Equity Activity (Tables)

9 Months Ended

Sep. 30, 2019


(Dollars in millions)	Before Tax		Tax (Expense)/		Net of Tax
For the three months ended September 30, 2019:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	(509)	$	(109)	$	(618)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	3	$	(1)	$	2
Reclassification of (gains)/losses to other (income) and expense		—		—		—
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	$	(439)	$	110	$	(329)
Reclassification of (gains)/losses to:
Cost of services		(22)		6		(17)
Cost of sales		(10)		3		(7)
Cost of financing		21		(5)		15
SG&A expense		(11)		3		(8)
Other (income) and expense		447		(112)		334
Interest expense		64		(16)		48
Total unrealized gains/(losses) on cash flow hedges	$	49	$	(12)	$	36
Retirement-related benefit plans (1):
Net (losses)/gains arising during the period	$	0	$	0	$	0
Curtailments and settlements		3		(1)		2
Amortization of prior service (credits)/costs		(3)		3		(1)
Amortization of net (gains)/losses		461		(128)		333
Total retirement-related benefit plans	$	461	$	(127)	$	335
Other comprehensive income/(loss)	$	4	$	(249)	$	(245)

(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 September 30, 2018:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	(22)	$	(22)	$	(44)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	0	$	0	$	0
Reclassification of (gains)/losses to other (income) and expense		—		—		—
Total net changes related to available-for-sale securities	$	0	$	0	$	0
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	(46)	$	11	$	(35)
Reclassification of (gains)/losses to:
Cost of services		(1)		0		(1)
Cost of sales		(8)		3		(6)
Cost of financing*		18		(5)		14
SG&A expense		(7)		2		(5)
Other (income) and expense		8		(2)		6
Interest expense*		18		(5)		14
Total unrealized gains/(losses) on cash flow hedges	$	(18)	$	4	$	(14)
Retirement-related benefit plans (1):
Prior service costs/(credits)	$	0	$	0	$	0
Net (losses)/gains arising during the period		(1)		1		(1)
Curtailments and settlements		2		0		1
Amortization of prior service (credits)/costs		(18)		5		(13)
Amortization of net (gains)/losses		737		(196)		540
Total retirement-related benefit plans	$	719	$	(191)	$	527
Other comprehensive income/(loss)	$	678	$	(209)	$	470

* 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.

Reclassifications and Taxes Related to Items of Other Comprehensive Income


(Dollars in millions)	Before Tax		Tax (Expense)/		Net of Tax
For the nine months ended September 30, 2019:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	(333)	$	(72)	$	(405)
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	$	(798)	$	196	$	(601)
Reclassification of (gains)/losses to:
Cost of services		(52)		13		(38)
Cost of sales		(40)		11		(29)
Cost of financing		73		(18)		55
SG&A expense		(45)		12		(33)
Other (income) and expense		331		(83)		248
Interest expense		150		(38)		112
Total unrealized gains/(losses) on cash flow hedges	$	(380)	$	93	$	(287)
Retirement-related benefit plans (1):
Net (losses)/gains arising during the period	$	113	$	(23)	$	90
Curtailments and settlements		7		(1)		6
Amortization of prior service (credits)/costs		(9)		4		(5)
Amortization of net (gains)/losses		1,385		(380)		1,005
Total retirement-related benefit plans	$	1,496	$	(401)	$	1,095
Other comprehensive income/(loss)	$	784	$	(380)	$	404

(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 nine months ended September 30, 2018:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	(535)	$	(128)	$	(663)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	(2)	$	1	$	(1)
Reclassification of (gains)/losses to other (income) and expense		—		—		—
Total net changes related to available-for-sale securities	$	(2)	$	1	$	(1)
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	(134)	$	39	$	(95)
Reclassification of (gains)/losses to:
Cost of services		(29)		7		(22)
Cost of sales		15		(4)		11
Cost of financing*		56		(14)		42
SG&A expense		14		(4)		10
Other (income) and expense		301		(76)		225
Interest expense*		52		(13)		39
Total unrealized gains/(losses) on cash flow hedges	$	274	$	(63)	$	210
Retirement-related benefit plans (1):
Prior service costs/(credits)	$	(1)	$	0	$	(1)
Net (losses)/gains arising during the period		83		(22)		60
Curtailments and settlements		7		(2)		5
Amortization of prior service (credits)/costs		(55)		15		(40)
Amortization of net (gains)/losses		2,231		(607)		1,624
Total retirement-related benefit plans	$	2,264	$	(616)	$	1,648
Other comprehensive income/(loss)	$	2,001	$	(807)	$	1,194

* 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.


					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		(601)		(405)		89		1		(916)
Amount reclassified from accumulated other comprehensive income		315		—		1,005		—		1,320
Total change for the period	$	(287)	$	(405)	$	1,095	$	1	$	404
September 30, 2019	$	(3)	$	(4,095)	$	(24,988)	$	0	$	(29,086)

* 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		(95)		(663)		65		(1)		(695)
Amount reclassified from accumulated other comprehensive income		305		—		1,584		—		1,889
Total change for the period	$	210	$	(663)	$	1,648	$	(1)	$	1,194
September 30, 2018	$	250	$	(3,451)	$	(24,618)	$	0	$	(27,820)

* 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.”