Derivative instruments and hedging activities (Tables)

6 Months Ended

Jun. 30, 2022

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, 2022			December 31, 2021


Reported under	(U.S. $ in millions)

Asset derivatives:
Other current assets:
Option and forward contracts	$	69		$	30
Liability derivatives:
Other current liabilities:
Option and forward contracts		(37	)		(23	)

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, 2022			June 30, 2021		June 30, 2022			June 30, 2021

Reported under	(U.S. $ in millions)

Line items in which effects of hedges are recorded	$	211		$	274	$	(3,786	)	$	(3,910	)
Option and forward contracts (1)		(38	)		27		—			—
Option and forward contracts economic hedge (2)		—			—		(16	)		15


	Financial expenses, net						Net revenues

	Six months ended,						Six months ended,

	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021

Reported under	(U.S. $ in millions)

Line items in which effects of hedges are recorded	$	468		$	564		$	(7,447	)	$	(7,892	)
Option and forward contracts (1)		(43	)		(43	)		—			—
Option and forward contracts economic hedge (2)		—			—			(35	)		(13	)

(1)

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.

(2)

Teva entered into option and forward contracts designed to limit the exposure of foreign exchange fluctuations on projected revenues and expenses recorded in euro, the Swiss franc, the Japanese yen, the British pound, the Russian ruble, the Canadian dollar and some other currencies to protect its projected operating results for 2022 and 2021. These derivative instruments do not meet the criteria for hedge accounting, however, they are accounted for as an economic hedge. These derivative instruments, which may include hedging transactions against future projected revenues and expenses, are

recognized on the balance sheet at their fair value on a quarterly basis, while the foreign exchange impact on the underlying revenues and expenses may occur in subsequent quarters. In the first six months of 2022, the positive impact from these derivatives recognized under revenues was $35 million. In the first six months of 2021, the positive impact from these derivatives recognized under revenues was $13 million. Changes in the fair value of the derivative instruments are recognized in 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.