11-K 1 tm2219211d1_11k.htm FORM 11-K

 

 

 

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)

 

xANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2021

 

OR

 

¨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

 

 

 

 

 

 

FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE WITH

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ABBVIE SAVINGS PLAN

DECEMBER 31, 2021 AND 2020

 

 

 

 

C O N T E N T S

 

   Page
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS  1
    
FINANCIAL STATEMENTS   
    
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS  2
    
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS  3
    
NOTES TO FINANCIAL STATEMENTS  4
    
SUPPLEMENTAL SCHEDULE  13
    
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)  14

 

 

 

 

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, 2021 and 2020, and the related statement of changes in net assets available for benefits for the year ended December 31, 2021, 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, 2021 and 2020, and the changes in its net assets available for benefits for the year ended December 31, 2021, 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 Schedules Required by ERISA

 

The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2021 (referred to as the “supplemental schedule”), 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, 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 23, 2022

 

1

 

 

AbbVie Savings Plan

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31, 2021 and 2020

(Dollars in thousands)

 

 

   2021   2020 
Assets          
Cash  $-   $225 
Investments, at fair value   8,147,399    6,927,771 
Employer contributions receivable   9,181    8,160 
Notes receivable from participants   40,047    43,029 
Accrued interest and dividend income   -    740 
Due from brokers   93    498 
Other receivable   98    - 
           
Total assets   8,196,818    6,980,423 
           
Liabilities          
Accrued administrative expenses   -    107 
Due to brokers   -    401 
           
Total liabilities   -    508 
           
NET ASSETS AVAILABLE FOR BENEFITS  $8,196,818   $6,979,915 

 

The accompanying notes are an integral part of these statements.

 

2

 

 

AbbVie Savings Plan

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year ended December 31, 2021

(Dollars in thousands)

 

 

Additions     
Contributions     
Employer  $108,281 
Participant   225,196 
Rollovers   34,426 
      
Total contributions   367,903 
      
Investment income     
Net appreciation in fair value of investments   1,124,826 
Interest and dividends   192,668 
      
Net investment income   1,317,494 
      
Interest income on notes receivable from participants   2,365 
      
Total additions   1,687,762 
      
Deductions     
Benefits paid to participants   469,770 
Other expenses   1,089 
      
Total deductions   470,859 
      
NET INCREASE   1,216,903 
      
Net assets available for benefits     
Beginning of year   6,979,915 
      
End of year  $8,196,818 

 

The accompanying notes are an integral part of this statement.

 

3

 

 

AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2021 and 2020

 

 

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.

 

Through March 31, 2021, Alight Solutions served as the recordkeeper of the Plan and The Northern Trust Company (“Northern Trust”) served as the custodian and trustee. Effective April 1, 2021, Empower Retirement replaced Alight Solutions as the recordkeeper and Great West Trust Company, LLC (“Custodian” and “Trustee”) replaced Northern Trust 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 (Northern Trust prior to April 1, 2021) 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, 2021, 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.

 

4

 

 

AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

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 2021, forfeitures reduced AbbVie’s contributions by approximately $1.9 million and paid Plan expenses of approximately $160,000. Approximately $1.1 million and $296,900 of forfeitures were available at the end of 2021 and 2020, respectively.

 

5

 

 

AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

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 72 (or 70 ½ if the participant turned 70 ½ before January 1, 2020). 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.

 

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, during 2020, the Plan implemented provisions under the CARES Act related to distributions for those participants who qualified under the CARES Act. The Plan was formally amended for such provisions on January 1, 2022 prior to the deadline required by the CARES Act

 

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.

 

6

 

 

AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

NOTE A - DESCRIPTION OF THE PLAN - Continued

 

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.

 

During 2020, the Plan implemented provisions under the CARES Act related to deferred loan repayments for those participants who qualified under the CARES Act. The Plan was formally amended for such provisions on January 1, 2022 prior to the deadline required by the CARES Act

 

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:

 

7

 

 

AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

Investment Valuation – Continued

 

Common stock, mutual funds and collective trust funds - Valued at the published net asset value (“NAV”) or market price per share.

