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Financial Instruments and Fair Value Measures (Tables)
6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
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
June 30,
2019
December 31, 2018
 
Balance sheet caption
June 30,
2019
December 31, 2018
Foreign currency forward exchange contracts
 
 
 
 
 
 
 
Designated as cash flow hedges
Prepaid expenses and
other
$
22

$
113

 
Accounts payable and accrued liabilities
$

$

Designated as net investment hedges
Prepaid expenses and
other
11


 
Accounts payable and accrued liabilities
1


Not designated as hedges
Prepaid expenses and
other
40

19

 
Accounts payable and accrued liabilities
38

26

Interest rate swaps designated as fair value hedges
Prepaid expenses and other


 
Accounts payable and accrued liabilities
8


Interest rate swaps designated as fair value hedges
Other assets
24


 
Other long-term liabilities
117

466

Total derivatives
 
$
97

$
132

 
 
$
164

$
492


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
June 30,
 
Six months ended
June 30,
(in millions)
 
2019
 
2018
 
2019
 
2018
Foreign currency forward exchange contracts
 
 
 
 
 
 
 
 
Designated as cash flow hedges
 
$
2

 
$
169

 
$
5

 
$
121

Designated as net investment hedges
 
10

 

 
10

 


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
June 30,
 
Six months ended
June 30,
(in millions)
Statement of earnings caption
 
2019
 
2018
 
2019
 
2018
Foreign currency forward exchange contracts
 
 
 
 
 
 
 
 
 
Designated as cash flow hedges
Cost of products sold
 
$
37

 
$
(46
)
 
$
77

 
$
(90
)
Designated as net investment hedges
Interest expense, net
 
9

 

 
9

 

Not designated as hedges
Net foreign exchange loss
 
(25
)
 
128

 
(40
)
 
69

Interest rate swaps designated as fair value hedges
Interest expense, net
 
253

 
(59
)
 
365

 
(243
)
Debt designated as hedged item in fair value hedges
Interest expense, net
 
(253
)
 
59

 
(365
)
 
243


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 June 30, 2019:
 
 
 
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
$
5,172

 
$
1,388

 
$
3,784

 
$

Debt securities
1,573

 

 
1,573

 

Equity securities
79

 
79

 

 

Interest rate hedges
24

 

 
24

 

Foreign currency contracts
73

 

 
73

 

Total assets
$
6,921

 
$
1,467

 
$
5,454

 
$

Liabilities
 
 
 
 
 
 
 
Interest rate hedges
$
125

 
$

 
$
125

 
$

Foreign currency contracts
39

 

 
39

 

Contingent consideration
6,789

 

 

 
6,789

Total liabilities
$
6,953

 
$

 
$
164

 
$
6,789

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, 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
$
7,289

 
$
1,209

 
$
6,080

 
$

Time deposits
568

 

 
568

 

Debt securities
1,536

 

 
1,536

 

Equity securities
4

 
4

 

 

Foreign currency contracts
132

 

 
132

 

Total assets
$
9,529

 
$
1,213

 
$
8,316

 
$

Liabilities
 
 
 
 
 
 
 
Interest rate hedges
$
466

 
$

 
$
466

 
$

Foreign currency contracts
26

 

 
26

 

Contingent consideration
4,483

 

 

 
4,483

Total liabilities
$
4,975

 
$

 
$
492

 
$
4,483


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:
 
 
Six months ended
June 30,
(in millions)
 
2019
 
2018
Beginning balance
 
$
4,483

 
$
4,534

Change in fair value recognized in net earnings
 
2,473

 
337

Milestone payments
 
(167
)
 
(50
)
Ending balance
 
$
6,789

 
$
4,821


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 June 30, 2019 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
$
306

$
306

 
$

 
$
306

 
$

Current portion of long-term debt and finance lease obligations, excluding fair value hedges
5,343

5,357

 
5,348

 
9

 

Long-term debt and finance lease obligations, excluding fair value hedges
31,712

32,753

 
32,731

 
22

 

Total liabilities
$
37,361

$
38,416

 
$
38,079

 
$
337

 
$


The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 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
$
3,699

$
3,693

 
$

 
$
3,693

 
$

Current portion of long-term debt and finance lease obligations, excluding fair value hedges
1,609

1,617

 
1,609

 
8

 

Long-term debt and finance lease obligations, excluding fair value hedges
35,468

34,052

 
34,024

 
28

 

Total liabilities
$
40,776

$
39,362

 
$
35,633

 
$
3,729

 
$


Summary of available-for-sale securities by type
The following table summarizes available-for-sale securities by type as of June 30, 2019:
 
Amortized cost
 
Gross unrealized
 
Fair value
(in millions)
 
Gains
 
Losses
 
Asset backed securities
$
375

 
$

 
$
(1
)
 
$
374

Corporate debt securities
1,095

 
4

 
(2
)
 
1,097

Other debt securities
102

 

 

 
102

Total
$
1,572

 
$
4

 
$
(3
)
 
$
1,573


The following table summarizes available-for-sale securities by type as of December 31, 2018:
 
Amortized cost
 
Gross unrealized
 
Fair value
(in millions)
 
Gains
 
Losses
 
Asset backed securities
$
423

 
$

 
$
(2
)
 
$
421

Corporate debt securities
1,042

 
1

 
(9
)
 
1,034

Other debt securities
81

 

 

 
81

Total
$
1,546

 
$
1

 
$
(11
)
 
$
1,536