Derivative instruments - (Tables)

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of notional amounts and interest rates for cross-currency swaps

The notional amounts and interest rates of our cross-currency swaps as of December 31, 2022, were as follows (notional amounts in millions):

	Foreign currency				U.S. dollars
Hedged notes	Notional amounts		Interest rates		Notional amounts		Interest rates
0.41% 2023 Swiss franc Bonds	CHF	700	0.4	%	$	704	3.4	%
2.00% 2026 euro Notes	€	750	2.0	%	$	833	3.9	%
5.50% 2026 pound sterling Notes	£	475	5.5	%	$	747	6.0	%
4.00% 2029 pound sterling Notes	£	700	4.0	%	$	1,111	4.6	%

Effective portion of the unrealized gain (loss) recognized in Other Comprehensive Income for our derivative instruments designated as cash flow hedges

The unrealized gains and losses recognized in AOCI for our derivative instruments designated as cash flow hedges were as follows (in millions):

	Years ended December 31,
Derivatives in cash flow hedging relationships	2022		2021		2020
Foreign currency forward contracts	$	308	$	373	$	(251)
Cross-currency swap contracts	(219)		(214)		190
Forward interest rate contracts	(5)		—		—
Total unrealized gains (losses)	$	84	$	159	$	(61)

Derivatives in fair value hedging relationships

The hedged liabilities and related cumulative-basis adjustments for fair value hedges of those liabilities were recorded in the Consolidated Balance Sheets as follows (in millions):

	Carrying amounts of hedged liabilities(1)				Cumulative amounts of fair value hedging adjustments related to the carrying amounts of the hedged liabilities(2)
	December 31,				December 31,
Consolidated Balance Sheets locations	2022		2021		2022		2021
Current portion of long-term debt	$	82	$	85	$	82	$	85
Long-term debt	$	6,017	$	6,729	$	(519)	$	199

____________

(1)Current portion of long-term debt includes $82 million and $85 million of carrying value with discontinued hedging relationships as of December 31, 2022 and 2021, respectively. Long-term debt includes $357 million and $440 million of carrying value with discontinued hedging relationships as of December 31, 2022 and 2021, respectively.

(2)Current portion of long-term debt includes $82 million and $85 million of hedging adjustments on discontinued hedging relationships as of December 31, 2022 and 2021, respectively. Long-term debt includes $257 million and $340 million of hedging adjustments on discontinued hedging relationships as of December 31, 2022 and 2021, respectively.

Summary of amounts of income and expense line items

The following tables summarize the amounts recorded in income and expense line items and the effects thereon from fair value and cash flow hedging, including discontinued hedging relationships (in millions):

	Year ended December 31, 2022
	Product sales		Other (expense) income, net		Interest expense, net
Total amounts recorded in income and (expense) line items presented in the Consolidated Statements of Income	$	24,801	$	(814)	$	(1,406)
The effects of cash flow and fair value hedging:
Gains (losses) on cash flow hedging relationships reclassified out of AOCI:
Foreign currency forward contracts	$	231	$	—	$	—
Cross-currency swap contracts	$	—	$	(233)	$	—
Gains (losses) on fair value hedging relationships—interest rate swap agreements:
Hedged items(1)	$	—	$	—	$	716
Derivatives designated as hedging instruments	$	—	$	—	$	(636)

	Year ended December 31, 2021
	Product sales		Other (expense) income, net		Interest expense, net
Total amounts recorded in income and (expense) line items presented in the Consolidated Statements of Income	$	24,297	$	259	$	(1,197)
The effects of cash flow and fair value hedging:
Losses on cash flow hedging relationships reclassified out of AOCI:
Foreign currency forward contracts	$	(8)	$	—	$	—
Cross-currency swap contracts	$	—	$	(245)	$	—
Gains (losses) on fair value hedging relationships—interest rate swap agreements:
Hedged items(1)	$	—	$	—	$	281
Derivatives designated as hedging instruments	$	—	$	—	$	(192)

	Year ended December 31, 2020
	Product sales		Other (expense) income, net		Interest expense, net
Total amounts recorded in income and (expense) line items presented in the Consolidated Statements of Income	$	24,240	$	256	$	(1,262)
The effects of cash flow and fair value hedging:
Gains on cash flow hedging relationships reclassified out of AOCI:
Foreign currency forward contracts	$	178	$	—	$	—
Cross-currency swap contracts	$	—	$	323	$	—
Gains (losses) on fair value hedging relationships—interest rate swap agreements:
Hedged items(1)	$	—	$	—	$	315
Derivatives designated as hedging instruments	$	—	$	—	$	(204)

__________

(1)    Gains on hedged items do not completely offset losses on the related designated hedging instruments due to amortization of the cumulative amounts of fair value hedging adjustments included in the carrying amount of the hedged debt for discontinued hedging relationships and the recognition of gains on terminated hedges when the corresponding hedged item was paid down in the period.

Fair values of derivatives included in the Consolidated Balance Sheets

The fair values of derivatives included in the Consolidated Balance Sheets were as follows (in millions):

	Derivative assets			Derivative liabilities
December 31, 2022	Consolidated Balance Sheets locations	Fair values		Consolidated Balance Sheets locations	Fair values
Derivatives designated as hedging instruments:
Foreign currency forward contracts	Other current assets/ Other noncurrent assets	$	287	Accrued liabilities/ Other noncurrent liabilities	$	76
Cross-currency swap contracts	Other current assets/ Other noncurrent assets	54		Accrued liabilities/ Other noncurrent liabilities	541
Interest rate swap contracts	Other current assets/ Other noncurrent assets	—		Accrued liabilities/ Other noncurrent liabilities	776
Forward interest rate contracts	Other current assets/ Other noncurrent assets	—		Accrued liabilities/ Other noncurrent liabilities	5
Total derivatives designated as hedging instruments		341			1,398
Total derivatives		$	341		$	1,398
	Derivative assets			Derivative liabilities
December 31, 2021	Consolidated Balance Sheets locations	Fair values		Consolidated Balance Sheets locations	Fair values
Derivatives designated as hedging instruments:
Foreign currency forward contracts	Other current assets/ Other noncurrent assets	$	183	Accrued liabilities/ Other noncurrent liabilities	$	39
Cross-currency swap contracts	Other current assets/ Other noncurrent assets	66		Accrued liabilities/ Other noncurrent liabilities	339
Interest rate swap contracts	Other current assets/ Other noncurrent assets	16		Accrued liabilities/ Other noncurrent liabilities	156
Forward interest rate contracts	Other current assets/ Other noncurrent assets	—		Accrued liabilities/ Other noncurrent liabilities	—
Total derivatives designated as hedging instruments		265			534
Total derivatives		$	265		$	534

For additional information, see Note 17, Fair value measurement.