v3.21.1
Financial Instruments and Fair Value Measures (Tables)
3 Months Ended
Mar. 31, 2021
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 captionMarch 31, 2021December 31, 2020Balance sheet captionMarch 31, 2021December 31, 2020
Foreign currency forward exchange contracts
Designated as cash flow hedgesPrepaid expenses and other$$Accounts payable and accrued liabilities$31 $82 
Designated as cash flow hedgesOther assets— Other long-term liabilities— 
Designated as net investment hedgesPrepaid expenses and other42 — Accounts payable and accrued liabilities— 11 
Not designated as hedgesPrepaid expenses and other46 49 Accounts payable and accrued liabilities71 33 
Interest rate swap contracts
Designated as cash flow hedgesPrepaid expenses and other— — Accounts payable and accrued liabilities14 
Designated as cash flow hedgesOther assets— — Other long-term liabilities16 20 
Designated as fair value hedgesPrepaid expenses and otherAccounts payable and accrued liabilities— — 
Designated as fair value hedgesOther assets74 131 Other long-term liabilities— — 
Total derivatives$179 $189 $126 $166 
Schedule of pre-tax amounts of derivatives designated as cash flow hedges recognized in other comprehensive income (loss) The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive loss:
Three months ended
March 31,
(in millions)20212020
Foreign currency forward exchange contracts
Designated as cash flow hedges$35 $49 
Designated as net investment hedges99 40 
Interest rate swap contracts designated as cash flow hedges(46)
Schedule of pre-tax amounts of derivatives designated as net investment hedges recognized in other comprehensive income (loss) The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive loss:
Three months ended
March 31,
(in millions)20212020
Foreign currency forward exchange contracts
Designated as cash flow hedges$35 $49 
Designated as net investment hedges99 40 
Interest rate swap contracts designated as cash flow hedges(46)
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 10 for the amount of net gains (losses) reclassified out of AOCI.
Three months ended
March 31,
(in millions)Statement of earnings caption20212020
Foreign currency forward exchange contracts
Designated as cash flow hedgesCost of products sold$(12)$— 
Designated as net investment hedgesInterest expense, net
Not designated as hedgesNet foreign exchange loss(25)
Treasury rate lock agreements designated as cash flow hedgesInterest expense, net
Interest rate swap contracts
Designated as cash flow hedgesInterest expense, net(7)
Designated as fair value hedgesInterest expense, net(57)360 
Debt designated as hedged item in fair value hedgesInterest expense, net57 (360)
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 March 31, 2021:
Basis of fair value measurement
(in millions)TotalQuoted prices in active markets for identical assets
(Level 1)
Significant other observable
inputs
(Level 2)
Significant unobservable inputs
(Level 3)
Assets
Cash and equivalents$9,755 $2,981 $6,774 $— 
Money market funds and time deposits11 — 11 — 
Debt securities49 — 49 — 
Equity securities157 147 10 — 
Interest rate swap contracts81 — 81 — 
Foreign currency contracts98 — 98 — 
Total assets$10,151 $3,128 $7,023 $— 
Liabilities
Interest rate swap contracts$24 $— $24 $— 
Foreign currency contracts102 — 102 — 
Contingent consideration12,522 — — 12,522 
Total liabilities$12,648 $— $126 $12,522 
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, 2020:
Basis of fair value measurement
(in millions)TotalQuoted prices in active markets for identical assets
(Level 1)
Significant other observable
inputs
(Level 2)
Significant unobservable inputs
(Level 3)
Assets
Cash and equivalents$8,449 $2,758 $5,691 $— 
Money market funds and time deposits12 — 12 — 
Debt securities50 — 50 — 
Equity securities159 149 10 — 
Interest rate swap contracts138 — 138 — 
Foreign currency contracts51 — 51 — 
Total assets$8,859 $2,907 $5,952 $— 
Liabilities
Interest rate swap contracts$34 $— $34 $— 
Foreign currency contracts132 — 132 — 
Contingent consideration12,997 — — 12,997 
Total liabilities$13,163 $— $166 $12,997 
Summary of significant level 3 unobservable inputs
The fair value of the company's contingent consideration liabilities as of March 31, 2021 was calculated using the following significant unobservable inputs:
Range
Weighted average(a)
Discount rate
0.2% - 2.9%
1.7 %
Probability of payment for unachieved milestones
56% - 92%
64 %
Probability of payment for royalties by indication(b)
56% - 100%
90 %
Projected year of payments
2021 - 2034
2027
(a) Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities.
(b) Excludes early stage indications with 0% estimated probability of payment and includes approved indications with 100% probability of payment. Excluding approved indications, the estimated probability of payment ranged from 56% to 89% at March 31, 2021.
Schedule of changes in fair value of Level 3 inputs The following table presents the changes in fair value of total contingent consideration liabilities which are measured using Level 3 inputs:
Three months ended
March 31,
(in millions)20212020
Beginning balance$12,997 $7,340 
Change in fair value recognized in net earnings(343)72 
Payments(132)(53)
Ending balance$12,522 $7,359 
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 March 31, 2021 are shown in the table below:
Basis of fair value measurement
(in millions)Book valueApproximate fair valueQuoted prices in active markets for identical assets
(Level 1)
Significant other 
observable inputs
(Level 2)
Significant unobservable inputs
(Level 3)
Liabilities
Short-term borrowings$$$— $$— 
Current portion of long-term debt and finance lease obligations, excluding fair value hedges11,331 11,400 10,862 538 — 
Long-term debt and finance lease obligations, excluding fair value hedges73,981 80,280 78,975 1,305 — 
Total liabilities$85,321 $91,689 $89,837 $1,852 $— 
The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 2020 are shown in the table below:
Basis of fair value measurement
(in millions)Book valueApproximate fair valueQuoted prices in active markets for identical assets
(Level 1)
Significant other 
observable inputs
(Level 2)
Significant unobservable inputs
(Level 3)
Liabilities
Short-term borrowings$34 $34 $— $34 $— 
Current portion of long-term debt and finance lease obligations, excluding fair value hedges8,461 8,542 8,249 293 — 
Long-term debt and finance lease obligations, excluding fair value hedges77,283 87,761 86,137 1,624 — 
Total liabilities$85,778 $96,337 $94,386 $1,951 $—