UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND
SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
OR
o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
ABBVIE SAVINGS PROGRAM
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
AbbVie Inc.
1 North Waukegan Road
North Chicago, IL 60064
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ABBVIE SAVINGS PLAN
DECEMBER 31, 2014 AND 2013
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AbbVie Employee Benefit Board of Review
AbbVie Savings Plan
We have audited the accompanying statements of net assets available for benefits of the AbbVie Savings Plan (the Plan) as of December 31, 2014 and 2013, and the related statement of changes in net assets available for benefits for the year ended December 31, 2014. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plans internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plans internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the AbbVie Savings Plan as of December 31, 2014 and 2013, and the changes in net assets available for benefits for the year ended December 31, 2014, in accordance with accounting principles generally accepted in the United States of America.
The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2014, has been subjected to audit procedures performed in conjunction with the audit of AbbVie Savings Plans financial statements. The supplemental information is presented for purposes of additional analysis and is not a required part of the basic financial statements but include supplemental information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplementary information is the responsibility of the Plans management. Our audit procedures included determining whether the supplemental information reconciles to the basic financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the
information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information referred to above is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
/s/ Grant Thornton LLP
Chicago, Illinois
June 26, 2015
AbbVie Savings Plan
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2014 and 2013
(Dollars in thousands)
|
|
2014 |
|
2013 |
| ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Cash |
|
$ |
402 |
|
$ |
1,371 |
|
Investments, at fair value |
|
3,400,732 |
|
2,975,027 |
| ||
Notes receivable from participants |
|
46,281 |
|
47,128 |
| ||
Accrued interest and dividend income |
|
260 |
|
389 |
| ||
Due from brokers |
|
2,565 |
|
1,087 |
| ||
|
|
|
|
|
| ||
Total assets |
|
3,450,240 |
|
3,025,002 |
| ||
|
|
|
|
|
| ||
Liabilities |
|
|
|
|
| ||
Other payables |
|
84 |
|
86 |
| ||
Due to brokers |
|
401 |
|
1,370 |
| ||
|
|
|
|
|
| ||
Total liabilities |
|
485 |
|
1,456 |
| ||
|
|
|
|
|
| ||
NET ASSETS AVAILABLE FOR BENEFITS |
|
$ |
3,449,755 |
|
$ |
3,023,546 |
|
The accompanying notes are an integral part of these statements.
AbbVie Savings Plan
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2014
(Dollars in thousands)
Additions |
|
|
| |
Contributions |
|
|
| |
Employer |
|
$ |
68,549 |
|
Participant |
|
135,525 |
| |
Rollovers |
|
13,856 |
| |
|
|
|
| |
Total contributions |
|
217,930 |
| |
|
|
|
| |
Investment income |
|
|
| |
Net appreciation in fair value of investments |
|
278,959 |
| |
Interest and dividends |
|
103,105 |
| |
|
|
|
| |
Net investment income |
|
382,064 |
| |
|
|
|
| |
Interest income on notes receivable from participants |
|
1,596 |
| |
|
|
|
| |
Total additions |
|
601,590 |
| |
|
|
|
| |
Deductions |
|
|
| |
Benefits paid to participants |
|
181,473 |
| |
Other expenses |
|
109 |
| |
|
|
|
| |
Total deductions |
|
181,582 |
| |
|
|
|
| |
Net increase prior to transfer |
|
420,008 |
| |
|
|
|
| |
Net plan transfers in (note A) |
|
6,201 |
| |
|
|
|
| |
NET INCREASE AFTER TRANSFER |
|
426,209 |
| |
|
|
|
| |
Net assets available for benefits |
|
|
| |
Beginning of year |
|
3,023,546 |
| |
|
|
|
| |
End of year |
|
$ |
3,449,755 |
|
The accompanying notes are an integral part of this statement.
AbbVie Savings Plan
December 31, 2014 and 2013
NOTE A - DESCRIPTION OF THE PLAN
The following description of the AbbVie Savings Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plans provisions.
General
On January 1, 2013, Abbott Laboratories (Abbott) separated into two publicly traded companies. The research-based pharmaceuticals business became AbbVie Inc. (AbbVie); the diversified medical products businesses remained with Abbott. Effective January 1, 2013, the Plan was created and assets related to those participants who became AbbVie employees after the separation were transferred into the Plan from the Abbott Laboratories Stock Retirement Plan. The separation agreement between Abbott and AbbVie covers a 30 month period and allows for the transfer of employees between the two companies during that period. During 2014, additional net assets totaling approximately $6.2 million were transferred to the Plan from the Abbott Laboratories Stock Retirement Plan related to such employee transfers.
In general, United States employees of AbbVie and selected participating subsidiaries and affiliates may, after meeting certain employment requirements, voluntarily participate in the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
Mercer Trust Company and Mercer HR Services LLC (collectively, Mercer) are the custodian (Custodian), trustee (Trustee) and record keeper of the Plan.
Contributions and Vesting
Contributions to the Plan are paid to the AbbVie Savings Trust (Trust). The trust is administered by the Trustee, the Custodian and an investment committee comprised of AbbVie employees (the Committee).
Employees are eligible to make contributions on any entry date following their date of hire. Eligible employees electing to participate may contribute from 2% to 25% of their eligible earnings to the Trust, subject to certain limitations. Participants who have attained age 50 before the end of the Plan year and who are making the maximum pretax contributions are eligible to make catch-up contributions. The Plan also permits Roth 401(k) after-tax contributions and a Roth 401(k) conversion feature. Participants may choose to make their contributions from pretax earnings, after-tax earnings or both. The pretax contributions are a pay conversion feature, which is a salary deferral option under the provisions of Section 401(k) of the IRC. Participant contributions may be invested in any or all of the investment options offered by the Plan.
AbbVie Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE A - DESCRIPTION OF THE PLAN - Continued
Contributions and Vesting - Continued
Employer contributions to the Plan are made each payroll period based on the participating employees eligible earnings. The amount of the employer contribution is determined by the Board of Directors of AbbVie and, for the year ended December 31, 2014, was 5% of the participants eligible earnings if the employee elected to contribute at least 2% to the Plan. Employer contributions are invested each pay period according to the employees investment elections.
Cash dividends on shares of AbbVie common shares are (1) paid in cash to the participants or beneficiaries, (2) paid to the Plan and distributed in cash to participants or beneficiaries no later than 90 days after the close of the Plans year in which paid or (3) paid to the Plan and credited to the applicable accounts in which shares are held, as elected by each participant or beneficiary in accordance with rules established by the administrator.
