Derivative instruments and hedging activities (Tables)

6 Months Ended

Jun. 30, 2021

Summary of Classification and Fair Values of Derivative Instruments

The following table summarizes the classification and fair values of derivative instruments:


	Fair value
	Not designated as hedging instruments
	June 30, 2021			December 31, 2020
Reported under	(U.S. $ in millions)
Asset derivatives:
Other current assets:
Option and forward contracts	$	30		$	24
Liability derivatives:
Other current liabilities:
Option and forward contracts		(25	)		(79	)

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 (loss)
	Three months ended,				Three months ended,
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Reported under	(U.S. $ in millions)
Line items in which effects of hedges are recorded	$	274	$	223	$	87	$	151
Cross-currency swaps - net investment hedge (1)		—		—		—		—


	Financial expenses, net					Other comprehensive income (loss)
	Six months ended,					Six months ended,
	June 30, 2021		June 30, 2020			June 30, 2021			June 30, 2020
Reported under	(U.S. $ in millions)
Line items in which effects of hedges are r e corde d	$	564	$	448		$	(115	)	$	(379	)
Cross-currency swaps - net investment hedge (1)		—		(2	)		—			(21	)

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
	Three months ended,				Three months ended,
	June 30, 2021		June 30, 2020		June 30, 2021			June 30, 2020
Reported under	(U.S. $ in millions)
Line items in which effects of hedges are recorded	$	274	$	223	$	(3,910	)	$	(3,870	)
Option and forward contracts (2)		27		13		—			—
Option and forward contracts economic hedge (3)		—		—		15			20


	Financial expenses, net					Net revenues
	Six months ended,					Six months ended,
	June 30, 2021			June 30, 2020		June 30, 2021			June 30, 2020
Reported under	(U.S. $ in millions)
Line items in which effects of hedges are recorded	$	564		$	448	$	(7,892	)	$	(8,227	)
Option and forward contracts (2)		(43	)		37		—			—
Option and forward contracts economic hedge (3 )		—			—		(13	)		(40	)

(1)

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 and received. In the first quarter of 2020, these cross-currency swap agreements expired. The settlement of these transactions resulted in cash proceeds of $3 million.

(2)

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