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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)

 

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

 

For the fiscal year ended December 31, 2014

 

OR

 

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

 

For the transition period from                      to

 

Commission File Number

 

A.                                    Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

ABBOTT LABORATORIES STOCK RETIREMENT PROGRAM

 

B.                                    Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

ABBOTT LABORATORIES

100 Abbott Park Road

Abbott Park, Illinois 60064-6049

 

 

 



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FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ABBOTT LABORATORIES STOCK RETIREMENT PLAN

DECEMBER 31, 2014 AND 2013

 



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C O N T E N T S

 

 

Page

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3

 

 

FINANCIAL STATEMENTS

 

 

 

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

5

 

 

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

6

 

 

NOTES TO FINANCIAL STATEMENTS

7

 

 

SUPPLEMENTAL SCHEDULE

 

 

 

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

19

 



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GRAPHIC

 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Grant Thornton LLP

175 W Jackson Boulevard, 20th Floor

Chicago, IL 60604-2687

 

T 312.856.0200

F 312.565.4719

GrantThornton.com

 

Plan Administrator

Abbott Laboratories Stock Retirement Plan

 

We have audited the accompanying statements of net assets available for benefits of the Abbott Laboratories Stock Retirement Plan (the Plan) as of December 31, 2014 and 2013, and the related statement of changes in net assets available for benefits for the year ended December 31, 2014.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  We were not engaged to perform an audit of the Plan’s internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Abbott Laboratories Stock Retirement Plan as of December 31, 2014 and 2013, and the changes in net assets available for benefits for the year ended December 31, 2014, in accordance with accounting principles generally accepted in the United States of America.

 

The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2014, has been subjected to audit procedures performed in conjunction with the audit of Abbott Laboratories Stock Retirement Plan’s financial statements.  The supplemental information is presented for purposes of additional analysis and is not a required part of the basic financial statements but include supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  The supplementary information is the responsibility of the Plan’s management.  Our audit procedures included determining whether the supplemental information reconciles to the basic financial statements or the underlying accounting and other

 

Grant Thornton LLP

U.S. member firm of Grant Thornton International Ltd

 



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records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information.  In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental 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 supplemental information referred to above is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

 

/s/ Grant Thornton LLP

 

Chicago, Illinois

June 26, 2015

 



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Abbott Laboratories Stock Retirement Plan

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31,

(Dollars in thousands)

 

 

 

2014

 

2013

 

Assets

 

 

 

 

 

Cash

 

$

697

 

$

1,054

 

Investments, at fair value

 

6,545,191

 

6,136,550

 

Notes receivable from participants

 

77,880

 

82,972

 

Accrued interest and dividend income

 

659

 

1,353

 

Due from brokers

 

5,048

 

4,092

 

 

 

 

 

 

 

Total assets

 

6,629,475

 

6,226,021

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Other payables

 

219

 

188

 

Due to brokers

 

695

 

19,051

 

 

 

 

 

 

 

Total liabilities

 

914

 

19,239

 

 

 

 

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS

 

$

6,628,561

 

$

6,206,782

 

 

The accompanying notes are an integral part of these statements.

 

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Abbott Laboratories Stock Retirement Plan

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year ended December 31, 2014

(Dollars in thousands)

 

Additions

 

 

 

Contributions

 

 

 

Employer

 

$

84,096

 

Participant

 

166,573

 

Rollovers

 

9,041

 

 

 

 

 

Total contributions

 

259,710

 

 

 

 

 

Investment income

 

 

 

Net appreciation in fair value of investments

 

570,738

 

Interest and dividends

 

217,189

 

 

 

 

 

Net investment income

 

787,927

 

 

 

 

 

Interest income on notes receivable from participants

 

2,668

 

 

 

 

 

Total additions

 

1,050,305

 

 

 

 

 

Deductions

 

 

 

Benefits paid to participants

 

622,085

 

Other expenses

 

240

 

 

 

 

 

Total deductions

 

622,325

 

 

 

 

 

Net increase prior to transfer

 

427,980

 

 

 

 

 

Net plan transfers out (note A)

 

(6,201

)

 

 

 

 

NET INCREASE AFTER TRANSFER

 

421,779

 

 

 

 

 

Net assets available for benefits

 

 

 

Beginning of year

 

6,206,782

 

 

 

 

 

End of year

 

$

6,628,561

 

 

The accompanying notes are an integral part of these statements.

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Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

NOTE A - DESCRIPTION OF THE PLAN

 

The following description of the Abbott Laboratories Stock Retirement 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 Abbott Laboratories (“Abbott”) 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.

 

Mercer Trust Company and Mercer HR Services LLC (collectively, “Mercer”) are the custodian (“Custodian”), trustee (“Trustee”) and record keeper of the Plan.

 

The Plan operates as a cash or deferred arrangement 401(k) plan and, effective October 1, 2001, is considered an employee stock ownership plan that meets the applicable United States Internal Revenue Code (“IRC”) sections.  Effective January 1, 2006, the Plan was amended to clarify that the portion of the Plan that is invested in Abbott shares is a permanent feature of the Plan.

