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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, 2019

 

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 001-35565

 

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

 

 

 


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FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE WITH

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ABBVIE SAVINGS PLAN

DECEMBER 31, 2019 AND 2018

 


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Report of Independent Registered Public Accounting Firm

 

To the Plan Participants and the Plan Administrator of the AbbVie Savings Plan

 

Opinion on the Financial Statements

 

We have audited the accompanying statements of net assets available for benefits of the AbbVie Savings Plan (the Plan) as of December 31, 2019 and 2018, and the related statement of changes in net assets available for benefits for the year ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2019 and 2018, and the changes in its net assets available for benefits for the year ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

 

Basis for Opinion

 

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Supplemental Schedule

 

The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2019, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The information in the supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying accounting and other records, as applicable,

 

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and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

 

/s/ Ernst & Young LLP

 

We have served as the Plan’s auditor since 2018.

 

Chicago, Illinois

June 18, 2020

 

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AbbVie Savings Plan

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31, 2019 and 2018

(Dollars in thousands)

 

 

 

 

2019

 

2018

 

Assets

 

 

 

 

 

Cash

 

$

3,261

 

$

2,632

 

Investments, at fair value

 

5,719,399

 

4,846,378

 

Employer contributions receivable

 

8,302

 

8,035

 

Notes receivable from participants

 

45,721

 

46,926

 

Accrued interest and dividend income

 

458

 

1,023

 

Due from brokers

 

1,802

 

332

 

 

 

 

 

 

 

Total assets

 

5,778,943

 

4,905,326

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Other liabilities

 

5,870

 

 

Accrued administrative expenses

 

82

 

80

 

Due to brokers

 

2,350

 

1,875

 

 

 

 

 

 

 

Total liabilities

 

8,302

 

1,955

 

 

 

 

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS

 

$

5,770,641

 

$

4,903,371

 

 

The accompanying notes are an integral part of these statements.

 

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AbbVie Savings Plan

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year ended December 31, 2019

(Dollars in thousands)

 

Additions

 

 

 

Contributions

 

 

 

Employer

 

$

99,070

 

Participant

 

199,535

 

Rollovers

 

22,859

 

 

 

 

 

Total contributions

 

321,464

 

 

 

 

 

Investment income

 

 

 

Net appreciation in fair value of investments

 

762,094

 

Interest and dividends

 

95,548

 

 

 

 

 

Net investment income

 

857,642

 

 

 

 

 

Interest income on notes receivable from participants

 

1,996

 

 

 

 

 

Total additions

 

1,181,102

 

 

 

 

 

Deductions

 

 

 

Benefits paid to participants

 

312,530

 

Other expenses

 

1,302

 

 

 

 

 

Total deductions

 

313,832

 

 

 

 

 

NET INCREASE

 

867,270

 

 

 

 

 

Net assets available for benefits

 

 

 

Beginning of year

 

4,903,371

 

 

 

 

 

End of year

 

$

5,770,641

 

 

The accompanying notes are an integral part of these statements.

 

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AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2019 and 2018

 

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 Plan’s provisions.

 

General

 

In general, United States employees of AbbVie Inc. (“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.

 

Alight Solutions serves as the record keeper of the Plan.  The Northern Trust Company (“Custodian” and “Trustee”) serves as the custodian and trustee.

 

Contributions and Vesting

 

Contributions to the Plan are paid to the AbbVie Savings Plan Trust (“Trust”).  The Trust is administered by the Trustee and an investment committee comprised of AbbVie employees (the “Committee”).

 

Employees are eligible to make contributions immediately following their date of hire.  Eligible employees electing to participate may contribute from 2% to 50% of their eligible earnings to the Trust.  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 Internal Revenue Code (“IRC”).  All the contributions are subject to certain limitations of the IRC.  Participant contributions may be invested in any 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, 2019, was 5% of the participant’s eligible earnings if the employee elected to contribute at least 2% to the Plan.  Employer contributions are invested each pay period according to the employee’s investment elections.

