ABBOTT LABORATORIES | 2013 | FY | 3

 

 

 
   Defined Benefit
Plans		   Medical and
Dental Plans		  
(in millions)
   2013   2012   2013   2012  

Projected benefit obligations, January 1

   $ 11,322   $ 9,212   $ 1,889   $ 1,657  

Service cost — benefits earned during the year

     303     389     43     61  

Interest cost on projected benefit obligations

     276     460     59     81  

(Gains) losses, primarily changes in discount rates, plan design changes, law changes and differences between actual and estimated health care costs

     (650 )   1,461     (156 )   148  

Benefits paid

     (185 )   (308 )   (60 )   (63 )

Separation of AbbVie Inc. 

     (4,654 )   —     (450 )   —  

Other, including foreign currency translation

     20     108     (28 )   5  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Projected benefit obligations, December 31

   $ 6,432   $ 11,322   $ 1,297   $ 1,889  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Plan assets at fair value, January 1

   $ 7,949   $ 6,961   $ 417   $ 389  

Actual return on plans' assets

     727     878     61     48  

Company contributions

     724     379     40     40  

Benefits paid

     (185 )   (302 )   (56 )   (60 )

Separation of AbbVie Inc. 

     (3,107 )   —     —     —  

Other, primarily foreign currency translation

     15     33     —     —  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Plan assets at fair value, December 31

   $ 6,123   $ 7,949   $ 462   $ 417  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Projected benefit obligations greater than plan assets, December 31

   $ (309 ) $ (3,373 ) $ (835 ) $ (1,472 )
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Long-term assets

   $ 685   $ 69   $ —   $ —  

Short-term liabilities

     (11 )   (43 )   —     —  

Long-term liabilities

     (983 )   (3,399 )   (835 )   (1,472 )
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net liability

   $ (309 ) $ (3,373 ) $ (835 ) $ (1,472 )
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Amounts Recognized in Accumulated Other Comprehensive Income (loss):

                          

Actuarial losses, net

   $ 1,791   $ 4,923   $ 334   $ 701  

Prior service cost (credits)

     20     61     (252 )   (322 )
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 1,811   $ 4,984   $ 82   $ 379  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

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(in millions)
   2013   2012  

Accumulated benefit obligation

   $ 408   $ 8,100  

Projected benefit obligation

     505     9,619  

Fair value of plan assets

     —     6,243  

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   Basis of Fair Value Measurement  
 
   Outstanding
Balances		   Quoted
Prices in
Active Markets		   Significant
Other
Observable
Inputs		   Significant
Unobservable
Inputs		  
 
   (in millions)
  

December 31, 2013:

                          

Equities:

                          

U.S. large cap (a)

   $ 1,618   $ 741   $ 877   $ —  

U.S. mid cap (b)

     409     134     275     —  

International (c)

     1,319     608     711     —  

Fixed income securities:

                          

U.S. government securities (d)

     453     61     392     —  

Corporate debt instruments (e)

     378     108     270     —  

Non-U.S. government securities (f)

     536     305     231     —  

Other (g)

     77     69     8     —  

Absolute return funds (h)

     1,474     197     791     486  

Commodities (i)

     170     6     97     67  

Other (j)

     151     149     —     2  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

   $ 6,585   $ 2,378   $ 3,652   $ 555  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

December 31, 2012:

                          

Equities:

                          

U.S. large cap (a)

   $ 1,831   $ 1,058   $ 773   $ —  

U.S. mid cap (b)

     491     133     358     —  

International (c)

     1,607     657     950     —  

Fixed income securities:

                          

U.S. government securities (d)

     899     172     727     —  

Corporate debt instruments (e)

     736     355     381     —  

Non-U.S. government securities (f)

     374     83     291     —  

Other (g)

     24     —     24     —  

Absolute return funds (h)

     2,070     85     1,246     739  

Commodities (i)

     222     9     172     41  

Other (j)

     112     109     —     3  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

   $ 8,366   $ 2,661   $ 4,922   $ 783  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

Prior year amounts have been revised to conform with the current year's asset classifications.

(a)
A mix of index funds that track the S&P 500 (60 percent in 2013 and 50 percent in 2012) and separate actively managed equity accounts that are benchmarked to the Russell 1000 (40 percent in 2013 and 50 percent in 2012).