 

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

 

U.S. government securities and 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.

 

Self-directed brokerage accounts – Include various securities which are valued at the closing price reported in the active market in which the securities are traded.

 

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.

 

8

 

 

AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

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     
2021  Level 1   Level 2   Level 3   Total 
Common stock  $2,302,391   $-   $-   $2,302,391 
Mutual funds   1,414,262    -    -    1,414,262 
Collective trust funds   4,407,773    -    -    4,407,773 
Self-directed brokerage accounts   22,973    -    -    22,973 
Total assets at fair value  $8,147,399   $-   $-    8,147,399 

 

   Basis of Fair Value Measurement     
2020  Level 1   Level 2   Level 3   Total 
Common stock  $1,893,533   $-   $-   $1,893,533 
Mutual funds   1,870,976    -    -    1,870,976 
Collective trust funds   2,814,034    -    -    2,814,034 
Certificates of deposit   -    4,000    -    4,000 
U.S. government securities   -    163,963    -    163,963 
Corporate debt   -    181,265    -    181,265 
Total assets at fair value  $6,578,543   $349,228   $-    6,927,771 

 

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, 2021 and 2020.

 

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.

 

9

 

 

AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

NOTE C – INVESTMENTS

 

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

 

   2021   2020 
AbbVie common shares, 12,352,161 and 12,683,760 shares, respectively, (dollars in thousands)  $1,672,483   $1,359,065 
Market value per share  $135.40   $107.15 

 

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 held units of a collective trust fund managed by Northern Trust, the former 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 2021, the Plan received $65.9 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.

 

10

 

 

AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

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 and restated. 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 and restated, 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 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 - Reconciliation of Financial Statements to the Form 5500

 

The following is a reconciliation of the December 31, 2021 net assets available for benefits per the financial statements to the Form 5500 (dollars in thousands):

 

Net assets available for benefits per the financial statements  $8,196,818 
Contract value to fair value adjustment for stable value funds reported at fair value on Form 5500   9,075 
Transfer from Legacy Allergan, Inc. Retirement 401(k) Plan   3,468,591 
Net assets available for benefits per Form 5500  $11,674,484 

 

The following is a reconciliation of net increase in net assets available for benefits for the year ending December 31, 2021 per the financial statements to the Form 5500:

 

Net increase in net assets available for benefits per the financial statements  $1,216,903 
Contract value to fair value adjustment for stable value funds reported at fair value on Form 5500   9,075 
Transfer from Legacy Allergan, Inc. Retirement 401(k) Plan   3,468,591 
Net increase in net assets available for benefits per Form 5500  $4,694,569 

 

11

 

 

AbbVie Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

NOTE H – SUBSEQUENT EVENTS

 

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

 

Effective January 1, 2022, the Legacy Allergan, Inc. Retirement 401(k) Plan (“Legacy Allergan Plan”) merged with and into the Plan. Net assets totaling approximately $3.47 billion were transferred from the Legacy Allergan Plan to the Plan.

 

Also effective January 1, 2022, the Plan was amended and restated. Any eligible employee who begins employment or re-employment on or after January 1, 2022, and any eligible employee who first becomes eligible to participate in the Plan on or after January 1, 2022, shall be covered by the AbbVie Savings Plan Plus (“ASP+”) provisions set forth in the Plan document. The ASP+ provisions provide for automatic enrollment into the Plan and matching contribution and annual company contribution formulas that differ from those that apply to participants who joined the Plan before January 1, 2022.