 

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AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE A - DESCRIPTION OF THE PLAN - Continued

 

Contributions and Vesting - Continued

 

The Plan offers a variety of investment options, including AbbVie common shares.  AbbVie was established by the January 1, 2013 separation of Abbott Laboratories (“Abbott”) into two publicly traded companies.  The separation 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.

 

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 Plan’s 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 plan administrator.

 

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 employee’s 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 2019, forfeitures reduced AbbVie’s contributions by approximately $849,000.  Approximately $60,600 and $121,000 of forfeitures were available at the end of 2019 and 2018, respectively.

 

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AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE A - DESCRIPTION OF THE PLAN - Continued

 

Distributions

 

Following retirement, termination or death, participants or their beneficiaries receive distributions in cash and/or AbbVie common shares and may receive them in installments, lump sums 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 or commence 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.  In-service withdrawals are available in certain circumstances as defined by the Plan.  The Plan also permits hardship withdrawals for participants who meet the criteria outlined in the Plan document.

 

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 stock.  Investment fees for mutual funds, collective trusts, and managed accounts are charged against the net assets of the respective fund.  AbbVie pays other record-keeping and administration fees, where applicable.  Expenses paid by AbbVie are excluded from these financial statements.

 

Participant Accounts

 

Each participant’s account is credited with the participant’s contributions and AbbVie’s contributions and allocations of plan earnings, and is charged with any transaction fees or commissions incurred by the participant.  Plan earnings are allocated based on the participant’s share of net earnings or losses of their respective elected investment options.  The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

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 employee’s 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 employee’s 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.

 

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AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Accounting

 

The financial statements have been prepared using the accrual basis of accounting.

 

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, mutual funds and collective trust funds - Valued at the published net asset value (“NAV”) or market price per share.  Redemption from the collective trust funds is permitted daily.

 

Certificates of deposit and repurchase agreements - Valued at amortized cost, which approximates fair value given the instruments’ short duration of less than 130 days.

 

Corporate debt - Valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar bonds, the bond is valued under a discounted cash flows approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks or a broker quote if available.

 

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AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

Investment Valuation — Continued

 

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 company’s management about the assumptions market participants would use in pricing the asset or liability.

 

The following tables set forth the fair value hierarchy levels of the Plan’s assets at fair value at December 31, (dollars in thousands):

 

 

 

Basis of Fair Value Measurement

 

 

 

2019

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Common stock

 

$

1,589,962

 

$

 

$

 

$

1,589,962

 

Mutual funds

 

1,588,786

 

 

 

1,588,786

 

Collective trust funds

 

2,283,515

 

 

 

2,283,515

 

Repurchase agreement

 

 

107,500

 

 

107,500

 

Certificates of deposit

 

 

9,401

 

 

9,401

 

Corporate debt

 

 

140,235

 

 

140,235

 

Total assets at fair value

 

$

5,462,263

 

$

257,136

 

$

 

5,719,399

 

 

 

 

Basis of Fair Value Measurement

 

 

 

2018

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Common stock

 

$

1,573,942

 

$

 

$

 

$

1,573,942

 

Mutual funds

 

1,308,204

 

 

 

1,308,204

 

Repurchase agreement

 

 

30,800

 

 

30,800

 

Corporate debt

 

 

229,043

 

 

229,043

 

Total assets at fair value

 

$

2,882,146

 

$

259,843

 

$

 

3,141,989

 

Assets measured at NAV:

 

 

 

 

 

 

 

 

 

Collective trust funds

 

 

 

 

 

 

 

1,704,389

 

Total investments

 

 

 

 

 

 

 

$

4,846,378

 

 

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AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

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, 2019 and 2018.

 

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.

 

Payment of Benefits

 

Benefits are recorded when paid.

