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Financial Instruments, Derivatives and Fair Value Measures
 9 Months Ended
Sep. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments, Derivatives and Fair Value Measures
Note 9 — 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 $7.9 billion at September 30, 2022 and $8.6 billion at December 31, 2021, 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 September 30, 2022 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 September 30, 2022 and December 31, 2021, Abbott held the gross notional amounts of $10.3 billion and $12.2 billion, respectively, of such foreign currency forward exchange contracts.

Abbott has designated a yen-denominated, 5-year term loan of approximately $413 million and $521 million as of September 30, 2022 and December 31, 2021, 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 notional values totaling approximately $2.9 billion at September 30, 2022 and December 31, 2021 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 September 30, 2022 and December 31, 2021:

Fair Value - AssetsFair Value - Liabilities
(in millions)September 30,
2022		Dec. 31,
2021		Balance Sheet CaptionSeptember 30,
2022		Dec. 31,
2021		Balance Sheet Caption
Interest rate swaps designated as fair value hedges$— $87 Deferred income taxes and other assets$166 $— Post-employment obligations, deferred income taxes and other long-term liabilities
Foreign currency forward exchange contracts:
Hedging instruments760 222 Prepaid expenses and other receivables66 65 Other accrued liabilities
Others not designated as hedges148 70 Prepaid expenses and other receivables141 32 Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary— — n/a413 521 Long-term debt
$908 $379 $786 $618 

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 and nine months ended September 30, 2022 and 2021.

Gain (loss) Recognized in Other
Comprehensive Income (loss)		Income (expense) and Gain (loss)
Reclassified into Income
Three Months
Ended September 30		Nine Months
Ended September 30		Three Months
Ended September 30		Nine Months
Ended September 30
(in millions)20222021202220212022202120222021Income Statement Caption
Foreign currency forward exchange contracts designated as cash flow hedges$350 $96 $442 $142 $79 $(92)$149 $(207)Cost of products sold
Debt designated as a hedge of net investment in a foreign subsidiary24 4 108 41 — — — — n/a
Interest rate swaps designated as fair value hedgesn/an/an/an/a(85)(14)(253)(81)Interest expense
Losses of $27 million and $18 million were recognized in the three months ended September 30, 2022 and 2021, respectively, related to foreign currency forward exchange contracts not designated as a hedge. Gains of $225 million and $15 million were recognized in the nine months ended September 30, 2022 and 2021, 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 September 30, 2022 and December 31, 2021 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.

September 30, 2022December 31, 2021
(in millions)Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Long-term Investment Securities:
Equity securities$604 $604 $748 $748 
Other160 160 68 68 
Total Long-term Debt(16,414)(15,821)(18,050)(21,152)
Foreign Currency Forward Exchange Contracts:   
Receivable position908 908 292 292 
(Payable) position(207)(207)(97)(97)
Interest Rate Hedge Contracts:    
Receivable position— — 87 87 
(Payable) position(166)(166)— — 

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
September 30, 2022:
Equity securities$293 $293 $— $— 
Foreign currency forward exchange contracts908 — 908 — 
Total Assets$1,201 $293 $908 $— 
Fair value of hedged long-term debt$2,685 $— $2,685 $— 
Interest rate swap derivative financial instruments166 — 166 — 
Foreign currency forward exchange contracts207 — 207 — 
Contingent consideration related to business combinations138 — — 138 
Total Liabilities$3,196 $— $3,058 $138 
December 31, 2021:
Equity securities$402 $402 $— $— 
Interest rate swap derivative financial instruments 87 — 87 — 
Foreign currency forward exchange contracts292 — 292 — 
Total Assets$781 $402 $379 $— 
Fair value of hedged long-term debt$2,926 $— $2,926 $— 
Foreign currency forward exchange contracts97 — 97 — 
Contingent consideration related to business combinations130 — — 130 
Total Liabilities$3,153 $— $3,023 $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.