Derivative instruments and hedging activities (Tables)

3 Months Ended

Mar. 31, 2025

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
	March 31, 2025			December 31, 2024
Reported under	(U.S. $ in millions)
Asset derivatives:
Other current assets:
Option and forward contracts	$	27		$	71
Liability derivatives:
Other current liabilities:
Option and forward contracts		(72	)		(24	)

Summary of Pre-tax (Gains) Losses From Derivatives Designated in Cash Flow Hedging Relationships

The table below provides information regarding the location and amount of

pre-tax

(gains) losses from derivatives designated in cash flow hedging relationships:


	Financial expenses, net					Other comprehensive income (loss)
	Three months ended,					Three months ended,
	March 31, 2025		March 31, 2024			March 31, 2025		March 31, 2024
Reported under	(U.S. $ in millions)
Line items in which effects of hedges are recorded	$	225	$	250		$	500	$	(117	)
Cross-currency swaps - cash flow hedge (1)		—		(8	)		—		1

Summary of Pre-tax (Gains) Losses From Derivatives Not Designated in as Hedging Instruments

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,
	March 31, 2025		March 31, 2024			March 31, 2025			March 31, 2024
Reported under	(U.S. $ in millions)
Line items in which effects of hedges are recorded	$	225	$	250		$	(3,891	)	$	(3,819	)
Option and forward contracts (2)		62		(10	)		—			—
Option and forward contracts economic hedge (3)		—		—			27			(13	)

(1)

On March 31, 2023, Teva entered into a cross-currency interest rate swap agreement, designated as cash flow hedge for accounting purposes with respect to an intercompany loan due October 2026, denominated in Japanese yen. The agreement was terminated in the first quarter of 2024 and resulted in cash proceeds of $16 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.

(3)

Teva entered into option and forward contracts designed to limit the exposure of foreign exchange fluctuations on projected revenues and expenses recorded in euro, Swiss franc, British pound, Russian ruble, Canadian dollar, Polish zloty, Japanese yen, new Israeli shekel, Indian rupee and some other currencies to protect its projected operating results for 2025. 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 three months ended March 31, 2025, the negative impact from these derivatives recognized under

revenues

was $27 million. In the three months ended March 31, 2024, 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. Cash flows associated with these derivatives are reflected as cash flows from operating activities in the consolidated statements of cash flows.