 

New Accounting Pronouncement

 

In July 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) 2018-09, Codification Improvements, which, among other things, amends an illustrative example of a fair value hierarchy disclosure to indicate that a certain type of investment should not always be considered to be eligible to use the net asset value per share practical expedient. Also, it further clarifies that an entity should evaluate whether a readily determinable fair value exists or whether its investments qualify for net asset value per share practical expedient in accordance with ASC 820, Fair Value Measurement. Adoption of the amended guidance, which is to be applied prospectively, affects the fair value disclosures, but does not change the fair value measurement of the investments. The guidance is effective for periods beginning after December 15, 2018.  Management evaluated the guidance and determined that a readily determinable fair value exists for collective trust funds that were previously disclosed as using the net asset value per share practical expedient.  The provisions of the ASU were adopted for the year ended December 31, 2019 and have been applied prospectively, in accordance with the adoption guidance.  Adoption of the amended guidance affected the fair value disclosures, but did not change the fair value measurement of the investments.

 

NOTE C — INVESTMENTS

 

A summary of AbbVie common share data as of December 31, is presented below:

 

 

 

2019

 

2018

 

AbbVie common shares, 12,760,892 and 12,444,443 shares, respectively, (dollars in thousands)

 

$

1,129,849

 

$

1,147,253

 

Market value per share

 

$

88.54

 

$

92.19

 

 

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AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

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

 

The Plan holds units of a collective trust fund managed by the Trustee for the Plan.  The Plan also invests in the common stock of AbbVie. These transactions qualify as party-in-interest transactions; however, they are exempt from the prohibited transaction rules under ERISA.  During 2019, the Plan received $53.8 million in common stock dividends from AbbVie.

 

Participants pay fees to the recordkeeper for loan and withdrawal transaction processing and also pay commissions on purchases and sales of AbbVie shares and sales of Abbott 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 participant’s 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 received a determination letter from the IRS dated August 20, 2018, stating that the Plan is qualified under Section 401(a) of the IRC, and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualified status. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes the Plan, as amended, is qualified and the related trust is tax-exempt.

 

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AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

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 Plan 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 there are no uncertain positions taken or expected to be taken.  The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

 

NOTE G — SUBSEQUENT EVENTS

 

AbbVie has evaluated subsequent events and other than as disclosed below, there were no subsequent events that require recognition or additional disclosure in these financial statements.

 

The SECURE Act, which was signed into law on December 20, 2019, changed the required minimum distribution age from 70 ½ to 72 for participants who turn age 70 ½ on or after January 1, 2020.

 

In response to the pandemic outbreak of a novel coronavirus (COVID-19), the United States Congress passed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to provide expanded access to retirement plan accounts.  In response, the Plan implemented provisions under the CARES Act related to distributions and deferred loan repayments for those participants who qualify under the CARES Act.

 

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SUPPLEMENTAL SCHEDULE

 

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AbbVie Savings Plan

EIN: 320375147, Plan Number: 001

SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2019

(Dollars in thousands)

 

Identity of party involved/

 

 

 

Current

 

description of asset/ rate/ maturity

 

Cost (a)

 

value

 

 

 

 

 

 

 

*ABBVIE INC., common shares

 

 

 

$

1,129,849

 

 

 

 

 

 

 

ABBOTT LABORATORIES, common shares

 

 

 

460,113

 

 

 

 

 

 

 

Mutual funds

 

 

 

 

 

AMERICAN FUNDS EUROPACIFIC GROWTH

 

 

 

246,849

 

AMERICAN FUNDS THE GROWTH FUND OF AMERICA

 

 

 

494,883

 

AMERICAN FUNDS WASHINGTON MUTUAL INVESTORS FUND

 

 

 

186,383

 

DIAMOND HILL SMALL/MID CAP FUND

 

 

 

114,256

 

GMO GLOBAL ASSET ALLOCATION SERIES FUND

 

 

 

149,846

 

JPMORGAN CORE BOND FUND

 

 

 

301,929

 

PIMCO ALL ASSET FUND

 

 

 

76,443

 

PIMCO SHORT-TERM PORTFOLIO INSTITUTIONAL

 

 

 

18,197

 

 

 

 

 

 

 

Collective trust funds

 

 

 

 

 

SSGA TARGET RETIREMENT 2015 SERIES FUND

 

 

 

14,183

 

SSGA TARGET RETIREMENT 2020 SERIES FUND

 

 

 

81,240

 

