Duration of forward exchange contracts

  
The following table summarizes the charges associated with the Allergan acquisition integration plan:

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  | Severance and employee benefits |  |  |  |  |  |  |  |  | Other integration |
|  |  |  |  |  | Three months endedMarch 31, |  |  |  |  |  | Three months endedMarch 31, |
| (in millions) |  |  |  |  |  |  |  |  | 2022 |  | 2021 |  |  |  |  |  |  |  |  | 2022 |  | 2021 |
| Cost of products sold |  |  |  |  |  |  |  |  | $ | 1  |  |  | $ | 6  |  |  |  |  |  |  |  |  |  | $ | 30  |  |  | $ | 15  |  |
| Research and development |  |  |  |  |  |  |  |  | 3  |  |  | —  |  |  |  |  |  |  |  |  |  | 6  |  |  | 51  |  |
| Selling, general and administrative |  |  |  |  |  |  |  |  | 4  |  |  | 17  |  |  |  |  |  |  |  |  |  | 66  |  |  | 50  |  |
| Total charges |  |  |  |  |  |  |  |  | $ | 8  |  |  | $ | 23  |  |  |  |  |  |  |  |  |  | $ | 102  |  |  | $ | 116  |  |

The following table summarizes the cash activity in the recorded liability associated with the integration plan for the three months ended March 31, 2022: 

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
| (in millions) | Severance and employee benefits |  | Other integration |
| Accrued balance as of December 31, 2021 | $ | 222  |  |  | $ | 33  |  |
| Charges | 8  |  |  | 98  |  |
|  |  |  |  |
|  |  |  |  |
| Payments and other adjustments | (22) |  |  | (98) |  |
| Accrued balance as of March 31, 2022 | $ | 208  |  |  | $ | 33  |  |

Other RestructuringAbbVie recorded restructuring charges of $57 million for the three months ended March 31, 2022 and $38 million for the three months ended March 31, 2021.The following table summarizes the cash activity in the restructuring reserve for the three months ended March 31, 2022:

|  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |
| (in millions) |  |
| Accrued balance as of December 31, 2021 | $ | 33  |  |
| Restructuring charges | 48  |  |
| Payments and other adjustments | (9) |  |
| Accrued balance as of March 31, 2022 | $ | 72  |  |

  
Note 8 Financial Instruments and Fair Value Measures

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Risk Management PolicySee Note 11 to the company’s Annual Report on Form 10-K for the year ended December 31, 2021 for a summary of AbbVie’s risk management policy and use of derivative instruments.Financial InstrumentsVarious AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany transactions denominated in a currency other than the functional currency of the local entity. These contracts, with notional amounts totaling $904 million at March 31, 2022 and $1.1 billion at December 31, 2021, are designated as cash flow hedges and are recorded at fair value. The durations of these forward exchange contracts were generally less than 18 months. Accumulated gains and losses as of March 31, 2022 are reclassified from accumulated other comprehensive income (loss) (AOCI) and included in cost of products sold at the time the products are sold, generally not exceeding six months from the date of settlement.In the third quarter of 2019, the company entered into treasury rate lock agreements with notional amounts totaling $10.0 billion to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the issuance of long-term debt in connection with the acquisition of Allergan. The treasury rate lock agreements were designated as cash flow hedges and recorded at fair value. The agreements were net settled upon issuance of the senior notes in November 2019 and the resulting net gain was recognized in other comprehensive loss. This gain is reclassified to interest expense, net over the term of the related debt. 

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


