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FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2023

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:


	September 30, 2023						December 31, 2022
Dollars in millions	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Cash and cash equivalents
Money market and other securities	$	—	$	5,545	$	—	$	—	$	7,770	$	—
Marketable debt securities
Certificates of deposit	—		2		—		—		32		—
Commercial paper	—		29		—		—		98		—
Corporate debt securities	—		442		—		—		—		—
U.S. Treasury securities	—		23		—		—		—		—
Derivative assets	—		467		—		—		305		—
Equity investments	291		55		—		424		680		—
Derivative liabilities	—		120		—		—		213		—
Contingent consideration liability
Contingent value rights	4		—		—		5		—		—
Other acquisition related contingent consideration	—		—		9		—		—		24

Marketable Securities

The following table summarizes marketable debt securities:


	September 30, 2023								December 31, 2022
Dollars in millions	Amortized Cost		Gross Unrealized						Amortized Cost		Gross Unrealized
			Gains		Losses		Fair Value				Gains		Losses		Fair Value
Certificates of deposit	$	2	$	—	$	—	$	2	$	32	$	—	$	—	$	32
Commercial paper	29		—		—		29		98		—		—		98
Corporate debt securities	445		—		(3)		442		—		—		—		—
U.S. Treasury securities	23		—		—		23		—		—		—		—
Total marketable debt securities(a)	$	499	$	—	$	(3)	$	496	$	130	$	—	$	—	$	130

(a) All marketable debt securities mature within three years as of September 30, 2023, and one year as of December 31, 2022.

Schedule of Equity Investments

The following summarizes the carrying amount of equity investments:


Dollars in millions	September 30, 2023		December 31, 2022
Equity investments with readily determinable fair values	$	346	$	1,104
Equity investments without readily determinable fair values	654		537
Limited partnerships and other equity method investments	557		546
Total equity investments	$	1,557	$	2,187

Debt Securities, Trading, and Equity Securities, FV-NI

The following summarizes the activity related to equity investments. Changes in fair value of equity investments are included in Other (income)/expense, net.


	Three Months Ended September 30,		Nine Months Ended September 30,
Dollars in millions	2023	2022	2023	2022
Equity investments with readily determinable fair values
Net loss recognized	15	75	203	927
Less: net (gain) loss recognized on investments sold	(86)	(1)	2	(17)
Net unrealized loss recognized on investments still held	101	76	201	944

Equity investments without readily determinable fair values
Upward adjustments	(3)	(64)	(9)	(70)
Impairments and downward adjustments	6	—	6	2
Equity in net (income)/loss of affiliates	(18)	3	13	107

Total equity investment losses	—	14	213	966

Schedule of Derivatives and Fair Value

The following table summarizes the fair value and the notional values of outstanding derivatives:


	September 30, 2023								December 31, 2022
	Asset(a)				Liability(b)				Asset(a)				Liability(b)
Dollars in millions	Notional		Fair Value		Notional		Fair Value		Notional		Fair Value		Notional		Fair Value
Designated as cash flow hedges
Foreign currency exchange contracts	$	6,420	$	326	$	926	$	(26)	$	5,771	$	271	$	2,281	$	(80)
Cross-currency swap contracts	584		12		626		(14)		—		—		584		(7)
Designated as net investment hedges
Foreign currency exchange contracts	416		20		—		—		—		—		—		—
Cross-currency swap contracts	481		23		947		(18)		72		1		1,157		(78)
Designated as fair value hedges
Interest rate swap contracts	—		—		3,755		(24)		—		—		255		(18)
Not designated as hedges
Foreign currency exchange contracts	2,048		86		1,486		(21)		1,564		33		1,703		(19)
Total return swap contracts (c)	—		—		359		(17)		—		—		322		(11)

(a) Included in Other current assets and Other non-current assets.

(b) Included in Other current liabilities and Other non-current liabilities.

Derivative Instruments, Gain (Loss)

The following table summarizes the financial statement classification and amount of (gain)/loss recognized on hedges:


	Three Months Ended September 30, 2023				Nine Months Ended September 30, 2023
Dollars in millions	Cost of products sold		Other (income)/expense, net		Cost of products sold		Other (income)/expense, net
Foreign currency exchange contracts	$	(51)	$	(40)	$	(261)	$	(100)
Cross-currency swap contracts	—		26		—		(2)
Interest rate swap contracts	—		—		—		(7)

	Three Months Ended September 30, 2022				Nine Months Ended September 30, 2022
Dollars in millions	Cost of products sold		Other (income)/expense, net		Cost of products sold		Other (income)/expense, net
Foreign currency exchange contracts	$	(195)	$	(61)	$	(408)	$	(136)
Cross-currency swap contracts	—		13		—		5
Interest rate swap contracts	—		(5)		—		(23)

The following table summarizes the effect of derivative and non-derivative instruments designated as hedges in Other comprehensive income:


	Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in millions	2023		2022		2023		2022
Derivatives designated as cash flow hedges
Foreign exchange contracts gain/(loss):
Recognized in Other comprehensive income	$	173	$	548	$	226	$	1,149
Reclassified to Cost of products sold	(51)		(195)		(261)		(408)
Cross-currency swap contracts gain/(loss):
Recognized in Other comprehensive income	(23)		(43)		5		(43)
Reclassified to Other (income)/expense, net	35		20		26		20
Forward starting interest rate swap contract loss:
Reclassified to Other (income)/expense, net	—		—		—		(3)
Derivatives designated as net investment hedges
Cross-currency swap contracts gain/(loss):
Recognized in Other comprehensive income	59		71		94		135
Foreign exchange contracts gain/(loss):
Recognized in Other comprehensive income	18		—		18		—
Non-derivatives designated as net investment hedges
Non-U.S. dollar borrowings gain/(loss):
Recognized in Other comprehensive income	—		40		(10)		123