SSGA TARGET RETIREMENT 2025 SERIES FUND

 

 

 

135,529

 

SSGA TARGET RETIREMENT 2030 SERIES FUND

 

 

 

127,308

 

SSGA TARGET RETIREMENT 2035 SERIES FUND

 

 

 

98,269

 

SSGA TARGET RETIREMENT 2040 SERIES FUND

 

 

 

91,407

 

SSGA TARGET RETIREMENT 2045 SERIES FUND

 

 

 

60,234

 

SSGA TARGET RETIREMENT 2050 SERIES FUND

 

 

 

40,115

 

SSGA TARGET RETIREMENT 2055 SERIES FUND

 

 

 

14,425

 

SSGA TARGET RETIREMENT 2060 SERIES FUND

 

 

 

8,529

 

SSGA TARGET RETIREMENT INCOME SERIES FUND

 

 

 

22,086

 

VANGUARD INSTITUTIONAL 500 INDEX TRUST

 

 

 

818,862

 

VANGUARD INSTITUTIONAL EXTENDED MARKET TRUST

 

 

 

428,839

 

VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND

 

 

 

333,382

 

*NORTHERN TRUST COLLECTIVE SHORT TERM INVESTMENT FUND

 

 

 

9,107

 

 

 

 

 

 

 

Repurchase Agreement

 

 

 

 

 

BUY TO OPEN REPO W/BOFA SECU 1.65% FROM 12-31-2019 TO 01-02-2020

 

 

 

51,700

 

BUY TO OPEN REPO W/THE BANK 1.58% FROM 12-31-2019 TO 01-02-2020

 

 

 

55,800

 

 

 

 

 

 

 

Certificates of Deposit

 

 

 

 

 

BANK MONTREAL CHICAGO BRH INSTL CTF DEP 07-11-2019 FLTG 07-10-2020

 

 

 

5,101

 

BANK MONTREAL CHICAGO BRH INSTL CTF DEP DTD 10-03-2019 VAR RT DUE 10-02-2020

 

 

 

1,000

 

BARCLAYS BK PLC NEW YORK BRH INSTL CTF DEP 00340 10-25-2019 VAR RT 10-15-2020

 

 

 

3,300

 

 

 

 

 

 

 

Corporate Debt

 

 

 

 

 

ALLY AUTO 1.72% DUE 04-15-2021

 

 

 

661

 

AMERICAN EXPRESS CR CORP DISC COML PAPER3/A3 YRS 1&2 04-13-2020

 

 

 

4,175

 

BK NOVA SCOTIA GTD 1.85% DUE 04-14-2020

 

 

 

2,999

 

BNG BANK N.V. FRN SNR MTN 07/20

 

 

 

13,915

 

CARMAX AUTO OWNER TRUST SER 16-4 CL A3 1.4% 08-15-2021

 

 

 

202

 

CITIBANK N A FLTG 07-23-2021

 

 

 

703

 

ERSTE ABWICKLUNGS FRN SNR 03/2020

 

 

 

2,401

 

EXPORT DEV CANADA FRN SNR 03/2020

 

 

 

5,003

 

 

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AbbVie Savings Plan

EIN: 320375147, Plan Number: 001

SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) - CONTINUED

December 31, 2019

(Dollars in thousands)

 

Identity of party involved/

 

 

 

Current

 

description of asset/ rate/ maturity

 

Cost (a)

 

value

 

 

 

 

 

 

 

Corporate Debt - continued

 

 

 

 

 

FIRST ABU DHABI BK 2.625% SNR 24/02/2020

 

 

 

1,502

 

FMS WERTMANAGEMENT FRN SNR 10/2020

 

 

 

5,604

 

FORD CR AUTO LEASE 2.93% DUE 06-15-2021

 

 

 

1,303

 

GM FINANCIAL AUTOMOBILE LEASIN SER-19-1 CL-A2B FLTG 04-20-2021 BEO

 

 

 

1,503

 

GM FINL AUTOMOBILE LEASING SER 19-2 CL A2B FLTG 06-21-2021

 

