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ABBOTT 2014 ANNUAL REPORT
48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the amounts and location of
certain derivative financial instruments as of December31:
(inmillions)
Fair Value—Assets Fair Value—Liabilities
2014 2013 Balance Sheet Caption 2014 2013 Balance Sheet Caption
Interest rate swaps designated as fair value hedges $101 $÷87
Deferred income taxes
and other assets $÷«— $÷«—
Post-employment
obligations and other
long-term liabilities
Foreign currency forward exchange contracts—
Hedging instruments 107 14
Other prepaid expenses
and receivables — —
Other accrued
liabilities
Others not designated as hedges 150 70 130 75
Debt designated as a hedge of net investment
in a foreign subsidiary — — N/A 445 505
Short-term
borrowings
$358 $171 $575 $580
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 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 ineectiveness was not signifi-
cant in 2014, 2013 and 2012 for these hedges.
(inmillions)
Gain (loss) Recognized in Other
Comprehensive Income (loss)
Income (expense) and Gain (loss)
Reclassified into Income
Income Statement Caption2014 2013 2012 2014 2013 2012
Foreign currency forward exchange contracts
designated as cash flow hedges $105 $÷35 $13 $÷11 $«44 $113 Cost of products sold
Debt designated as a hedge of net investment in a
foreign subsidiary (60) 110 65 — — — N/A
Interest rate swaps designated as fair value hedges N/A N/A N/A 14 (98) 62 Interest expense
Foreign currency forward exchange contracts not
designated as hedges N/A N /A N/A 122 84 125
Net foreign
exchange (gain) loss
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, osetting the eect of marking the interest rate swaps
to market.
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.
(inmillions)
2014 2013
Carrying Value Fair Value Carrying Value Fair Value
Long-term Investment Securities:
Equity securities $÷÷212 $÷÷212 $÷÷÷93 $÷÷÷93
Other 17 17 26 24
Total Long-term Debt (3,463) (4,113) (3,397) (3,930)
Foreign Currency Forward Exchange Contracts:
Receivable position 263 263 84 84
(Payable) position (135) (135) (75) (75)
Interest Rate Hedge Contracts:
Receivable position 101 101 87 87