 

12

 

 

 

SUPPLEMENTAL SCHEDULE

 

 

13

 

 

AbbVie Savings Plan

EIN: 320375147, Plan Number: 001

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

December 31, 2021

(Dollars in thousands)

 

 

Identity of party involved/      Current 
description of asset/ rate/ maturity  Cost (a)   value 
*AbbVie Inc., common shares       $1,827,392(b)
           
Abbott Laboratories, common shares        629,909 
           
Money market fund          
Vanguard Federal Money Market        1,080 
           
Mutual funds          
American Funds EuroPacific Growth Fund, Class R6        332,406(b)
American Funds Growth Fund of America, Class R6        734,479 
American Funds Washington Mutual Investors Fund, Class R6        235,308 
Diamond Hill Small/Mid-Cap Fund        145,220 
           
Collective trust funds          
State Street Target Retirement 2020 Securities Lending Series Fund Class IV        114,805 
State Street Target Retirement 2025 Securities Lending Series Fund Class IV        264,370 
State Street Target Retirement 2030 Securities Lending Series Fund Class IV        295,056 
State Street Target Retirement 2035 Securities Lending Series Fund Class IV        227,253 
State Street Target Retirement 2040 Securities Lending Series Fund Class IV        188,207 
State Street Target Retirement 2045 Securities Lending Series Fund Class IV        129,863 
State Street Target Retirement 2050 Securities Lending Series Fund Class IV        86,405 
State Street Target Retirement 2055 Securities Lending Series Fund Class IV        35,953 
State Street Target Retirement 2060 Securities Lending Series Fund Class IV        20,878 
State Street Target Retirement 2065 Securities Lending Series Fund Class IV        2,776 
State Street Target Retirement Income Securities Lending Series Fund Class IV        55,229 
State Street Global Allcap Equity Ex-US Index Securities Lending Series Fund Class II        435,174 
State Street Russell Small/Mid Index Securities Lending Series Fund Class II        583,264 
State Street S&P 500 Index Securities Lending Series Fund Class II        1,241,948 
State Street US Bond Index Securities Lending Series Fund Class XIV        4,158 
TCW Metwest Total Return Bond Fund Class A        385,915 
Wells Fargo Stable Value Fund W        343,923 
Wells Fargo Synthetic Stable Value Fund        99,139(b)
           
Self-directed brokerage accounts        53,460(b)
           
*Loans to participants, 3.25% to 9.25%        58,656(b)
           
           
        $8,532,226 

 

*Represents a party-in-interest transaction.

 

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

(b) Current value includes assets transferred from Legacy Allergan, Inc. Retirement 401(k) Plan 

 

14

 

 

AbbVie Puerto Rico Savings Plan

 

Financial Statements and Supplemental Schedule

December 31, 2021 and 2020 and for the Year Ended December 31, 2021

With Report of Independent Registered Public Accounting Firm

 

 

 

 

AbbVie Puerto Rico Savings Plan

 

C O N T E N T S

 

December 31, 2021 and 2020 and for the Year Ended December 31, 2021

 

  Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
   
FINANCIAL STATEMENTS  
   
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS 2
   
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS 3
   
NOTES TO FINANCIAL STATEMENTS 4
   
SUPPLEMENTAL SCHEDULE  12
   
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) 13

 

 

 

 

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, 2021 and 2020, and the related statement of changes in net assets available for benefits for the year ended December 31, 2021, 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, 2021 and 2020, and the changes in its net assets available for benefits for the year ended December 31, 2021, 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 Schedules Required by ERISA

 

The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2021, (referred to as the “supplemental schedule”), 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, 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 23, 2022

 

1

 

 

AbbVie Puerto Rico Savings Plan

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31, 2021 and 2020

(Dollars in thousands)

 

 

   2021   2020 
Assets          
Cash  $447   $3 
Investments, at fair value   496,860    411,369 
Employer contributions receivable   12    74 
Notes receivable from participants   4,938    5,353 
Accrued interest and dividend income   -    4 
Due from brokers   2    118 
           
Total assets   502,259    416,921 
           
Liabilities          
Due to brokers   -    1 
           
Total liabilities   -    1 
           
NET ASSETS AVAILABLE FOR BENEFITS  $502,259   $416,920 

 

The accompanying notes are an integral part of these statements.