 

 

2,266

 

GM FINL AUTOMOBILE LEASING TR 2018-3 ASSET BACKED NT CL A-2-A 2.74% 09-21-2020

 

 

 

207

 

HSBC HLDGS PLC SR NT FLTG RATE 05-18-2021

 

 

 

2,002

 

HYUNDAI AUTO 3.04% DUE 06-15-2021

 

 

 

432

 

KOMMUNALBANKEN AS FLTG 15/04/2021

 

 

 

4,399

 

KOMMUNALBANKEN AS FR SNR 03/20

 

 

 

10,001

 

KOMMUNALBANKEN AS FR SNR 03/21

 

 

 

2,224

 

KOMMUNALBANKEN AS FR SNR 06/20

 

 

 

5,340

 

KOMMUNALBANKEN AS FR SNR 09/21

 

 

 

1,002

 

L-BANK BW FOERDBK FRN SNR 04/20

 

 

 

2,762

 

LLOYDS BANK PLC 2.7% DUE 08-17-2020

 

 

 

221

 

LLOYDS BK PLC NT FLTG DUE 05-07-2021 REG

 

 

 

2,007

 

MERCEDES-BENZ AUTO LEASE TR SER 19-A CL A2 3.01% 02-16-2021

 

 

 

1,177

 

NED WATERSCHAPSBK FR SNR 02/20

 

 

 

13,005

 

NED.FINANCE IDX/LKD EMTN 07/09/2021

 

 

 

5,000

 

NED.FINANCE.MAATS FRN SNR 01/2020

 

 

 

13,403

 

NORDRH-WESTFALEN FRN SNR 08/2021

 

 

 

5,003

 

NRW BANK FRN SNR 02/21 USD200000’754

 

 

 

12,996

 

NRW BANK FRN SNR 03/2021 USD1000’722

 

 

 

7,000

 

NTT FINANCE CORP FR SNR EMTN 06/20

 

 

 

701

 

QNB FINANCE LTD FRN GTD SNR MTN 02/2020

 

 

 

1,001

 

QNB FINANCE LTD FRN GTD SNR MTN 02/2020

 

 

 

1,202

 

SWEDBANK AB 2.2% 04/03/2020

 

 

 

400

 

TOYOTA AUTO RECEIVABLES 2018-B OWNER TR ASSET BACKED NT CL A-2B 03-15-2021 REG

 

 

 

513

 

VOLKSWAGEN AUTO LEASE TR 2019-A NT CL A-2B 03-21-2022 REG

 

 

 

2,000

 

WESTPAC BKG CORP 2.0% 03-03-2020

 

 

 

4,000

 

 

 

 

 

 

 

*Loans to participants, 3.25% to 8.25%

 

 

 

45,721

 

 

 

 

 

 

 

 

 

 

 

$

5,765,120

 

 


*Represents a party-in-interest transaction.

 

 

 

 

 

 

 

 

 

 

 

(a) Cost information omitted as all investments are fully participant directed.

 

 

 

 

 

 

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FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE WITH

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ABBVIE PUERTO RICO SAVINGS PLAN

DECEMBER 31, 2019 AND 2018

 


Table of Contents

 

AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2019 and 2018

 

C O N T E N T S

 

 

Page

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1

 

 

FINANCIAL STATEMENTS

 

 

 

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

3

 

 

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

4

 

 

NOTES TO FINANCIAL STATEMENTS

5

 

 

SUPPLEMENTAL SCHEDULE

13

 

 

SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

14

 


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Report of Independent Registered Public Accounting Firm

 

To the Plan Participants and the Plan Administrator of the AbbVie Puerto Rico Savings Plan

 

Opinion on the Financial Statements

 

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, 2019 and 2018, and the related statement of changes in net assets available for benefits for the year ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2019 and 2018, and the changes in its net assets available for benefits for the year ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

 

Basis for Opinion

 

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Supplemental Schedule

 

The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2019, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The information in the supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying accounting and other records, as applicable,

 

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and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

 

/s/ Ernst & Young LLP

 

We have served as the Plan’s auditor since 2018.