The Plan offered the following investment options in 2013: AbbVie common shares, AbbVie Short Term Investment Fund, American Funds (including EuroPacific Growth Fund, The Growth Fund of America, The Investment Company of America, and Washington Mutual Investors Fund), Vanguard Developed Markets Index Fund, Vanguard Extended Market Index Fund, Vanguard Institutional Index Fund - Institutional, Vanguard Mid-Cap Value Index Fund Admiral, PIMCO All Asset Fund, PIMCO Total Return Fund, Blackrock International Opportunities Fund (collective trust), GMO Global Asset Allocation Series Fund and Wellington Mid Cap Growth Fund (collective trust).
During 2014, American Funds Investment Company of America, Blackrock International Opportunities Fund (collective trust), PIMCO Total Return Fund, Vanguard Developed Markets Index Fund, Vanguard Institutional Index Fund Institutional, and Vanguard Mid-Cap Value Index Fund Admiral were removed as investment options in the Plan and Diamond Hill Small/Mid-Cap Fund, J.P. Morgan Core Bond Fund, Vanguard Institutional Index Fund Institutional Plus, Vanguard Total International Stock Index Fund and Wellington WTC-CIF II International Small-Cap Equity Fund (collective trust) were added to the Plan. In addition, the SSgA Target Retirement Funds (collective trusts) were added to the Plan to provide participants with an opportunity for making a single investment choice that would professionally diversify their retirement savings based on the participants anticipated retirement date.
The January 1, 2013 separation of Abbott into two publicly traded companies was a tax-free distribution where Abbott shareholders received one share of AbbVie stock for every share of Abbott held as of the close of business on December 12, 2012, the record date for the distribution. Effective January 1, 2013, AbbVie participants may no longer make new contributions or transfer new money to purchase Abbott stock in the Plan; however, they may continue to hold Abbott stock in their Plan accounts. In addition, participants who received Hospira, Inc. (Hospira) stock as a
AbbVie Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE A - DESCRIPTION OF THE PLAN - Continued
Contributions and Vesting - Continued
result of the spin-off of Hospira, Inc. from Abbott on April 30, 2004, may continue to hold the stock in their accounts, but are also prohibited from directing new contributions or plan transfers into Hospira stock.
Participants may direct the Trustee to sell all or a portion of the AbbVie common shares held in their accounts and reinvest the proceeds in any of the investment options available to the participants.
Participants are at all times fully vested in their own contributions and earnings thereon. Vesting in employer contributions and earnings thereon is based on the following vesting schedule:
|
|
Vesting |
|
Service |
|
percentage |
|
Less than two years |
|
0 |
% |
Two years or more |
|
100 |
% |
Non-vested portions of employer contributions and earnings thereon are forfeited as of an employees termination date. Forfeitures are used to (1) restore any forfeitures of participants who returned to service with AbbVie within a given period of time, (2) pay Plan expenses and (3) reduce future employer contributions if terminated participants do not return to service within the given period of time. In 2014, forfeitures reduced AbbVies contributions by approximately $191,000. Approximately $4,200 and $1,000 of forfeitures were available at the end of 2014 and 2013, respectively.
Distributions
Following retirement, termination or death, participants or their beneficiaries receive a distribution in installments, cash, AbbVie common shares or, at their election, annuity insurance contracts for certain account balances, as defined (as these contracts are allocated to the respective participants, they are not recorded as assets of the Plan), or direct rollovers, as applicable. Also, upon retirement, participants may elect to defer distribution to a future date but, after termination of employment, distribution must be made by the 1st of April following the year the participant reaches age 70-1/2. Interest, dividends and other earnings will continue to accrue on such deferred amounts. Participants with over five years of credited service are permitted to withdraw their after-tax contributions and rollover contributions in shares or in cash, subject to certain limitations.
AbbVie Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE A - DESCRIPTION OF THE PLAN - Continued
Notes Receivable from Participants
Participants may convert their pretax accounts into one or two loans to themselves. The borrowing may not exceed the lesser of the current market value of the assets allocated to their pretax accounts or 50% of all of their Plan accounts up to $50,000, subject to Internal Revenue Service (IRS) limitations and restrictions. Participants pay interest on such borrowings at the prime rate in effect at the time the participant loan is made. Loans must be repaid within five years (or by the employees anticipated retirement date, if sooner) unless the loan is used for the purchase of the primary residence of the employee, in which case the repayment period can be extended to a period of fifteen years (or until the employees anticipated retirement date, if sooner). Repayment is made through periodic payroll deductions but a loan may be repaid in a lump sum at any time. For employees terminating employment with AbbVie during the repayment period, the balance of the outstanding loan is netted from their Plan distribution.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements have been prepared using the accrual basis of accounting.
Adoption of New Accounting Rules
On May 1, 2015 the Financial Accounting Standards Board issued updated guidance related to fair value measurement and the disclosures for investments in certain entities that calculate net asset value (NAV) per share (or its equivalent). The updated guidance applies to reporting entities that elect to measure the fair value of certain investments using the NAV per share (or its equivalent) of the investment as a practical expedient. Currently, investments valued using the practical expedient are categorized within the fair value hierarchy on the basis of when the investment is redeemable with the investee at NAV. The amendments remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the NAV per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient.
AbbVie Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Adoption of New Accounting Rules - Continued
The amendments are effective for the Plan for fiscal years beginning after December 15, 2015 and shall apply retrospectively to all periods presented. Earlier application is permitted. The Plans administrator is currently evaluating the impact the updated guidance will have on the Plans financial statement disclosures.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results may differ from those estimates.
Investment Valuation
Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Plan uses the following methods and significant assumptions to estimate the fair value of investments:
Common stock and mutual funds - Valued at the published market price per unit multiplied by the number of respective shares, units, or par held.
Collective trust funds - Valued at the NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.
AbbVie Short Term Investment Fund investments:
Fixed income securities - U.S. Government agencies and treasury notes, municipal bonds, corporate bonds and international securities - Valued at prices obtained from independent financial services industry-recognized vendors multiplied by the number of units held.
The fair value hierarchy under the accounting standard for fair value measurements 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
AbbVie Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Investment Valuation - Continued
· Level 3 Valuations using significant inputs that are unobservable in the market and include the use of judgment by the companys management about the assumptions market participants would use in pricing the asset or liability.