 

On January 1, 2013, Abbott separated into two publicly traded companies.  The research-based pharmaceuticals business became AbbVie Inc. (“AbbVie”); the diversified medical products businesses remained with Abbott.  Effective January 1, 2013, the AbbVie Savings Plan was created and the assets of those participants who became AbbVie employees after the separation were transferred from the Plan to the AbbVie Savings Plan.  The separation agreement between Abbott and AbbVie covers a 30 month period and allows for the transfer of employees between the two companies during that period.  During 2014, additional net assets totaling approximately $6.2 million were transferred from the Plan to the AbbVie Savings Plan related to such employee transfers.

 

Contributions and Vesting

 

Contributions to the Plan are paid to the Abbott Laboratories Stock Retirement Trust (“Trust”).  The Trust is administered by Mercer and an investment committee (the “Committee”).

 

Employees are eligible to make contributions on any entry date following their date of hire.  Eligible employees electing to participate contribute from 2% and may contribute up to 25% of their eligible earnings to the Trust, subject to certain limitations.  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 IRC. Participant

 

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Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE A - DESCRIPTION OF THE PLAN — Continued

 

Contributions and Vesting - Continued

 

contributions may be invested in any or all of the investment options, except for investment options closed to new contributions.

 

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 Abbott and, for the year ended December 31, 2014, was 5% of the participant’s eligible earnings if the employee elected to contribute at least 2% of eligible earnings to the Plan.  Employer contributions are invested each pay period according to the employee’s investment elections.

 

Cash dividends on shares of Abbott 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 administrator.

 

The Plan offered the following investment options in 2014 and 2013:  Abbott common shares, SRP Short Term Investment Fund, American Funds (including EuroPacific Growth Fund, The Growth Fund of America, The Investment Company of America Fund, and Washington Mutual Investors Fund), GMO Global Asset Allocation Series Fund, PIMCO All Asset Fund, PIMCO Total Return Fund, Vanguard Developed Markets Index Fund, Vanguard Extended Market Index Fund, Vanguard Institutional Index Fund, Vanguard Mid-Cap Value Index Fund Admiral, Blackrock International Opportunities Fund, and Wellington Mid-Cap Growth Fund.

 

The separation of Abbott and AbbVie 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.  Participants who received AbbVie stock through this distribution may continue to hold the stock in their Plan accounts but may not make new contributions or transfer new money to purchase AbbVie stock in the Plan; however, participants may elect to reinvest their AbbVie dividends in AbbVie stock. If no election is made, AbbVie dividends will be invested in the Plan’s default investment, which as of December 31, 2014 was the GMO Global Asset Allocation Series Fund.

 

Abbott spun off its hospital products business, Hospira, Inc. (“Hospira”), in 2004 and Abbott shareholders received one share of Hospira stock for every ten shares of Abbott shares owned.  Participants who received Hospira stock through this distribution may continue to hold the stock in their Plan accounts but may not make new contributions or transfer new money to purchase Hospira stock in the Plan.

 

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Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE A - DESCRIPTION OF THE PLAN - Continued

 

Contributions and Vesting - Continued

 

Participants may direct the Trustee to sell all or a portion of the Abbott, AbbVie and Hospira common shares held in their accounts and reinvest the proceeds in any of the other investment options available to the participants.

 

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 Abbott 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 2014, forfeitures reduced Abbott’s employer contributions by approximately $889,000.  Approximately $46,000 and $1,000 of forfeitures were available at the end of 2014 and 2013, respectively.

 

Distributions

 

Following retirement, termination or death (or for some acquired participants, upon disability), participants or their beneficiaries may elect to receive a distribution in installments or in a single lump sum.  Participants may elect a direct rollover of their accounts.  Distributions are made in cash or, to the extent contained in the participant’s account, a participant may elect distribution of Abbott, AbbVie and Hospira common shares.  Also, upon termination, participants may elect to defer distribution to a future date but, after termination of employment, distribution must be made by the 1st of April following the year the participant reaches age 70 ½ or, if earlier, the 1st of April following the year in which the participant dies.  Interest, dividends and other earnings will continue to accrue on such deferred amounts.  Participants are permitted to withdraw their after-tax contributions and rollover contributions and, after age 59 ½, may also withdraw pretax contributions; in each case subject to certain limitations.  Withdrawals may be made in shares or in cash.

 

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Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

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 Abbott 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.

 

Adoption of New Accounting Rules

 

On May 1, 2015 the Financial Accounting Standards Board (“FASB”) issued updated guidance related to fair value measurement and the disclosures for investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent).  The updated guidance applies to reporting entities that elect to measure the fair value of certain investments using the NAV per share (or its equivalent) of the investment as a practical expedient.  Currently, investments valued using the practical expedient are categorized within the fair value hierarchy on the basis of when the investment is redeemable with the investee at NAV. The amendments remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the NAV per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient.

 

The amendments are effective for the Plan for fiscal years beginning after December 15, 2015 and shall apply retrospectively to all periods presented. Earlier application is permitted. The Plan’s administrator is currently evaluating the impact the updated guidance will have on the Plan’s financial statement disclosures, but does not expect the effect to be material.

