AbbVie 2012 Annual Report Download - page 56

accrued liabilities to accrue a litigation reserve related to claims on AbbVie’s previous sales and
marketing activities for Depakote. AbbVie made payments of $1.6 billion in 2012 to settle these claims.
AbbVie issued senior notes of $14.7 billion in November 2012 and $1.0 billion of commercial paper in
December 2012. Abbott’s guarantee of the senior notes terminated upon the distribution of AbbVie
common stock to the shareholders of Abbott upon the separation on January 1, 2013. The senior notes,
which have maturities ranging from three to 30 years, may be redeemed, at any time, except the
floating rate notes and some of the senior notes of each series, at a redemption price equal to the
principal amount plus a make-whole premium. The balance of commercial paper outstanding at
December 31, 2012, was $1.0 billion at a weighted-average interest rate of 0.4%. AbbVie may retire or
issue additional commercial paper to meet liquidity requirements as needed. Historically, cash flows
from financing activities represented cash transactions with Abbott.
The company’s cash and equivalents and short-term investments increased from $653 million at
December 31, 2011 to $7,976 million at December 31, 2012. During 2012, Abbott contributed
approximately $4.4 billion of cash to newly formed AbbVie entities, and AbbVie distributed
$13.2 billion in cash and debt securities to Abbott. Subsequent to the separation, effective January 1,
2013, AbbVie no longer participates in cash management and funding arrangements with Abbott.
While a significant portion of cash and equivalents at December 31, 2012 are considered reinvested
indefinitely in foreign subsidiaries, AbbVie does not expect such reinvestment to affect its liquidity and
capital resources. If these funds were needed for operations in the United States, AbbVie would be
required to accrue and pay U.S. income taxes to repatriate these funds. AbbVie believes that it has
sufficient sources of liquidity to support its assumption that the disclosed amount of undistributed
earnings at December 31, 2012 can be considered to be reinvested indefinitely.
On February 15, 2013, the company announced a $1.5 billion stock repurchase program, which was
effective immediately. Purchases of AbbVie shares may be made from time to time at management’s
discretion. The plan has no time limit and can be discontinued at any time.
A dividend of $0.40 per share was paid on February 15, 2013 to stockholders of record on January 15,
2013. The board of directors declared a quarterly cash dividend of $0.40 per share for stockholders of
record on April 15, 2013, which will be payable May 15, 2013. AbbVie expects to pay a regular cash
dividend at an annual rate of $1.60 per share; however, the timing, declaration, amount of, and
payment of any dividends is within the discretion of its board of directors and will depend upon many
factors, including AbbVie’s financial condition, earnings, capital requirements of its operating
subsidiaries, covenants associated with certain of AbbVie’s debt service obligations, legal requirements,
regulatory constraints, industry practice, ability to access capital markets, and other factors deemed
relevant by its board of directors.
Substantially all of AbbVie’s trade receivables in Greece, Portugal, Italy and Spain are with
governmental health systems. Global economic conditions and liquidity issues in these countries have
resulted, and may continue to result, in delays in the collection of receivables and credit losses. The
time to collect outstanding receivables increased in 2011; however, with the exception of Greece,
collection times improved in 2012 relative to 2011 and amounts over one year past due decreased in
2012 relative to 2011.
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