 

2

 

 

AbbVie Puerto Rico Savings Plan

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year ended December 31, 2021

(Dollars in thousands)

 

 

Additions    
Contributions    
Employer  $3,897 
Participant   9,893 
Rollovers   239 
      
Total contributions   14,029 
      
Investment income     
Net appreciation in fair value of investments   76,489 
Interest and dividends   11,834 
      
Net investment income   88,323 
      
Interest income on notes receivable from participants   301 
      
Total additions   102,653 
      
Deductions     
Benefits paid to participants   17,130 
Other expenses   184 
      
Total deductions   17,314 
      
NET INCREASE   85,339 
      
Net assets available for benefits     
Beginning of year   416,920 
      
End of year  $502,259 

 

The accompanying notes are an integral part of this statement.

 

3

 

 

AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2021 and 2020

 

 

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.

 

Effective April 1, 2021, Empower Retirement began serving as the recordkeeper of the Plan and Great West Trust Company, LLC (“Custodian”) began serving as the custodian. Through March 31, 2021, Alight Solutions served as the recordkeeper of the Plan and The Northern Trust Company (“Northern Trust”) served 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 (Northern Trust prior to April 1, 2021), 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 (“Puerto Rico Code”), as amended. All the contributions are subject to certain limitations of the Puerto Rico 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, 2021, 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.

 

4

 

 

AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

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 2021, approximately $25,400 of forfeitures were used to reduce AbbVie’s contributions. As of December 31, 2021 and 2020, approximately $5,300 and $4,700, 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 72 (or 70 ½ if the participant turned 70 ½ before January 1, 2020). 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.

 

5

 

 

AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

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 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 Puerto Rico 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.

 

6

 

 

AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

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.

 

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.

 

7

 

 

AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

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     
2021  Level 1   Level 2   Level 3   Total 
Common stock  $256,868   $-   $-   $256,868 
Mutual funds   37,032    -    -    37,032 
Collective trust funds   202,960    -    -    202,960 
Total assets at fair value  $496,860   $-   $-   $496,860 

 

   Basis of Fair Value Measurement     
2020  Level 1   Level 2   Level 3   Total 
Common stock  $208,757   $-   $-   $208,757 
Mutual funds   110,336    -    -    110,336 
Collective trust funds   92,276    -    -    92,276 
Total assets at fair value  $411,369   $-   $-   $411,369 

 

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, 2021 and 2020.

 

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.

 

8

 

 

AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

NOTE C - INVESTMENTS

 

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

 

   2021   2020 
AbbVie common shares, 1,334,710 and 1,350,430, respectively (dollars in thousands)  $180,720   $144,699 
Market value per share  $135.40   $107.15 

 

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 held units of a collective trust fund managed by the Northern Trust 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 2021, the Plan received $7.1 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 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.

 

9

 

 

AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

NOTE F - TAX STATUS

 

The Plan has received a determination letter from the Commonwealth of Puerto Rico’s Department of Treasury (“Treasury”) dated August 12, 2020, stating that the Plan is qualified under Section 1081.01 of the Puerto Rico Code, and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Treasury, the Plan was amended and restated. Once qualified, the Plan is required to operate in conformity with the Puerto Rico Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Puerto Rico Code and, therefore, believes that the Plan, as amended and restated, 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 - Reconciliation of Financial Statements to the Form 5500

 

The following is a reconciliation of the December 31, 2021 net assets available for benefits per the financial statements to the Form 5500 (dollars in thousands):

 

Net assets available for benefits per the financial statements  $502,259 
Contract value to fair value adjustment for stable value fund reported at fair value on Form 5500   645 
Net assets available for benefits per Form 5500  $502,904 

 

The following is a reconciliation of net increase in net assets available for benefits for the year ending December 31, 2021 per the financial statements to the Form 5500:

