AbbVie 2012 Annual Report Download - page 87
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There have been no transfers of assets or liabilities between the fair value measurement levels. The
following table is a reconciliation of the fair value measurements that use significant unobservable
inputs (Level 3), which consist of contingent payments related to acquisitions.
(in millions)
Fair value as of December 31, 2010 $ 295
Other (2)
Loss recognized in earnings 56
Fair value as of December 31, 2011 349
Payments (134)
Other 7
Loss recognized in earnings 29
Fair value as of December 31, 2012 $ 251
In connection with the acquisition of Solvay’s U.S. pharmaceuticals business in 2010, the achievement
of a certain sales milestone resulted in a payment of approximately $134 million in 2012 for which a
liability was previously established.
In addition to the financial instruments that the company is required to recognize at fair value on the
combined balance sheets, the company has certain financial instruments that are recognized at
historical cost or some basis other than fair value. The carrying values and fair values of certain
financial instruments as of December 31 are shown in the table below.
Approximate
Book values fair values
(in millions) 2012 2011 2012 2011
Assets
Investments $ 107 $171 $ 104 $171
Liabilities
Short-term borrowings 1,020 — 1,020 —
Current maturities of long-term debt and lease obligations 22 16 22 16
Long-term debt and lease obligations 14,630 32 15,066 32
The following table summarizes the bases used to measure the approximate fair values of the financial
instruments as of December 31, 2012.
Basis of fair value measurement
Quoted prices
in active Significant
markets for other Significant
Fair value at identical observable unobservable
December 31, assets inputs inputs
(in millions) 2012 (Level 1) (Level 2) (Level 3)
Assets
Investments $ 104 $— $ 32 $72
Total assets $ 104 $— $ 32 $72
Liabilities
Short-term borrowings $ 1,020 $— $ 1,020 $—
Current maturities of long-term debt and lease
obligations 22 — 22 —
Long-term debt and lease obligations 15,066 — 15,066 —
Total liabilities $16,108 $— $16,108 $—
81