AbbVie 2014 Annual Report Download - page 84
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13NOV201221352027
2013 and 2012, respectively. The amount of hedge ineffectiveness was not significant for the years ended
December 31, 2014, 2013 and 2012.
Gain (loss)
recognized (Expense) income
in other and (loss) gain
comprehensive reclassified
(loss) income into income
(in millions) 2014 2013 2012 2014 2013 2012 Income statement caption
Foreign currency forward exchange contracts—
Designated as cash flow hedges $193 $(77) $(11) $ (79) $ — $ 24 Cost of products sold
Not designated as hedges n/a n/a n/a (523) 81 (23) Net foreign exchange (loss) gain
Interest rate swaps designated as fair value
hedges n/a n/a n/a 252 (351) (81) Interest expense (income), net
The gain/(loss) related to fair value hedges is recognized in net interest expense and directly offsets
the (loss)/gain on the underlying hedged item, the fixed-rate debt, resulting in no net impact to net interest
expense for years ended December 31, 2014 and 2013.
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.
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 consolidated balance sheet as of December 31, 2014:
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) 2014 (Level 1) (Level 2) (Level 3)
Assets
Cash and equivalents $8,348 $1,214 $7,134 $—
Time deposits 9 — 9 —
Equity securities 13 13 — —
Foreign currency contracts 211 — 211 —
Total assets $8,581 $1,227 $7,354 $—
Liabilities
Interest rate hedges $ 180 $ — $ 180 $—
Foreign currency contracts 63 — 63 —
Total liabilities $ 243 $ — $ 243 $—
78 2014 Form 10-K