Equity Activity

3 Months Ended

Mar. 31, 2019

Equity Activity

Equity Activity

9. Equity Activity:

Reclassifications and Taxes Related to Items of Other Comprehensive Income

(Dollars in millions)	Before Tax			Tax (Expense)/			Net of Tax
For the three months ended March 31, 2019:	Amount			Benefit			Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	171		$	0		$	172
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	(1	)	$	0		$	(1	)
Reclassification of (gains)/losses to other (income) and expense	—			—			—
Total net changes related to available-for-sale securities	$	(1	)	$	0		$	(1	)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	(352	)	$	84		$	(268	)
Reclassification of (gains)/losses to:
Cost of services	(10		)	3			(7		)
Cost of sales	(18		)	5			(13		)
Cost of financing	29			(7		)	22
SG&A expense	(22		)	6			(16		)
Other (income) and expense	87			(22		)	65
Interest expense	33			(8		)	24
Total unrealized gains/(losses) on cash flow hedges	$	(254	)	$	61		$	(193	)
Retirement-related benefit plans(1):
Net (losses)/gains arising during the period	$	(4	)	$	1		$	(2	)
Curtailments and settlements	1			0			1
Amortization of prior service (credits)/costs	(3		)	1			(2		)
Amortization of net (gains)/losses	464			(130		)	334
Total retirement-related benefit plans	$	458		$	(128	)	$	330
Other comprehensive income/(loss)	$	375		$	(67	)	$	308

(1) These AOCI components are included in the computation of net periodic pension cost. Refer to note 10, “Retirement-Related Benefits,” for additional information.

Reclassifications and Taxes Related to Items of Other Comprehensive Income

(Dollars in millions)	Before Tax			Tax (Expense)/			Net of Tax
For the three months ended March 31, 2018:	Amount			Benefit			Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	(167	)	$	51		$	(115	)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	(2	)	$	1		$	(2	)
Reclassification of (gains)/losses to other (income) and expense	0			0			0
Total net changes related to available-for-sale securities	$	(3	)	$	1		$	(2	)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	61		$	(9	)	$	51
Reclassification of (gains)/losses to:
Cost of services	(19		)	5			(14		)
Cost of sales	17			(5		)	12
Cost of financing*	18			(4		)	13
SG&A expense	18			(5		)	13
Other (income) and expense	(104		)	26			(78		)
Interest expense*	16			(4		)	12
Total unrealized gains/(losses) on cash flow hedges	$	7		$	3		$	10
Retirement-related benefit plans(1):
Prior service costs/(credits)	$	(1	)	$	0		$	(1	)
Net (losses)/gains arising during the period	2			(1		)	1
Curtailments and settlements	0			0			0
Amortization of prior service (credits)/costs	(19		)	5			(14		)
Amortization of net (gains)/losses	753			(203		)	550
Total retirement-related benefit plans	$	735		$	(199	)	$	537
Other comprehensive income/(loss)	$	573		$	(143	)	$	430

*  Reclassified to conform to current period presentation.

(1)   These AOCI components are included in the computation of net periodic pension cost. Refer to note 10, “Retirement-Related Benefits,” for additional information.

Accumulated Other Comprehensive Income/(Loss) (net of tax)

							Net Change			Net Unrealized
	Net Unrealized			Foreign			Retirement-			Gains/(Losses)			Accumulated
	Gains/(Losses)			Currency			Related			on Available-			Other
	on Cash Flow			Translation			Benefit			For-Sale			Comprehensive
(Dollars in millions)	Hedges			Adjustments*			Plans			Securities			Income/(Loss)
January 1, 2019	$	284		$	(3,690	)	$	(26,083	)	$	0		$	(29,490	)
Other comprehensive income before reclassifications	(268		)	172			(2		)	(1		)	(99		)
Amount reclassified from accumulated other comprehensive income	75			—			333			—			407
Total change for the period	$	(193	)	$	172		$	330		$	(1	)	$	308
March 31, 2019	$	90		$	(3,519	)	$	(25,753	)	$	(1	)	$	(29,182	)

*Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.

							Net Change			Net Unrealized
	Net Unrealized			Foreign			Retirement-			Gains/(Losses)			Accumulated
	Gains/(Losses)			Currency			Related			on Available-			Other
	on Cash Flow			Translation			Benefit			For-Sale			Comprehensive
(Dollars in millions)	Hedges			Adjustments*			Plans			Securities			Income/(Loss)
January 1, 2018	$	35		$	(2,834	)	$	(23,796	)	$	3		$	(26,592	)
Cumulative effect of a change in accounting principle **	5			46			(2,471		)	(2		)	(2,422		)
Other comprehensive income before reclassifications	51			(115		)	0			(2		)	(65		)
Amount reclassified from accumulated other comprehensive income	(41		)	0			537			0			495
Total change for the period	$	10		$	(115	)	$	537		$	(2	)	$	430
March 31, 2018	$	50		$	(2,903	)	$	(25,730	)	$	(1	)	$	(28,583	)

*Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.

**Reflects the adoption of the FASB guidance on stranded tax effects, hedging and financial instruments. Refer to note 2, “Accounting Changes.”