The following tables summarize the basis used to measure assets at fair value at December 31, 2014 and 2013 (dollars in thousands):
|
|
Basis of Fair Value Measurement |
| ||||||||||
2014 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
Common stock |
|
|
|
|
|
|
|
|
| ||||
AbbVie |
|
$ |
922,907 |
|
$ |
|
|
$ |
|
|
$ |
922,907 |
|
Abbott |
|
418,195 |
|
|
|
|
|
418,195 |
| ||||
Hospira |
|
15,980 |
|
|
|
|
|
15,980 |
| ||||
Total common stock |
|
1,357,082 |
|
|
|
|
|
1,357,082 |
| ||||
Mutual funds |
|
|
|
|
|
|
|
|
| ||||
Growth |
|
308,557 |
|
|
|
|
|
308,557 |
| ||||
Blend |
|
981,017 |
|
|
|
|
|
981,017 |
| ||||
Value |
|
183,850 |
|
|
|
|
|
183,850 |
| ||||
Income |
|
173,119 |
|
|
|
|
|
173,119 |
| ||||
Total mutual funds |
|
1,646,543 |
|
|
|
|
|
1,646,543 |
| ||||
Collective trust funds |
|
|
|
|
|
|
|
|
| ||||
Target retirement date (a) |
|
|
|
71,372 |
|
|
|
71,372 |
| ||||
Growth (b) |
|
|
|
46,182 |
|
|
|
46,182 |
| ||||
Blend (c) |
|
|
|
40,358 |
|
|
|
40,358 |
| ||||
Total collective trust funds |
|
|
|
157,912 |
|
|
|
157,912 |
| ||||
AbbVie Short Term Investment Fund |
|
|
|
|
|
|
|
|
| ||||
Cash equivalents |
|
|
|
1,951 |
|
|
|
1,951 |
| ||||
Fixed income |
|
|
|
|
|
|
|
|
| ||||
International |
|
|
|
50,399 |
|
|
|
50,399 |
| ||||
U.S. corporate |
|
|
|
7,775 |
|
|
|
7,775 |
| ||||
U.S. municipals |
|
|
|
850 |
|
|
|
850 |
| ||||
U.S. Government agencies and treasury |
|
|
|
178,220 |
|
|
|
178,220 |
| ||||
Total AbbVie Short Term Investment Fund |
|
|
|
239,195 |
|
|
|
239,195 |
| ||||
Total assets at fair value |
|
$ |
3,003,625 |
|
$ |
397,107 |
|
$ |
|
|
$ |
3,400,732 |
|
AbbVie Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Investment Valuation Continued
The collective trust funds do not have a readily determinable fair value and are valued at their NAV per share as provided by the funds administrators. The following provides additional information regarding these funds as of December 31, 2014:
(a) These funds invest in other collective investment funds. Their objective is to approximate as closely as practicable, before expenses, the performance of a custom benchmark index over the long term, while providing participants the ability to purchase and redeem units on an as of basis. Redemption from the funds is permitted daily.
(b) The fund invests in small and midsize companies. The investment objective of this fund is to achieve long-term total return in excess of the Russell Mid-Cap Growth Index. Redemption from the fund is permitted daily.
(c) This fund invests principally in another fund. The investment objective of this fund is to provide long-term total return in excess of the S&P EPAC SmallCap Index. Redemption from the fund is permitted daily.
|
|
Basis of Fair Value Measurement |
| ||||||||||
2013 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
Common stock |
|
|
|
|
|
|
|
|
| ||||
AbbVie |
|
$ |
692,521 |
|
$ |
|
|
$ |
|
|
$ |
692,521 |
|
Abbott |
|
402,698 |
|
|
|
|
|
402,698 |
| ||||
Hospira |
|
12,823 |
|
|
|
|
|
12,823 |
| ||||
Total common stock |
|
1,108,042 |
|
|
|
|
|
1,108,042 |
| ||||
Mutual funds |
|
|
|
|
|
|
|
|
| ||||
Growth |
|
284,637 |
|
|
|
|
|
284,637 |
| ||||
Blend |
|
767,056 |
|
|
|
|
|
767,056 |
| ||||
Value |
|
295,045 |
|
|
|
|
|
295,045 |
| ||||
Income |
|
173,520 |
|
|
|
|
|
173,520 |
| ||||
Total mutual funds |
|
1,520,258 |
|
|
|
|
|
1,520,258 |
| ||||
Collective trust funds |
|
|
|
|
|
|
|
|
| ||||
Growth (a) |
|
|
|
44,524 |
|
|
|
44,524 |
| ||||
Blend (b) |
|
|
|
50,750 |
|
|
|
50,750 |
| ||||
Total collective trust funds |
|
|
|
95,274 |
|
|
|
95,274 |
| ||||
AbbVie Short Term Investment Fund |
|
|
|
|
|
|
|
|
| ||||
International |
|
|
|
58,669 |
|
|
|
58,669 |
| ||||
U.S. corporate |
|
|
|
14,550 |
|
|
|
14,550 |
| ||||
U.S. municipals |
|
|
|
4,850 |
|
|
|
4,850 |
| ||||
U.S. Government agencies and treasury |
|
|
|
173,384 |
|
|
|
173,384 |
| ||||
Total AbbVie Short Term Investment Fund |
|
|
|
251,453 |
|
|
|
251,453 |
| ||||
Total assets at fair value |
|
$ |
2,628,300 |
|
$ |
346,727 |
|
$ |
|
|
$ |
2,975,027 |
|
AbbVie Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Investment Valuation - Continued
The collective trust funds do not have a readily determinable fair value and are valued at their NAV per share as provided by the funds administrators. The following provides additional information regarding these funds as of December 31, 2013:
(a) The fund invests in small and midsize companies. The investment objective of this fund is to achieve long-term total return in excess of the Russell Mid-Cap Growth Index. Redemption from the fund is permitted daily.
(b) This fund invests in international securities. The investment objective of this fund is to seek long-term capital appreciation by achieving a return in excess of the S&P Broad Market Global Ex U.S. Index. Redemption from the fund is permitted daily.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid balance plus any accrued but unpaid interest. Delinquent loans are reclassified as distributions based upon the terms of the Plan. No allowance for credit losses has been recorded as of December 31, 2014 and 2013.
Investment Income Recognition
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on an accrual basis. Dividends are recorded on the ex-dividend date. Net realized and unrealized appreciation/depreciation is recorded in the accompanying statement of changes in net assets available for benefits as net appreciation in fair value of investments.
Administrative Expenses
Participants are charged transaction fees for loan and withdrawal processing and commissions on purchases and sales of AbbVie shares and sales of Abbott and Hospira stock. Investment fees for mutual funds, collective trust, and managed accounts are charged against the net assets of the respective fund. AbbVie pays other Mercer record-keeping and administration fees, where applicable.
Payment of Benefits
Benefits are recorded when paid.
