Pre-tax gains (losses) to be transferred into interest expense, net for treasury rate lock agreement cash flow hedges during the next 12 months

  
The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive loss:

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  | Three months endedMarch 31, |
| (in millions) |  |  |  |  |  | 2022 |  | 2021 |
| Foreign currency forward exchange contracts |  |  |  |  |  |  |  |  |
| Designated as cash flow hedges |  |  |  |  |  | $ | (6) |  |  | $ | 35  |  |
| Designated as net investment hedges |  |  |  |  |  | 82  |  |  | 99  |  |
| Interest rate swap contracts designated as cash flow hedges |  |  |  |  |  | 4  |  |  | 1  |  |
|  |  |  |  |  |  |  |  |  |

Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $52 million into cost of products sold for foreign currency cash flow hedges, pre-tax losses of $1 million into interest expense, net for interest rate swap cash flow hedges and pre-tax gains of $24 million into interest expense, net for treasury rate lock agreement cash flow hedges during the next 12 months.Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized in other comprehensive loss pre-tax gains of $99 million for the three months ended March 31, 2022 and pre-tax gains of $382 million for the three months ended March 31, 2021.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.

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  | Three months endedMarch 31, |
| (in millions) | Statement of earnings caption |  |  |  |  |  | 2022 |  | 2021 |
| Foreign currency forward exchange contracts |  |  |  |  |  |  |  |  |  |
| Designated as cash flow hedges | Cost of products sold |  |  |  |  |  | $ | 8  |  |  | $ | (12) |  |
| Designated as net investment hedges | Interest expense, net |  |  |  |  |  | 14  |  |  | 4  |  |
| Not designated as hedges | Net foreign exchange loss |  |  |  |  |  | (41) |  |  | (25) |  |
| Treasury rate lock agreements designated as cash flow hedges | Interest expense, net |  |  |  |  |  | 6  |  |  | 6  |  |
| Interest rate swap contracts |  |  |  |  |  |  |  |  |  |
| Designated as cash flow hedges | Interest expense, net |  |  |  |  |  | (2) |  |  | (7) |  |
| Designated as fair value hedges | Interest expense, net |  |  |  |  |  | (184) |  |  | (57) |  |
| Debt designated as hedged item in fair value hedges | Interest expense, net |  |  |  |  |  | 184  |  |  | 57  |  |

Fair Value MeasuresThe fair value hierarchy consists of the following three levels:•Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets that the company has the ability to access;•Level 2 – Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and•Level 3 – Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company’s management about the assumptions market participants would use in pricing the asset or liability.

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| 2022 Form 10-Q | abbv-20220331_g2.gif | 12 |


