EXHIBIT 12
COMPUTATION OF RATIO OF NET INCOME TO FIXED CHARGES AND
NET INCOME TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(UNAUDITED)
(Dollars in millions)
For Six Months Ended
--------------------
June 30, 2000 June 30, 1999
------------- -------------
Income before income taxes (1) $4,926 $6,137
Add: Fixed charges, excluding
capitalized interest 905 973
------ ------
Net income as adjusted $5,831 $7,110
====== ======
Fixed charges:
Interest expense $ 685 $ 739
Capitalized interest 15 15
Portion of rental expense representative of
interest 220 234
------ ------
Total fixed charges $ 920 $ 988
====== ======
Preferred stock dividends (2) 14 15
------ ------
Combined fixed charges and preferred stock
dividends $ 934 $1,003
====== ======
Ratio of net income to fixed charges 6.33 7.20
Ratio of net income to combined fixed charges
and preferred stock dividends 6.24 7.09
(1) Income before income taxes excludes the company's share in the income and
losses of less-than-fifty percent-owned affiliates.
(2) Included in the ratio computation are preferred stock dividends of $10
million for the first six months of 2000 and 1999, or $14 million and $15
million, respectively, representing the pre-tax income that would be required to
cover those dividend requirements based on the company's effective tax rate for
the six months ended June 30, 2000 and 1999.
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SEGMENT INFORMATION
(UNAUDITED)
Hardware Segments
-----------------------------------------
Personal Enterprise Global
(Dollars in millions) Technology Systems Systems Services
---------- ------- ------- --------
Three Months Ended June 30, 2000:
External revenue $ 2,456 $ 3,914 $ 2,774 $ 8,184
Internal revenue 710 21 162 600
------- ------- ------- -------
Total revenue $ 3,166 $ 3,935 $ 2,936 $ 8,784
======= ======= ======= =======
Pre-tax income (loss) $ 226 $ (69) $ 448 $ 1,069
======= ======= ======= =======
Revenue year-to-year change (6.3)% (4.4)% (8.6)% 1.9%
Pre-tax income year-to-year change 222.9% 31.0% (24.7)% (4.6)%
Pre-tax income margin 7.1% (1.8)% 15.3% 12.2%
Three Months Ended June 30, 1999*:
External revenue $ 2,347 $ 4,111 $ 3,069 $ 7,988
Internal revenue 1,031 7 142 628
------- ------- ------- -------
Total revenue $ 3,378 $ 4,118 $ 3,211 $ 8,616
======= ======= ======= =======
Pre-tax income (loss) $ 70 $ (100) $ 595 $ 1,121
======= ======= ======= =======
Pre-tax income margin 2.1% (2.4)% 18.5% 13.0%
* Reclassified to conform with 2000 presentation.
Reconciliations to IBM as Reported:
Three Months Ended Three Months Ended
(Dollars in millions) June 30, 2000 June 30, 1999
------------- -------------
Revenue:
Total reportable segments $ 23,627 $ 24,014
Eliminations/other (1,976) (2,109)
-------- --------
Total IBM Consolidated $ 21,651 $ 21,905
======== ========
Pretax income:
Total reportable segments $ 2,604 $ 2,502
Sales of IBM's Global Network -- 3,430
Second quarter actions -- (1,820)
Eliminations/other 169 (69)
-------- --------
Total IBM Consolidated $ 2,773 $ 4,043
======== ========
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Global Enterprise Total
Software Financing Investments Segments
-------- --------- ----------- --------
$ 3,182 $ 829 $ 321 $ 21,660
209 264 1 1,967
------- ------- ------- --------
$ 3,391 $ 1,093 $ 322 $ 23,627
======= ======= ======= ========
$ 736 $ 306 $ (112) $ 2,604
======= ======= ======= ========
2.5% 13.6% (23.5)% (1.6)%
(2.6)% 16.3% 44.8% 4.1%
21.7% 28.0% (34.8)% 11.0%
$ 3,126 $ 764 $ 418 $ 21,823
182 198 3 2,191
------- ------- ------- --------
$ 3,308 $ 962 $ 421 $ 24,014
======= ======= ======= ========
$ 756 $ 263 $ (203) $ 2,502
======= ======= ======= ========
22.9% 27.3% (48.2)% 10.4%
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SEGMENT INFORMATION
(UNAUDITED)
Hardware Segments
-----------------------------------------
Personal Enterprise Global
(Dollars in millions) Technology Systems Systems Services
---------- ------- ------- --------
Six Months Ended June 30, 2000:
External revenue $ 4,396 $ 7,175 $ 5,190 $15,736
Internal revenue 1,503 31 325 1,195
------- ------- ------- -------
Total revenue $ 5,899 $ 7,206 $ 5,515 $16,931
======= ======= ======= =======
Pre-tax income (loss) $ 246 $ (247) $ 887 $ 2,067
======= ======= ======= =======
Revenue year-to-year change (8.4)% (8.5)% (9.5)% 0.6%
Pre-tax income year-to-year change 179.5% (59.4)% (22.3)% 0.3%
Pre-tax income margin 4.2% (3.4)% 16.1% 12.2%
Six Months Ended June 30, 1999*:
External revenue $ 4,557 $ 7,862 $ 5,807 $15,538
Internal revenue 1,880 14 285 1,297
------- ------- ------- -------
Total revenue $ 6,437 $ 7,876 $ 6,092 $16,835
======= ======= ======= =======
Pre-tax income (loss) $ 88 $ (155) $ 1,142 $ 2,061
======= ======= ======= =======
Pre-tax income margin 1.4% (2.0)% 18.7% 12.2%
* Reclassified to conform with 2000 presentation.
Reconciliations to IBM as Reported:
Six Months Ended Six Months Ended
(Dollars in millions) June 30, 2000 June 30, 1999
------------- -------------
Revenue:
Total reportable segments $ 44,835 $ 46,386
Eliminations/other (3,836) (4,164)
-------- --------
Total IBM Consolidated $ 40,999 $ 42,222
======== ========
Pretax income:
Total reportable segments $ 4,709 $ 4,762
Sales of IBM's Global Network -- 3,430
Second quarter actions -- (1,820)
Eliminations/other 234 (229)
-------- --------
Total IBM Consolidated $ 4,943 $ 6,143
======== ========
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Global Enterprise Total
Software Financing Investments Segments
-------- --------- ----------- --------
$ 6,109 $ 1,657 $ 662 $ 40,925
384 470 2 3,910
------- ------- ---------- --------
$ 6,493 $ 2,127 $ 664 $ 44,835
======= ======= ========== ========
$ 1,317 $ 594 $ (155) $ 4,709
======= ======= ========== ========
0.8% 12.4% (18.4)% (3.3)%
(9.9)% 18.3% 54.1% (1.1)%
20.3% 27.9% (23.3)% 10.5%
$ 6,046 $ 1,488 $ 800 $ 42,098
393 405 14 4,288
------- ------- --------- --------
$ 6,439 $ 1,893 $ 814 $ 46,386
======= ======= ========= ========
$ 1,462 $ 502 $ (338) $ 4,762
======= ======= ========= ========
22.7% 26.5% (41.5)% 10.3%
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EXHIBITS OMITTED FROM THIS COPY
The By-laws of IBM as amended through July 25, 2000
The Financial Data Schedule
IBM's Definitive Proxy Statement dated March 23, 2000.
Copies of these exhibits may be obtained without charge from EquiServe, First
Chicago Trust Division, Suite 4688, P.O. Box 2530, Jersey City, New Jersey
07303-2530
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