AbbVie Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE C - INVESTMENTS
The following investments represented 5% or more of the Plans net assets at December 31, 2014 and 2013 (dollars in thousands):
|
|
2014 |
|
2013 |
| ||
AbbVie common shares |
|
$ |
922,907 |
|
$ |
692,521 |
|
Abbott common shares |
|
418,195 |
|
402,698 |
| ||
American Funds EuroPacific Growth Fund, Class R6 |
|
n/a |
|
173,178 |
| ||
American Funds The Growth Fund of America, Class R6 |
|
308,557 |
|
284,637 |
| ||
Vanguard Extended Market Index Fund |
|
195,649 |
|
176,941 |
| ||
Vanguard Institutional Index Fund - Institutional |
|
|
|
211,044 |
| ||
Vanguard Institutional Index Fund - Institutional Plus |
|
408,698 |
|
|
| ||
A summary of AbbVie common share data as of December 31, 2014 and 2013 is presented below:
|
|
2014 |
|
2013 |
| ||
AbbVie common shares, 14,103,102 and 13,113,439 shares, respectively, (dollars in thousands) |
|
$ |
922,907 |
|
$ |
692,521 |
|
Market value per share |
|
$ |
65.44 |
|
$ |
52.81 |
|
During 2014, the Plans investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows (dollars in thousands):
Common shares |
|
$ |
246,134 |
|
Mutual funds |
|
37,344 |
| |
Fixed income |
|
658 |
| |
Collective trust funds |
|
(5,177 |
) | |
|
|
$ |
278,959 |
|
In general, the investments provided by the Plan are exposed to various risks, such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participant accounts and the amounts reported in the statements of net assets available for benefits.
AbbVie Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE D - RELATED-PARTY AND PARTY-IN-INTEREST TRANSACTIONS
A significant portion of the Plans assets is invested in AbbVie common shares.
Participants pay fees to Mercer for loan and withdrawal transaction processing and also pay commissions on purchases and sales of AbbVie shares and sales of Abbott and Hospira stock. These transactions qualify as permitted party-in-interest transactions.
NOTE E - PLAN TERMINATION
The Plan may be terminated at any time by AbbVie upon written notice to the Trustee and Board of Review, and will be terminated if AbbVie completely discontinues its contributions under the Plan. All participants account balances are fully vested upon Plan termination. Upon termination of the Plan, distributions of each participants share in the Trust, as determined by the terms of the Plan, will be made to each participant. At the present time, AbbVie has no intention of terminating the Plan.
NOTE F - TAX STATUS
The Plan has not yet filed a Form 5300 Application for Determination for Employee Benefit Plan with the IRS to request a favorable determination letter confirming that the Plan and related Trust are designed in accordance with applicable sections of the IRC. However, the Plan administrator believes that the Plan is designed and is currently being operated in accordance with the applicable requirements of the IRC.
Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the organization has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS or other applicable taxing authorities. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014 and 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
AbbVie Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE G SUBSEQUENT EVENTS
AbbVie has evaluated subsequent events and there were no subsequent events that require recognition or additional disclosure in these financial statements.
AbbVie Savings Plan
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2014
(Dollars in thousands)
Identity of party involved/ |
|
|
|
|
|
|
|
Current |
| |
description of asset |
|
Rate |
|
Maturity |
|
Cost (a) |
|
value |
| |
|
|
|
|
|
|
|
|
|
| |
*AbbVie Inc., common shares |
|
|
|
|
|
|
|
$ |
922,907 |
|
|
|
|
|
|
|
|
|
|
| |
Abbott Laboratories, common shares |
|
|
|
|
|
|
|
418,195 |
| |
|
|
|
|
|
|
|
|
|
| |
Hospira, Inc., common shares |
|
|
|
|
|
|
|
15,980 |
| |
|
|
|
|
|
|
|
|
|
| |
Mutual funds |
|
|
|
|
|
|
|
|
| |
American Funds EuroPacific Growth Fund, Class R6 |
|
|
|
|
|
|
|
163,893 |
| |
American Funds The Growth Fund of America, Class R6 |
|
|
|
|
|
|
|
308,557 |
| |
American Funds Washington Mutual Investors Fund, Class R6 |
|
|
|
|
|
|
|
106,374 |
| |
Diamond Hill Small/Mid-Cap Fund |
|
|
|
|
|
|
|
77,476 |
| |
GMO Global Asset Allocation Series Fund, Class R6 |
|
|
|
|
|
|
|
150,292 |
| |
J.P. Morgan Core Bond Fund |
|
|
|
|
|
|
|
103,135 |
| |
PIMCO All Asset Fund |
|
|
|
|
|
|
|
69,984 |
| |
Vanguard Extended Market Index Fund |
|
|
|
|
|
|
|
195,649 |
| |
Vanguard Institutional Index Fund - Institutional Plus |
|
|
|
|
|
|
|
408,698 |
| |
Vanguard Total International Stock Index Fund |
|
|
|
|
|
|
|
62,485 |
| |
|
|
|
|
|
|
|
|
|
| |
Collective trust funds |
|
|
|
|
|
|
|
|
| |
SSgA Target Retirement 2010 Series Fund |
|
|
|
|
|
|
|
884 |
| |
SSgA Target Retirement 2015 Series Fund |
|
|
|
|
|
|
|
7,259 |
| |
SSgA Target Retirement 2020 Series Fund |
|
|
|
|
|
|
|
16,306 |
| |
SSgA Target Retirement 2025 Series Fund |
|
|
|
|
|
|
|
17,586 |
| |
SSgA Target Retirement 2030 Series Fund |
|
|
|
|
|
|
|
12,966 |
| |
SSgA Target Retirement 2035 Series Fund |
|
|
|
|
|
|
|
8,263 |
| |
SSgA Target Retirement 2040 Series Fund |
|
|
|
|
|
|
|
4,310 |
| |
SSgA Target Retirement 2045 Series Fund |
