v3.23.1
Financial Instruments and Fair Value Measures (Tables)
3 Months Ended
Mar. 31, 2023
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, 2023December 31, 2022Balance sheet captionMarch 31, 2023December 31, 2022
Foreign currency forward exchange contracts
Designated as cash flow hedgesPrepaid expenses and other$32 $49 Accounts payable and accrued liabilities$12 $
Designated as cash flow hedgesOther assetsOther long-term liabilities— 
Designated as net investment hedgesPrepaid expenses and otherAccounts payable and accrued liabilities78 36 
Designated as net investment hedgesOther assets37 74 Other long-term liabilities57 47 
Not designated as hedgesPrepaid expenses and other77 33 Accounts payable and accrued liabilities28 41 
Interest rate swap contracts
Designated as fair value hedgesPrepaid expenses and other— — Accounts payable and accrued liabilities17 17 
Designated as fair value hedgesOther assets11 — Other long-term liabilities351 375 
Total derivatives$161 $163 $544 $524 
Schedule of pre-tax amounts of derivatives designated as cash flow hedges recognized in other comprehensive income (loss) The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive loss:
Three months ended
March 31,
(in millions)20232022
Foreign currency forward exchange contracts
Designated as cash flow hedges$(9)$(6)
Designated as net investment hedges(94)82 
Interest rate swap contracts designated as cash flow hedges— 
Schedule of pre-tax amounts of derivatives designated as net investment hedges recognized in other comprehensive income (loss) The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive loss:
Three months ended
March 31,
(in millions)20232022
Foreign currency forward exchange contracts
Designated as cash flow hedges$(9)$(6)
Designated as net investment hedges(94)82 
Interest rate swap contracts designated as cash flow hedges— 
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 caption20232022
Foreign currency forward exchange contracts
Designated as cash flow hedgesCost of products sold$30 $
Designated as net investment hedgesInterest expense, net28 14 
Not designated as hedgesNet foreign exchange loss30 (41)
Treasury rate lock agreements designated as cash flow hedgesInterest expense, net
Interest rate swap contracts
Designated as cash flow hedgesInterest expense, net— (2)
Designated as fair value hedgesInterest expense, net35 (184)
Debt designated as hedged item in fair value hedgesInterest expense, net(35)184 
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, 2023:
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$6,711 $3,297 $3,414 $— 
Money market funds and time deposits10 — 10 — 
Debt securities33 — 33 — 
Equity securities110 80 30 — 
Interest rate swap contracts11 — 11 — 
Foreign currency contracts150 — 150 — 
Total assets$7,025 $3,377 $3,648 $— 
Liabilities
Interest rate swap contracts$368 $— $368 $— 
Foreign currency contracts176 — 176 — 
Contingent consideration17,931 — — 17,931 
Total liabilities$18,475 $— $544 $17,931 
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, 2022:
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$9,201 $4,201 $5,000 $— 
Money market funds and time deposits21 — 21 — 
Debt securities28 — 28 — 
Equity securities91 59 32 — 
Foreign currency contracts163 — 163 — 
Total assets$9,504 $4,260 $5,244 $— 
Liabilities
Interest rate swap contracts$392 $— $392 $— 
Foreign currency contracts132 — 132 — 
Contingent consideration16,384 — — 16,384 
Total liabilities$16,908 $— $524 $16,384 
Summary of significant level 3 unobservable inputs
The fair value of the company's contingent consideration liabilities was calculated using the following significant unobservable inputs:
March 31, 2023December 31, 2022
(in millions)Range
Weighted average(a)
Range
Weighted average(a)
Discount rate
4.2% - 5.4%
4.5%
4.7%- 5.1%
4.8%
Probability of payment for unachieved milestones
100% - 100%
100%
100% - 100%
100%
Probability of payment for royalties by indication(b)
89% - 100%
100%
56% - 100%
99%
Projected year of payments
2023 - 2034
2028
2023 - 2034
2028
(a) Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities.
(b) Excluding approved indications, the estimated probability of payment was 89% at March 31, 2023 and 56% at December 31, 2022.
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)20232022
Beginning balance$16,384 $14,887 
Change in fair value recognized in net earnings1,872 (748)
Payments(325)(321)
Ending balance$17,931 $13,818 
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, 2023 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 hedges2,816 2,793 2,703 90 — 
Long-term debt and finance lease obligations, excluding fair value hedges59,590 55,784 55,058 726 — 
Total liabilities$62,407 $58,578 $57,761 $817 $— 
The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 2022 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 hedges4,152 4,121 3,930 191 — 
Long-term debt and finance lease obligations, excluding fair value hedges59,463 54,073 53,365 708 — 
Total liabilities$63,616 $58,195 $57,295 $900 $—