 

Chicago, Illinois

June 18, 2020

 

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AbbVie Puerto Rico Savings Plan

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31, 2019 and 2018

(Dollars in thousands)

 

 

 

2019

 

2018

 

Assets

 

 

 

 

 

Cash

 

$

113

 

$

69

 

Investments, at fair value

 

348,881

 

308,484

 

Employer contributions receivable

 

2

 

2

 

Notes receivable from participants

 

6,687

 

6,513

 

Accrued interest and dividend income

 

32

 

45

 

Due from brokers

 

20

 

84

 

 

 

 

 

 

 

Total assets

 

355,735

 

315,197

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Other liabilities

 

37

 

526

 

Due to brokers

 

238

 

232

 

 

 

 

 

 

 

Total liabilities

 

275

 

758

 

 

 

 

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS

 

$

355,460

 

$

314,439

 

 

The accompanying notes are an integral part of these statements

 

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AbbVie Puerto Rico Savings Plan

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year ended December 31, 2019

(Dollars in thousands)

 

 

 

 

 

Additions

 

 

 

Contributions

 

 

 

Employer

 

$

3,890

 

Participant

 

9,392

 

Rollovers

 

717

 

 

 

 

 

Total contributions

 

13,999

 

 

 

 

 

Investment income

 

 

 

Net appreciation in fair value of investments

 

29,772

 

Interest and dividends

 

9,083

 

 

 

 

 

Net investment income

 

38,855

 

 

 

 

 

Interest income on notes receivable from participants

 

270

 

 

 

 

 

Total additions

 

53,124

 

 

 

 

 

Deductions

 

 

 

Benefits paid to participants

 

11,833

 

Other expenses

 

270

 

 

 

 

 

Total deductions

 

12,103

 

 

 

 

 

NET INCREASE

 

41,021

 

 

 

 

 

Net assets available for benefits

 

 

 

Beginning of year

 

314,439

 

 

 

 

 

End of year

 

$

355,460

 

 

The accompanying notes are an integral part of these statements

 

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AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2019 and 2018

 

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 Plan’s provisions.

 

General

 

Employees of AbbVie Inc.’s (“AbbVie”) selected subsidiaries and affiliates in Puerto Rico (the “Company”) may, after meeting certain employment requirements, voluntarily participate in the Plan.  The Plan’s sponsor is AbbVie Ltd.  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.

 

Alight Solutions serves as the record keeper of the Plan.  The Northern Trust Company (“Custodian”) serves as the custodian.  Banco Popular de Puerto Rico serves as trustee (“Trustee”) of the Plan.

 

Contributions and Vesting

 

Contributions to the Plan are paid to the AbbVie Puerto Rico Savings Plan 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 immediately following their date of hire.  Eligible employees electing to participate may contribute from 2% to 50% of their eligible earnings to the Trust.  Participants may choose to make their contributions from either pretax earnings or after-tax earnings or both, subject to certain limitations.  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, which is a salary deferral option under the provisions of Section 1081.01(d) of the Puerto Rico Internal Revenue Code of 2011 (“PR Code”), as amended.  All the contributions are subject to certain limitations of the PR Code.  Participant contributions may be invested in any 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, 2019, was 5% of the participant’s eligible earnings if the employee elected to contribute at least 2% to the Plan.  Employer contributions are invested each pay period according to the employee’s investment elections.

 

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AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE A - DESCRIPTION OF THE PLAN - Continued

 

Contributions and Vesting - Continued

 

The Plan offers a variety of investment options, including AbbVie common shares.  AbbVie was established by the January 1, 2013 separation of Abbott Laboratories (“Abbott”) into two publicly traded companies.  The separation 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.

 

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 employee’s 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 2019, approximately $21,000 of forfeitures were used to reduce AbbVie’s contributions.  As of December 31, 2019 and 2018, approximately $7,800 and $3,600, respectively, of forfeitures were available.

 

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 or commence 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.  In-service withdrawals are available in certain circumstances as defined by the Plan.  The Plan also permits hardship withdrawals for participants who meet the criteria outlined in the Plan document.