|
|
|
|
|
|
|
1,699 |
| |
SSgA Target Retirement 2050 Series Fund |
|
|
|
|
|
|
|
673 |
| |
SSgA Target Retirement 2055 Series Fund |
|
|
|
|
|
|
|
433 |
| |
SSgA Target Retirement Income Series Fund |
|
|
|
|
|
|
|
993 |
| |
Wellington Mid Cap Growth Fund |
|
|
|
|
|
|
|
46,182 |
| |
Wellington WTC-CIF II International Small-Cap Equity Fund |
|
|
|
|
|
|
|
40,358 |
| |
|
|
|
|
|
|
|
|
|
| |
*Loans to participants, 0.01% to 9.50% |
|
|
|
|
|
|
|
46,281 |
| |
|
|
|
|
|
|
|
|
|
| |
AbbVie Short Term Investment Fund |
|
|
|
|
|
|
|
|
| |
Fixed Income Securities |
|
|
|
|
|
|
|
|
| |
Bank Nederlandse Gemeenten |
|
1.125% |
|
9/12/2016 |
|
|
|
5,533 |
| |
Development Bank of Japan Inc. |
|
Variable |
|
2/25/2015 |
|
|
|
700 |
| |
Development Bank of Japan Inc. |
|
Variable |
|
2/23/2015 |
|
|
|
400 |
| |
Development Bank of Japan Inc. |
|
Variable |
|
4/17/2015 |
|
|
|
400 |
| |
Egypt Government Aid Bonds |
|
4.450% |
|
9/15/2015 |
|
|
|
926 |
| |
Erste Abwicklungsanstalt |
|
Variable |
|
1/29/2016 |
|
|
|
5,013 |
| |
Erste Abwicklungsanstalt |
|
Variable |
|
6/7/2016 |
|
|
|
2,004 |
| |
Export-Import Bank of Korea |
|
5.875% |
|
1/14/2015 |
|
|
|
1,902 |
| |
Export-Import Bank of Korea |
|
5.125% |
|
3/16/2015 |
|
|
|
756 |
| |
Export-Import Bank of Korea |
|
1.250% |
|
11/20/2012 |
|
|
|
1,803 |
| |
Federal Farm Credit Bank Consolidated Bond |
|
Variable |
|
4/11/2016 |
|
|
|
2,707 |
| |
AbbVie Savings Plan
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) - CONTINUED
December 31, 2014
(Dollars in thousands)
Identity of party involved/ |
|
|
|
|
|
|
|
Current |
| |
description of asset |
|
Rate |
|
Maturity |
|
Cost (a) |
|
value |
| |
|
|
|
|
|
|
|
|
|
| |
AbbVie Short Term Investment Fund - Continued |
|
|
|
|
|
|
|
|
| |
Fixed Income Securities - Continued |
|
|
|
|
|
|
|
|
| |
Federal Farm Credit Bank Consolidated Bond |
|
Variable |
|
2/1/2016 |
|
|
|
45,658 |
| |
Federal Farm Credit Bank Consolidated Bond |
|
Variable |
|
2/26/2016 |
|
|
|
74,629 |
| |
Federal Farm Credit Bank Consolidated Bond |
|
Variable |
|
10/3/2016 |
|
|
|
2,501 |
| |
Federal Farm Credit Bank Consolidated Bond |
|
Variable |
|
12/19/2016 |
|
|
|
7,000 |
| |
Federal Home Loan Bank Consolidated Bond |
|
0.230% |
|
1/8/2016 |
|
|
|
36,040 |
| |
Federal Home Loan Mortgage Corporation |
|
0.570% |
|
8/26/2016 |
|
|
|
1,496 |
| |
FMS Wertmanagement Aoer |
|
Variable |
|
1/28/2016 |
|
|
|
6,397 |
| |
General Electric Capital Corp |
|
Variable |
|
6/20/2016 |
|
|
|
3,002 |
| |
Industrial Bank of Korea |
|
4.375% |
|
8/4/2015 |
|
|
|
102 |
| |
Industrial Bank of Korea |
|
1.375% |
|
10/5/2015 |
|
|
|
502 |
| |
Japan Bank for International |
|
2.875% |
|
2/2/2015 |
|
|
|
2,004 |
| |
JPMorgan Chase Bank NA |
|
Variable |
|
7/30/2015 |
|
|
|
2,303 |
| |
KfW |
|
Variable |
|
10/30/2015 |
|
|
|
3,000 |
| |
Kommunalbanken AS |
|
Variable |
|
3/18/2016 |
|
|
|
7,503 |
| |
Korea Development Bank |
|
1.000% |
|
1/22/2016 |
|
|
|
300 |
| |
Korea Hydro & Nuclear Power |
|
3.125% |
|
9/16/2015 |
|
|
|
304 |
| |
Korea National Oil Corp |
|
4.000% |
|
10/27/2016 |
|
|
|
522 |
| |
Muenchener Hypothekenbank |
|
1.125% |
|
7/13/2015 |
|
|
|
2,205 |
| |
Nederlandse Financierings |
|
Variable |
|
3/2/2015 |
|
|
|
2,303 |
| |
Nederlandse Waterschapsbank NV |
|
Variable |
|
5/23/2015 |
|
|
|
2,202 |
| |
Oesterreichische Kontrollbank |
|
4.500% |
|
3/9/2015 |
|
|
|
1,813 |
| |
Oregon State Department of Administrative Services |
|
0.480% |
|
4/1/2015 |
|
|
|
850 |
| |
Province of Ontario Canada |
|
4.500% |
|
2/3/2015 |
|
|
|
1,304 |
| |
SLM Student Loan Trust 20 7 A2 |
|
Variable |
|
1/25/2016 |
|
|
|
71 |
| |
Svensk Exportkredit |
|
Variable |
|
4/29/2016 |
|
|
|
501 |
| |
Toyota Motor Credit Corp |
|
Variable |
|
9/23/2016 |
|
|
|
1,199 |
| |
U.S. Treasury Note |
|
0.625% |
|
12/31/2016 |
|
|
|
8,189 |
| |
University of California |
|
0.392% |
|
5/15/2015 |
|
|
|
1,200 |
| |
|
|
|
|
|
|
|
|
|
| |
Collective trust fund |
|
|
|
|
|
|
|
|
| |
EB Temporary Investment Fund |
|
|
|
|
|
|
|
1,951 |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
$ |
3,447,013 |
|
*Represents a party-in-interest transaction.
(a) Cost information omitted as all investments are fully participant directed.
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ABBVIE PUERTO RICO SAVINGS PLAN
DECEMBER 31, 2014 AND 2013
C O N T E N T S
|
Page |
|
|
3 | |
|
|
FINANCIAL STATEMENTS |
|
|
|
5 | |
|
|
6 | |
|
|
7 | |
|
|
| |
|
|
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) |
17 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AbbVie Inc. Employee Benefit Board of Review
AbbVie Puerto Rico Savings Plan
We have audited the accompanying statements of net assets available for benefits of the AbbVie Puerto Rico Savings Plan (the Plan) as of December 31, 2014 and 2013, and the related statement of changes in net assets available for benefits for the year ended December 31, 2014. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plans internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plans internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the AbbVie Puerto Rico Savings Plan as of December 31, 2014 and 2013, and the changes in net assets available for benefits for the year ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.
