AbbVie 2013 Annual Report Download - page 74

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Other (Income) Expense, Net
Other (income) expense, net, included expenses of $11 million in 2013, $29 million in 2012 and
$56 million in 2011 of fair value adjustments to the contingent consideration related to an acquisition
of a business in 2010. Other (income) expense, net, for 2013, 2012 and 2011 also included ongoing
contractual payments associated with the conclusion of a preexisting joint venture arrangement
dissolved in 2008. Other (income) expense, net, for 2012 included income of $21 million from the
resolution of a contractual agreement and a loss of $52 million for the impairment of an equity
security.
Accounts Payable and Accrued Liabilities
as of December 31 (in millions) 2013 2012
Sales rebates $1,401 $1,616
Accounts payable 933 556
Due to Abbott Laboratories 876 923
Dividends payable 643 —
Salaries, wages and commissions 621 523
Royalty license arrangements 443 398
Other 1,531 1,718
Accounts payable and accrued liabilities $6,448 $5,734
Long-Term Liabilities
as of December 31 (in millions) 2013 2012
Deferred income taxes $ 570 $ 360
Pension and other post-employment benefits 1,628 979
Other 1,337 900
Long-term liabilities $3,535 $2,239
Note 4 Earnings Per Share
For periods subsequent to the separation, AbbVie calculated basic earnings per share (EPS) pursuant
to the two-class method. The two-class method is an earnings allocation formula that determines
earnings per share for common stock and participating securities according to dividends declared and
participation rights in undistributed earnings. Under this method, all earnings (distributed and
undistributed) are allocated to common shares and participating securities based on their respective
rights to receive dividends. In addition, participating securities may include certain performance-based
awards that may otherwise have been excluded from the calculation of EPS under the treasury-stock
method. AbbVie’s forfeitable restricted stock units (RSUs) and restricted stock awards (RSAs),
including most performance-based awards, participate in dividends on the same basis as common shares
and such dividends are nonforfeitable to the holder once declared. As a result, these forfeitable RSUs
and RSAs meet the definition of a participating security.
The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock
or the two-class method. For the year ended December 31, 2013, the two-class method was more
dilutive. As such, the dilutive effect of outstanding RSUs and RSAs for the year ended December 31,
2013 of approximately 5 million was excluded from the denominator for the calculation of diluted EPS.
These awards otherwise would have been included in the calculation of EPS under the treasury stock
method. Additionally, all earnings (distributed and undistributed) allocable to participating securities,
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