 

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Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

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 (“U.S. GAAP”) 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

 

The Plan uses the following methods and significant assumptions to estimate the fair value of investments:

 

Common stock and mutual funds - Valued at the published market price per unit multiplied by the number of respective shares, units, or par held.

 

Collective trust funds - Valued at the NAV provided by the administrator of the fund.  The NAV is used as a practical expedient for fair value.  The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.

 

SRP Short Term Investment Fund (“STIF”) investments:

 

Short-term notes, government guaranteed notes, and U.S. treasury bills, - Valued at the published market price per unit multiplied by the number of respective shares, units, or par held.

 

Floating rate notes, short-term asset backed securities, U.S. Government agencies and treasury notes, municipal bonds, corporate bonds and international securities - Valued at prices obtained from independent financial services industry-recognized vendors multiplied by the number of units held.

 

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

 

Short-term investment fund - Valued using $1 for the net asset value per unit, which approximates fair market value.

 

Private 40-Act mutual funds - Valued at the NAV provided by the administrator of the fund.  The NAV is used as a practical expedient for fair value.  The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.

 

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Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

Investment Valuation - Continued

 

The following tables summarize the basis used to measure assets at fair value at December 31, 2014 and 2013 (dollars in thousands):

 

 

 

Basis of Fair Value Measurement

 

 

 

Quoted

 

Significant

 

 

 

 

 

 

 

Prices in

 

Other

 

Significant

 

 

 

 

 

Active

 

Observable

 

Unobservable

 

 

 

2014

 

Markets

 

Inputs

 

Inputs

 

Total

 

Common stock

 

 

 

 

 

 

 

 

 

Abbott

 

$

1,390,445

 

$

 

$

 

$

1,390,445

 

AbbVie

 

1,582,187

 

 

 

1,582,187

 

Hospira

 

62,346

 

 

 

62,346

 

Total common stock

 

3,034,978

 

 

 

3,034,978

 

Mutual funds

 

 

 

 

 

 

 

 

 

Growth

 

502,307

 

 

 

502,307

 

Blend

 

1,427,176

 

 

 

1,427,176

 

Value

 

573,562

 

 

 

573,562

 

Income

 

287,132

 

 

 

287,132

 

Total mutual funds

 

2,790,177

 

 

 

2,790,177

 

Collective trust funds

 

 

 

 

 

 

 

 

 

Growth (a)

 

 

91,005

 

 

91,005

 

Blend (b)

 

 

69,308

 

 

69,308

 

Total collective trust funds

 

 

160,313

 

 

160,313

 

SRP STIF Fund

 

 

 

 

 

 

 

 

 

Floating rate notes - corporate

 

 

70,044

 

 

70,044

 

Short-term asset backed securities

 

 

21,013

 

 

21,013

 

Short-term notes - corporate

 

47,050

 

 

 

47,050

 

Government guaranteed notes

 

4,317

 

 

 

4,317

 

Municipals

 

 

6,441

 

 

6,441

 

Corporate bonds

 

 

16,848

 

 

16,848

 

International

 

 

30,171

 

 

30,171

 

Commerical paper

 

 

26,621

 

 

26,621

 

Certificate of deposit

 

 

8,005

 

 

8,005

 

Short-term investment fund

 

552

 

 

 

552

 

Private 40-Act mutual funds (c)

 

 

328,661

 

 

328,661

 

Total SRP STIF Fund

 

51,919

 

507,804

 

 

559,723

 

Total assets at fair value

 

$

5,877,074

 

$

668,117

 

$

 

$

6,545,191

 

 

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Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

Investment Valuation - Continued

 

 

 

Basis of Fair Value Measurement

 

 

 

Quoted

 

Significant

 

 

 

 

 

 

 

Prices in

 

Other

 

Significant

 

 

 

 

 

Active

 

Observable

 

Unobservable

 

 

 

2013

 

Markets

 

Inputs

 

Inputs

 

Total

 

Common stock

 

 

 

 

 

 

 

 

 

Abbott

 

$

1,214,271

 

$

 

$

 

$

1,214,271

 

AbbVie

 

1,440,976

 

 

 

1,440,976

 

Hospira

 

47,325

 

 

 

47,325

 

Total common stock

 

2,702,572

 

 

 

2,702,572

 

Mutual funds

 

 

 

 

 

 

 

 

 

Growth

 

481,020

 

 

 

481,020

 

Blend

 

1,371,619

 

 

 

1,371,619

 

Value

 

496,339

 

 

 

496,339

 

Income

 

287,232

 

 

 

287,232

 

Total mutual funds

 

2,636,210

 

 

 

2,636,210

 

Collective trust funds

 

 

 

 

 

 

 

 

 

Growth (a)

 

 

95,044

 

 

95,044

 

Blend (b)

 

 

81,857

 

 

81,857

 

Total collective trust funds

 

 

176,901

 

 

176,901

 

SRP STIF Fund

 

 

 

 

 

 

 

 

 

Floating rate notes - corporate

 

 

74,606

 

 

74,606

 

Short-term asset backed securities

 

 

17,534

 

 

17,534

 

U.S. Government agencies and treasury

 

 

38,144

 

 

38,144

 

