Equity Activity (Tables)

3 Months Ended

Mar. 31, 2021

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, 2021:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	549	$	(228)	$	321
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	$	187	$	(47)	$	140
Reclassification of (gains)/losses to:
Cost of services		(14)		3		(10)
Cost of sales		22		(6)		16
Cost of financing		6		(2)		4
SG&A expense		15		(4)		11
Other (income) and expense		116		(29)		87
Interest expense		16		(4)		12
Total unrealized gains/(losses) on cash flow hedges	$	347	$	(88)	$	259
Retirement-related benefit plans (1):
Prior service costs/(credits)	$	0	$	0	$	0
Net (losses)/gains arising during the period		20		(6)		14
Curtailments and settlements		17		(5)		12
Amortization of prior service (credits)/costs		3		0		3
Amortization of net (gains)/losses		648		(177)		471
Total retirement-related benefit plans	$	689	$	(189)	$	500
Other comprehensive income/(loss)	$	1,586	$	(505)	$	1,080

(1) These accumulated other comprehensive income (AOCI) components are included in the computation of net periodic pension cost. Refer to note 17, “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, 2020:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	(919)	$	(122)	$	(1,041)
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	$	(180)	$	45	$	(135)
Reclassification of (gains)/losses to:
Cost of services		(10)		2		(7)
Cost of sales		(9)		2		(6)
Cost of financing		8		(2)		6
SG&A expense		(10)		2		(7)
Other (income) and expense		89		(22)		67
Interest expense		22		(5)		16
Total unrealized gains/(losses) on cash flow hedges	$	(90)	$	23	$	(67)
Retirement-related benefit plans (1):
Prior service costs/(credits)	$	(4)	$	1	$	(3)
Net (losses)/gains arising during the period		8		(2)		6
Curtailments and settlements		8		(3)		6
Amortization of prior service (credits)/costs		1		1		1
Amortization of net (gains)/losses		570		(157)		412
Total retirement-related benefit plans	$	582	$	(160)	$	422
Other comprehensive income/(loss)	$	(427)	$	(260)	$	(686)

(1) These AOCI components are included in the computation of net periodic pension cost. Refer to note 17, “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, 2021	$	(456)	$	(4,665)	$	(24,216)	$	0	$	(29,337)
Other comprehensive income before reclassifications		140		321		14		0		475
Amount reclassified from accumulated other comprehensive income		119		—		486		—		606
Total change for the period	$	259	$	321	$	500	$	0	$	1,080
March 31, 2021	$	(197)	$	(4,343)	$	(23,716)	$	(1)	$	(28,257)

* 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, 2020	$	(179)	$	(3,700)	$	(24,718)	$	0	$	(28,597)
Other comprehensive income before reclassifications		(135)		(1,041)		3		0		(1,174)
Amount reclassified from accumulated other comprehensive income		68		—		419		—		488
Total change for the period	$	(67)	$	(1,041)	$	422	$	0	$	(686)
March 31, 2020	$	(246)	$	(4,741)	$	(24,296)	$	0	$	(29,283)

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