Financial Instruments and Fair Value Measures (Tables)
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9 Months Ended |
Sep. 30, 2018 |
Fair Value Disclosures [Abstract] |
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Summary of amounts and location of derivatives on the condensed consolidated balance sheets |
The following table summarizes the amounts and location of AbbVie’s derivative instruments on the condensed consolidated balance sheets: | | | | | | | | | | | | | | | | | | Fair value – Derivatives in asset position | | Fair value – Derivatives in liability position | (in millions) | Balance sheet caption | September 30, 2018 | December 31, 2017 | | Balance sheet caption | September 30, 2018 | December 31, 2017 | Foreign currency forward exchange contracts | | | | | | | | Designated as cash flow hedges | Prepaid expenses and other | $ | 95 |
| $ | 1 |
| | Accounts payable and accrued liabilities | $ | 2 |
| $ | 120 |
| Designated as cash flow hedges | Other assets | 3 |
| — |
| | Other long-term liabilities | — |
| — |
| Not designated as hedges | Prepaid expenses and other | 17 |
| 22 |
| | Accounts payable and accrued liabilities | 14 |
| 29 |
| Interest rate swaps designated as fair value hedges | Prepaid expenses and other | — |
| — |
| | Accounts payable and accrued liabilities | 7 |
| 8 |
| Interest rate swaps designated as fair value hedges | Other assets | — |
| — |
| | Other long-term liabilities | 700 |
| 393 |
| Total derivatives | | $ | 115 |
| $ | 23 |
| | | $ | 723 |
| $ | 550 |
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Schedule of pre-tax amounts of derivatives recognized in other comprehensive income (loss) |
The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive income (loss): | | | | | | | | | | | | | | | | | | | | Three months ended September 30, | | Nine months ended September 30, | (in millions) | | 2018 | | 2017 | | 2018 | | 2017 | Foreign currency forward exchange contracts | | $ | 1 |
| | $ | (114 | ) | | $ | 122 |
| | $ | (253 | ) |
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Summary of pre-tax amounts and location of derivatives recognized in the condensed consolidated statements of earnings |
The following table summarizes the pre-tax amounts and location of derivative instrument net gains (losses) recognized in the condensed consolidated statements of earnings, including the net gains (losses) reclassified out of AOCI into net earnings. See Note 11 for the amount of net gains (losses) reclassified out of AOCI.
| | | | | | | | | | | | | | | | | | | | | | Three months ended September 30, | | Nine months ended September 30, | (in millions) | Statement of earnings caption | | 2018 | | 2017 | | 2018 | | 2017 | Foreign currency forward exchange contracts | | | | | | | | | | Designated as cash flow hedges | Cost of products sold | | $ | (54 | ) | | $ | 38 |
| | $ | (144 | ) | | $ | 101 |
| Not designated as hedges | Net foreign exchange loss | | 22 |
| | (17 | ) | | 91 |
| | (88 | ) | Interest rate swaps designated as fair value hedges | Interest expense, net | | (63 | ) | | 11 |
| | (306 | ) | | 43 |
| Debt designated as hedged item in fair value hedges | Interest expense, net | | 63 |
| | (11 | ) | | 306 |
| | (43 | ) |
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Summary of bases used to measure assets and liabilities carried at fair value on a recurring basis |
The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of September 30, 2018: | | | | | | | | | | | | | | | | | | | | Basis of fair value measurement | (in millions) | Total | | Quoted prices in active markets for identical assets (Level 1) | | Significant other observable inputs (Level 2) | | Significant unobservable inputs (Level 3) | Assets | | | | | | | | Cash and equivalents | $ | 8,015 |
| | $ | 653 |
| | $ | 7,362 |
| | $ | — |
| Time deposits | 559 |
| | — |
| | 559 |
| | — |
| Debt securities | 1,591 |
| | — |
| | 1,591 |
| | — |
| Equity securities | 5 |
| | 5 |
| | — |
| | — |
| Foreign currency contracts | 115 |
| | — |
| | 115 |
| | — |
| Total assets | $ | 10,285 |
| | $ | 658 |
| | $ | 9,627 |
| | $ | — |
| Liabilities | | | | | | | | Interest rate hedges | $ | 707 |
| | $ | — |
| | $ | 707 |
| | $ | — |
| Foreign currency contracts | 16 |
| | — |
| | 16 |
| | — |
| Contingent consideration | 4,866 |
| | — |
| | — |
| | 4,866 |
| Total liabilities | $ | 5,589 |
| | $ | — |
| | $ | 723 |
| | $ | 4,866 |
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The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of December 31, 2017: | | | | | | | | | | | | | | | | | | | | Basis of fair value measurement | (in millions) | Total | | Quoted prices in active markets for identical assets (Level 1) | | Significant other observable inputs (Level 2) | | Significant unobservable inputs (Level 3) | Assets | | | | | | | | Cash and equivalents | $ | 9,303 |