The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2014, has been subjected to audit procedures performed in conjunction with the audit of AbbVie Puerto Rico Savings Plans financial statements. The supplemental information is presented for purposes of additional analysis and is not a required part of the basic financial statements but include supplemental information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplementary information is the responsibility of the Plans management. Our audit procedures included determining whether the supplemental information reconciles to the basic financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and
accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information referred to above is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
/s/ Grant Thornton LLP
Chicago, Illinois
June 26, 2015
AbbVie Puerto Rico Savings Plan
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2014 and 2013
(Dollars in thousands)
|
|
2014 |
|
2013 |
| ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Cash |
|
$ |
567 |
|
$ |
123 |
|
Investments, at fair value |
|
244,137 |
|
211,111 |
| ||
Notes receivable from participants |
|
10,981 |
|
10,592 |
| ||
Due from brokers |
|
338 |
|
45 |
| ||
|
|
|
|
|
| ||
Total assets |
|
256,023 |
|
221,871 |
| ||
|
|
|
|
|
| ||
Liabilities |
|
|
|
|
| ||
Due to brokers |
|
102 |
|
122 |
| ||
|
|
|
|
|
| ||
NET ASSETS AVAILABLE FOR BENEFITS |
|
$ |
255,921 |
|
$ |
221,749 |
|
The accompanying notes are an integral part of these statements.
AbbVie Puerto Rico Savings Plan
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2014
(Dollars in thousands)
Additions |
|
|
| |
Contributions |
|
|
| |
Employer |
|
$ |
3,103 |
|
Participant |
|
6,607 |
| |
|
|
|
| |
Total contributions |
|
9,710 |
| |
|
|
|
| |
Investment income |
|
|
| |
Net appreciation in fair value of investments |
|
31,711 |
| |
Interest and dividends |
|
6,646 |
| |
|
|
|
| |
Net investment income |
|
38,357 |
| |
|
|
|
| |
Interest income on notes receivable from participants |
|
316 |
| |
|
|
|
| |
Total additions |
|
48,383 |
| |
|
|
|
| |
Deductions |
|
|
| |
Benefits paid to participants |
|
13,002 |
| |
Other expenses |
|
32 |
| |
|
|
|
| |
Total deductions |
|
13,034 |
| |
|
|
|
| |
Net increase prior to transfer |
|
35,349 |
| |
|
|
|
| |
Net plan transfers out (note A) |
|
(1,177 |
) | |
|
|
|
| |
NET INCREASE AFTER TRANSFER |
|
34,172 |
| |
|
|
|
| |
Net assets available for benefits |
|
|
| |
Beginning of year |
|
221,749 |
| |
|
|
|
| |
End of year |
|
$ |
255,921 |
|
The accompanying notes are an integral part of this statement.
AbbVie Puerto Rico Savings Plan
December 31, 2014 and 2013
NOTE A - DESCRIPTION OF THE PLAN
The following description of the AbbVie Puerto Rico Savings Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plans provisions.
General
On January 1, 2013, Abbott Laboratories (Abbott) separated into two publicly traded companies. The research-based pharmaceuticals business became AbbVie Inc. (AbbVie); the diversified medical products businesses remained with Abbott. Effective January 1, 2013, the Plan, formerly known as the Abbott Laboratories Stock Retirement Plan (Puerto Rico) was renamed AbbVie Puerto Rico Savings Plan and the plan sponsor was renamed AbbVie Ltd (formerly Abbott Pharmaceuticals PR Ltd.). In addition, effective January 1, 2013, a new Abbott Plan, Abbott Laboratories Stock Retirement Plan (Puerto Rico), was created and during 2013 assets relating to the accounts of participants continuing employment with Abbott were transferred from the Plan to the new Abbott Laboratories Stock Retirement Plan (Puerto Rico).
The separation agreement between Abbott and AbbVie covers a 30 month period and allows for the transfer of employees between the two companies during that period. During 2014, additional net assets totaling approximately $1.2 million were transferred from the Plan to the new Abbott Laboratories Stock Retirement Plan (Puerto Rico) related to such employee transfers.
Employees of AbbVies (formerly Abbotts) selected subsidiaries and affiliates in Puerto Rico (the Company) may, after meeting certain employment requirements, voluntarily participate in the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
Mercer Trust Company and Mercer HR Services LLC (collectively, Mercer) are the custodian (Custodian) and record keeper of the Plan. Banco Popular de Puerto Rico serves as trustee (Trustee) of the Plan.
Contributions and Vesting
Contributions to the Plan are paid to a trust. The trust is administered by the Trustee, the Custodian and an investment committee comprised of AbbVie employees (the Committee).
Employees are eligible to make contributions on any entry date following their date of hire. Eligible employees electing to participate may contribute from 2% to 25% of their eligible earnings to the Trust, subject to certain limitations. Participants may choose to make their contributions from either pretax earnings or after-tax earnings or both. Participants who have attained age 50 before the end of the Plan year and who are making the maximum pretax contribution are eligible to make catch-up contributions. Participants pretax contributions are a pay conversion feature,
AbbVie Puerto Rico Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE A - DESCRIPTION OF THE PLAN - Continued
Contributions and Vesting - Continued
which is a salary deferral option under the provisions of Section 1081.01(d) of the Puerto Rico Internal Revenue Code of 2011, as amended. Participant contributions may be invested in any or all of the investment options offered by the Plan.
Employer contributions to the Plan are made each payroll period based on the participating employees eligible earnings. The amount of the employer contribution is determined by the Board of Directors of AbbVie and for the year ended December 31, 2014, was 5% of the participants eligible earnings if the employee elected to contribute at least 2% to the Plan. Employer contributions are invested each pay period according to the employees investment elections.
The Plan offered the following investment options in 2014 and 2013: AbbVie common shares, Abbott common shares, American Funds (including EuroPacific Growth Fund, The Growth Fund of America, The Investment Company of America Fund, and Washington Mutual Investors Fund), Blackrock International Opportunities Fund, GMO Global Asset Allocation Series Fund, PIMCO All Asset Fund, PIMCO Total Return Fund, PIMCO Money Market Fund (Institutional), Vanguard Developed Markets Index Fund, Vanguard Extended Market Index Fund, Vanguard Institutional Index Fund, Vanguard Mid-Cap Value Index Fund Admiral, and Wellington Mid Cap Growth Fund (collective trust).
The January 1, 2013 separation of Abbott into two publicly traded companies was a tax-free distribution where Abbott shareholders received one share of AbbVie stock for every share of Abbott held as of the close of business on December 12, 2012, the record date for the distribution. Effective January 1, 2013, AbbVie participants may no longer make new contributions or transfer new money to purchase Abbott stock in the Plan; however, they may continue to hold Abbott stock in their Plan accounts. In addition, participants who received Hospira, Inc. (Hospira) stock as a result of the spin-off of Hospira, Inc. from Abbott on April 30, 2004, may continue to hold the stock in their accounts, but are also prohibited from directing new contributions or plan transfers into Hospira stock.
Participants may direct the Custodian to sell all or a portion of the AbbVie common shares held in their accounts and reinvest the proceeds in any of the investment options available to the participants.
