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Derivative instruments and hedging activities (Tables) | 12 Months Ended
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Dec. 31, 2019
Summary of Notional Amounts for Hedged Items, Designated as Hedge Accounting |
c. | Derivative instrument disclosure:
The following table summarizes the notional amounts for hedged items, when transactions are designated as hedge accounting:
|  | December 31, |
|  | 2019 |  |  | 2018 |
|  | (U.S. $ in millions) |
Cross-currency swap—cash flow hedge |  | $ | — |  |  | $ | 588 |
Interest rate swap—fair value hedge |  |  | — |  |  |  | 500 |
Cross-currency swap—net investment hedge |  |  | 1,000 |  |  |  | 1,000 |
Summary of Classification and Fair Values of Derivative Instruments | The following table summarizes the classification and fair value of derivative instruments:
|  | Fair value |
|  | Designated as hedging instruments |  |  | Not designated as hedging instruments |
|  | December 31, 2019 |  |  | December 31, 2018 |  |  | December 31, 2019 |  |  | December 31, 2018 |
Reported under |  | (U.S. $ in millions) |
Asset derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other current assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Option and forward contracts |  | $ | — |  |  | $ | — |  |  | $ | 32 |  |  | $ | 18 |
Other non-current assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps—cash flow hedge |  |  | — |  |  |  | 58 |  |  |  |  |  |  |  | — |
Liability derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps—net investment hedge |  |  | (22 | ) |  |  | — |  |  |  |  |  |  |  |  |
Option and forward contracts |  |  | — |  |  |  | — |  |  |  | (41 | ) |  |  | (26 | )
Other taxes and long-term liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cross-currency swaps—net investment hedge |  |  | — |  |  |  | (41 | ) |  |  | — |  |  |  | — |
Senior notes and loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps—fair value hedge |  |  | — |  |  |  | (9 | ) |  |  | — |  |  |  | — |
Derivatives Not Designated as Hedging Instruments | The table below provides information regarding the location and amount of pre-tax (gains) losses from derivatives designated in fair value or cash flow hedging relationships:
|  | Financial expenses, net |  |  | Other comprehensive income |
|  | Year ended December 31, |  |  | Year ended December 31, |
|  | 2019 |  |  | 2018** |  |  | 2017** |  |  | 2019 |  |  | 2018** |  |  | 2017** |
Reported under |  | (U.S. $ in millions) |
Line items in which effects of hedges are recorded |  | $ | 822 |  |  | $ | 959 |  |  | $ | 895 |  |  | $ | 160 |  |  | $ | (585 | ) |  | $ | 1,369 |
Cross-currency swaps—cash flow hedge (1) |  |  | (2 | ) |  |  | (2 | ) |  |  | (3 | ) |  |  | (33 | ) |  |  | (35 | ) |  |  | 71 |
Cross-currency swaps—net investment hedge (2) |  |  | (29 | ) |  |  | (31 | ) |  |  | (13 | ) |  |  | (22 | ) |  |  | (51 | ) |  |  | 97 |
Interest rate swaps—fair value hedge (3) |  |  | 2 |  |  |  | * |  |  |  | (4 | ) |  |  | — |  |  |  | — |  |  |  | — |
* | Represents an amount less than $0.5 million.
** | Comparative figures are based on prior hedge accounting standard.
Information Regarding The Location And Amount Of Pretax (Gains) Losses Of Derivatives Designated In Fair Value Or Cash Flow Hedging Relationships | The table below provides information regarding the location and amount of pre-tax (gains) losses from derivatives not designated as hedging instruments:
|  | Financial expenses, net |  |  | Net revenues |
|  | Year ended December 31, |  |  | Year ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2019 |  |  | 2018 |  |  | 2017 |
Reported under |  | (U.S. $ in millions) |
Line items in which effects of hedges are recorded |  | $ | 822 |  |  | $ | 959 |  |  | $ | 895 |  |  | $ | 16,887 |  |  | $ | 18,271 |  |  | $ | 21,853 |
Option and forward contracts (4) |  |  | (51 | ) |  |  | (12 | ) |  |  | 82 |  |  |  | — |  |  |  | — |  |  |  | — |
Option and forward contracts Economic hedge (5) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 14 |  |  |  | (4 | ) |  |  | — |
(1) | With respect to cross-currency swap agreements, Teva recognized gains which mainly reflect the differences between the fixed interest rate and the floating interest rate. In the fourth quarter of 2019, Teva terminated cross-currency swap agreements against its outstanding 3.65% senior notes maturing in November 2021. The settlement of these transactions resulted in cash proceeds of $95 million. The cash flow hedge accounting adjustments of these instruments, which are recorded under senior notes and loans, are amortized under financial expenses-net over the life of the debt as additional interest expense.
(2) | In each of the first and second quarters of 2017, Teva entered into a cross currency swap agreement with a notional amount of $500 million maturing in 2020. These cross currency swaps were designated as a net investment hedge of Teva’s foreign subsidiaries euro denominated net assets, in order to reduce the risk of adverse exchange rate fluctuations. With respect to these cross currency swap agreements, Teva recognized gains which mainly reflect the differences between the float-for-float interest rates paid in euros and received in U.S. dollar . No amounts were reclassified from accumulated other comprehensive income into income related to the sale of a subsidiary.
(3) | In the fourth quarter of 2016, Teva entered into an interest rate swap agreement designated as fair value hedge relating to its 2.8% senior notes due 2023 with respect to $500 million notional amount of outstanding debt. With respect to this interest rate swap agreement, Teva recognized a loss which mainly reflects the differences between the fixed interest rate and the floating interest rate. In the third quarter of 2019, Teva terminated this interest rate swap agreement. The settlement of these transactions resulted in cash proceeds of $ 10 million. The fair value hedge accounting adjustments of fair value hedge instruments, which are recorded under senior notes and loans, are amortized under financial expenses-net over the life of the debt as additional interest expense.
(4) | Teva uses foreign exchange contracts (mainly option and forward contracts) to hedge balance sheet items from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, Teva recognizes gains or losses that offset the revaluation of the balance sheet items also recorded under financial expenses—net.
(5) | Teva entered into option and forward contracts designed to limit the exposure of foreign exchange fluctuations on revenues and expenses recorded in euro, the British pound, the Russian ruble and some other currencies during the quarter for which such instruments are purchased. These derivative instruments do not meet the criteria for hedge accounting, however, they are accounted for as economic hedge. These derivative instruments are recognized on the Balance Sheet at their fair value, with changes in the fair value recognized under the same line item in the Statements of Income as the underlying exposure being hedged. The cash flows associated with these derivatives are reflected as cash flows from operating activities in the consolidated Statements of Cash Flows.
Summary of Sold Receivables Outstanding Balance Net of DPP Asset under Outstanding Securitization Program | The following table summarizes the sold receivables outstanding balance net of DPP asset under the outstanding securitization program:
|  | As of and for the year ended December 31, |
|  | 2019 |  |  | 2018 |
|  | (U.S. $ in millions) |
Sold receivables at the beginning of the year |  | $ | 686 |  |  | $ | 799 |
Proceeds from sale of receivables |  |  | 4,852 |  |  |  | 5,071 |
Cash collections (remitted to the owner of the receivables) |  |  | (4,849 | ) |  |  | (5,151 | )
Effect of currency exchange rate changes |  |  | 1 |  |  |  | (33 | )
Sold receivables at the end of the year |  | $ | 690 |  |  | $ | 686 |

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