AbbVie 2012 Annual Report Download - page 86
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The following table summarizes the bases used to measure certain assets and liabilities that are carried
at fair value on a recurring basis in the combined balance sheets as of December 31.
Basis of fair value measurement
Quoted prices
in active Significant
markets for other Significant
Balance at identical observable unobservable
December 31, assets inputs Inputs
(in millions) 2012 (Level 1) (Level 2) (Level 3)
Assets
Cash and equivalents $5,901 $675 $5,226 $ —
Certificates of deposit 1,775 — 1,775 —
U.S. Treasury securities 300 300 ——
Equity securities 12 12 ——
Foreign currency forward contracts 15 — 15 —
Total assets $8,003 $987 $7,016 $ —
Liabilities
Interest rate hedges $ 81 $ — $81 $—
Foreign currency forward contracts 25 — 25 —
Contingent consideration 251 ——251
Total liabilities $ 357 $ — $ 106 $251
Basis of fair value measurement
Quoted prices
in active Significant
markets for other Significant
Balance at identical observable unobservable
December 31, assets inputs inputs
(in millions) 2011 (Level 1) (Level 2) (Level 3)
Assets
Cash and equivalents $ 27 $ 27 $— $ —
U.S. Treasury securities 626 626 ——
Equity securities 58 58 ——
Foreign currency forward contracts 39 — 39 —
Total assets $750 $711 $39 $ —
Liabilities
Foreign currency forward contracts $ 43 $ — $43 $ —
Contingent consideration 349 ——349
Total liabilities $392 $ —$43 $349
Available-for-sale equity securities consist of investments for which the fair value is determined by using
the published market price per unit multiplied by the number of units held, without consideration of
transaction costs. The derivatives entered into by the company are valued using publicized spot and
forward prices for foreign currency hedges and publicized swap curves for interest rate hedges. The
contingent payments are valued using a discounted cash flow technique that reflects management’s
expectations about probability of payment.
Gross unrealized holding gains on available-for-sale equity securities totaled $1 million and $44 million
at December 31, 2012 and 2011, respectively.
80