EXHIBIT 12
COMPUTATION OF RATIO OF NET INCOME TO FIXED CHARGES AND
NET INCOME TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
FOR THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
(Dollars in millions)
2001 2000
---- ----
Income before income taxes (1) $2,496 $2,161
Add: Fixed charges, excluding
capitalized interest 475 452
------ ------
Income as adjusted before income taxes $2,971 $2,613
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Fixed charges:
Interest expense $ 361 $ 342
Capitalized interest 7 7
Portion of rental expense representative of
interest 114 110
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Total fixed charges $ 482 $ 459
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Preferred stock dividends (2) 7 7
------ ------
Combined fixed charges and preferred stock
dividends $ 489 $ 466
====== ======
Ratio of net income to fixed charges 6.16 5.69
Ratio of net income to combined fixed charges
and preferred stock dividends 6.08 5.61
(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 $5
million for the first three months of 2001 and 2000, or $7 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
three months ended March 31, 2001 and 2000.
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SEGMENT INFORMATION
(UNAUDITED)
Hardware Segments
---------------------------------------
Personal and
Printing Enterprise Global Global Enterprise Total
(Dollars in millions) Technology Systems Systems Services Software Financing Investments Segments
---------- ------- ------- -------- ------- ------- ------- -------
Quarter Ended March 31, 2001:
External revenue $ 2,317 $ 3,176 $ 3,136 $ 8,471 $2,918 $834 $253 $21,105
Internal revenue 549 18 167 589 214 226 1 1,764
------- ------- ------- ------- ------- ------- ------- -------
Total revenue $ 2,866 $ 3,194 $ 3,303 $ 9,060 $3,132 $1,060 $254 $22,869
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Pre-tax income (loss) $ 131 $ (58) $ 391 $ 1,068 $586 $273 $(140) $2,251
======= ======= ======= ======= ======= ======= ======= =======
Revenue year-to-year change 22.3% 2.0% 6.2% 11.2% 1.0% 2.5% (25.7)% 7.8%
Pre-tax income year-to-year change nm 35.6% 6.0% 7.0% 0.9% (5.2)% (225.6)% 6.9%
Pre-tax income margin 4.6% (1.8)% 11.8% 11.8% 18.7% 25.8% (55.1)% 9.8%
Quarter Ended March 31, 2000*:
External revenue $ 1,553 $ 3,120 $ 2,944 $ 7,552 $2,927 $828 $341 $19,265
Internal revenue 791 10 165 595 175 206 1 1,943
------- ------- ------- ------- ------- ------- ------- -------
Total revenue $ 2,344 $ 3,130 $ 3,109 $ 8,147 $3,102 $1,034 $342 $21,208
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Pre-tax income (loss) $ 2 $ (90) $ 369 $ 998 $581 $288 $(43) $2,105
======= ======= ======= ======= ======= ======= ======= =======
Pre-tax income margin 0.1% (2.9)% 11.9% 12.2% 18.7% 27.9% (12.6)% 9.9%
nm - not meaningful
* Reclassified to conform with 2001 presentation.
Reconciliations to IBM as Reported:
Quarter Ended Quarter Ended
(Dollars in millions) March 31, 2001 March 31, 2000
-------------- --------------
Revenue:
Total reportable segments $ 22,869 $ 21,208
Eliminations/other (1,825) (1,860)
-------- --------
Total IBM Consolidated $ 21,044 $ 19,348
======== ========
Pretax income:
Total reportable segments $ 2,251 $ 2,105
Eliminations/other 238 65
-------- --------
Total IBM Consolidated $ 2,489 $ 2,170
======== ========
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SEGMENT INFORMATION
PRE-TAX INCOME
EFFECT OF ORGANIZATIONAL CHANGES
Quarter Ended March 31, 2000
------------------------------------------
Previously
Reported
Pre-tax Organization Pre-tax
(Dollars in millions) Income Changes Income
------ ------- ------
Technology $ 20 $ (18) $ 2
Personal and
Printing Systems (178) 88 (90)
Enterprise Systems 439 (70) 369
Global Services 998 -- 998
Software 581 -- 581
Global Financing 288 -- 288
Enterprise Investments (43) -- (43)
-----------------------------------------
Total Segments $ 2,105 $ -- $ 2,105
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