EXHIBIT 12
COMPUTATION OF RATIO OF NET INCOME TO FIXED CHARGES AND
NET INCOME TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
FOR NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
<Table>
<Caption>
(Dollars in millions)
2001 2000
---- ----
Income before income taxes (1) $7,684 $7,711
Add: Fixed charges, excluding
capitalized interest 1,314 1,379
------ ------
Income as adjusted before income taxes $8,998 $9,090
====== ======
Fixed charges:
Interest expense $ 973 $1,050
Capitalized interest 24 23
Portion of rental expense representative of
interest 341 329
------ ------
Total fixed charges $1,338 $1,402
====== ======
Preferred stock dividends (2) 14 21
------ ------
Combined fixed charges and preferred stock
dividends $1,352 $1,423
====== ======
Ratio of net income to fixed charges 6.72 6.48
Ratio of net income to combined fixed charges
and preferred stock dividends 6.66 6.39
</Table>
(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 nine months of 2001 and $15 million for the first nine
months of 2000, or $14 million and $21 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 nine months ended September 30, 2001
and 2000.
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<Page>
SEGMENT INFORMATION
(UNAUDITED)
<Table>
<Caption>
Hardware Segments
-------------------------------------------------
Personal and
Global Printing Enterprise
(Dollars in millions) Services Technology Systems Systems
- -------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 2001:
External revenue $8,682 $ 1,654 $ 2,829 $ 3,056
Internal revenue 684 628 18 175
------ ------- ------- -------
Total revenue $9,366 $ 2,282 $ 2,847 $ 3,231
====== ======= ======= =======
Pre-tax income (loss) $1,373 $ (258) $ (70) $ 194
====== ======= ======= =======
Revenue year-to-year change 5.4% (21.9)% (28.7)% (2.2)%
Pre-tax income year-to-year change 19.7% (242.5)% (179.5)% (29.2)%
Pre-tax income margin 14.7% (11.3)% (2.5)% 6.0%
THREE MONTHS ENDED SEPTEMBER 30, 2000*:
External revenue $8,230 $ 2,250 $ 3,971 $ 3,164
Internal revenue 654 672 22 138
------ ------- ------- -------
Total revenue $8,884 $ 2,922 $ 3,993 $ 3,302
====== ======= ======= =======
Pre-tax income (loss) $1,147 $ 181 $ 88 $ 274
====== ======= ======= =======
Pre-tax income margin 12.9% 6.2% 2.2% 8.3%
</Table>
* Reclassified to conform with 2001 presentation.
RECONCILIATIONS TO IBM AS REPORTED:
<Table>
<Caption>
Three Months Ended Three Months Ended
(Dollars in millions) September 30, 2001 September 30, 2000
------------------ -------------------
Revenue:
Total reportable segments $ 22,424 $ 23,601
Eliminations/other (1,996) (1,820)
-------- --------
Total IBM Consolidated $ 20,428 $ 21,781
======== ========
Pretax income:
Total reportable segments $ 2,181 $ 2,444
Eliminations/other 81 360
-------- --------
Total IBM Consolidated $ 2,262 $ 2,804
======== ========
</Table>
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<Page>
<Table>
<Caption>
Global Enterprise Total
(Dollars in millions) Software Financing Investments Segments
- --------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 2001:
External revenue $ 3,201 $ 814 $ 242 $ 20,478
Internal revenue 236 204 1 1,946
---------- ------- ----- --------
Total revenue $ 3,437 $ 1,018 $ 243 $ 22,424
========== ======= ===== ========
Pre-tax income (loss) $ 704 $ 314 $ (76) $ 2,181
========== ======= ===== ========
