AbbVie 2013 Annual Report Download - page 79

AbbVie may redeem all of the senior notes of each series, other than the floating notes due in 2015, at
any time, and some of the senior notes of each series, other than the floating notes due in 2015, from
time to time, at a redemption price equal to the principal amount of the senior notes redeemed plus a
make-whole premium. AbbVie may not redeem the floating notes due in 2015 prior to maturity.
At December 31, 2013, the company was in compliance with its senior note covenants.
Short-Term Borrowings
At December 31, 2013 and 2012, short-term borrowings included $400 million and $1.0 billion,
respectively, of commercial paper borrowings. The weighted-average interest rate on short-term
borrowings was 0.2% and 0.4% for 2013 and 2012, respectively. AbbVie has a $2.0 billion unsecured
bank credit facility agreement, which backs the commercial paper program, and matures in July 2017.
Abbott was relieved of its obligations under the credit facility upon separation of AbbVie from Abbott
on January 1, 2013, and AbbVie became the sole obligor of this facility. The credit facility enables the
company to borrow funds on an unsecured basis at floating interest rates. At December 31, 2013, the
company was in compliance with its credit facility covenants. Compensating balances and commitment
fees are not material.
Maturities of Long-Term Debt and Capital Lease Obligations
As part of the separation, AbbVie entered into agreements to lease certain facilities, including office,
laboratory, and factory and warehouse space, under principally non-cancelable operating leases with
Abbott. The leases generally include renewal options and provide for the company to pay taxes,
maintenance, insurance and other operating costs of the leased property. AbbVie also leases office
space on a short-term basis typically under cancelable operating leases. Lease expense for 2013 was
$107 million and was not material for both 2012 and 2011. Capital lease obligations relate to
automobiles and certain facilities. As of December 31, 2013, annual future minimum lease payments for
capital lease obligations are not material. The following table summarizes AbbVie’s future minimum
lease payments under non-cancelable operating leases, debt maturities and future minimum lease
payments for capital lease obligations as of December 31, 2013.
Operating Debt maturities
as of and for the years ended December 31 (in millions) leases and capital leases
2014 $87 $ 18
2015 79 4,012
2016 71 11
2017 62 4,008
2018 46 1,006
Thereafter 530 5,743
Total obligations and commitments 875 14,798
Fair value hedges and unamortized bond discounts n/a (488)
Total debt and lease obligations $875 $14,310
Contingencies and Guarantees
In connection with the separation, AbbVie has indemnified Abbott for all liabilities resulting from the
operation of AbbVie’s business other than income tax liabilities with respect to periods prior to the
distribution date and other liabilities as agreed to by AbbVie and Abbott. AbbVie has no material
exposures to off-balance sheet arrangements, no special-purpose entities and no activities that included
non-exchange-traded contracts accounted for at fair value. In the ordinary course of business, AbbVie
has periodically entered into third-party agreements, such as the assignment of product rights, which
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