Equity Activity (Tables)

3 Months Ended

Mar. 31, 2023

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, 2023:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	(87)	$	56	$	(30)
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	15	$	(4)	$	11
Reclassification of (gains)/losses to other (income) and expense		—		—		—
Total net changes related to available-for-sale securities	$	15	$	(4)	$	11
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	(29)	$	6	$	(23)
Reclassification of (gains)/losses to:
Cost of services		2		0		2
Cost of sales		(14)		4		(10)
Cost of financing		5		(1)		4
SG&A expense		(10)		3		(7)
Other (income) and expense		(126)		32		(94)
Interest expense		21		(5)		16
Total unrealized gains/(losses) on cash flow hedges	$	(151)	$	38	$	(113)
Retirement-related benefit plans*:
Prior service costs/(credits)	$	—	$	1	$	1
Net (losses)/gains arising during the period		2		0		2
Curtailments and settlements		(1)		0		(1)
Amortization of prior service (credits)/costs		(2)		1		(2)
Amortization of net (gains)/losses		131		(38)		93
Total retirement-related benefit plans	$	130	$	(38)	$	92
Other comprehensive income/(loss)	$	(93)	$	53	$	(40)

* These accumulated other comprehensive income (AOCI) components are included in the computation of net periodic pension cost. Refer to note 18, “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, 2022:	Amount		Benefit		Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	442	$	(136)	$	306
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	$	60	$	(16)	$	44
Reclassification of (gains)/losses to:
Cost of services		(15)		4		(11)
Cost of sales		(12)		4		(9)
Cost of financing		5		(1)		4
SG&A expense		(6)		2		(4)
Other (income) and expense		7		(2)		5
Interest expense		21		(5)		15
Total unrealized gains/(losses) on cash flow hedges	$	59	$	(15)	$	44
Retirement-related benefit plans*:
Prior service costs/(credits)	$	(5)	$	5	$	0
Net (losses)/gains arising during the period		9		(4)		5
Curtailments and settlements		8		(2)		6
Amortization of prior service (credits)/costs		7		(2)		5
Amortization of net (gains)/losses		468		(131)		337
Total retirement-related benefit plans	$	486	$	(134)	$	352
Other comprehensive income/(loss)	$	987	$	(285)	$	703

* These AOCI components are included in the computation of net periodic pension cost. Refer to note 18, “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, 2023	$	(135)	$	(3,591)	$	(13,013)	$	(1)	$	(16,740)
Other comprehensive income before reclassifications		(23)		(30)		2		11		(39)
Amount reclassified from accumulated other comprehensive income/(loss)		(90)		—		90		—		0
Total change for the period	$	(113)	$	(30)	$	92	$	11	$	(40)
March 31, 2023	$	(248)	$	(3,621)	$	(12,921)	$	10	$	(16,780)

					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, 2022	$	(18)	$	(3,362)	$	(19,854)	$	(1)	$	(23,234)
Other comprehensive income before reclassifications		44		306		5		0		355
Amount reclassified from accumulated other comprehensive income/(loss)		0		—		348		—		348
Total change for the period	$	44	$	306	$	352	$	0	$	703
March 31, 2022	$	26	$	(3,056)	$	(19,502)	$	(1)	$	(22,532)

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