain from the divestiture of the printing business and the gain from the sale of Lenovo stock.
** Includes interest expense associated with the debt to support the company’s accelerated share repurchase and gain from the divestiture of the printing business.
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SEGMENT INFORMATION - ON CONTINUING OPERATIONS BASIS
(UNAUDITED)
| | Global Services | | | | | | | | | |
| | Global | | Global | | | | | | | | | |
| | Technology | | Business | | Systems and | | | | Global | | Total | |
(Dollars in millions) | | Services | | Services | | Technology | | Software | | Financing | | Segments | |
Nine Months Ended September 30, 2008: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
External revenue | | $ | 29,640 | | $ | 14,918 | | $ | 13,862 | | $ | 15,670 | | $ | 1,900 | | $ | 75,990 | |
Internal revenue | | 1,162 | | 776 | | 633 | | 2,041 | | 1,367 | | 5,980 | |
Total revenue | | $ | 30,803 | | $ | 15,694 | | $ | 14,495 | | $ | 17,711 | | $ | 3,267 | | $ | 81,970 | |
Pre-tax income | | $ | 3,171 | | $ | 1,940 | | $ | 829 | | $ | 4,286 | | $ | 1,165 | | $ | 11,391 | |
| | | | | | | | | | | | | |
Revenue year-to-year change | | 12.6 | % | 12.0 | % | (5.1 | )% | 14.8 | % | 13.8 | % | 9.4 | % |
Pre-tax income year-to-year change | | 27.0 | % | 31.4 | % | 5.0 | % | 20.1 | % | 11.6 | % | 21.5 | % |
Pre-tax income margin | | 10.3 | % | 12.4 | % | 5.7 | % | 24.2 | % | 35.7 | % | 13.9 | % |
| | | | | | | | | | | | | |
Nine Months Ended September 30, 2007: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
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 | |
| | | | | | | | | | | | | |
Pre-tax income margin | | 9.1 | % | 10.5 | % | 5.2 | % | 23.1 | % | 36.4 | % | 12.5 | % |
Reconciliations to IBM as Reported:
| | Nine Months Ended | | Nine Months Ended | |
(Dollars in millions) | | September 30, 2008 | | September 30, 2007 | |
Revenue: | | | | | |
Total reportable segments | | $ | 81,970 | | $ | 74,939 | |
Eliminations/other | | (5,347 | ) | (5,018 | ) |
Total IBM Consolidated | | $ | 76,623 | | $ | 69,920 | |
| | | | | |
Pre-tax income: | | | | | |
Total reportable segments | | $ | 11,391 | | $ | 9,376 | |
Eliminations/other | | (484 | )* | (375 | )* |
Total IBM Consolidated | | $ | 10,907 | | $ | 9,001 | |
* Includes interest expense associated with the debt to support the company’s accelerated share repurchase, gain from the divestiture of the printing business and the gain from the sale of Lenovo stock.
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