(b)
A mix of index funds (70 percent in 2013 and 75 percent in 2012) and separate actively managed equity accounts (30 percent in 2013 and 25 percent in 2012) that track or are benchmarked to the S&P 400 midcap index.

(c)
Primarily separate actively managed pooled investment accounts that are benchmarked to the MSCI and MSCI emerging market indices.

(d)
Index funds not actively managed (50 percent in 2013 and 2012) and separate actively managed accounts (50 percent in 2013 and 2012).

(e)
Index funds not actively managed (40 percent in 2013 and 20 percent in 2012) and separate actively managed accounts (60 percent in 2013 and 80 percent in 2012).

(f)
Primarily United Kingdom, Japan and Irish government-issued bonds.

(g)
Primarily mortgage backed securities.

(h)
Primarily funds invested by managers that have a global mandate with the flexibility to allocate capital broadly across a wide range of asset classes and strategies including, but not limited to equities, fixed income, commodities, interest rate futures, currencies and other securities to outperform an agreed upon benchmark with specific return and volatility targets.

(i)
Primarily investments in liquid commodity future contracts and private energy funds.

(j)
Primarily cash and cash equivalents.

us-gaap:ScheduleOfAllocationOfPlanAssetsTableTextBlock

The weighted average assumptions used to determine benefit obligations for defined benefit plans and medical and dental plans are as follows:

 
   2013   2012   2011  

Discount rate

     4.9 %   4.3 %   5.0 %

Expected aggregate average long-term change in compensation

     5.0 %   5.3 %   5.3 %

        The weighted average assumptions used to determine the net cost for defined benefit plans and medical and dental plans are as follows:

 
   2013   2012   2011  

Discount rate

     4.2 %   5.0 %   5.4 %

Expected return on plan assets

     7.8 %   8.0 %   7.8 %

Expected aggregate average long-term change in compensation

     5.0 %   5.3 %   5.1 %

us-gaap:ScheduleOfAssumptionsUsedTableTextBlock

 

 

 
   2013   2012  
 
   (in millions)
  

January 1

   $ 783   $ 682  

Transfers in (out of) from other categories

     6     6  

Separation of AbbVie, Inc. 

     (165 )   —  

Actual return on plan assets:

              

Assets on hand at year end

     29     59  

Assets sold during the year

     51     (4 )

Purchases, sales and settlements, net

     (149 )   40  
           
​ ​ ​ ​ ​ ​ ​ ​

December 31

   $ 555   $ 783  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

us-gaap:ScheduleOfEffectOfSignificantUnobservableInputsChangesInPlanAssetsTableTextBlock

 

 

(in millions)
   Defined
Benefit Plans		   Medical and
Dental Plans		  

2014

   $ 186   $ 71  

2015

     198     73  

2016

     213     74  

2017

     229     76  

2018

     249     77  

2019 to 2023

     1,578     417  

us-gaap:ScheduleOfExpectedBenefitPaymentsTableTextBlock

 

 

 
   2013   2012   2011  

Health care cost trend rate assumed for the next year

     7 %   7 %   7 %

Rate that the cost trend rate gradually declines to

     5 %   5 %   5 %

Year that rate reaches the assumed ultimate rate

     2019     2019     2019  

us-gaap:ScheduleOfHealthCareCostTrendRatesTableTextBlock

 

 

 
   Defined Benefit Plans   Medical and
Dental Plans		  
 
   2013   2012   2011   2013   2012   2011  
 
   (in millions)
  

Service cost — benefits earned during the year

   $ 303   $ 389   $ 332   $ 43   $ 61   $ 55  

Interest cost on projected benefit obligations

     276     460     446     59     81     88  

Expected return on plans' assets

     (396 )   (611 )   (608 )   (36 )   (33 )   (34 )

Settlement

     —     —     40     —     —     —  

Amortization of actuarial losses

     169     244     163     34     34     38  

Amortization of prior service cost (credits)

     3     2     4     (35 )   (42 )   (42 )
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total cost

     355     484     377     65     101     105  

Less: Discontinued operations

     —     (206 )   (176 )   —     (48 )   (49 )
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net cost — continuing operations

   $ 355   $ 278   $ 201   $ 65   $ 53   $ 56  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                           

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