Derivative instruments (Tables)

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The notional amounts and interest rates of our cross-currency swaps as of December 31, 2023, were as follows (notional amounts in millions):


	Foreign currency				U.S. dollars
Hedged notes	Notional amounts		Interest rates		Notional amounts		Interest rates

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	%

Summary of Unrealized Gains and Losses Recognized in AOCI

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	2023		2022		2021
Foreign currency forward contracts	$	(14)	$	308	$	373
Cross-currency swap contracts	73		(219)		(214)
Forward interest rate contracts	(31)		(5)		—
Total unrealized gains	$	28	$	84	$	159

Hedged Liabilities and Cumulative Amount

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	2023		2022		2023		2022
Current portion of long-term debt	$	1,441	$	82	$	41	$	82
Long-term debt	$	4,788	$	6,017	$	(355)	$	(519)

____________

(1)Current portion of long-term debt includes $69 million and $82 million of carrying value with discontinued hedging relationships as of December 31, 2023 and 2022, respectively. Long-term debt includes $288 million and $357 million of carrying value with discontinued hedging relationships as of December 31, 2023 and 2022, respectively.

(2)Current portion of long-term debt includes $69 million and $82 million of hedging adjustments on discontinued hedging relationships as of December 31, 2023 and 2022, respectively. Long-term debt includes $188 million and $257 million of hedging adjustments on discontinued hedging relationships as of December 31, 2023 and 2022, respectively.

Summary 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, 2023
	Product sales		Other income (expense), net		Interest expense, net
Total amounts recorded in income and (expense) line items presented in the Consolidated Statements of Income	$	26,910	$	2,833	$	(2,875)
The effects of cash flow and fair value hedging:
Gains on cash flow hedging relationships reclassified out of AOCI:
Foreign currency forward contracts	$	180	$	—	$	—
Cross-currency swap contracts	$	—	$	42	$	—
(Losses) gains on fair value hedging relationships—interest rate swap agreements:
Hedged items(1)	$	—	$	—	$	(118)
Derivatives designated as hedging instruments	$	—	$	—	$	205


	Year ended December 31, 2022
	Product sales		Other income (expense), 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 income (expense), 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)

__________

(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 Value of Derivatives

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


	Derivative assets			Derivative liabilities
December 31, 2023	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	$	145	Accrued liabilities/ Other noncurrent liabilities	$	116
Cross-currency swap contracts	Other current assets/ Other noncurrent assets	—		Accrued liabilities/ Other noncurrent liabilities	405
Interest rate swap contracts	Other current assets/ Other noncurrent assets	—		Accrued liabilities/ Other noncurrent liabilities	571
Forward interest rate contracts	Other current assets/ Other noncurrent assets	—		Accrued liabilities/ Other noncurrent liabilities	—
Total derivatives designated as hedging instruments		145			1,092



Total derivatives		$	145		$	1,092

	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

For additional information, see Note 18, Fair value measurement.