| | $ | 849 |
| | $ | 8,454 |
| | $ | — |
| Debt securities | 2,524 |
| | — |
| | 2,524 |
| | — |
| Equity securities | 4 |
| | 4 |
| | — |
| | — |
| Foreign currency contracts | 23 |
| | — |
| | 23 |
| | — |
| Total assets | $ | 11,854 |
| | $ | 853 |
| | $ | 11,001 |
| | $ | — |
| Liabilities | | | | | | | | Interest rate hedges | $ | 401 |
| | $ | — |
| | $ | 401 |
| | $ | — |
| Foreign currency contracts | 149 |
| | — |
| | 149 |
| | — |
| Contingent consideration | 4,534 |
| | — |
| | — |
| | 4,534 |
| Total liabilities | $ | 5,084 |
| | $ | — |
| | $ | 550 |
| | $ | 4,534 |
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Schedule of changes in fair value of Level 3 inputs |
The following table presents the changes in fair value of contingent consideration liabilities which are measured using Level 3 inputs: | | | | | | | | | | | | Nine months ended September 30, | (in millions) | | 2018 | | 2017 | Beginning balance | | $ | 4,534 |
| | $ | 4,213 |
| Change in fair value recognized in net earnings | | 432 |
| | 547 |
| Milestone payments | | (100 | ) | | (305 | ) | Ending balance | | $ | 4,866 |
| | $ | 4,455 |
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Schedule of book values, approximate fair values and bases used to measure certain financial instruments |
The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of September 30, 2018 are shown in the table below:
| | | | | | | | | | | | | | | | | | | | | | | | Basis of fair value measurement | (in millions) | Book value | Approximate fair value | | Quoted prices in active markets for identical assets (Level 1) | | Significant other observable inputs (Level 2) | | Significant unobservable inputs (Level 3) | Liabilities | | | | | | | | | Short-term borrowings | $ | 3,002 |
| $ | 3,002 |
| | $ | — |
| | $ | 3,002 |
| | $ | — |
| Current portion of long-term debt and lease obligations, excluding fair value hedges | 1,026 |
| 1,025 |
| | 999 |
| | 26 |
| | — |
| Long-term debt and lease obligations, excluding fair value hedges | 37,187 |
| 36,392 |
| | 36,320 |
| | 72 |
| | — |
| Total liabilities | $ | 41,215 |
| $ | 40,419 |
| | $ | 37,319 |
| | $ | 3,100 |
| | $ | — |
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The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 2017 are shown in the table below:
| | | | | | | | | | | | | | | | | | | | | | | | Basis of fair value measurement | (in millions) | Book value | Approximate fair value | | Quoted prices in active markets for identical assets (Level 1) | | Significant other observable inputs (Level 2) | | Significant unobservable inputs (Level 3) | Assets | | | | | | | | | Investments | $ | 48 |
| $ | 48 |
| | $ | — |
| | $ | — |
| | $ | 48 |
| Total assets | $ | 48 |
| $ | 48 |
| | $ | — |
| | $ | — |
| | $ | 48 |
| Liabilities | | | | | | | | | Short-term borrowings | $ | 400 |
| $ | 400 |
| | $ | — |
| | $ | 400 |
| | $ | — |
| Current portion of long-term debt and lease obligations, excluding fair value hedges | 6,023 |
| 6,034 |
| | 4,004 |
| | 2,030 |
| | — |
| Long-term debt and lease obligations, excluding fair value hedges | 31,346 |
| 32,846 |
| | 32,763 |
| | 83 |
| | — |
| Total liabilities | $ | 37,769 |
| $ | 39,280 |
| | $ | 36,767 |
| | $ | 2,513 |
| | $ | — |
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Summary of available-for-sale securities by type |
The following table is a summary of available-for-sale securities by type as of September 30, 2018: | | | | | | | | | | | | | | | | | | Amortized cost | | Gross unrealized | | Fair value | (in millions) | | Gains | | Losses | | Asset backed securities | $ | 447 |
| | $ | — |
| | $ | (2 | ) | | $ | 445 |
| Corporate debt securities | 1,050 |
| | 3 |
| | (3 | ) | | 1,050 |
| Other debt securities | 97 |
| | — |
| | (1 | ) | | 96 |
| Total | $ | 1,594 |
| | $ | 3 |
| | $ | (6 | ) | | $ | 1,591 |
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The following table is a summary of available-for-sale securities by type as of December 31, 2017: | | | | | | | | | | | | | | | | | | Amortized cost | | Gross unrealized | | Fair value | (in millions) | | Gains | | Losses | | Asset backed securities | $ | 930 |
| | $ | 1 |
| | $ | (3 | ) | | $ | 928 |
| Corporate debt securities | 1,451 |
| | 4 |
| | (2 | ) | | 1,453 |
| Other debt securities | 144 |
| | — |
| | (1 | ) | | 143 |
| Equity securities | 4 |
| | 2 |
| | (2 | ) | | 4 |
| Total | $ | 2,529 |
| | $ | 7 |
| | $ | (8 | ) | | $ | 2,528 |
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