Fair Value Measurements and Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Financial Assets and Liabilities Measured at Fair Value

The following tables present information about the company’s financial assets and liabilities measured at fair value on a recurring basis:


	December 31,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
(In millions)	2023		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents	$	5,021	$	5,021	$	—	$	—
Bank time deposits	3		3		—		—
Investments	20		20		—		—

Insurance contracts	210		—		210		—
Derivative contracts	8		—		8		—
Total assets	$	5,262	$	5,044	$	218	$	—
Liabilities
Derivative contracts	$	290	$	—	$	290	$	—
Contingent consideration	87		—		—		87
Total liabilities	$	377	$	—	$	290	$	87


	December 31,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
(In millions)	2022		(Level 1)		(Level 2)		(Level 3)
Assets
Cash equivalents	$	5,804	$	5,804	$	—	$	—
Investments	25		25		—		—
Warrants	12		—		12		—
Insurance contracts	162		—		162		—
Derivative contracts	79		—		79		—
Total assets	$	6,082	$	5,829	$	253	$	—
Liabilities
Derivative contracts	$	101	$	—	$	101	$	—
Contingent consideration	174		—		—		174
Total liabilities	$	275	$	—	$	101	$	174

Rollforward of the Fair Value of Investments

The following table provides a rollforward of the fair value, as determined by level 3 inputs (such as likelihood of achieving production or revenue milestones, as well as changes in the fair values of the investments underlying a recapitalization investment portfolio), of the contingent consideration.


(In millions)	2023		2022
Contingent consideration
Beginning balance	$	174	$	317
Acquisitions (including assumed balances)	1		(18)
Payments	(63)		(66)
Changes in fair value included in earnings	(25)		(59)
Ending balance	$	87	$	174

Schedule of Aggregate Notional Value of Outstanding Derivative Contracts

The following table provides the aggregate notional value of outstanding derivative contracts.


	December 31,		December 31,
(In millions)	2023		2022



Cross-currency interest rate swaps designated as net investment hedge - euro	$	1,000	$	900
Cross-currency interest rate swaps designated as net investment hedge - Japanese yen	4,650		1,200
Cross-currency interest rate swaps designated as net investment hedge - Swiss franc	2,500		—






Currency exchange contracts	1,567		2,434

Schedule of Fair Value of Derivative Instruments

While certain derivatives are subject to netting arrangements with counterparties, the company does not offset derivative assets and liabilities within the balance sheet. The following tables present the fair value of derivative instruments in the accompanying balance sheets and statements of income.


	Fair value – assets				Fair value – liabilities
	December 31,		December 31,		December 31,		December 31,
(In millions)	2023		2022		2023		2022
Derivatives designated as hedging instruments

Cross-currency interest rate swaps (a)	$	5	$	77	$	287	$	85
Derivatives not designated as hedging instruments
Currency exchange contracts (b)	3		2		3		16

Total derivatives	$	8	$	79	$	290	$	101

(a)The fair value of the cross-currency interest rate swaps is included in the accompanying balance sheet under the caption other assets or other long-term liabilities.

(b)The fair value of the currency exchange contracts is included in the accompanying balance sheet under the captions other current assets or other accrued expenses.

Schedule of Derivative Instruments, Gain (Loss) Recognized


	Gain (loss) recognized
(In millions)	2023		2022		2021
Fair value hedging relationships
Cross-currency interest rate swaps
Hedged long-term obligations - included in other income/(expense)	$	—	$	77	$	—
Derivatives designated as hedging instruments - included in other income/(expense)	—		(81)		—
Interest rate swaps
Hedged long-term obligations - included in other income/(expense)	—		—		25
Derivatives designated as hedging instruments - included in other income/(expense)	—		—		(3)


Derivatives designated as cash flow hedges
Interest rate swaps

Amount reclassified from accumulated other comprehensive items to interest expense	(4)		—		—
Amount reclassified from accumulated other comprehensive items to other income/(expense)	(3)		(3)		(73)
Financial instruments designated as net investment hedges
Foreign currency-denominated debt and other payables
Included in currency translation adjustment within other comprehensive items	(356)		695		922
Cross-currency interest rate swaps
Included in currency translation adjustment within other comprehensive items	(222)		52		71
Included in interest expense	120		19		8
Derivatives not designated as hedging instruments
Currency exchange contracts
Included in cost of product revenues	1		6		12
Included in other income/(expense)	(29)		102		162

Schedule of Carrying Value and Fair Value of the Company's Debt Instruments

The carrying value and fair value of the company’s debt instruments are as follows:


	December 31, 2023				December 31, 2022
	Carrying		Fair		Carrying		Fair
(In millions)	value		value		value		value
Senior notes	$	34,650	$	32,191	$	33,889	$	29,901

Commercial paper	—		—		310		310
Other	77		77		79		79
	$	34,727	$	32,268	$	34,278	$	30,290

The fair value of debt instruments, excluding private placement notes, was determined based on quoted market prices and on borrowing rates available to the company at the respective period ends, which represent level 2 measurements. The fair value of private placement notes was determined based on internally developed pricing models and unobservable inputs, which represent level 3 measurements.