Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Amounts related to cumulative basis adjustments for fair value hedges

At September 30, 2025 and December 31, 2024, the following amounts were recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:

(Dollars in millions)	September 30, 2025		December 31, 2024
Short-term debt:
Carrying amount of the hedged item	$	(1)	$	(13)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities)	$	(1)	$	(13)
Long-term debt:
Carrying amount of the hedged item	$	(6,659)	$	(6,497)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities) (1)	$	31	$	190

(1)Includes $(122) million and $(155) million of hedging adjustments on discontinued hedging relationships at September 30, 2025 and December 31, 2024, respectively.

Effect of derivative instruments in the Consolidated Income Statement

The effect of fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are summarized by income and expense line items as follows:

	(Gains)/Losses of Total Hedge Activity
	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	2025		2024		2025		2024
Cost of services	$	7	$	(5)	$	12	$	(19)
Cost of sales	$	0	$	(3)	$	(2)	$	(30)
Cost of financing	$	(1)	$	2	$	(2)	$	9
SG&A expense	$	(74)	$	(83)	$	(157)	$	(168)
Other (income) and expense (1)	$	162	$	(428)	$	(881)	$	(1)
Interest expense	$	(4)	$	11	$	(9)	$	45

(1)Primarily driven by currency gains and losses on the company's foreign currency derivatives hedging programs. Refer to note 6, "Other (Income) and Expense," for additional information.

	(Gains)/Losses Recognized in Consolidated Income Statement
(Dollars in millions)	Consolidated Income Statement Line Item	Recognized on Derivatives				Attributable to Risk Being Hedged (1)
For the three months ended September 30:		2025		2024		2025		2024
Derivative instruments in fair value hedges: (2)
Interest rate contracts	Cost of financing	$	(1)	$	(31)	$	4	$	37
	Interest expense	(6)		(155)		22		185
Derivative instruments not designated as hedging instruments:
Foreign exchange contracts	Other (income) and expense	83		(194)		N/A		N/A
Equity contracts	SG&A expense	(75)		(83)		N/A		N/A
Total		$	0	$	(463)	$	27	$	222

	Effects of Derivatives Recognized in Consolidated Income Statement and OCI
						(Gains)/Losses
(Dollars in millions)	Gains/(Losses) Recognized in OCI				Consolidated Income Statement Line Item	Reclassified from AOCI				Amounts Excluded from Effectiveness Testing (3)
For the three months ended September 30:	2025		2024			2025		2024		2025		2024
Derivative instruments in cash flow hedges:
Interest rate contracts	$	—	$	—	Cost of financing	$	1	$	1	N/A		N/A
					Interest expense	3		3		N/A		N/A
Foreign exchange contracts
Amount included in the assessment of effectiveness	70		(153)		Cost of services	7		(5)		N/A		N/A
					Cost of sales	0		(3)		N/A		N/A
					Cost of financing	1		1		N/A		N/A
					SG&A expense	1		0		N/A		N/A
					Other (income) and expense	51		(255)		N/A		N/A
					Interest expense	3		5		N/A		N/A
Amount excluded from the assessment of effectiveness	(50)		(62)		Other (income) and expense	N/A		N/A		28		20
Instruments in net investment hedges: (4)
Foreign exchange contracts
Amount included in the assessment of effectiveness	154		(1,086)
Amount excluded from the assessment of effectiveness	6		10		Cost of financing	N/A		N/A		(5)		(5)
					Interest expense	N/A		N/A		(26)		(26)
Total	$	179	$	(1,290)		$	66	$	(254)	$	(4)	$	(11)

(1)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.

(2)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.

(3)Amounts excluded from effectiveness testing for both net investment hedges and cash flow hedges of foreign currency debt are amortized to net income on a straight line basis over the life of the relevant hedging instrument.

(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.

N/A - not applicable

	(Gains)/Losses Recognized in Consolidated Income Statement
(Dollars in millions)	Consolidated Income Statement Line Item	Recognized on Derivatives				Attributable to Risk Being Hedged (1)
For the nine months ended September 30:		2025		2024		2025		2024
Derivative instruments in fair value hedges: (2)
Interest rate contracts	Cost of financing	$	(14)	$	5	$	23	$	13
	Interest expense	(79)		24		123		66
Derivative instruments not designated as hedging instruments:
Foreign exchange contracts	Other (income) and expense	(202)		174		N/A		N/A
Equity contracts	SG&A expense	(156)		(158)		N/A		N/A
Total		$	(451)	$	46	$	146	$	79

	Effects of Derivatives Recognized in Consolidated Income Statement and OCI
						(Gains)/Losses
	Gains/(Losses) Recognized in OCI				Consolidated Income Statement Line Item	Reclassified from AOCI				Amounts Excluded from Effectiveness Testing (3)
(Dollars in millions)
For the nine months ended September 30:	2025		2024			2025		2024		2025		2024
Derivative instruments in cash flow hedges:
Interest rate contracts	$	—	$	—	Cost of financing	$	2	$	2	N/A		N/A
					Interest expense	9		10		N/A		N/A
Foreign exchange contracts
Amount included in the assessment of effectiveness	87		147		Cost of services	12		(19)		N/A		N/A
					Cost of sales	(2)		(30)		N/A		N/A
					Cost of financing	2		3		N/A		N/A
					SG&A expense	(1)		(10)		N/A		N/A
					Other (income) and expense	(763)		(233)		N/A		N/A
					Interest expense	9		15		N/A		N/A
Amount excluded from the assessment of effectiveness	(207)		(84)		Other (income) and expense	N/A		N/A		84		57
Instruments in net investment hedges: (4)
Foreign exchange contracts
Amount included in the assessment of effectiveness	(2,252)		(205)
Amount excluded from the assessment of effectiveness	17		10		Cost of financing	N/A		N/A		(13)		(14)
					Interest expense	N/A		N/A		(72)		(69)
Total	$	(2,356)	$	(131)		$	(732)	$	(263)	$	(1)	$	(26)

(1)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period..

(2)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.

(3)Amounts excluded from effectiveness testing for both net investment hedges and cash flow hedges of foreign currency debt are amortized to net income on a straight line basis over the life of the relevant hedging instrument.

(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.

N/A - not applicable