Note 9 Debt, Credit Facilities, and Commitments and Contingencies

The following is a summary of AbbVie's long-term debt:

as of December 31 (in millions)		Effective interest rate in 2015(a)			2015			Effective interest rate in 2014(a)			2014

Senior notes issued in 2012:
Floating rate notes due 2015			1.13	%	$	—			1.09	%	$	500
1.2% notes due 2015			1.29	%		—			1.31	%		3,500
1.75% notes due 2017			1.86	%		4,000			1.86	%		4,000
2.0% notes due 2018			2.15	%		1,000			2.15	%		1,000
2.9% notes due 2022			2.97	%		3,100			2.97	%		3,100
4.4% notes due 2042			4.46	%		2,600			4.46	%		2,600
Senior notes issued in 2015:
1.8% notes due 2018			1.92	%		3,000			—			—
2.5% notes due 2020			2.65	%		3,750			—			—
3.2% notes due 2022			3.28	%		1,000			—			—
3.6% notes due 2025			3.66	%		3,750			—			—
4.5% notes due 2035			4.58	%		2,500			—			—
4.7% notes due 2045			4.73	%		2,700			—			—
Term loan facilities:
Floating rate notes due 2016			1.23	%		2,000			—			—
Floating rate notes due 2018			1.38	%		2,000			—			—
Other			—			139			—			115
Fair value hedges			—			(72	)		—			(180	)
Unamortized bond discounts			—			(85	)		—			(49	)
Unamortized deferred financing costs			—			(117	)		—			(34	)

Total long-term debt and lease obligations						31,265						14,552
Current portion						2,025						4,014

Noncurrent portion					$	29,240					$	10,538



(a)	Excludes the effect of any related interest rate swaps.

On September 25, 2015, AbbVie entered into a $2 billion three-year term loan credit agreement and a $2 billion 364-day term loan credit agreement (collectively, the term loan facilities). In November 2015, AbbVie drew on these term loan facilities and used the proceeds to refinance its $4 billion of senior notes that matured in November 2015. The borrowings under the term loan facilities bear interest at variable rates which will adjust based on AbbVie's public debt ratings. The term loan facilities may be prepaid without penalty upon prior notice and contain customary covenants, all of which the company was in compliance with as of December 31, 2015.

In May 2015, the company issued $16.7 billion aggregate principal amount of unsecured senior notes. The senior notes rank equally with all other unsecured and unsubordinated indebtedness of the company. AbbVie may redeem the senior notes prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium and, except for the 1.8% notes due 2018, AbbVie may redeem the senior notes at par between one and six months prior to maturity. Debt issuance costs incurred in connection with the offering totaled $93 million and are being amortized over the respective terms of the senior notes to interest expense, net in the consolidated statements of earnings. The senior notes contain customary covenants, all of which the company was in compliance with as of December 31, 2015.

Approximately $11.5 billion of the net proceeds from the issuance of the senior notes were used to finance the acquisition of Pharmacyclics and approximately $5.0 billion of the net proceeds were used to finance the ASR with Morgan Stanley. Refer to Notes 5 and 12 for additional information related to the acquisition of Pharmacyclics and the ASR, respectively.

In March 2015, AbbVie entered into an $18 billion, 364-Day Bridge Term Loan Credit Agreement (the bridge loan) in support of the then planned acquisition of Pharmacyclics. No amounts were drawn under the bridge loan, which was terminated as a result of the company's May 2015 issuance of the senior notes. Interest expense, net in 2015 include $86 million of costs related to the bridge loan.

AbbVie has outstanding $10.7 billion aggregate principal amount of unsecured senior notes which were issued in 2012. AbbVie may redeem all of the senior notes of each series, at any time, and some of the senior notes of each series, from time to time, at a redemption price equal to the principal amount of the senior notes redeemed plus a make-whole premium. At December 31, 2015, the company was in compliance with its senior note covenants.

Short-Term Borrowings

At December 31, 2015 and 2014, short-term borrowings included $400 million and $416 million, respectively, of commercial paper borrowings. The weighted-average interest rate on short-term borrowings was 0.3 percent and 0.2 percent for 2015 and 2014, respectively.

In October 2014, AbbVie entered into a $3.0 billion five-year revolving credit facility, which matures in October 2019 and replaced a $2.0 billion five-year revolving credit facility. The revolving credit facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At December 31, 2015, the company was in compliance with all its credit facility covenants. Commitment fees under AbbVie's revolving credit facilities were not material in 2015, 2014 and 2013. No amounts were outstanding under the credit facility as of December 31, 2015 and December 31, 2014.

Maturities of Long-Term Debt and Capital Lease Obligations

The following table summarizes AbbVie's future minimum lease payments under non-cancelable operating leases and debt maturities and future minimum lease payments for capital lease obligations as of December 31, 2015:

as of and for the years ended December 31 (in millions)	Operating leases		Debt maturities and capital leases

2016	$	119	$	2,025
2017		111		4,024
2018		97		6,025
2019		86		18
2020		78		3,760
Thereafter		519		15,687

Total obligations and commitments		1,010		31,539
Fair value hedges and unamortized bond discounts and deferred financing costs		—		(274	)

Total debt and lease obligations	$	1,010	$	31,265

Lease expense was $146 million in 2015, $115 million in 2014, and $107 million in 2013. AbbVie's operating leases generally include renewal options and provide for the company to pay taxes, maintenance, insurance and other operating costs of the leased property. As of December 31, 2015, annual future minimum lease payments for capital lease obligations are not material.

Debt maturities and capital leases in 2016 include the $2.0 billion floating rate notes due in 2016 drawn under the 364-day term loan credit agreement.

Contingencies and Guarantees

In connection with the separation, AbbVie has indemnified Abbott for all liabilities resulting from the operation of AbbVie's business other than income tax liabilities with respect to periods prior to the distribution date and other liabilities as agreed to by AbbVie and Abbott. AbbVie has no material exposures to off-balance sheet arrangements, no special-purpose entities and no activities that included non-exchange-traded contracts accounted for at fair value. In the ordinary course of business, AbbVie has periodically entered into third-party agreements, such as the assignment of product rights, which have resulted in AbbVie becoming secondarily liable for obligations for which AbbVie had previously been primarily liable. Based upon past experience, the likelihood of payments under these agreements is remote. AbbVie periodically acquires a business or product rights in which AbbVie agrees to pay contingent consideration based on attaining certain thresholds or based on the occurrence of certain future events.