 

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AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE A - DESCRIPTION OF THE PLAN - 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 stock.  Investment fees for mutual funds and collective trusts are charged against the net assets of the respective fund.  The Company pays other record-keeping and administration fees and Banco Popular de Puerto Rico trustee fees, where applicable.  Expenses paid by the Company are excluded from these financial statements.

 

Participant Accounts

 

Each participant’s account is credited with the participant’s contributions and employer contributions and allocations of plan earnings, and is charged with any transaction fees or commissions incurred by the participant.  Plan earnings are allocated based on the participant’s share of net earnings or losses of their respective elected investment options.  The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

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 the PR 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 employee’s 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 employee’s 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.

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Accounting

 

The financial statements have been prepared using the accrual basis of accounting.

 

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AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

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, mutual funds and collective trust funds - Valued at the published net asset value (“NAV”) or market price per share.  Redemption from the collective trust funds is permitted daily.

 

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 company’s management about the assumptions market participants would use in pricing the asset or liability.

 

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AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

Investment Valuation - Continued

 

The following tables set forth the fair value hierarchy levels of the Plan’s assets at fair value at December 31, (dollars in thousands):

 

 

 

Basis of Fair Value Measurement

 

 

 

2019

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Common stock

 

$

181,907

 

$

 

$

 

$

181,907

 

Mutual funds

 

94,853

 

 

 

94,853

 

Collective trust funds

 

72,121

 

 

 

72,121

 

Total assets at fair value

 

$

348,881

 

$

 

$

 

$

348,881

 

 

 

 

Basis of Fair Value Measurement

 

 

 

2018

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Common stock

 

$

176,097

 

$

 

$

 

$

176,097

 

Mutual funds

 

81,576

 

 

 

81,576

 

Total assets at fair value

 

$

257,673

 

$

 

$

 

257,673

 

Assets measured at NAV:

 

 

 

 

 

 

 

 

 

Collective trust funds

 

 

 

 

 

 

 

50,811

 

Total investments

 

 

 

 

 

 

 

$

308,484

 

 

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, 2019 and 2018.

 

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.

 

Payment of Benefits

 

Benefits are recorded when paid.

 

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AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

New Accounting Pronouncement

 

In July 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) 2018-09, Codification Improvements, which, among other things, amends an illustrative example of a fair value hierarchy disclosure to indicate that a certain type of investment should not always be considered to be eligible to use the net asset value per share practical expedient. Also, it further clarifies that an entity should evaluate whether a readily determinable fair value exists or whether its investments qualify for net asset value per share practical expedient in accordance with ASC 820, Fair Value Measurement. Adoption of the amended guidance, which is to be applied prospectively, affects the fair value disclosures, but does not change the fair value measurement of the investments. The guidance is effective for periods beginning after December 15, 2018.  Management evaluated the guidance and determined that a readily determinable fair value exists for collective trust funds that were previously disclosed as using the net asset value per share practical expedient.  The provisions of the ASU were adopted for the year ended December 31, 2019 and have been applied prospectively, in accordance with the adoption guidance.  Adoption of the amended guidance affected the fair value disclosures, but did not change the fair value measurement of the investments.

 

NOTE C - INVESTMENTS

 

A summary of AbbVie common share data as of December 31, is presented below:

 

 

 

2019

 

2018

 

AbbVie common shares, 1,432,689 and 1,373,917, respectively (dollars in thousands)

 

$

126,850

 

$

126,661

 

Market value per share

 

$

88.54

 

$

92.19

 

 

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

 

The Plan holds units of a collective trust fund managed by the Custodian for the Plan.  The Plan also invests in the common stock of AbbVie. These transactions qualify as party-in-interest transactions; however, they are exempt from the prohibited transaction rules under ERISA.  During 2019, the Plan received $6.1 million in common stock dividends from AbbVie.