Participants are at all times fully vested in their own contributions and earnings thereon. Vesting in employer contributions and earnings thereon is based on the following vesting schedule:
AbbVie Puerto Rico Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE A - DESCRIPTION OF THE PLAN - Continued
Contributions and Vesting - Continued
|
|
Vesting |
|
Service |
|
percentage |
|
|
|
|
|
Less than two years |
|
0 |
% |
Two years or more |
|
100 |
% |
Non-vested portions of employer contributions and earnings thereon are forfeited as of an employees termination date. Forfeitures are used to (1) restore any forfeitures of participants who returned to service with the Company within a given period of time, (2) pay Plan expenses and (3) reduce future employer contributions if terminated participants do not return to service within the given period of time. In 2014, approximately $1,300 of forfeitures were used to reduce AbbVies contributions. No forfeitures were available at the end of 2014 and 2013.
Distributions
Following retirement, termination or death, participants or their beneficiaries receive a distribution in cash, AbbVie common shares or direct rollovers, as applicable. Also, upon retirement, participants may elect to defer distribution to a future date, but distribution must be made by the 1st of April following the year the participant reaches age 70-1/2. Interest, dividends and other earnings will continue to accrue on such deferred amounts. Prior to separation of service, participants are permitted to withdraw their rollover contributions and their after-tax contributions in shares or in cash, subject to certain limitations.
Notes Receivable from Participants
Participants may convert their pretax accounts to one or two loans to themselves. The borrowing may not exceed the lesser of the current market value of the assets allocated to their pretax accounts or 50% of all of their Plan accounts up to $50,000, subject to Puerto Rico Internal Revenue Code limitations and restrictions. Participants pay interest on such borrowings at the prime rate in effect at the time the participant loan is made. Loans must be repaid within five years (or by the employees anticipated retirement date, if sooner) unless the loan is used for the purchase of the primary residence of the employee, in which case the repayment period can be extended to a period of fifteen years (or until the employees anticipated retirement date, if sooner). Repayment is generally made through periodic payroll deductions but a loan may be repaid in a lump sum at any time. For employees terminating employment with AbbVie during the repayment period, the balance of the outstanding loan is netted from their Plan distribution.
AbbVie Puerto Rico Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements have been prepared using the accrual basis of accounting.
Adoption of New Accounting Rules
On May 1, 2015 the Financial Accounting Standards Board issued updated guidance related to fair value measurement and the disclosures for investments in certain entities that calculate net asset value (NAV) per share (or its equivalent). The updated guidance applies to reporting entities that elect to measure the fair value of certain investments using the NAV per share (or its equivalent) of the investment as a practical expedient. Currently, investments valued using the practical expedient are categorized within the fair value hierarchy on the basis of when the investment is redeemable with the investee at NAV. The amendments remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the NAV per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient.
The amendments are effective for the Plan for fiscal years beginning after December 15, 2015 and shall apply retrospectively to all periods presented. Earlier application is permitted. The Plans administrator is currently evaluating the impact the updated guidance will have on the Plans financial statement disclosures.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results may differ from those estimates.
Investment Valuation
Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Plan uses the following methods and significant assumptions to estimate the fair value of investments:
Common stock and mutual funds - Valued at the published market price per unit multiplied by the number of shares or units held.
Money market mutual fund Valued at the published net asset value of $1 per unit.
AbbVie Puerto Rico Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Investment Valuation
Collective trust fund - Valued at the NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.
The fair value hierarchy under the accounting standard for fair value measurements 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 companys management about the assumptions market participants would use in pricing the asset or liability.
The following tables summarize the basis used to measure assets at fair value at December 31, 2014 and 2013 (dollars in thousands):
|
|
Basis of Fair Value Measurement |
| ||||||||||
2014 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
Common stock |
|
|
|
|
|
|
|
|
| ||||
Abbott |
|
$ |
52,910 |
|
$ |
|
|
$ |
|
|
$ |
52,910 |
|
AbbVie |
|
117,249 |
|
|
|
|
|
117,249 |
| ||||
Hospira |
|
1,976 |
|
|
|
|
|
1,976 |
| ||||
Total common stock |
|
172,135 |
|
|
|
|
|
172,135 |
| ||||
Mutual funds |
|
|
|
|
|
|
|
|
| ||||
Growth |
|
8,957 |
|
|
|
|
|
8,957 |
| ||||
Blend |
|
16,248 |
|
|
|
|
|
16,248 |
| ||||
Value |
|
9,050 |
|
|
|
|
|
9,050 |
| ||||
Money market |
|
27,925 |
|
|
|
|
|
27,925 |
| ||||
Income |
|
8,624 |
|
|
|
|
|
8,624 |
| ||||
Total mutual funds |
|
70,804 |
|
|
|
|
|
70,804 |
| ||||
Collective trust fund Growth (a) |
|
|
|
1,198 |
|
|
|
1,198 |
| ||||
Total assets at fair value |
|
$ |
242,939 |
|
$ |
1,198 |
|
$ |
|
|
$ |
244,137 |
|
AbbVie Puerto Rico Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Investment Valuation - Continued
|
|
Basis of Fair Value Measurement |
| ||||||||||
2013 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
Common stock |
|
|
|
|
|
|
|
|
| ||||
Abbott |
|
$ |
51,921 |
|
$ |
|
|
$ |
|
|
$ |
51,921 |
|
AbbVie |
|
90,761 |
|
|
|
|
|
90,761 |
| ||||
Hospira |
|
1,447 |
|
|
|
|
|
1,447 |
| ||||
Total common stock |
|
144,129 |
|
|
|
|
|
144,129 |
| ||||
Mutual funds |
|
|
|
|
|
|
|
|
| ||||
Growth |
|
8,276 |
|
|
|
|
|
8,276 |
| ||||
Blend |
|
16,000 |
|
|
|
|
|
16,000 |
| ||||
Value |
|
8,282 |
|
|
|
|
|
8,282 |
| ||||
Money market |
|
23,783 |
|
|
|
|
|
23,783 |
| ||||
Income |
|
9,221 |
|
|
|
|
|
9,221 |
| ||||
Total mutual funds |
|
65,562 |
|
|
|
|
|
65,562 |
| ||||
Collective trust fund |
|
|
|
|
|
|
|
|
| ||||
Growth (a) |
|
|
|
1,420 |
|
|
|
1,420 |
| ||||
Total assets at fair value |
|
$ |
209,691 |
|
$ |
1,420 |
|
$ |
|
|
$ |
211,111 |
|
(a) The collective trust fund does not have a readily determinable fair value and is valued at its NAV per share as provided by the funds administrators. The investment strategy of this investment is to achieve long-term total return in excess of the Russell Mid-Cap Growth Index. Redemption from the fund is permitted daily.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid balance plus any accrued but unpaid interest. Delinquent loans are reclassified as distributions based upon the terms of the Plan. No allowance for credit losses has been recorded as of December 31, 2014 and 2013.