Short-term notes - corporate

 

35,113

 

 

 

35,113

 

Government guaranteed notes

 

14,466

 

 

 

14,466

 

Municipals

 

 

12,496

 

 

12,496

 

Corporate bonds

 

 

40,952

 

 

40,952

 

International

 

 

28,517

 

 

28,517

 

Commerical paper

 

 

19,535

 

 

19,535

 

Certificate of deposit

 

 

6,000

 

 

6,000

 

Short-term investment funds

 

75

 

 

 

75

 

Private 40-Act mutual fund (c)

 

 

333,429

 

 

333,429

 

Total SRP STIF Fund

 

49,654

 

571,213

 

 

620,867

 

Total assets at fair value

 

$

5,388,436

 

$

748,114

 

$

 

$

6,136,550

 

 

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Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

Investment Valuation - Continued

 

The collective trust funds and the private 40-Act mutual funds do not have a readily determinable fair value and are valued at their NAV per share as provided by the funds’ administrators.  The following provides additional information regarding these funds:

 

(a)         The fund invests in small and midsize companies.  The investment objective of this fund is to achieve long-term total return in excess of the Russell Mid-Cap Growth Index.  Redemption from the fund is permitted daily.

 

(b)         This fund invests in international securities.  The investment objective of this fund is to seek long-term capital appreciation by achieving a return in excess of the S&P Broad Market Global Ex U.S. Index in 2013 and updated to the MSCI All Country World ex-US Index in 2014 .  Redemption from the fund is permitted daily.

 

(c)          These funds invest in fixed income instruments of varying maturities.  The investment objective of one fund is to seek maximum current income and the other is to seek maximum total return, both being consistent with preservation of capital and liquidity.  Redemption from the funds is permitted daily.  The funds agree to redeem shares solely in cash up to the lesser of $250,000 or 1% of the fund’s net assets during any 90-day period for any one shareholder.  In consideration of the best interests of the remaining shareholders, the funds reserve the right to pay any redemption proceeds exceeding this amount in whole or in part by a distribution in kind of securities held by the funds in lieu of cash. It is highly unlikely that shares would ever be redeemed in kind.

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.

 

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.

 

Administrative Expenses

 

Participants are charged transaction fees for loan and withdrawal processing and commissions on purchases and sales of Abbott shares and sales of AbbVie and Hospira stock. Investment fees for mutual funds, collective trust, managed accounts and money market funds are charged against the

 

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Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

net assets of the respective fund.  Abbott pays other Mercer record-keeping and administration fees, where applicable.

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

Payment of Benefits

 

Benefits are recorded when paid.

 

NOTE C - INVESTMENTS

 

The following investments represented 5% or more of the Plan’s net assets at December 31, 2014 and 2013 (dollars in thousands):

 

 

 

2014

 

2013

 

AbbVie Inc common shares

 

$

1,582,187

 

$

1,440,976

 

Abbott Laboratories common shares

 

1,390,445

 

1,214,271

 

American Funds The Growth Fund of America, Class R6

 

502,307

 

481,020

 

Vanguard Institutional Index Fund

 

405,816

 

342,618

 

GMO Global Asset Allocation Series Fund, Class R6

 

358,177

 

347,692

 

PIMCO Short-Term Floating NAV Portfolio II

 

n/a

 

333,429

 

 

Distributions of Abbott common shares and conversions of participants’ common share account balances to participant loans or other investment options are recorded at fair market value.

 

A summary of Abbott common share data as of December 31, 2014 and 2013 is presented below:

 

 

 

2014

 

2013

 

Abbott common shares, 30,885,039 and 31,679,395 shares, respectively (dollars in thousands)

 

$

1,390,445

 

$

1,214,271

 

Market value per share

 

$

45.02

 

$

38.33

 

 

During 2014, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows (dollars in thousands):

 

Common shares

 

$

541,950

 

Mutual funds

 

32,771

 

Fixed income

 

1,855

 

Collective trust funds

 

(5,838

)

 

 

$

570,738

 

 

15



Table of Contents

 

Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE C — INVESTMENTS - Continued

 

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

 

A significant portion of the Plan’s assets is invested in Abbott common shares.

 

Participants pay fees to Mercer for loan and withdrawal transaction processing and for commissions on purchases and sales of Abbott shares and sales of AbbVie and Hospira stock.  These transactions qualify as permitted party-in-interest transactions.

 

NOTE E - PLAN TERMINATION

 

The Plan may be terminated at any time by Abbott upon written notice to the Trustee and Committee, and will be terminated if Abbott 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, Abbott has no intention of terminating the Plan.

 

NOTE F - TAX STATUS

 

The IRS has determined and informed Abbott by a letter dated April 23, 2014, that the Plan and related Trust are designed in accordance with applicable sections of the IRC.  The Plan has been amended since the applicable date of the determination letter.  However, the Plan administrator believes that the Plan is designed and is currently being operated in accordance with the applicable requirements of the IRC.

 

16



Table of Contents

 

Abbott Laboratories Stock Retirement Plan

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE F - TAX STATUS - Continued

 

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 IRS or other applicable taxing authorities.  The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014 and 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements.  The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

 

NOTE G — SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events from December 31, 2014 through the date these financial statements were available to be issued.  There were no subsequent events that require recognition or additional disclosure in these financial statements.