 

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AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE D - RELATED-PARTY AND PARTY-IN-INTEREST TRANSACTIONS - Continued

 

Participants pay fees to the recordkeeper for loan and withdrawal transaction processing and also pay commissions on purchases and sales of AbbVie shares and sales of Abbott 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 participant’s 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 received a determination letter from the Commonwealth of Puerto Rico’s Department of Treasury (“Treasury”) dated November 27, 2019, stating that the Plan is qualified under Section 1081.01 of the PR Code, and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the PR Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the PR Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt.

 

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 there are no uncertain positions taken or expected to be taken.  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 other than as described below, there were no subsequent events that require recognition or additional disclosure in these financial statements.

 

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AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2019 and 2018

 

NOTE G — SUBSQUENT EVENTS - Continued

 

The required minimum distribution age from 70 ½ to 72 for participants who turn age 70 ½ on or after January 1, 2020.

 

In response to the pandemic outbreak of a novel coronavirus (COVID-19), the Puerto Rico Treasury Department issued guidance to authorize special “disaster relief distributions” from Puerto Rico tax qualified retirement plans for participants experiencing financial hardships associated with the COVID-19 pandemic.  The Plan adopted the disaster relief distribution provision and through June 30, 2020, participants are permitted to take disaster relief distributions up to $25,000 without any early distribution penalties and at special tax rates.

 

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SUPPLEMENTAL SCHEDULE

 

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AbbVie Puerto Rico Savings Plan

EIN: 980429860, Plan Number: 002

SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2019

(Dollars in thousands)

 

Identity of party involved/

 

 

 

Current

 

description of asset

 

Cost (a)

 

value

 

 

 

 

 

 

 

*AbbVie Inc., common stock

 

 

 

$

126,850

 

 

 

 

 

 

 

Abbott Laboratories, common stock

 

 

 

55,057

 

 

 

 

 

 

 

Mutual funds

 

 

 

 

 

American Funds EuroPacific Growth Fund, Class R6

 

 

 

6,266

 

American Funds Growth Fund of America, Class R6

 

 

 

16,760

 

American Funds Washington Mutual Investors Fund, Class R6

 

 

 

4,293

 

Blackrock Short-Term Investment Fund

 

 

 

21,409

 

Diamond Hill Small/Mid-Cap Fund

 

 

 

2,455

 

GMO Global Asset Allocation Series Fund, Class R6

 

 

 

4,317

 

J.P. Morgan Core Bond Fund

 

 

 

14,863

 

PIMCO All Asset Fund

 

 

 

2,635

 

Vanguard Total International Stock Index Fund

 

 

 

21,855

 

 

 

 

 

 

 

Collective trust fund

 

 

 

 

 

SSGA Target Retirement 2015 Series Fund

 

 

 

1,656

 

SSGA Target Retirement 2020 Series Fund

 

 

 

6,704

 

SSGA Target Retirement 2025 Series Fund

 

 

 

7,979

 

SSGA Target Retirement 2030 Series Fund

 

 

 

7,736

 

SSGA Target Retirement 2035 Series Fund

 

 

 

2,657

 

SSGA Target Retirement 2040 Series Fund

 

 

 

2,351

 

SSGA Target Retirement 2045 Series Fund

 

 

 

1,535

 

SSGA Target Retirement 2050 Series Fund

 

 

 

486

 

SSGA Target Retirement 2055 Series Fund

 

 

 

610

 

SSGA Target Retirement 2060 Series Fund

 

 

 

406

 

SSGA Target Retirement Income Series Fund

 

 

 

1,139

 

Vanguard Institutional 500 Index Fund

 

 

 

25,355

 

Vanguard Institutional Extended Market Fund

 

 

 

13,255

 

*Northern Trust Collective Short Term Investment Fund

 

 

 

252

 

 

 

 

 

 

 

*Loans to participants, 3.25% to 8.25%

 

 

 

6,687

 

 

 

 

 

 

 

 

 

 

 

$

355,568

 

 


*Represents a party-in-interest transaction.

 

(a) Cost information omitted as all investments are fully participant directed.

 

14


Table of Contents

 

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 18, 2020

By:

/s/ Michael J. Thomas

 

 

Michael J. Thomas

 

 

Plan Administrator

 

16


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