Equity Activity (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2021:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	28	$	44	$	72
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	$	(34)	$	9	$	(26)
Reclassification of (gains)/losses to:
Cost of services		(7)		2		(5)
Cost of sales		10		(3)		8
Cost of financing		6		(1)		4
SG&A expense		16		(4)		12
Other (income) and expense		49		(12)		37
Interest expense		16		(4)		12
Total unrealized gains/(losses) on cash flow hedges	$	56	$	(14)	$	42
Retirement-related benefit plans (1):
Prior service costs/(credits)	$	0	$	0	$	0
Net (losses)/gains arising during the period		2		10		11
Curtailments and settlements		16		(5)		11
Amortization of prior service (credits)/costs		1		1		1
Amortization of net (gains)/losses		643		(175)		467
Total retirement-related benefit plans	$	661	$	(170)	$	491
Other comprehensive income/(loss)	$	745	$	(140)	$	605

(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 June 30, 2020:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	4	$	135	$	139
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	$	(36)	$	9	$	(26)
Reclassification of (gains)/losses to:
Cost of services		1		0		1
Cost of sales		(9)		3		(7)
Cost of financing		7		(2)		5
SG&A expense		(7)		2		(5)
Other (income) and expense		(70)		18		(52)
Interest expense		19		(5)		15
Total unrealized gains/(losses) on cash flow hedges	$	(94)	$	25	$	(70)
Retirement-related benefit plans (1):
Prior service costs/(credits)	$	—	$	0	$	0
Net (losses)/gains arising during the period		57		(22)		35
Curtailments and settlements		13		(4)		9
Amortization of prior service (credits)/costs		0		1		1
Amortization of net (gains)/losses		566		(155)		411
Total retirement-related benefit plans	$	637	$	(180)	$	457
Other comprehensive income/(loss)	$	548	$	(21)	$	527

(1) These 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 six months ended June 30, 2021:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	577	$	(184)	$	393
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	$	153	$	(39)	$	114
Reclassification of (gains)/losses to:
Cost of services		(21)		5		(16)
Cost of sales		32		(8)		24
Cost of financing		12		(3)		9
SG&A expense		31		(8)		23
Other (income) and expense		165		(41)		123
Interest expense		31		(8)		24
Total unrealized gains/(losses) on cash flow hedges	$	404	$	(102)	$	301
Retirement-related benefit plans (1):
Prior service costs/(credits)	$	0	$	0	$	0
Net (losses)/gains arising during the period		22		4		25
Curtailments and settlements		34		(10)		23
Amortization of prior service (credits)/costs		4		0		4
Amortization of net (gains)/losses		1,291		(352)		938
Total retirement-related benefit plans	$	1,350	$	(359)	$	991
Other comprehensive income/(loss)	$	2,330	$	(645)	$	1,685

(1) These 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 six months ended June 30, 2020:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	(915)	$	13	$	(902)
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	$	(216)	$	55	$	(162)
Reclassification of (gains)/losses to:
Cost of services		(9)		2		(6)
Cost of sales		(18)		5		(13)
Cost of financing		15		(4)		11
SG&A expense		(17)		4		(13)
Other (income) and expense		19		(5)		15
Interest expense		41		(10)		31
Total unrealized gains/(losses) on cash flow hedges	$	(184)	$	47	$	(137)
Retirement-related benefit plans (1):
Prior service costs/(credits)	$	(4)	$	1	$	(3)
Net (losses)/gains arising during the period		65		(24)		41
Curtailments and settlements		21		(6)		15
Amortization of prior service (credits)/costs		1		1		2
Amortization of net (gains)/losses		1,136		(312)		824
Total retirement-related benefit plans	$	1,219	$	(341)	$	879
Other comprehensive income/(loss)	$	121	$	(281)	$	(160)

(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		114		393		25		0		532
Amount reclassified from accumulated other comprehensive income		187		—		966		—		1,153
Total change for the period	$	301	$	393	$	991	$	0	$	1,685
June 30, 2021	$	(155)	$	(4,271)	$	(23,225)	$	(1)	$	(27,652)

*  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		(162)		(902)		38		1		(1,025)
Amount reclassified from accumulated other comprehensive income		25		—		841		—		866
Total change for the period	$	(137)	$	(902)	$	879	$	1	$	(160)
June 30, 2020	$	(316)	$	(4,602)	$	(23,839)	$	1	$	(28,757)

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