AbbVie 2013 Annual Report Download - page 82
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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, 2013.
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) 2013 (Level 1) (Level 2) (Level 3)
Assets
Cash and equivalents $9,595 $684 $8,911 $ —
Time deposits 300 — 300 —
Equity securities 10 10 — —
Foreign currency contracts 17 — 17 —
Total assets $9,922 $694 $9,228 $ —
Liabilities
Interest rate hedges $ 432 $ — $ 432 $ —
Foreign currency contracts 73 — 73 —
Contingent consideration 165 — — 165
Total liabilities $ 670 $ — $ 505 $165
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 combined balance sheet as of December 31, 2012.
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) 2012 (Level 1) (Level 2) (Level 3)
Assets
Cash and equivalents $5,901 $675 $5,226 $ —
Time deposits 1,775 — 1,775 —
U.S. Treasury securities 300 300 — —
Equity securities 12 12 — —
Foreign currency contracts 15 — 15 —
Total assets $8,003 $987 $7,016 $ —
Liabilities
Interest rate hedges $ 81 $ — $ 81 $ —
Foreign currency contracts 25 — 25 —
Contingent consideration 251 — — 251
Total liabilities $ 357 $ — $ 106 $251
The fair value for time deposits included in cash and equivalents and short-term investments is
determined based on a discounted cash flow analysis reflecting quoted market rates for the same or
similar instruments. The fair values of time deposits approximate their amortized cost due to the short
maturities of these instruments. Available-for-sale equity securities consist of 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. The derivatives entered into by the company are
valued using publicized spot and forward prices for foreign currency hedges and publicized swap curves
for interest rate hedges. The contingent payments are valued using a discounted cash flow technique
that reflects management’s expectations about probability of payment.
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