AbbVie 2012 Annual Report Download - page 88

Investments consist of cost method investments and held-to-maturity debt securities. In determining the
fair value of cost method investments, the company takes into consideration recent transactions, as well
as the financial information of the investee, which represents a Level 3 basis of fair value measurement.
The fair value of held-to-maturity debt securities and long-term debt was estimated based upon the
quoted market prices for the same or similar debt instruments. The fair values of short-term and
current borrowings approximate the carrying values due to the short maturities of these instruments.
There were no material adjustments to fair value during the years ended December 31, 2012 and 2011,
of assets and liabilities that are not measured at fair value on a recurring basis, except as discussed in
Note 4 regarding the impairment of the company’s investment in Reata. The counterparties to financial
instruments consist of select major international financial institutions.
Concentrations of Risk
The company invests excess cash in time deposits, money market funds and U.S. Treasury securities and
diversifies the concentration of cash among different financial institutions. The company monitors
concentrations of credit risk associated with deposits with financial institutions. Credit exposure limits
have been established to limit a concentration with any single issuer or institution.
Three U.S. wholesalers accounted for 48 percent and 43 percent of total net accounts receivables as of
December 31, 2012 and 2011, respectively, and substantially all of AbbVie’s U.S. sales are to these
three wholesalers. In addition, governmental accounts in Greece, Portugal, Italy and Spain accounted
for 20 percent and 30 percent of total net accounts receivable as of December 31, 2012 and 2011,
respectively.
Note 9 Post-Employment Benefits
Abbott Sponsored Plans
AbbVie employees participated in certain U.S. and international defined benefit pension and other
post-employment plans sponsored by Abbott. These plans included participants of Abbott’s other
businesses and were accounted for as multiemployer plans in AbbVie’s combined financial statements.
As a result, no asset or liability was recorded by AbbVie in the historical balance sheets through
December 31, 2012 to recognize the funded status of these plans. Abbott made voluntary contributions
to its defined benefit pension funds that AbbVie accounts for as multiemployer plans totaling
$310 million, $289 million and $439 million in 2012, 2011 and 2010, respectively. The multiemployer
pension plans were approximately 94 percent and 99 percent funded as of December 31, 2012 and
2011, respectively. In connection with the separation of AbbVie from Abbott on January 1, 2013, these
plans will be separated and Abbott will transfer certain liabilities and assets of these plans to AbbVie.
The estimated amounts that will be assumed by AbbVie in 2013 are shown in the table below.
Other
Defined post-employment
(in millions) benefit plans plans
Accumulated benefit obligations $ 2,456 $318
Deferred losses (1,422) (59)
Projected benefit obligations 2,929 318
Fair value of assets 2,295 —
Net liability $ 634 $318
For Abbott sponsored defined benefit and post-employment benefit plans, AbbVie recorded expenses
of $200 million in 2012 and $150 million in both 2011 and 2010.
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