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FINANCIAL INSTRUMENTS | 9 Months Ended
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Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS. The following table provides information about assets and liabilities not carried at fair value and excludes finance leases, equity securities without readily determinable fair value and non-financial assets and liabilities. Substantially all of these assets are considered Level 3 and substantially all these liabilities’ fair value are considered Level 2.
|  | September 30, 2025 |  | December 31, 2024
|  | Carrying amount (net) | Estimated fair value |  | Carrying amount (net) | Estimated fair value
Assets | Loans and other receivables(a) | $ | 2,186 |  | $ | 2,142 |  |  | $ | 2,261 |  | $ | 1,981 |
Liabilities | Borrowings (Note 10) | 20,838 |  | 20,873 |  |  | 19,273 |  | 18,805 |
| Investment contracts(a) | 1,171 |  | 1,240 |  |  | 1,375 |  | 1,432 |
(a) Primarily related to our run-off insurance operations. See Note 12 for further information. Assets and liabilities that are reflected in the accompanying financial statements at fair value are not included in the above disclosures; such items include cash and cash equivalents, investment securities (Note 3) and derivative financial instruments below. DERIVATIVES AND HEDGING. Per our policy, derivatives are used solely for managing risks and not for speculative purposes. We use derivatives to manage risks related to foreign currency exchange (including foreign equity investments), interest rates and commodity prices. We use foreign currency forward and cross-currency interest rate swap contracts designated as cash flow hedges primarily to reduce the effects of foreign exchange rate changes. The gains or losses on derivatives that are designated as cash flow hedges are initially recorded in Statement of Other Comprehensive Income (Loss) and subsequently reclassified to earnings when the hedged transaction affects earnings. We expect to reclassify $55 million of gains from AOCI to earnings in the next 12 months contemporaneously with the earnings effects of the related forecasted transactions. We use our foreign currency debt and cross-currency interest rate swaps in net investment hedges to hedge currency exposure of our net investments in foreign operations. Gains and losses on net investment hedges are initially recorded in the Statement of Other Comprehensive Income (Loss). The carrying value of foreign currency debt designated as net investment hedges was $4,944 million and $5,199 million at September 30, 2025 and December 31, 2024, respectively. For cross-currency interest rate swaps in qualified hedging relationships, we recognize the periodic interest settlements within Interest and other financial charges in the Statement of Operations. Such interest amounts were $9 million and $17 million for the three and nine months ended September 30, 2025, respectively. There was no activity during the first three quarters of 2024. The cash flows associated with these periodic interest settlements are classified as operating activities in the Statement of Cash Flows. We also use derivatives for economic hedges when we have exposures to currency exchange risk for which we are unable to meet the requirements for hedge accounting or when changes in the carrying amount of the hedged item are already recorded in income in the same period as the derivative making hedge accounting unnecessary. Even though the derivative is an effective economic hedge, there may be a net effect on income in each period due to differences in the timing of income recognition between the derivative and the hedged item.
FAIR VALUE OF DERIVATIVES | September 30, 2025 |  | December 31, 2024
| Gross Notional | Fair Value - Assets | Fair Value - Liabilities |  | Gross Notional | Fair Value - Assets | Fair Value - Liabilities
Qualifying currency exchange contracts | $ | 1,170 |  | $ | 54 |  | $ | — |  |  | $ | 1,873 |  | $ | 36 |  | $ | 40 |
Qualifying cross currency interest rate swaps(a) | 3,533 |  | — |  | 119 |  |  | 416 |  | 8 |  | — |
Non-qualifying currency exchange contracts and other(b) | 4,554 |  | 161 |  | 39 |  |  | 6,759 |  | 199 |  | 91 |
Gross derivatives | $ | 9,257 |  | $ | 215 |  | $ | 159 |  |  | $ | 9,047 |  | $ | 243 |  | $ | 131 |
Netting and credit adjustments |  | $ | (64) |  | $ | (64) |  |  |  | $ | (55) |  | $ | (54) |
Net derivatives recognized in statement of financial position |  | $ | 152 |  | $ | 95 |  |  |  | $ | 188 |  | $ | 77 |
(a) The fair values for cross-currency interest rate swaps are components of All other assets and All other Liabilities. All other derivatives included in the table are components of All other current assets and All other current liabilities in the Statement of Financial Position. (b) Gains (losses) included in our Statement of Operations were $(22) million and $175 million for the three months ended September 30, 2025 and 2024, and $194 million and $237 million for nine months ended September 30, 2025 and 2024, respectively, primarily in SG&A, driven by hedges of foreign currency exchange and deferred employee compensation. Substantially all of these amounts are offset by the remeasurement of the underlying exposure through income. CASH FLOW HEDGES AND NET INVESTMENT HEDGES
| Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives |  |  | Amount of Gain (Loss) Reclassified from AOCI into Net Income
| Three months ended September 30 | Nine months ended September 30 |  | Three months ended September 30 | Nine months ended September 30
| 2025 | 2024 | 2025 | 2024 |  |  | 2025 | 2024 | 2025 | 2024
Cash flow hedges(a) | $ | (27) |  | $ | 17 |  | $ | 82 |  | $ | (4) |  |  |  | $ | 29 |  | $ | 2 |  | $ | 33 |  | $ | 14 |
Net investment hedges | (68) |  | (258) |  | (760) |  | (108) |  |  |  | — |  | — |  | — |  | — |
(a) Primarily currency exchange contracts, and recognized in SG&A and Costs of equipment or services sold in our Statement of Operations. FAIR VALUE HEDGES. We used fair value hedges to hedge the effects of interest rate and currency changes on debt we issued. All fair value hedges were terminated in 2022 due to exposure management actions. The cumulative net gains related to hedging adjustments of $995 million and $1,037 million on discontinued hedges were included primarily in long-term borrowings of $8,704 million and $8,387 million as of September 30, 2025 and December 31, 2024, respectively, and will continue to amortize into interest expense until the borrowings mature. COUNTERPARTY CREDIT RISK. Our exposures to counterparties (including accrued interest) were $152 million and $188 million at September 30, 2025 and December 31, 2024, respectively. Counterparties' exposures to our derivative liability (including accrued interest), were $95 million and $77 million at September 30, 2025 and December 31, 2024, respectively.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 825 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/825/tableOfContent + Details
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