Investment Income Recognition
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net realized and unrealized appreciation/depreciation is recorded in the accompanying statement of changes in net assets available for benefits as net appreciation in fair value of investments.
AbbVie Puerto Rico Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Administrative Expenses
Participants are charged transaction fees for loan and withdrawal processing and commissions on purchases and sales of AbbVie shares and sales of Abbott and Hospira stock. Investment fees for mutual funds and collective trusts are charged against the net assets of the respective fund. The Company pays other Mercer record-keeping and administration fees and Banco Popular de Puerto Rico trustee fees, where applicable.
Payment of Benefits
Benefits are recorded when paid.
NOTE C - INVESTMENTS
The following investments represented 5% or more of the Plans net assets at December 31, 2014 and 2013 (dollars in thousands):
|
|
2014 |
|
2013 |
| ||
AbbVie common stock |
|
$ |
117,249 |
|
$ |
90,761 |
|
Abbott common stock |
|
52,910 |
|
51,921 |
| ||
PIMCO Money Market |
|
27,925 |
|
23,783 |
| ||
A summary of AbbVie common share data as of December 31, 2014 and 2013 is presented below:
|
|
2014 |
|
2013 |
| ||
AbbVie common shares, 1,791,696 and 1,718,631, respectively (dollars in thousands) |
|
$ |
117,249 |
|
$ |
90,761 |
|
Market value per share |
|
$ |
65.44 |
|
$ |
52.81 |
|
During 2014, the Plans investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows (dollars in thousands):
Common shares/stock |
|
$ |
31,968 |
|
Mutual funds |
|
(292 |
) | |
Collective trust fund |
|
35 |
| |
|
|
$ |
31,711 |
|
AbbVie Puerto Rico Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE C INVESTMENTS - Continued
In general, the investments provided by the Plan are exposed to various risks, such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participant accounts and the amounts reported in the statements of net assets available for benefits.
NOTE D - RELATED-PARTY AND PARTY-IN-INTEREST TRANSACTIONS
A significant portion of the Plans assets is invested in AbbVie common shares.
Participants pay fees to Mercer for loan and withdrawal transaction processing and also pay commissions on purchases and sales of AbbVie shares and sales of Abbott and Hospira stock. These transactions qualify as permitted party-in-interest transactions.
NOTE E - PLAN TERMINATION
The Plan may be terminated at any time by AbbVie upon written notice to the Trustee and Committee, and will be terminated if AbbVie completely discontinues its contributions under the Plan. All participants account balances are fully vested upon Plan termination. Upon termination of the Plan, distributions of each participants share in the Trust, as determined by the terms of the Plan, will be made to each participant. At the present time, AbbVie has no intention of terminating the Plan.
NOTE F - TAX STATUS
On November 15, 2010, the Department of the Treasury of the Commonwealth of Puerto Rico issued its most recent letter to the effect that the Plan, as written, qualifies under Section 1165(e) of the Puerto Rico Internal Revenue Code of 1994 and, consequently, is exempt from local income tax. The Plan has been amended since the letter was issued, including amendments to comply with the provisions of the Puerto Rico Internal Revenue Code of 2011, as amended. The Plans management believes that the Plan is designed and is currently being operated, in all material respects, in accordance with the applicable Puerto Rico Internal Revenue Code.
AbbVie Puerto Rico Savings Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2014 and 2013
NOTE F - TAX STATUS - Continued
Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the organization has taken an uncertain position that more likely than not would not be sustained upon examination by the applicable taxing authorities. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014 and 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
NOTE G SUBSQUENT EVENTS
The Company has evaluated subsequent events and there were no subsequent events that require recognition or additional disclosure in these financial statements.
AbbVie Puerto Rico Savings Plan
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2014
(Dollars in thousands)
Identity of party involved/ |
|
|
|
Current |
| |
description of asset |
|
Cost (a) |
|
value |
| |
|
|
|
|
|
| |
*AbbVie Inc., common stock |
|
|
|
$ |
117,249 |
|
|
|
|
|
|
| |
Abbott Laboratories, common stock |
|
|
|
52,910 |
| |
|
|
|
|
|
| |
Hospira, Inc., common stock |
|
|
|
1,976 |
| |
|
|
|
|
|
| |
Mutual funds |
|
|
|
|
| |
American Funds EuroPacific Growth Fund, Class R6 |
|
|
|
4,258 |
| |
American Funds Growth Fund of America, Class R6 |
|
|
|
8,957 |
| |
American Funds The Investment Company of America Fund, Class R6 |
|
|
|
4,290 |
| |
American Funds Washington Mutual Investors Fund, Class R6 |
|
|
|
2,102 |
| |
Blackrock International Opportunities Fund |
|
|
|
1,165 |
| |
GMO Global Asset Allocation Series Fund, Class R6 |
|
|
|
4,681 |
| |
PIMCO All Asset Fund |
|
|
|
4,054 |
| |
PIMCO Money Market Fund (Institutional) |
|
|
|
27,925 |
| |
PIMCO Total Return Fund |
|
|
|
4,570 |
| |
Vanguard Developed Markets Index Fund |
|
|
|
578 |
| |
Vanguard Extended Market Index Fund |
|
|
|
2,537 |
| |
Vanguard Institutional Index Fund |
|
|
|
3,029 |
| |
Vanguard Mid-Cap Value Index Fund - Admiral |
|
|
|
2,658 |
| |
|
|
|
|
|
| |
Collective trust fund |
|
|
|
|
| |
Wellington Mid Cap Growth Fund |
|
|
|
1,198 |
| |
|
|
|
|
|
| |
*Loans to participants, 3.25% to 9.50% |
|
|
|
10,981 |
| |
|
|
|
|
|
| |
|
|
|
|
$ |
255,118 |
|
*Represents a party-in-interest transaction. |
|
|
|
|
|
|
|
|
|
|
|
(a) Cost information omitted as all investments are fully participant directed. |
|
|
|
|
|
EXHIBITS
23.1 Consent of Independent Registered Public Accounting Firm AbbVie Savings Plan.
23.2 Consent of Independent Registered Public Accounting Firm AbbVie Puerto Rico Savings Plan.
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
ABBVIE SAVINGS PROGRAM | |
|
|
|
|
|
Date: |
June 26, 2015 |
|
By: |
/s/ Michael J. Thomas |
|
|
|
|
Michael J. Thomas |
|
|
|
|
Plan Administrator |
EXHIBIT INDEX
Exhibit No. |
|
Exhibit |
|
|
|
23.1 |
|
Consent of Independent Registered Public Accounting Firm AbbVie Savings Plan. |
|
|
|
23.2 |
|
Consent of Independent Registered Public Accounting Firm AbbVie Puerto Rico Savings Plan. |