 

17



Table of Contents

 

SUPPLEMENTAL SCHEDULE

 



Table of Contents

 

Abbott Laboratories Stock Retirement Plan

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

December 31, 2014

(Dollars in thousands)

 

Identity of party involved/

 

 

 

 

 

 

 

Current

 

description of asset

 

Rate

 

Maturity

 

Cost (a)

 

value

 

 

 

 

 

 

 

 

 

 

 

*Abbott Laboratories, common shares

 

 

 

 

 

 

 

$

1,390,445

 

 

 

 

 

 

 

 

 

 

 

AbbVie Inc., common shares

 

 

 

 

 

 

 

1,582,187

 

 

 

 

 

 

 

 

 

 

 

Hospira, Inc., common shares

 

 

 

 

 

 

 

62,346

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

 

 

 

 

 

 

 

 

American Funds EuroPacific Growth Fund, Class R6

 

 

 

 

 

 

 

288,202

 

American Funds The Growth Fund of America, Class R6

 

 

 

 

 

 

 

502,307

 

American Funds The Investment Company of America Fund, Class R6

 

 

 

 

 

 

 

244,824

 

American Funds Washington Mutual Investors Fund, Class R6

 

 

 

 

 

 

 

166,028

 

GMO Global Asset Allocation Series Fund, Class R6

 

 

 

 

 

 

 

358,177

 

PIMCO All Asset Fund

 

 

 

 

 

 

 

104,769

 

PIMCO Total Return Fund

 

 

 

 

 

 

 

182,363

 

Vanguard Developed Markets Index Fund

 

 

 

 

 

 

 

73,711

 

Vanguard Extended Market Index Fund

 

 

 

 

 

 

 

301,270

 

Vanguard Institutional Index Fund

 

 

 

 

 

 

 

405,816

 

Vanguard Mid-Cap Value Index Fund Admiral

 

 

 

 

 

 

 

162,710

 

 

 

 

 

 

 

 

 

 

 

Collective trust funds

 

 

 

 

 

 

 

 

 

Blackrock International Opportunities Fund

 

 

 

 

 

 

 

69,308

 

Wellington Mid-Cap Growth Fund

 

 

 

 

 

 

 

91,005

 

 

 

 

 

 

 

 

 

 

 

*Loans to participants, 3.25% to 9.50%

 

 

 

 

 

 

 

77,880

 

 

 

 

 

 

 

 

 

 

 

SRP Short Term Investment Fund

 

 

 

 

 

 

 

 

 

Floating rate securities

 

 

 

 

 

 

 

 

 

Abbey National Treasury Service

 

0.68

%

9/29/2017

 

 

 

1,995

 

Apple Inc.

 

0.58

%

5/6/2019

 

 

 

3,001

 

AT&T Inc.

 

0.69

%

3/30/2017

 

 

 

1,000

 

Becton Dickinson and Co

 

0.72

%

6/15/2016

 

 

 

6,502

 

Canadian National Railway

 

0.48

%

11/6/2015

 

 

 

1,000

 

Citigroup Inc.

 

1.06

%

4/1/2016

 

 

 

7,526

 

Conagra Foods Inc.

 

0.65

%

7/21/2016

 

 

 

998

 

Devon Energy Corporation

 

0.81

%

12/15/2016

 

 

 

1,991

 

Devon Energy Corporation

 

0.72

%

12/15/2015

 

 

 

2,301

 

Goldman Sachs Group Inc.

 

0.89

%

6/4/2017

 

 

 

5,788

 

HSBC USA INC

 

0.89

%

11/13/2019

 

 

 

1,200

 

JPMorgan Chase Bank NA

 

0.79

%

2/15/2017

 

 

 

6,583

 

JPMorgan Chase Bank NA

 

0.68

%

6/2/2017

 

 

 

2,287

 

JPN Bank for International Coop

 

0.64

%

11/13/2018

 

 

 

1,701

 

Kookmin Bank

 

1.53

%

10/11/2016

 

 

 

1,214

 

Land Nordrhein-Westfalen

 

0.60

%

5/3/2017

 

 

 

7,039

 

McKesson Corp

 

0.66

%

9/10/2015

 

 

 

1,000

 

Shinhan Bank

 

0.92

%

4/8/2017

 

 

 

2,005

 

Svenska Handelsbanken

 

0.71

%

3/21/2016

 

 

 

5,016

 

Verizon Communications

 

0.66

%

6/9/2017

 

 

 

4,990

 

Verizon Communications

 

1.80

%

9/15/2016

 

 

 

967

 

Verizon Communications

 

2.02

%

9/14/2018

 

 

 

1,040

 

Walgreens Boots Alliance

 

0.71

%

5/18/2016

 

 

 

2,900

 

 

19



Table of Contents

 

Abbott Laboratories Stock Retirement Plan

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

December 31, 2014

(Dollars in thousands)

 

Identity of party involved/

 

 

 

 

 

 

 

Current

 

description of asset

 

