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Financial Instruments, Derivatives and Fair Value Measures
 3 Months Ended
Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments, Derivatives and Fair Value Measures
Note 10 — Financial Instruments, Derivatives and Fair Value Measures

Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates, primarily for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts, with gross notional amounts totaling $7.1 billion at March 31, 2023 and $7.7 billion at December 31, 2022, are designated as cash flow hedges of the variability of the cash flows due to changes in foreign exchange rates and are recorded at fair value. Accumulated gains and losses as of March 31, 2023 will be included in Cost of products sold at the time the products are sold, generally through the next twelve to eighteen months.

Abbott enters into foreign currency forward exchange contracts to manage currency exposures for foreign currency denominated third-party trade payables and receivables, and for intercompany loans and trade accounts payable where the receivable or payable is denominated in a currency other than the functional currency of the entity. For intercompany loans, the contracts require Abbott to sell or buy foreign currencies, primarily European currencies, in exchange for primarily U.S. dollars and other European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar and European currencies. At March 31, 2023 and December 31, 2022, Abbott held the gross notional amounts of $11.4 billion and $12.0 billion, respectively, of such foreign currency forward exchange contracts.

Abbott has designated a yen-denominated, 5-year term loan of approximately $451 million and $446 million as of March 31, 2023 and December 31, 2022, respectively, as a hedge of the net investment in certain foreign subsidiaries. The change in the value of the debt, which is due to changes in foreign exchange rates, is recorded in Accumulated other comprehensive income (loss), net of tax.

Abbott is a party to interest rate hedge contracts with a notional amount totaling approximately $2.9 billion at March 31, 2023 and December 31, 2022 to manage its exposure to changes in the fair value of fixed-rate debt. These contracts are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The effect of the hedge is to change a fixed-rate interest obligation to a variable rate for that portion of the debt. Abbott records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.
The following table summarizes the amounts and location of certain derivative financial instruments as of March 31, 2023 and December 31, 2022:

Fair Value - AssetsFair Value - Liabilities
(in millions)March 31,
2023		December 31,
2022		Balance Sheet CaptionMarch 31,
2023		December 31,
2022		Balance Sheet Caption
Interest rate swaps designated as fair value hedges:
Non-current $— $— Deferred income taxes and other assets$126 $136 Post-employment obligations, deferred income taxes and other long-term liabilities
Current— — Prepaid expenses and other receivables21 20 Other accrued liabilities
Foreign currency forward exchange contracts:
Hedging instruments76 304 Prepaid expenses and other receivables139 96 Other accrued liabilities
Others not designated as hedges78 108 Prepaid expenses and other receivables96 130 Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary— — n/a451 446 Long-term debt
$154 $412 $833 $828 

The following table summarizes the activity for foreign currency forward exchange contracts designated as cash flow hedges and certain other derivative financial instruments, as well as the amounts and location of income (expense) and gain (loss) reclassified into income for the three months ended March 31, 2023 and 2022.

Gain (loss) Recognized in Other Comprehensive Income (loss)Income (expense) and
 Gain (loss) Reclassified into Income
Three Months
Ended March 31		Three Months
Ended March 31
(in millions)2023202220232022Income Statement Caption
Foreign currency forward exchange contracts designated as cash flow hedges$(63)$(49)$126 $27 Cost of products sold
Debt designated as a hedge of net investment in a foreign subsidiary(5)30 — — n/a
Interest rate swaps designated as fair value hedgesn/an/a9 (121)Interest expense
Losses of $103 million and $51 million were recognized in the three months ended March 31, 2023 and 2022, respectively, related to foreign currency forward exchange contracts not designated as a hedge. These amounts are reported in the Condensed Consolidated Statement of Earnings on the Net foreign exchange (gain) loss line.

The carrying values and fair values of certain financial instruments as of March 31, 2023 and December 31, 2022 are shown in the following table. The carrying values of all other financial instruments approximate their estimated fair values. The counterparties to financial instruments consist of select major international financial institutions. Abbott does not expect any losses from non-performance by these counterparties.

March 31, 2023December 31, 2022
(in millions)Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Long-term Investment Securities:
Equity securities$565 $565 $558 $558 
Other211 211 208 208 
Total Long-term Debt(16,900)(16,927)(16,773)(16,313)
Foreign Currency Forward Exchange Contracts:   
Receivable position154 154 412 412 
(Payable) position(235)(235)(226)(226)
Interest Rate Hedge Contracts:    
(Payable) position(147)(147)(156)(156)

The fair value of the debt was determined based on significant other observable inputs, including current interest rates.
The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis in the balance sheet:

Basis of Fair Value Measurement
(in millions)Outstanding
Balances		Quoted
Prices in
Active
Markets		Significant
Other
Observable
Inputs		Significant
Unobservable
Inputs
March 31, 2023:
Equity securities$315 $315 $— $— 
Foreign currency forward exchange contracts154 — 154 — 
Total Assets$469 $315 $154 $— 
Fair value of hedged long-term debt$2,720 $— $2,720 $— 
Interest rate swap derivative financial instruments147 — 147 — 
Foreign currency forward exchange contracts235 — 235 — 
Contingent consideration related to business combinations133 — — 133 
Total Liabilities$3,235 $— $3,102 $133 
December 31, 2022:
Equity securities$307 $307 $— $— 
Foreign currency forward exchange contracts412 — 412 — 
Total Assets$719 $307 $412 $— 
Fair value of hedged long-term debt$2,691 $— $2,691 $— 
Interest rate swap derivative financial instruments156 — 156 — 
Foreign currency forward exchange contracts226 — 226 — 
Contingent consideration related to business combinations130 — — 130 
Total Liabilities$3,203 $— $3,073 $130 

The fair value of foreign currency forward exchange contracts is determined using a market approach, which utilizes values for comparable derivative instruments. The fair value of debt was determined based on the face value of the debt adjusted for the fair value of the interest rate swaps, which is based on a discounted cash flow analysis using significant other observable inputs. The fair value of the contingent consideration was determined based on independent appraisals at the time of acquisition, adjusted for the time value of money and other changes in fair value.