v3.25.2
Derivative Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Amounts related to cumulative basis adjustments for fair value hedges
At June 30, 2025 and December 31, 2024, the following amounts were recorded in the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:
(Dollars in millions)June 30,
2025		December 31,
2024
Short-term debt:  
Carrying amount of the hedged item$(5)$(13)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities) $(5)$(13)
Long-term debt:  
Carrying amount of the hedged item$(6,627)$(6,497)
Cumulative hedging adjustments included in the carrying amount — assets/(liabilities) (1)
$62 $190 
(1)Includes $(133) million and $(155) million of hedging adjustments on discontinued hedging relationships at June 30, 2025 and December 31, 2024, respectively.
Effect of derivative instruments in the Consolidated Income Statement
The total effects of all fair value hedges, cash flow hedges, net investment hedges and derivatives not designated as hedging instruments are summarized by income and expense line items as follows:
Gains/(Losses) of Total Hedge Activity
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)2025202420252024
Cost of services$(4)$9 $(5)$14 
Cost of sales$(5)$15 $2 $27 
Cost of financing$0 $(4)$1 $(7)
SG&A expense$114 $11 $83 $85 
Other (income) and expense (1)
$601 $(140)$1,043 $(427)
Interest expense$3 $(19)$5 $(34)
(1)Primarily driven by currency gains and losses on the company's foreign currency derivatives hedging programs. Refer to note 6, "Other (Income) and Expense," for additional information.
Gains/(Losses) Recognized in Consolidated Income Statement
(Dollars in millions)Consolidated
Income Statement
Line Item		Recognized on
Derivatives
Attributable to Risk
Being Hedged (1)
For the three months ended June 30:2025202420252024
Derivative instruments in fair value hedges: (2)
     
Interest rate contractsCost of financing$2 $(8)$(5)$2 
Interest expense13 (42)(28)10 
Derivative instruments not designated as hedging instruments: 
Foreign exchange contractsOther (income) and expense165 (161)  N/A N/A
Equity contracts
SG&A expense115 4   N/A N/A
Total $295 $(207)$(33)$12 
Gains/(Losses) Recognized in Consolidated Income Statement and Other Comprehensive Income
Recognized in OCIConsolidated
Income Statement
Line Item		Reclassified
from AOCI
Amounts Excluded from
Effectiveness Testing (3)
(Dollars in millions)
For the three months ended June 30:202520242025202420252024
Derivative instruments in cash flow hedges:       
Interest rate contracts$— $— Cost of financing$0 $(1)N/AN/A
Interest expense(3)(3)N/AN/A
Foreign exchange contracts
Amount included in the assessment of effectiveness(25)134 Cost of services(4)9 N/AN/A
Cost of sales(5)15 N/AN/A
Cost of financing(1)(1)N/AN/A
SG&A expense(2)7 N/AN/A
Other (income) and expense466 39 N/AN/A
Interest expense(3)(5)N/AN/A
Amount excluded from the assessment of effectiveness(57)(31)Other (income) and expense N/A N/A(30)(18)
Instruments in net investment hedges: (4)
Foreign exchange contracts
Amount included in the assessment of effectiveness(1,585)269 
Amount excluded from the assessment of effectiveness0 — Cost of financing N/A N/A4 4 
Interest expense N/A N/A24 21 
Total$(1,668)$372  $449 $61 $(2)$6 
(1)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.
(2)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.
(3)Amounts excluded from effectiveness testing for both net investment hedges and cash flow hedges of foreign currency debt are amortized to net income on a straight line basis over the life of the relevant hedging instrument.
(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.
N/A - not applicable
Gains/(Losses) Recognized in Consolidated Income Statement
(Dollars in millions)Consolidated
Income Statement
Line Item		Recognized on
Derivatives
Attributable to Risk
Being Hedged (1)
For the six months ended June 30:2025202420252024
Derivative instruments in fair value hedges: (2)
     
Interest rate contractsCost of financing$13 $(35)$(18)$23 
Interest expense72 (180)(101)120 
Derivative instruments not designated as hedging instruments:     
Foreign exchange contractsOther (income) and expense285 (368)  N/A N/A
Equity contractsSG&A expense81 75   N/A N/A
Total $451 $(509)$(119)$143 
Gains/(Losses) Recognized in Consolidated Income Statement and Other Comprehensive Income
Recognized in OCIConsolidated
Income Statement
Line Item		Reclassified
from AOCI
Amounts Excluded from
Effectiveness Testing (3)
(Dollars in millions)
For the six months ended June 30:202520242025202420252024
Derivative instruments in cash flow hedges:       
Interest rate contracts$— $— Cost of financing$(1)$(1)N/AN/A
Interest expense(6)(7)N/AN/A
Foreign exchange contracts
Amount included in the assessment of effectiveness17 300 Cost of services(5)14 N/AN/A
Cost of sales2 27 N/AN/A
Cost of financing(1)(2)N/AN/A
SG&A expense2 10 N/AN/A
Other (income) and expense814 (22)N/AN/A
Interest expense(6)(10)N/AN/A
Amount excluded from the assessment of effectiveness(158)(21)Other (income) and expenseN/AN/A(56)(37)
Instruments in net investment hedges: (4)
       
Foreign exchange contracts
Amount included in the assessment of effectiveness(2,406)881 
Amount excluded from the assessment of effectiveness11— Cost of financing N/A N/A8 8 
Interest expense N/A N/A45 43 
Total$(2,535)$1,160 $798 $9 $(3)$14 
(1)The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period..
(2)The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.
(3)Amounts excluded from effectiveness testing for both net investment hedges and cash flow hedges of foreign currency debt are amortized to net income on a straight line basis over the life of the relevant hedging instrument.
(4)Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.
N/A - not applicable