Rate

 

Maturity

 

Cost (a)

 

value

 

SRP Short Term Investment Fund - Continued

 

 

 

 

 

 

 

 

 

Short-term asset backed securities

 

 

 

 

 

 

 

 

 

ACASC 2007-1A

 

0.49

%

4/20/2021

 

 

 

1,888

 

AIMCO 2006-AA

 

0.51

%

8/20/2020

 

 

 

861

 

Atrium CDO Corp

 

1.36

%

11/16/2022

 

 

 

1,001

 

California Republic Auto 2014-3

 

0.63

%

6/15/2017

 

 

 

1,500

 

Citibank Credit Card 2013-A11

 

0.42

%

2/7/2018

 

 

 

3,300

 

Commercial Mortgage Trust

 

1.08

%

6/11/2027

 

 

 

998

 

Cornerstone 2007-1A

 

0.50

%

7/15/2021

 

 

 

2,508

 

FNMA Guaranteed REMIC

 

0.58

%

12/25/2043

 

 

 

3,681

 

Lightpoint 2006-5A

 

0.53

%

8/5/2019

 

 

 

363

 

Race Point 2006-3

 

0.54

%

4/15/2020

 

 

 

2,784

 

Selkirk Limited

 

1.86

%

12/20/1941

 

 

 

1,951

 

SLM Student Loan Trust 2007-7

 

0.46

%

1/25/2016

 

 

 

178

 

 

 

 

 

 

 

 

 

 

 

Short-term notes

 

 

 

 

 

 

 

 

 

Banco Santander Chile

 

1.18

%

4/11/2017

 

 

 

996

 

Bank of Tokyo-Mitsubishi

 

0.87

%

9/9/2016

 

 

 

1,004

 

Banque Federative

 

1.13

%

1/20/2017

 

 

 

2,014

 

Credit Agricole London

 

0.81

%

6/12/2017

 

 

 

4,103

 

Credit Agricole SA

 

1.12

%

10/3/2016

 

 

 

2,012

 

Daimler Finance NA

 

0.61

%

3/10/2017

 

 

 

4,990

 

Electricite De France

 

0.74

%

1/20/2017

 

 

 

2,306

 

ING Bank NV

 

0.61

%

1/4/2016

 

 

 

3,499

 

Japan Bank for International

 

2.50

%

1/21/2016

 

 

 

7,139

 

Kookmin Bank

 

1.53

%

10/11/2016

 

 

 

3,034

 

Kookmin Bank

 

1.15

%

1/27/2017

 

 

 

1,510

 

Macquarie Bank

 

1.06

%

3/24/2017

 

 

 

3,013

 

Mizuho Bank

 

0.71

%

4/16/2017

 

 

 

2,001

 

Norddeutsche Landesbank

 

0.88

%

10/16/2015

 

 

 

5,008

 

Sumitomo Mitsui Banking Corp

 

1.35

%

7/18/2015

 

 

 

4,421

 

 

 

 

 

 

 

 

 

 

 

Government guaranteed notes

 

 

 

 

 

 

 

 

 

Dexia Credit Local SA

 

1.25

%

10/18/2016

 

 

 

3,313

 

Dexia Credit Local SA

 

0.68

%

1/11/2017

 

 

 

1,004

 

 

 

 

 

 

 

 

 

 

 

Municipals

 

 

 

 

 

 

 

 

 

Ohio State Build America Bond

 

2.47

%

5/1/2016

 

 

 

1,640

 

Texas State

 

0.53

%

6/1/2017

 

 

 

4,801

 

 

 

 

 

 

 

 

 

 

 

Corporate bonds

 

 

 

 

 

 

 

 

 

AbbVie Inc.

 

1.20

%

11/6/2015

 

 

 

2,507

 

Barclays Bank

 

4.75

%

2/23/2015

 

 

 

1,408

 

Citigroup Inc.

 

6.01

%

1/15/2015

 

 

 

1,302

 

Credit Agricole London

 

1.08

%

4/15/2019

 

 

 

1,713

 

HBOS PLC

 

0.96

%

9/6/2017

 

 

 

991

 

Hyundai Capital America Co

 

3.75

%

4/6/2016

 

 

 

1,367

 

Hyundai Capital America Co

 

3.75

%

4/6/2016

 

 

 

301

 

International Lease Finance Co

 

5.75

%

5/15/2016

 

 

 

1,868

 

Morgan Stanley

 

6.00

%

4/28/2015

 

 

 

3,455

 

 

20



Table of Contents

 

Abbott Laboratories Stock Retirement Plan

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

December 31, 2014

(Dollars in thousands)

 

Identity of party involved/

 

 

 

 

 

 

 

Current

 

description of asset

 

Rate

 

Maturity

 

Cost (a)

 

value

 

SRP Short Term Investment Fund - Continued

 

 

 

 

 

 

 

 

 

Corporate bonds - Continued

 

 

 

 

 

 

 

 

 

Morgan Stanley

 

4.10

%

1/26/2015

 

 

 

125

 

Sabmiller Holdings Inc.

