Abbott Laboratories 2012 Annual Report Download - page 38

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Abbott 2012 Annual Report
Notes to Consolidated Financial Statements
(dollars in millions) Defined Benefit Plans Medical and Dental Plans
2012 2011 2010 2012 2011 2010
Service cost — benefits earned during the year $ 376 $ 332 $ 288 $ 61 $ 55 $ 60
Interest cost on projected benefit obligations 447 446 421 81 88 101
Expected return on plans’ assets (611) (608) (571) (33) (34) (31)
Settlement — 40 — — — —
Amortization of actuarial losses 235 163 136 34 38 38
Amortization of prior service cost (credits) 4 4 4 (42) (42) (22)
Total cost $ 451 $ 377 $ 278 $101 $105 $146
Note 4 — Post-Employment Benefits
Retirement plans consist of defined benefit, defined contribution and medical and dental plans. Information for Abbott’s major defined benefit plans
and post-employment medical and dental benefit plans is as follows:
(dollars in millions) Defined Benefit Plans Medical and Dental Plans
2012 2011 2010 2012 2011 2010
Projected benefit obligations, January 1 $ 8,963 $ 8,606 $ 6,852 $ 1,657 $ 1,673 $ 1,705
Service cost — benefits earned during the year 376 332 288 61 55 60
Interest cost on projected benefit obligations 447 446 421 81 88 101
Losses (gains), primarily changes in discount rates, plan design changes,
law changes and differences between actual and estimated health care costs 1,412 608 565 148 (104) (153)
Benefits paid (302) (294) (289) (63) (62) (74)
Acquisition of Solvay’s pharmaceuticals business — — 1,045 — — 28
Settlement — (776) — — — —
Other, primarily foreign currency translation 108 41 (276) 5 7 6
Projected benefit obligations, December 31 $11,004 $ 8,963 $ 8,606 $ 1,889 $ 1,657 $ 1,673
Plans’ assets at fair value, January 1 $ 6,961 $ 7,451 $ 5,812 $ 389 $ 396 $ 341
Actual return on plans’ assets 878 29 782 48 5 55
Company contributions 379 394 525 40 40 74
Benefits paid (302) (294) (289) (60) (52) (74)
Acquisition of Solvay’s pharmaceuticals business — — 763 — — —
Settlement — (776) — — — —
Other, primarily foreign currency translation 33 157 (142) — — —
Plans’ assets at fair value, December 31 $ 7,949 $ 6,961 $ 7,451 $ 417 $ 389 $ 396
Projected benefit obligations
greater than plans’ assets, December 31 $ (3,055) $(2,002) $(1,155) $(1,472) $(1,268) $(1,277)
Long-term assets $ 69 $ 66 $ 27 $ — $ — $ —
Short-term liabilities (39) (35) (34) — — —
Long-term liabilities (3,085) (2,033) (1,148) (1,472) (1,268) (1,277)
Net liability $ (3,055) $(2,002) $(1,155) $(1,472) $(1,268) $(1,277)
Amounts Recognized in Accumulated Other Comprehensive Income (loss):
Actuarial losses, net $ 4,742 $ 3,822 $ 2,879 $ 701 $ 601 $ 713
Prior service cost (credits) 71 25 30 (322) (364) (406)
Total $ 4,813 $ 3,847 $ 2,909 $ 379 $ 237 $ 307
The projected benefit obligations for non-U.S. defined benefit plans was
$3.1 billion, $2.3 billion and $3.0 billion at December 31, 2012, 2011
and 2010, respectively. The accumulated benefit obligations for all
defined benefit plans was $9.4 billion, $7.7 billion and $7.5 billion at
December 31, 2012, 2011 and 2010, respectively. For plans where the
accumulated benefit obligations exceeded plan assets at December 31,
2012, 2011 and 2010, the aggregate accumulated benefit obligations
were $7.9 billion, $6.7 billion and $2.0 billion, respectively; the projected
benefit obligations were $9.3 billion, $7.9 billion and $2.2 billion, respec-
tively; and the aggregate plan assets were $6.2 billion, $5.8 billion and
$1.1 billion, respectively.
In connection with the separation of AbbVie from Abbott on January 1,
2013, Abbott will transfer certain liabilities and assets of both defined
benefit pension plans and medical and dental plans. The estimated
amount of the accumulated benefit obligations, projected benefit
obligations, fair value of assets and deferred gains and losses to be
assumed by AbbVie are $3.9 billion, $4.5 billion, $3.1 billion and
$1.9 billion, respectively, for defined benefit plans. The estimated
amount of the accumulated benefit obligations and deferred gains and
losses to be assumed by AbbVie are $501 million and $114 million,
respectively, for medical and dental plans.
During 2011, $776 million of assets and liabilities of a plan sponsored
by Abbott Healthcare BV, a Dutch subsidiary of Abbott Laboratories,
were irrevocably transferred to a Dutch insurance company in full
settlement of that plan. The assets were used to purchase an annuity
contract to fulfill the plan’s obligations.