Equity Activity

3 Months Ended

Mar. 31, 2017

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 March 31, 2017:	Amount			Benefit			Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	161		$	108		$	270
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	1			0			1
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	$	(33	)	$	8		$	(25	)
Reclassification of (gains)/losses to:
Cost of sales	(11		)	3			(8		)
Cost of services	(8		)	3			(5		)
SG&A expense	(20		)	5			(15		)
Other (income) and expense	(65		)	25			(40		)
Interest expense	7			(3		)	5
Total unrealized gains/(losses) on cash flow hedges	$	(130	)	$	41		$	(89	)
Retirement-related benefit plans(1):
Prior service costs/(credits)	$	0		$	0		$	0
Net (losses)/gains arising during the period	61			(20		)	41
Curtailments and settlements	(1		)	0			(1		)
Amortization of prior service (credits)/costs	(21		)	7			(15		)
Amortization of net (gains)/losses	710			(229		)	481
Total retirement-related benefit plans	$	748		$	(241	)	$	507
Other comprehensive income/(loss)	$	779		$	(92	)	$	688

(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 March 31, 2016:	Amount			Benefit			Amount
Other comprehensive income/(loss):
Foreign currency translation adjustments	$	239		$	266		$	505
Net changes related to available-for-sale securities:
Unrealized gains/(losses) arising during the period	$	(36	)	$	14		$	(22	)
Reclassification of (gains)/losses to other (income) and expense	37			(14		)	23
Total net changes related to available-for-sale securities	$	1		$	0		$	0
Unrealized gains/(losses) on cash flow hedges:
Unrealized gains/(losses) arising during the period	$	(265	)	$	91		$	(174	)
Reclassification of (gains)/losses to:
Cost of sales*	(9		)	2			(7		)
Cost of services*	6			(3		)	4
SG&A expense	(3		)	0			(3		)
Other (income) and expense	(87		)	33			(53		)
Interest expense	2			(1		)	1
Total unrealized gains/(losses) on cash flow hedges	$	(356	)	$	124		$	(232	)
Retirement-related benefit plans(1):
Net (losses)/gains arising during the period	$	(147	)	$	53		$	(94	)
Curtailments and settlements	5			(2		)	3
Amortization of prior service (credits)/costs	(25		)	9			(16		)
Amortization of net (gains)/losses	690			(248		)	442
Total retirement-related benefit plans	$	522		$	(187	)	$	335
Other comprehensive income/(loss)	$	406		$	202		$	608

* Reclassified to conform to 2017 presentation.

(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, 2017	$	319		$	(3,603	)	$	(26,116	)	$	2		$	(29,398	)
Other comprehensive income before reclassifications	(25		)	270			40			(1		)	284
Amount reclassified from accumulated other comprehensive income	(64		)	0			466			1			404
Total change for the period	(89		)	270			507			0			688
March 31, 2017	$	230		$	(3,333	)	$	(25,609	)	$	2		$	(28,710	)

*  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, 2016	$	100		$	(3,463	)	$	(26,248	)	$	5		$	(29,607	)
Other comprehensive income before reclassifications	(174		)	505			(91		)	(22		)	218
Amount reclassified from accumulated other comprehensive income	(58		)	0			426			23			391
Total change for the period	(232		)	505			335			0			608
March 31, 2016	$	(133	)	$	(2,958	)	$	(25,913	)	$	5		$	(28,998	)

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