 

1.85

%

1/15/2015

 

 

 

1,811

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

America Movil Sab de CV

 

1.27

%

9/12/2016

 

 

 

251

 

DBS Group Holdings Ltd

 

0.78

%

7/16/2019

 

 

 

1,999

 

DBS Group Holdings Ltd

 

2.25

%

7/16/2019

 

 

 

998

 

Glencore Canada Corporation

 

5.38

%

6/1/2015

 

 

 

712

 

Hana Bank

 

1.38

%

2/5/2016

 

 

 

2,000

 

Hyundai Capital Services

 

1.07

%

3/18/2017

 

 

 

998

 

Kansas City Southern de Mexico

 

0.98

%

10/28/2016

 

 

 

5,806

 

Nomura Holdings Inc.

 

5.00

%

3/4/2015

 

 

 

1,007

 

Petrobras Global Finance BV

 

2.42

%

1/15/2019

 

 

 

532

 

Petrobras Global Finance BV

 

1.88

%

5/20/2016

 

 

 

3,222

 

Petrobras Global Finance BV

 

2.63

%

3/17/2017

 

 

 

1,569

 

Royal Bank of Scotland

 

4.88

%

3/16/2015

 

 

 

2,519

 

Telecom Italia Capital

 

5.25

%

10/1/2015

 

 

 

1,020

 

Telefonica Emisiones

 

3.73

%

4/27/2015

 

 

 

2,522

 

UBS AG Stamford

 

0.92

%

8/14/2019

 

 

 

5,016

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

 

 

 

 

 

 

 

AXA Financial Inc.

 

0.00

%

6/1/2015

 

 

 

1,997

 

ENI Financial USA

 

0.63

%

2/17/2015

 

 

 

5,000

 

Entergy Corp

 

0.00

%

1/6/2015

 

 

 

5,900

 

Macquarie Bank Ltd

 

0.53

%

4/7/2015

 

 

 

2,800

 

NiSource Financial Corp

 

0.00

%

1/21/2015

 

 

 

4,997

 

Tesco Treasury

 

0.00

%

8/17/2015

 

 

 

3,930

 

Vodafone Group

 

0.00

%

6/2/2015

 

 

 

1,997

 

 

 

 

 

 

 

 

 

 

 

Certificate of deposit

 

 

 

 

 

 

 

 

 

Credit Suisse

 

0.58

%

8/24/2015

 

 

 

5,001

 

Intesa Sanpaolo SPA

 

1.66

%

4/11/2016

 

 

 

2,004

 

Itau Unibanco SA

 

1.18

%

6/4/2015

 

 

 

1,000

 

 

 

 

 

 

 

 

 

 

 

Short-term investment fund

 

 

 

 

 

 

 

 

 

TBC Inc. Pooled Emp. Daily

 

 

 

 

 

 

 

552

 

 

 

 

 

 

 

 

 

 

 

Private 40-Act mutual funds

 

 

 

 

 

 

 

 

 

PIMCO Short-Term Floating NAV Portfolio II

 

 

 

 

 

 

 

305,503

 

PIMCO Short-Term Portfolio

 

 

 

 

 

 

 

23,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

6,623,071

 

 


*Represents a party-in-interest transaction.

 

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

 

21



Table of Contents

 

FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ABBOTT LABORATORIES STOCK RETIREMENT PLAN (PUERTO RICO)

DECEMBER 31, 2014 and 2013

 



Table of Contents

 

C O N T E N T S

 

 

Page

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3

 

 

FINANCIAL STATEMENTS

 

 

 

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

5

 

 

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

6

 

 

NOTES TO FINANCIAL STATEMENTS

7

 

 

SUPPLEMENTAL SCHEDULE

 

 

 

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

17

 



Table of Contents

 

GRAPHIC

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Grant Thornton LLP

 

175 W Jackson Boulevard, 20th Floor

 

Chicago, IL 60604-2687

 

 

 

T 312.856.0200

 

F 312.565.4719

 

GrantThornton.com

 

Plan Administrator

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

 

We have audited the accompanying statements of net assets available for benefits of the Abbott Laboratories Stock Retirement Plan (Puerto Rico) (the Plan) as of December 31, 2014 and 2013, and the related statement of changes in net assets available for benefits for the year ended December 31, 2014.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  We were not engaged to perform an audit of the Plan’s internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Abbott Laboratories Stock Retirement Plan (Puerto Rico) as of December 31, 2014 and 2013, and the changes in net assets available for benefits for the year ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

 

The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2014, has been subjected to audit procedures performed in conjunction with the audit of Abbott Laboratories Stock Retirement Plan (Puerto Rico)’s financial statements.  The supplemental information is presented for purposes of additional analysis and is not a required part of the basic financial statements but include supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  The supplementary information is the responsibility of the Plan’s management.  Our audit procedures included determining whether the supplemental information reconciles to the basic financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information

 

Grant Thornton LLP

U.S. member firm of Grant Thornton International Ltd

 



Table of Contents

 

presented in the supplemental information.  In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental 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 supplemental information referred to above is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

 

 

/s/ Grant Thornton LLP

 

Chicago, Illinois

June 26, 2015

 



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31, 2014 and 2013

(Dollars in thousands)

 

 

 

2014

 

2013

 

Assets

 

 

 

 

 

Cash

 

$

41

 

$

2

 

Investments, at fair value

 

114,108

 

95,609

 

Notes receivable from participants

 

8,199

 

8,025

 

Due from brokers

 

 

185

 

 

 

 

 

 

 

Total assets

 

122,348

 

103,821

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Due to brokers

 

10

 

1

 

 

 

 

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS

 

$

122,338

 

$

103,820

 

 

The accompanying notes are an integral part of these statements.

