AbbVie 2012 Annual Report Download - page 85
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The following table summarizes the amounts and location of AbbVie’s derivative instruments as of
December 31.
Fair value—assets Fair value—liabilities
(in millions) 2012 2011 Balance sheet caption 2012 2011 Balance sheet caption
Interest rate swaps designated as fair
value hedges $— $— $81 $— Long-term liabilities
Foreign currency forward exchange
contracts—
Hedging instruments 1 18 Prepaid expenses and other 10 — Accounts payable
and accrued liabilities
Others not designated as hedges 14 21 Prepaid expenses and other 15 43 Accounts payable
and accrued liabilities
Total $15 $39 $106 $43
The following table summarizes the activity for derivative instruments and the amounts and location of
income (expense) and gain (loss) reclassified into income and for certain other derivative instruments
for the years ended December 31. The amount of hedge ineffectiveness was not significant in 2012,
2011 and 2010.
(Loss) gain
recognized Income (expense)
in other and gain (loss)
comprehensive reclassified
(loss) income into income
(in millions) 2012 2011 2010 2012 2011 2010 Income statement caption
Foreign currency forward exchange
contracts—
Designated as cash flow hedges $(11) $ (2) $ 75 $ 24 $18 $45 Cost of products sold
Not designated as hedges n/a n/a n/a (23) 30 30 Net foreign exchange (gain) loss
Interest rate swaps designated as fair value
hedges n/a n/a n/a (81) —— Interest expense, net
The loss of $81 million related to fair value hedges recognized in net interest expense in 2012 was
offset equally by $81 million in gains on the underlying hedged item, the fixed-rate debt.
Fair Value Measures
The fair value hierarchy under the accounting standard for fair value measurements consists of the
following three levels.
• Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets that
the company has the ability to access;
• Level 2—Valuations based on quoted prices for similar instruments in active markets, quoted
prices for identical or similar instruments in markets that are not active, and model-based
valuations in which all significant inputs are observable in the market; and
• Level 3—Valuations using significant inputs that are unobservable in the market and include the
use of judgment by the company’s management about the assumptions market participants would
use in pricing the asset or liability.
79