Equity Activity:

6 Months Ended

Jun. 30, 2014

Equity Activity:

Equity Activity:

7. 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, 2014:				Amount		Benefit		Amount
Other comprehensive income/(loss):
	Foreign currency translation adjustments		$	339	$	19	$	358
	Net changes related to available-for-sale securities:
		Unrealized gains/(losses) arising during the period		1	$	0	$	0
		Reclassification of (gains)/losses to other (income) and expense		0		0		0
		Subsequent changes in previously impaired securities arising during
		the period		––		––		––
	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	$	(16)	$	2	$	(14)
		Reclassification of (gains)/losses to:
		Cost of sales		23		(7)		16
		SG&A expense		7		(1)		5
		Other (income) and expense		5		(2)		3
		Interest expense		(1)		0		(1)
	Total unrealized gains/(losses) on cash flow hedges		$	18	$	(8)	$	10
	Retirement-related benefit plans(1):
		Prior service costs/(credits)	$	0	$	0	$	0
		Net (losses)/gains arising during the period		15		(5)		10
		Curtailments and settlements		8		(3)		6
		Amortization of prior service (credits)/costs		(29)		10		(19)
		Amortization of net (gains)/losses		639		(218)		422
	Total retirement-related benefit plans		$	633	$	(216)	$	418
Other comprehensive income/(loss)			$	991	$	(205)	$	787
(1)		These AOCI components are included in the computation of net periodic pension cost. (See note 8, "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, 2013:				Amount		Benefit		Amount
Other comprehensive income/(loss):
	Foreign currency translation adjustments		$	(936)	$	(23)	$	(959)
	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		0		0		0
		Subsequent changes in previously impaired securities arising during
		the period		0		0		0
	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	$	(10)	$	9	$	(1)
		Reclassification of (gains)/losses to:
		Cost of sales		7		(2)		4
		SG&A expense		(5)		2		(3)
		Other (income) and expense		(48)		19		(30)
		Interest expense		0		0		0
	Total unrealized gains/(losses) on cash flow hedges		$	(57)	$	28	$	(29)
	Retirement-related benefit plans(1):
		Prior service costs/(credits)	$	0	$	0	$	0
		Net (losses)/gains arising during the period		210		(71)		138
		Amortization of prior service (credits)/costs		(28)		10		(18)
		Amortization of net (gains)/losses		864		(304)		559
	Total retirement-related benefit plans		$	1,045	$	(366)	$	679
Other comprehensive income/(loss)			$	53	$	(361)	$	(309)
(1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "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, 2014:				Amount		Benefit		Amount
Other comprehensive income/(loss):
	Foreign currency translation adjustments		$	278	$	29	$	307
	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		5		(2)		3
		Subsequent changes in previously impaired securities arising during
		the period		––		––		––
	Total net changes related to available-for-sale securities		$	5	$	(2)	$	3
	Unrealized gains/(losses) on cash flow hedges:
		Unrealized gains/(losses) arising during the period	$	72	$	(31)	$	41
		Reclassification of (gains)/losses to:
		Cost of sales		49		(17)		32
		SG&A expense		8		(1)		7
		Other (income) and expense		(24)		9		(15)
		Interest expense		0		0		0
	Total unrealized gains/(losses) on cash flow hedges		$	104	$	(40)	$	64
	Retirement-related benefit plans(1):
		Prior service costs/(credits)	$	1	$	0	$	0
		Net (losses)/gains arising during the period		47		(16)		31
		Curtailments and settlements		13		(4)		8
		Amortization of prior service (credits)/costs		(59)		20		(39)
		Amortization of net (gains)/losses		1,288		(432)		856
	Total retirement-related benefit plans		$	1,290	$	(433)	$	857
Other comprehensive income/(loss)			$	1,678	$	(445)	$	1,232
(1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "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, 2013:				Amount		Benefit		Amount
Other comprehensive income/(loss):
	Foreign currency translation adjustments		$	(1,341)	$	(107)	$	(1,448)
	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
		Subsequent changes in previously impaired securities arising during
		the period		1		0		1
	Total net changes related to available-for-sale securities		$	(1)	$	1	$	0
	Unrealized gains/(losses) on cash flow hedges:
		Unrealized gains/(losses) arising during the period	$	350	$	(119)	$	231
		Reclassification of (gains)/losses to:
		Cost of sales		(3)		1		(2)
		SG&A expense		(15)		6		(10)
		Other (income) and expense		(85)		33		(52)
		Interest expense		0		0		0
	Total unrealized gains/(losses) on cash flow hedges		$	247	$	(79)	$	168
	Retirement-related benefit plans(1):
		Prior service costs/(credits)	$	33	$	(11)	$	21
		Net (losses)/gains arising during the period		195		(67)		129
		Amortization of prior service (credits)/costs		(58)		20		(38)
		Amortization of net (gains)/losses		1,750		(597)		1,153
	Total retirement-related benefit plans		$	1,920	$	(655)	$	1,265
Other comprehensive income/(loss)			$	826	$	(842)	$	(16)
(1) These AOCI components are included in the computation of net periodic pension cost. (See note 8, "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, 2014		$	(165)	$	332	$	(21,767)	$	(1)	$	(21,602)
Other comprehensive income before
	reclassifications		41		307		31		1		379
Amount reclassified from accumulated
	other comprehensive income		24		0		825		3		853
Total change for the period			64		307		857		3		1,232
June 30, 2014		$	(101)	$	639	$	(20,910)	$	3	$	(20,369)
						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, 2013		$	(90)	$	1,733	$	(27,406)	$	4	$	(25,759)
Other comprehensive income before
	reclassifications		231		(1,448)		150		0		(1,067)
Amount reclassified from accumulated
	other comprehensive income		(63)		0		1,115		0		1,050
Total change for the period			168		(1,448)		1,265		0		(16)
June 30, 2013		$	78	$	284	$	(26,141)	$	4	$	(25,774)
*	Foreign currency translation adjustments are presented gross except for any associated hedges which are presented net of tax.