Abbott Laboratories 2012 Annual Report Download - page 36

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34
Abbott 2012 Annual Report
(dollars in millions) Fair Value — Assets Fair Value — Liabilities
2012 2011 2010 Balance Sheet Caption 2012 2011 2010 Balance Sheet Caption
Interest rate swaps designated $185 $598 $138 Deferred income $ 80 $ — $ 36 Post-employment
as fair value hedges taxes and other assets obligations and other
long-term liabilities
Foreign currency forward
exchange contracts —
Hedging instruments 22 115 16 Other prepaid 11 2 10 Other accrued
Others not designated as hedges 98 165 109 expenses and receivables 135 179 120 liabilities
Debt designated as a hedge of net — — — n/a 615 680 650 Short-term borrowings
investment in a foreign subsidiary
$305 $878 $263 $841 $861 $816
Notes to Consolidated Financial Statements
The following table summarizes the amounts and location of certain
derivative financial instruments as of December 31:
Gain (loss) Recognized in Other Income (expense) and Gain (loss)
(dollars in millions) Comprehensive Income (loss) Reclassified into Income
2012 2011 2010 2012 2011 2010 Income Statement Caption
Foreign currency forward exchange $ 2 $ 65 $170 $138 $ (26) $ 63 Cost of products sold
contracts designated as cash flow hedges
Debt designated as a hedge of 65 (30) (75) — — — n/a
net investment in a foreign subsidiary
Interest rate swaps designated as fair value hedges n/a n/a n/a 62 488 248 Interest expense
Foreign currency forward exchange n/a n/a n/a 108 (11) 155 Net foreign exchange
contracts not designated as hedges (gain) loss
(dollars in millions) 2012 2011 2010
Carrying Fair Carrying Fair Carrying Fair
Value Value Value Value Value Value
Long-term Investment Securities:
Equity securities $ 213 $ 213 $ 317 $ 317 $ 240 $ 240
Other 61 56 61 42 62 43
Total Long-term Debt (18,394) (19,588) (13,067) (15,129) (14,568) (15,723)
Foreign Currency Forward Exchange Contracts:
Receivable position 120 120 280 280 125 125
(Payable) position (146) (146) (181) (181) (130) (130)
Interest Rate Hedge Contracts:
Receivable position 185 185 598 598 146 146
(Payable) position (80) (80) — — (36) (36)
The following table summarizes the activity for foreign currency
forward exchange contracts designated as cash flow hedges, debt
designated as a hedge of net investment in a foreign subsidiary
The interest rate swaps are designated as fair value hedges of the
variability of the fair value of fixed-rate debt due to changes in the
long-term benchmark interest rates. The hedged debt is marked
to market, offsetting the effect of marking the interest rate swaps
to market.
and the amounts and location of income (expense) and gain (loss)
reclassified into income and for certain other derivative financial
instruments. The amount of hedge ineffectiveness was not significant
in 2012, 2011 and 2010 for these hedges.
The carrying values and fair values of certain financial instruments as
of December 31 are shown in the table below. The carrying values of
all other financial instruments approximate their estimated fair values.
The counterparties to financial instruments consist of select major
international financial institutions. Abbott does not expect any losses
from nonperformance by these counterparties.