AbbVie 2014 Annual Report Download - page 53

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Contractual Obligations
The following table summarizes AbbVie’s estimated contractual obligations as of December 31, 2014.
Less than One to Three to More than
(in millions) Total one year three years five years five years
Short-term borrowings $ 425 $ 425 $ — $ — $ —
Research and development collaborations(a) 500 500 — — —
Long-term debt and capital lease obligations,
including current portion 14,815 4,021 4,037 1,020 5,737
Interest on long-term debt(b) 4,604 303 685 517 3,099
Future minimum non-cancelable operating lease
commitments 562 114 195 155 98
Purchase obligations and other(c) 863 818 38 5 2
Other long-term liabilities(d) 930 174 193 154 409
Total $22,699 $6,355 $5,148 $1,851 $9,345
(a) Accounts payable and accrued liabilities includes a $500 million accrual for a payment to Calico due to
the satisfaction of certain conditions under the R&D collaboration, which was paid in the first quarter
of 2015.
(b) Includes estimated future interest payments on long-term debt securities and capital lease obligations.
Interest payments on debt are calculated for future periods using interest rates in effect at the end of
2014. 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, 2014. Refer to Notes 9 and 10 for further discussion
regarding the company’s debt instruments and related interest rate agreements outstanding at
December 31, 2014. Annual interest on capital lease obligations is not material.
(c) 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.
(d) Amounts less than one year includes a voluntary contribution of $150 million AbbVie made to its main
domestic defined benefit plan subsequent to December 31, 2014. Amounts otherwise exclude 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. Also included in this amount are components of
other long-term liabilities including restructuring. Refer to Notes 8 and 11 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 6 to the consolidated financial statements
for further discussion of these collaboration arrangements.
2014 Form 10-K 47