AbbVie 2012 Annual Report Download - page 83

of a $10.2 billion distribution to Abbott, as provided by the terms of the separation agreement. The
debt was guaranteed by Abbott until AbbVie separated from Abbott on January 1, 2013.
AbbVie may redeem all of the senior notes of each series, other than the floating notes due in 2015, at
any time, and some of the senior notes of each series, other than the floating notes due in 2015, from
time to time, at a redemption price equal to the principal amount of the senior notes redeemed plus a
make-whole premium. AbbVie may not redeem the floating notes due in 2015 prior to maturity.
Debt issuance costs incurred in connection with the senior note debt offering, which totaled
$63 million, are being amortized over the respective terms of the notes to interest expense in the
combined statements of earnings.
At December 31, 2012, the company was in compliance with its senior note covenants.
Short-Term Borrowings
At December 31, 2012, short-term borrowings included $1.0 billion of commercial paper borrowings.
The weighted-average interest rate on short-term borrowings was 0.4% at December 31, 2012. AbbVie
has a $2.0 billion unsecured bank credit facility agreement, which backs the commercial paper program,
and matures in July 2017. Abbott was relieved of its obligations under the credit facility upon
separation of AbbVie from Abbott on January 1, 2013, and AbbVie became the sole obligor of this
facility. The credit facility enables the company to borrow funds on an unsecured basis at floating
interest rates. At December 31, 2012, the company was in compliance with its credit facility covenants.
Compensating balances and commitment fees are not material.
Leases
As part of the separation, AbbVie entered into agreements to lease certain facilities, including office,
laboratory, and factory and warehouse space, under principally non-cancelable operating leases. The
leases generally provide for the company to pay taxes, maintenance, insurance and other operating
costs of the leased property. AbbVie also leases office space on a short-term basis typically under
cancelable operating leases. The company has capital lease obligations principally for automobiles. As
of December 31, 2012, annual future minimum lease payments are not material.
Future Minimum Lease Payments and Long-Term Debt Maturities
as of and for the years ended December 31 (in millions)
2013 $22
2014 15
2015 4,012
2016 9
2017 4,000
Later years 6,746
Total obligations and commitments 14,804
Fair value hedges and unamortized bond discounts (152)
Current and long-term debt and lease obligations $14,652
Contingencies and Guarantees
In connection with the distribution, AbbVie has indemnified Abbott for all liabilities resulting from the
operation of AbbVie’s business other than income tax liabilities with respect to periods prior to the
distribution date and other liabilities as agreed to by AbbVie and Abbott. AbbVie has no material
exposures to off-balance sheet arrangements, no special-purpose entities and no activities that included
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