Revenue year-to-year change 9.8% (6.9)% (12.6)% (5.0)%
Pre-tax income year-to-year change 36.7% 6.8% (38.2)% (10.8)%
Pre-tax income margin 20.5% 30.8% (31.3)% 9.7%
THREE MONTHS ENDED SEPTEMBER 30, 2000*:
External revenue $ 2,918 $ 868 $ 277 $ 21,678
Internal revenue 211 225 1 1,923
---------- ------- ----- --------
Total revenue $ 3,129 $ 1,093 $ 278 $ 23,601
========== ======= ===== ========
Pre-tax income (loss) $ 515 $ 294 $ (55) $ 2,444
========== ======= ===== ========
Pre-tax income margin 16.5% 26.9% (19.8%) 10.4%
</Table>
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<Page>
SEGMENT INFORMATION
(UNAUDITED)
<Table>
<Caption>
Hardware Segments
-------------------------------------------------
Personal and
Global Printing Enterprise
(Dollars in millions) Services Technology Systems Systems
- -------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2001:
External revenue $25,895 $ 6,091 $ 9,072 $ 9,669
Internal revenue 1,923 1,795 50 547
------- ------- -------- -------
Total revenue $27,818 $ 7,886 $ 9,122 $10,216
======= ======= ======== =======
Pre-tax income (loss) $ 3,748 $ (81) $ (136) $ 1,111
======= ======= ======== =======
Revenue year-to-year change 7.8% (1.4)% (16.0)% 2.4%
Pre-tax income year-to-year change 16.6% (120.9)% nm 6.3%
Pre-tax income margin 13.5% (1.0)% (1.5)% 10.9%
NINE MONTHS ENDED SEPTEMBER 30, 2000*:
External revenue $23,966 $ 5,826 $ 10,820 $ 9,500
Internal revenue 1,849 2,172 44 475
------- ------- -------- -------
Total revenue $25,815 $ 7,998 $ 10,864 $ 9,975
======= ======= ======== =======
Pre-tax income (loss) $ 3,214 $ 388 $ (4) $ 1,045
======= ======= ======== =======
Pre-tax income margin 12.5% 4.9% (0.0)% 10.5%
</Table>
nm - not meaningful
* Reclassified to conform with 2001 presentation.
RECONCILIATIONS TO IBM AS REPORTED:
<Table>
<Caption>
Nine Months Ended Nine Months Ended
(Dollars in millions) September 30, 2001 September 30, 2000
------------------ -------------------
Revenue:
Total reportable segments $ 68,800 $ 68,436
Eliminations/other (5,760) (5,656)
-------- --------
Total IBM Consolidated $ 63,040 $ 62,780
======== ========
Pretax income:
Total reportable segments $ 7 ,278 $ 7,153
Eliminations/other 375 594
-------- --------
Total IBM Consolidated $ 7,653 $ 7,747
======== ========
</Table>
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<Page>
<Table>
<Caption>
Global Enterprise Total
(Dollars in millions) Software Financing Investments Segments
- -----------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2001:
External revenue $ 9,155 $ 2,486 $ 782 $63,150
Internal revenue 686 647 2 5,650
--------- ------- ----- -------
Total revenue $ 9,841 $ 3,133 $ 784 $68,800
========= ======= ===== =======
Pre-tax income (loss) $ 2,001 $ 878 $(243) $ 7,278
========= ======= ===== =======
Revenue year-to-year change 2.3% (2.7)% (16.8)% 0.5%
Pre-tax income year-to-year change 9.2% (1.1)% (15.7)% 1.7%
Pre-tax income margin 20.3% 28.0% (31.0)% 10.6%
NINE MONTHS ENDED SEPTEMBER 30, 2000*:
External revenue $ 9,027 $ 2,525 $ 939 $62,603
Internal revenue 595 695 3 5,833
--------- ------- ----- -------
Total revenue $ 9,622 $ 3,220 $ 942 $68,436
========= ======= ===== =======
Pre-tax income (loss) $ 1,832 $ 888 $(210) $ 7,153
========= ======= ===== =======
Pre-tax income margin 19.0% 27.6% (22.3)% 10.5%
</Table>
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