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13NOV201221352027
The following table summarizes the bases used to measure the approximate fair values of the financial
instruments as of December 31, 2013.
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) 2013 (Level 1) (Level 2) (Level 3)
Assets
Investments $ 129 $ 39 $ 30 $60
Total assets $ 129 $ 39 $ 30 $60
Liabilities
Short-term borrowings $ 413 $ — $413 $—
Current portion of long-term debt and lease obligations 18 — 18 —
Long-term debt and lease obligations, excluding fair
value hedges 14,493 14,413 80 —
Total liabilities $14,924 $14,413 $511 $—
Investments consist of cost method investments and held-to-maturity debt securities. Cost method
investments include certain 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. To
determine the fair value of other cost method investments, the company takes into consideration recent
transactions, as well as the financial information of the investee, which represents a Level 3 basis of fair
value measurement. The fair value of held-to-maturity debt securities was estimated based upon the
quoted market prices for the same or similar debt instruments. The fair values of short-term and current
borrowings approximate the carrying values due to the short maturities of these instruments.
The fair value of long-term debt, excluding fair value hedges, was determined by using the published
market price for the debt instruments, without consideration of transaction costs, which represents a
Level 1 basis of fair value measurement. The counterparties to financial instruments consist of select major
international financial institutions.
Concentrations of Risk
The company invests excess cash in time deposits, money market funds and U.S. Treasury securities
and diversifies the concentration of cash among different financial institutions. The company monitors
concentrations of credit risk associated with deposits with financial institutions. Credit exposure limits have
been established to limit a concentration with any single issuer or institution.
At December 31, 2014, AbbVie had approximately $240 million of net monetary assets denominated in
the Venezuelan bolivar (converted at a rate of 6.3 VEF/USD) in its Venezuelan entity, which had net sales of
$240 million in 2014. If AbbVie’s net monetary assets denominated in the Venezuelan bolivar had been
converted at a rate of 12 VEF/USD at December 31, 2014, it would have resulted in a devaluation loss of
$114 million in 2014. The company cannot predict whether there will be further devaluations of the
Venezuelan currency or whether the use of the official rate of 6.3 will continue to be supported by evolving
facts and circumstances. If circumstances change such that the company concludes it would be appropriate
to use a different rate, or if a devaluation of the official rate occurs, it could result in a significant change
to AbbVie’s results of operations.
Three U.S. wholesalers accounted for 49 percent and 38 percent of total net accounts receivable as of
December 31, 2014 and December 31, 2013, respectively, and substantially all of AbbVie’s sales in the
2014 Form 10-K 81