Our primary objective in executing and holding derivative contracts is to reduce the volatility of earnings and cash flows associated with risks related to foreign currency exchange rates, interest rates, and equity prices. These derivative contracts reduce, but do not entirely eliminate, the aforementioned risks. Our policy is to use derivative contracts solely for managing risks and not for speculative purposes.

For derivative instruments designated as cash flow hedges, changes in the fair value of designated hedging instruments are initially recorded as a component of AOCI and subsequently reclassified to earnings in the period in which the hedged transaction affects earnings and to the same financial statement line item impacted by the hedged transaction. As of June 30, 2026, we expect to reclassify $42 million of pre-tax net deferred gains associated with designated cash flow hedges to earnings in the next 12 months, contemporaneously with the impact on earnings of the related hedged transactions.

Within the Condensed Consolidated Statements of Cash Flows, cash flows associated with derivatives designated as cash flow hedges are recorded in All other operating activities – net.

We use cross-currency interest rate swaps and foreign currency forward contracts in combination with foreign currency option contracts to hedge the foreign currency risk associated with our net investment in foreign operations. As of June 30, 2026, these contracts were designated as hedges of our net investment in foreign operations, primarily in Euro and Chinese Renminbi currencies.

Within the Condensed Consolidated Statements of Cash Flows, cash flows associated with derivatives designated as net investment hedges are recorded in All other investing activities – net and cash flows from the periodic interest settlements on the cross-currency swaps are recorded in All other operating activities – net.

We use interest rate swaps to hedge the interest rate risk on our fixed rate borrowings. These derivatives are designated as fair value hedges to hedge the changes in fair value due to benchmark interest rate risk of specific designated cash flows of our senior unsecured notes.

We record the changes in fair value on these swap contracts in Interest and other financial charges – net in our Condensed Consolidated Statements of Income, the same line item where the offsetting change in the fair value of the designated cash flows of the senior unsecured note is recorded as a basis adjustment.

Within the Condensed Consolidated Statements of Cash Flows, cash flows for the periodic interest settlements on the interest rate swaps are recorded in All other operating activities – net.

We also execute derivative instruments, such as foreign currency forward contracts and equity-linked total return swaps, which are not designated as qualifying hedges. These derivatives serve as economic hedges of foreign currency exchange rate and equity price risks. We also identify and record foreign currency-related features in our purchase or sales contracts where the currency is not the local or functional currency of any substantive party to the contract as embedded derivatives.

The changes in fair value of derivatives not designated as qualifying hedge transactions are recorded in Cost of products, Cost of services, Selling, general, and administrative (“SG&A”), and Other (income) expense – net in the Condensed Consolidated Statements of Income based on the nature of the underlying hedged transaction. Changes in fair value of embedded derivatives are recognized in Other (income) expense – net in the Condensed Consolidated Statements of Income.

Within the Condensed Consolidated Statements of Cash Flows, cash flows associated with derivatives not designated but used as economic hedges are recorded, based on the nature of the underlying hedged transaction, in All other operating activities – net and All other investing activities – net, and cash flows related to embedded derivatives are recorded in All other operating activities – net.


Fair Value of Derivatives	June 30, 2026						December 31, 2025
	Gross Notional		Fair Value – Assets		Fair Value – Liabilities		Gross Notional		Fair Value – Assets		Fair Value – Liabilities
Foreign currency forward contracts	$	1,636	$	82	$	7	$	1,508	$	52	$	23
Derivatives accounted for as cash flow hedges	1,636		82		7		1,508		52		23
Cross-currency swaps	3,990		68		70		4,115		51		135
Foreign currency forward and options contracts	2,628		52		38		2,581		50		37
Derivatives accounted for as net investment hedges	6,618		120		109		6,697		101		172
Interest rate swaps	2,700		—		25		2,700		28		—
Derivatives accounted for as fair value hedges	2,700		—		25		2,700		28		—
Foreign currency forward contracts	5,468		10		24		4,761		20		7
Other derivatives(1)	324		11		3		320		56		5



Derivatives not designated as hedging instruments	5,792		21		27		5,081		76		12
Total derivatives	$	16,746	$	222	$	167	$	15,986	$	256	$	207

The following table presents amounts recorded in Long-term borrowings in the Condensed Consolidated Statements of Financial Position related to cumulative basis adjustment for fair value hedges.


	June 30, 2026				December 31, 2025
	Carrying amount		Cumulative basis adjustment included in the carrying amount		Carrying amount		Cumulative basis adjustment included in the carrying amount
Long-term borrowings designated as fair value hedges	$	2,670	$	(25)	$	2,722	$	27

Under the master arrangements with the respective counterparties to our derivative contracts, in certain circumstances and subject to applicable requirements, we are allowed to net settle transactions with a single net amount payable by one party to the other. However, we have elected to present the derivative assets and derivative liabilities on a gross basis in our Condensed Consolidated Statements of Financial Position and in the table above.

As of June 30, 2026 and December 31, 2025, the potential effect of rights of offset associated with the derivative contracts would be an offset to both assets and liabilities by $98 million and $107 million, respectively.


