AbbVie 2013 Annual Report Download - page 81
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The following table summarizes the amounts and location of AbbVie’s derivative instruments as of
December 31.
Fair value—Derivatives in liability
Fair value—Derivatives in asset position position
(in millions) 2013 2012 Balance sheet caption 2013 2012 Balance sheet caption
Interest rate swaps designated as fair
value hedges $— $— n/a $432 $ 81 Long-term liabilities
Foreign currency forward exchange
contracts—
Hedging instruments — 1 Prepaid expenses and other 61 10 Accounts payable
and accrued liabilities
Others not designated as hedges 17 14 Prepaid expenses and other 12 15 Accounts payable
and accrued liabilities
Total $17 $15 $505 $106
While certain derivatives are subject to netting arrangements with the company’s counterparties, the
company does not offset derivative assets and liabilities within the consolidated balance sheets
presented herein.
The following table summarizes the activity for derivative instruments and the amounts and location of
income (expense) and gain (loss) reclassified into income and for certain other derivative instruments
for the years ended December 31. The amount of hedge ineffectiveness was not significant in 2013,
2012 and 2011.
(Loss) gain
recognized Income (expense)
in other and gain (loss)
comprehensive reclassified
(loss) income into income
(in millions) 2013 2012 2011 2013 2012 2011 Income statement caption
Foreign currency forward exchange
contracts—
Designated as cash flow hedges $(77) $(11) $ (2) $ — $ 24 $18 Cost of products sold
Not designated as hedges n/a n/a n/a 81 (23) 30 Net foreign exchange loss (gain)
Interest rate swaps designated as fair
value hedges n/a n/a n/a (351) (81) — Interest expense (income), net
The losses of $351 million and $81 million related to fair value hedges recognized in net interest
expense in 2013 and 2012, respectively, were offset equally by $351 million and $81 million,
respectively, in gains on the underlying hedged item, the fixed-rate debt.
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.
77