 

Net increase in net assets available for benefits per the financial statements  $85,339 
Contract value to fair value adjustment for stable value fund reported at fair value on Form 5500   645 
Net increase in net assets available for benefits per Form 5500  $85,984 

 

10

 

 

AbbVie Puerto Rico Savings Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2021 and 2020

 

 

NOTE H – SUBSEQUENT EVENTS

 

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

 

Effective January 1, 2022, the Plan was amended and restated. Any eligible employee who begins employment or re-employment on or after January 1, 2022, and any eligible employee who first becomes eligible to participate in the Plan on or after January 1, 2022, shall be covered by the AbbVie Savings Plan Plus (“ASP+”) provisions set forth in the Plan document. The ASP+ provisions provide for automatic enrollment into the Plan and matching contribution and annual company contribution formulas that differ from those that apply to participants who joined the Plan before January 1, 2022.

 

11

 

 

SUPPLEMENTAL SCHEDULE

 

12

 

 

AbbVie Puerto Rico Savings Plan

EIN: 980429860, Plan Number: 002

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

December 31, 2021

(Dollars in thousands)

 

 

Identity of party involved/      Current 
description of asset  Cost (a)   value 
*AbbVie Inc., common stock       $180,720 
           
Abbott Laboratories, common stock        76,148 
           
Money market fund          
Vanguard Federal Money Market Fund        5 
           
Mutual funds          
American Funds EuroPacific Growth Fund, Class R6        7,244 
American Funds Growth Fund of America, Class R6        21,867 
American Funds Washington Mutual Investors Fund, Class R6        5,070 
Diamond Hill Small/Mid-Cap Fund        2,845 
Vanguard Total International Stock Index Fund        1 
           
Collective trust fund          
SSGA Target Retirement 2020 Non-Lending Series Fund Class M        22 
State Street Target Retirement 2020 Securities Lending Series Fund Clas IV        11,624 
State Street Target Retirement 2025 Securities Lending Series Fund Clas IV        16,314 
State Street Target Retirement 2030 Securities Lending Series Fund Clas IV        15,777 
State Street Target Retirement 2035 Securities Lending Series Fund Clas IV        8,548 
State Street Target Retirement 2040 Securities Lending Series Fund Clas IV        5,716 
State Street Target Retirement 2045 Securities Lending Series Fund Clas IV        3,197 
State Street Target Retirement 2050 Securities Lending Series Fund Clas IV        1,213 
State Street Target Retirement 2055 Securities Lending Series Fund Clas IV        1,295 
State Street Target Retirement 2060 Securities Lending Series Fund Clas IV        866 
State Street Target Retirement 2065 Securities Lending Series Fund Clas IV        212 
State Street Target Retirement Income Securities Lending Series Fund Clas IV        4,146 
State Street Global Allcap Equity Ex-US Index Securities Lending Series Fund Class II        26,370 
State Street Russell Small/Mid Index Securities Lending Series Fund Class II        18,374 
State Street S&P 500 Index Securities Lending Series Fund Class II        37,902 
State Street US Bond Index Securities Lending Series Fund Class XIV        435 
TCW Metwest Total Return Bond Fund Class A        21,661 
Vanguard Institutional 500 Index Trust Fund        3 
Wells Fargo Stable Value Fund Class X        29,930 
           
*Loans to participants, 3.25% to 5.50%        4,938 
           
        $502,443 

 

*Represents a party-in-interest transaction.

 

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

 

13

 

 

EXHIBIT INDEX

 

Exhibit No.   Exhibit
     
23.1   Consent of Independent Registered Public Accounting Firm — AbbVie Savings Plan
     
23.2   Consent of Independent Registered Public Accounting Firm — AbbVie Puerto Rico Savings Plan

 

 

 

 

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 23, 2022 By: /s/ Michael J. Thomas
    Michael J. Thomas
    Plan Administrator