Pre-tax Gains (Losses) Recognized in OCI Related to Cash Flow and Net Investment Hedges
	For the three months ended June 30				For the six months ended June 30
	2026		2025		2026		2025
Cash flow hedges	$	22	$	(47)	$	51	$	(62)
Net investment hedges(1)	(35)		(189)		72		(254)


Derivative Financial Instruments and Hedging Activity	For the three months ended June 30, 2026
	Cost of products		Cost of services		SG&A		Interest and other financial charges – net		Other(4)

Foreign currency forward contracts	$	9	$	2	$	—	$	—	$	—
Effects of cash flow hedges	9		2		—		—		—
Cross-currency swaps	—		—		—		13		—
Foreign currency forward and options contracts	—		—		—		6		—
Effects of net investment hedges(1)	—		—		—		19		—

Interest rate swaps(2)	—		—		—		(34)		—
Debt basis adjustment on Long-term borrowings	—		—		—		34		—

Effects of fair value hedges	—		—		—		1		—
Foreign currency forward contracts	10		3		—		—		—



Other derivatives(3)	—		—		7		—		22
Effects of derivatives not designated as hedging instruments	10		3		7		—		23























	For the three months ended June 30, 2025
	Cost of products		Cost of services		SG&A		Interest and other financial charges – net		Other(4)

Foreign currency forward contracts	$	(3)	$	(1)	$	—	$	—	$	—
Effects of cash flow hedges	(3)		(1)		—		—		—
Cross-currency swaps	—		—		—		6		—
Foreign currency forward and option contracts	—		—		—		5		—
Effects of net investment hedges(1)	—		—		—		11		—

Interest rate swaps(2)	—		—		—		24		—
Debt basis adjustment on Long-term borrowings	—		—		—		(28)		—

Effects of fair value hedges	—		—		—		(4)		—
Foreign currency forward contracts	44		12		—		—		(1)
Other derivatives(3)	—		—		4		—		6
Effects of derivatives not designated as hedging instruments	44		12		4		—		5


Derivative Financial Instruments and Hedging Activity	For the six months ended June 30, 2026
	Cost of products		Cost of services		SG&A		Interest and other financial charges – net		Other(4)

Foreign currency forward contracts	$	14	$	3	$	—	$	—	$	—
Effects of cash flow hedges	14		3		—		—		—
Cross-currency swaps	—		—		—		25		—
Foreign currency forward and options contracts	—		—		—		11		—
Effects of net investment hedges(1)	—		—		—		36		—

Interest rate swaps(2)	—		—		—		(51)		—
Debt basis adjustment on Long-term borrowings	—		—		—		53		—

Effects of fair value hedges	—		—		—		2		—
Foreign currency forward contracts	23		6		—		—		—



Other derivatives(3)	—		—		4		—		16
Effects of derivatives not designated as hedging instruments	23		6		4		—		16























	For the six months ended June 30, 2025
	Cost of products		Cost of services		SG&A		Interest and other financial charges – net		Other(4)

Foreign currency forward contracts	$	(5)	$	(1)	$	—	$	—	$	—
Effects of cash flow hedges	(5)		(1)		—		—		—
Cross-currency swaps	—		—		—		14		—
Foreign currency forward and option contracts	—		—		—		8		—
Effects of net investment hedges(1)	—		—		—		22		—

Interest rate swaps(2)	—		—		—		80		—
Debt basis adjustment on Long-term borrowings	—		—		—		(88)		—

Effects of fair value hedges	—		—		—		(8)		—
Foreign currency forward contracts	59		16		—		—		(1)
Other derivatives(3)	—		—		1		—		(9)
Effects of derivatives not designated as hedging instruments	59		16		1		—		(10)

(2) Amount includes interest income (expense) on interest rate derivatives of $1 million and $(4) million for the three months ended June 30, 2026 and 2025, respectively, and $2 million and $(8) million for the six months ended June 30, 2026 and 2025, respectively.


Fair Value of Assets and Liabilities Measured on a Recurring Basis
	As of June 30, 2026								As of December 31, 2025
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	—	$	309	$	—	$	309	$	—	$	399	$	—	$	399
Investment securities	52		—		30		82		47		—		30		77
Derivatives	—		222		—		222		—		256		—		256
Liabilities:
Derivatives	—		167		—		167		—		207		—		207
Contingent consideration	—		—		20		20		—		—		30		30

As of June 30, 2026 and December 31, 2025, Cash, cash equivalents, and restricted cash of $2,105 million and $4,512 million, respectively, included money market funds of $309 million and $399 million, and other cash equivalents of $950 million and $3,046 million, respectively. The carrying values of the other cash equivalents approximates the fair value due to their short maturities and are valued using Level 1 or Level 2 inputs. Refer to Note 16, “Supplemental Financial Information” for further information.

Derivatives are measured at fair value using a discounted cash flow method or option models using interest rates, foreign exchange spot and forward rates and yield curves observable at commonly quoted intervals, implied volatilities, and credit spreads as key inputs. Unobservable inputs relate to our own credit risk which is not significant to the overall measurement of fair value.

Contingent consideration is recorded at fair value based on estimates of future cash flows in connection with business acquisitions. As the valuation of these liabilities is based on inputs that are less observable or not observable in the market, the determination of fair value is classified within Level 3 of the fair value hierarchy.

Changes in fair value measurements of assets and liabilities measured at fair value on a non-recurring basis, such as equity method investments, equity investments without readily determinable fair value, financing receivables, and long-lived assets, were not material for the six months ended June 30, 2026 and 2025, with the exception of the gain on fair value measurement of the NMP equity method investment as described in Note 7, “Acquisitions, Goodwill, and Other Intangible Assets.”

The estimated fair value of borrowings as of June 30, 2026 and December 31, 2025 was $10,495 million and $10,545 million, respectively, compared to a carrying value (which only includes a reduction for unamortized debt issuance costs and discounts and cumulative basis adjustment) of $10,093 million and $10,003 million, respectively. The fair value of our borrowings includes accrued interest and is determined based on observable and quoted prices and spreads of comparable debt and benchmark securities and is considered Level 2 in the fair value hierarchy. See Note 8, “Borrowings” and Note 16, “Supplemental Financial Information” for further information.