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Financial Instruments, Derivatives and Fair Value Measures | 3 Months Ended
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Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments, Derivatives and Fair Value Measures | Note 11 — 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 $7.3 billion at March 31, 2024 and at December 31, 2023, 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 March 31, 2024 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 March 31, 2024 and December 31, 2023, Abbott held gross notional amounts of $14.5 billion and $13.8 billion, respectively, of such foreign currency forward exchange contracts. Abbott has designated a yen-denominated, 5-year term loan, scheduled to mature in November 2024, of approximately $395 million and $419 million as of March 31, 2024 and December 31, 2023, 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 totaling approximately $2.2 billion at March 31, 2024 and December 31, 2023 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 March 31, 2024 and December 31, 2023:
|  | Fair Value - Assets |  | Fair Value - Liabilities
(in millions) |  | March 31, 2024 |  | December 31, 2023 |  | Balance Sheet Caption |  | March 31, 2024 |  | December 31, 2023 |  | Balance Sheet Caption
Interest rate swaps designated as fair value hedges: |  |  |  |  |  |  |  |  |  |  |  |
Non-current |  | $ | — |  |  | $ | — |  |  | Deferred income taxes and other assets |  | $ | 88 |  |  | $ | 95 |  |  | Post-employment obligations, deferred income taxes and other long-term liabilities
Current |  | — |  |  | — |  |  | Prepaid expenses and other receivables |  | 31 |  |  | — |  |  | Other accrued liabilities
Foreign currency forward exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |
Hedging instruments |  | 118 |  |  | 88 |  |  | Prepaid expenses and other receivables |  | 61 |  |  | 134 |  |  | Other accrued liabilities
Others not designated as hedges |  | 52 |  |  | 81 |  |  | Prepaid expenses and other receivables |  | 39 |  |  | 97 |  |  | Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary |  | — |  |  | — |  |  | n/a |  | 395 |  |  | 419 |  |  | Current portion of long-term debt
|  | $ | 170 |  |  | $ | 169 |  |  |  |  | $ | 614 |  |  | $ | 745 |  |  |
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 months ended March 31, 2024 and 2023.
|  | Gain (loss) Recognized in Other Comprehensive Income (loss) |  | Income (expense) and Gain (loss) Reclassified into Income |  |
|  | Three Months Ended March 31 |  |  | Three Months Ended March 31 |  |  |
(in millions) |  | 2024 |  | 2023 |  |  | 2024 |  | 2023 |  |  | Income Statement Caption
Foreign currency forward exchange contracts designated as cash flow hedges |  | $ | 127 |  |  | $ | (63) |  |  |  | $ | 18 |  |  | $ | 126 |  |  |  | Cost of products sold
Debt designated as a hedge of net investment in a foreign subsidiary |  | 24 |  |  | (5) |  |  |  | — |  |  | — |  |  |  | n/a
Interest rate swaps designated as fair value hedges |  | n/a |  | n/a |  |  | (24) |  |  | 9 |  |  |  | Interest expense
Gains of $92 million and losses of $103 million were recognized in the three months ended March 31, 2024 and 2023, 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 March 31, 2024 and December 31, 2023 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.
|  | March 31, 2024 |  | December 31, 2023
(in millions) |  | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
Long-term Investment Securities: |  |  |  |  |  |  |  |
Equity securities |  | $ | 547 |  |  | $ | 547 |  |  | $ | 555 |  |  | $ | 555 |
Other |  | 271 |  |  | 271 |  |  | 244 |  |  | 244 |
Total Long-term Debt |  | (14,586) |  |  | (14,299) |  |  | (14,679) |  |  | (14,769) |
Foreign Currency Forward Exchange Contracts: |  |  |  |  |  |  |  |
Receivable position |  | 170 |  |  | 170 |  |  | 169 |  |  | 169 |
(Payable) position |  | (100) |  |  | (100) |  |  | (231) |  |  | (231) |
Interest Rate Hedge Contracts: |  |  |  |  |  |  |  |
(Payable) position |  | (119) |  |  | (119) |  |  | (95) |  |  | (95) |
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
March 31, 2024: |  |  |  |  |  |  |  |
Equity securities |  | $ | 327 |  |  | $ | 327 |  |  | $ | — |  |  | $ | — |
Foreign currency forward exchange contracts |  | 170 |  |  | — |  |  | 170 |  |  | — |
Total Assets |  | $ | 497 |  |  | $ | 327 |  |  | $ | 170 |  |  | $ | — |
Fair value of hedged long-term debt |  | $ | 2,046 |  |  | $ | — |  |  | $ | 2,046 |  |  | $ | — |
Interest rate swap derivative financial instruments |  | 119 |  |  | — |  |  | 119 |  |  | — |
Foreign currency forward exchange contracts |  | 100 |  |  | — |  |  | 100 |  |  | — |
Contingent consideration related to business combinations |  | 59 |  |  | — |  |  | — |  |  | 59 |
Total Liabilities |  | $ | 2,324 |  |  | $ | — |  |  | $ | 2,265 |  |  | $ | 59 |
December 31, 2023: |  |  |  |  |  |  |  |
Equity securities |  | $ | 326 |  |  | $ | 326 |  |  | $ | — |  |  | $ | — |
Foreign currency forward exchange contracts |  | 169 |  |  | — |  |  | 169 |  |  | — |
Total Assets |  | $ | 495 |  |  | $ | 326 |  |  | $ | 169 |  |  | $ | — |
Fair value of hedged long-term debt |  | $ | 2,052 |  |  | $ | — |  |  | $ | 2,052 |  |  | $ | — |
Interest rate swap derivative financial instruments |  | 95 |  |  | — |  |  | 95 |  |  | — |
Foreign currency forward exchange contracts |  | 231 |  |  | — |  |  | 231 |  |  | — |
Contingent consideration related to business combinations |  | 112 |  |  | — |  |  | — |  |  | 112 |
Total Liabilities |  | $ | 2,490 |  |  | $ | — |  |  | $ | 2,378 |  |  | $ | 112 |
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. The decrease in the amount of contingent consideration from December 31, 2023 reflects a payment of $40 million and a $13 million change in the fair value of the remaining contingent consideration. The maximum amount for certain contingent consideration is not determinable as it is based on a percent of certain sales. Excluding such contingent consideration, the maximum amount that may be due under the other contingent consideration arrangements was estimated at March 31, 2024 to be approximately $135 million, which is dependent upon attaining certain sales thresholds or upon the occurrence of certain events, such as regulatory approvals.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
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