AbbVie 2012 Annual Report Download - page 58

credit facility and would not result in an acceleration of the scheduled maturities of any of the
company’s outstanding debt.
Contractual Obligations
The following table summarizes AbbVie’s estimated contractual obligations as of December 31, 2012.
Less than One to Three to More than
(in millions) Total one year three years five years five years
Short-term borrowings $ 1,020 $1,020 $ — $ — $ —
Long-term debt and capital lease obligations,
including current maturities 14,804 22 4,027 4,009 6,746
Interest on long-term debt(a) 5,009 283 596 627 3,503
Purchase obligations and other(b) 2,060 1,737 82 67 174
Other long-term liabilities(c) 533 — 403 69 61
Total $23,426 $3,062 $5,108 $4,772 $10,484
(a) Includes estimated future interest payments on long-term debt securities. Interest payments on
debt are calculated for future periods using interest rates in effect at the end of 2012. Projected
interest payments include the related effects of interest rate swap agreements. Certain of these
projected interest payments may differ in the future based on changes in floating interest rates or
other factors or events. The projected interest payments only pertain to obligations and agreements
outstanding at December 31, 2012. Refer to Notes 7 and 8 for further discussion regarding the
company’s debt instruments and related interest rate agreements outstanding at December 31,
2012.
(b) Includes the company’s significant unconditional purchase obligations. These commitments do not
exceed the company’s projected requirements and are made in the normal course of business.
(c) Excludes pension and other post-employment benefits and related deferred compensation cash
outflows. Timing of funding is uncertain and dependent on future movements in interest rates and
investment returns, changes in laws and regulations, and other variables. Included in this amount
are components of other long-term liabilities including restructuring and the expected payment
related to the contingent sales-based payment recognized as part of the acquisition of Solvay.
Refer to Notes 4, 6 and 8 for further information.
AbbVie enters into R&D collaboration arrangements with third parties that may require future
milestone payments to third parties contingent upon the achievement of certain development,
regulatory or commercial milestones. Individually, these arrangements are not material in any one
annual reporting period. However, if milestones for multiple products covered by these arrangements
would happen to be reached in the same reporting period, the aggregate charge to expense could be
material to the results of operations in that period. From a business perspective, the payments are
viewed as positive because they signify that the product is successfully moving through development and
is now generating or is more likely to generate cash flows from product sales. It is not possible to
predict with reasonable certainty whether these milestones will be achieved or the timing for
achievement. As a result, these potential payments are not included in the table of contractual
obligations. Refer to Note 4 for further discussion of these collaboration arrangements.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in accordance with U.S. generally accepted accounting
principles requires the use of estimates and assumptions that affect the reported amounts of assets and
liabilities and the reported amounts of revenue and expenses. A summary of the company’s significant
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