 

5



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year ended December 31, 2014

(Dollars in thousands)

 

Additions

 

 

 

Contributions

 

 

 

Employer

 

$

2,701

 

Participant

 

5,015

 

 

 

 

 

Total contributions

 

7,716

 

 

 

 

 

Investment income

 

 

 

Net appreciation in fair value of investments

 

11,066

 

Interest and dividends

 

3,870

 

 

 

 

 

Net investment income

 

14,936

 

 

 

 

 

Interest income on notes receivable from participants

 

259

 

 

 

 

 

Total additions

 

22,911

 

 

 

 

 

Deductions

 

 

 

Benefits paid to participants

 

5,529

 

Other expenses

 

41

 

 

 

 

 

Total deductions

 

5,570

 

 

 

 

 

Net increase prior to transfer

 

17,341

 

 

 

 

 

Net plan transfers in (note A)

 

1,177

 

 

 

 

 

NET INCREASE AFTER TRANSFER

 

18,518

 

 

 

 

 

Net assets available for benefits

 

 

 

Beginning of year

 

103,820

 

 

 

 

 

End of year

 

$

122,338

 

 

The accompanying notes are an integral part of this statement.

 

6



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

NOTE A - DESCRIPTION OF THE PLAN

 

The following description of the Abbott Laboratories Stock Retirement Plan (Puerto Rico) (the “Plan”) provides only general information.  Participants should refer to the Plan document for a more complete description of the Plan’s provisions.

 

General

 

On January 1, 2013, Abbott Laboratories (“Abbott”) separated into two publicly traded companies. The research-based pharmaceuticals business became AbbVie Inc. (“AbbVie”); the diversified medical products businesses remained with Abbott.  Effective January 1, 2013, the Plan was established for employees of Abbott’s selected subsidiaries and affiliates in Puerto Rico (the “Company”).  The employees of the Company had previously participated in the former Abbott Laboratories Stock Retirement Plan (Puerto Rico), which effective January 1, 2013 was renamed AbbVie Puerto Rico Savings Plan (the “Former Plan”) and sponsorship was assumed by an affiliate of AbbVie.

 

During 2013, assets relating to participants who held account balances in the Former Plan, but continued employment with the Company were transferred from the Former Plan to the Plan. The separation agreement between Abbott and AbbVie covers a 30 month period and allows for the transfer of employees between the two companies during that period.  During 2014, additional net assets totaling approximately $1.2 million were transferred from the Former Plan to the Plan related to such employee transfers.

 

Employees of the Company may, after meeting certain employment requirements, voluntarily participate in the Plan.  The Plan’s sponsor is Abbott Healthcare (Puerto Rico) Ltd. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.

 

Mercer Trust Company and Mercer HR Services LLC (collectively, “Mercer”) are the custodian (“Custodian”) and record keeper of the Plan.  Banco Popular de Puerto Rico serves as trustee (“Trustee”) of the Plan.

 

The Plan is a profit sharing plan containing a cash or deferred arrangement intended to qualify for favorable tax treatment under sections 1081.01 (a) and (d) of the Puerto Rico Internal Revenue Code of 2011, as amended. In addition, the Plan provides an arrangement by which employees may invest in Abbott shares.

 

Contributions and Vesting

 

Contributions to the Plan are paid to a trust. The trust is administered by the Trustee.  An investment committee (the “Committee”) may direct the Trustee to establish investment funds of the Committee’s choosing.

 

Employees are eligible to make contributions on any entry date following their date of hire.  Eligible employees electing to participate may contribute from 2% to 25% of their eligible earnings to the trust, subject to certain limitations.  Participants may choose to make their contributions from either pretax earnings or after-tax earnings or both.  Participants who have attained age 50

 

7



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE A - DESCRIPTION OF THE PLAN - Continued

 

Contributions and Vesting - Continued

 

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, as amended.  Participant contributions may be invested in any or all of the investment options except for investment options closed to new contributions.

 

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 Abbott and, for the year ended December 31, 2014, was 5% of the participant’s eligible earnings if the employee elected to contribute at least 2% of eligible earnings to the Plan.  Employer contributions are invested each pay period according to the employee’s investment elections.

 

The Plan offered the following investment options in 2014 and 2013:  Abbott common shares, American Funds (including EuroPacific Growth Fund, The Growth Fund of America, The Investment Company of America Fund, and Washington Mutual Investors Fund), Blackrock International Opportunities Fund, GMO Global Asset Allocation Series Fund, PIMCO All Asset Fund, PIMCO Short Asset Investment Fund, PIMCO Total Return Fund, Vanguard Developed Markets Fund, Vanguard Extended Market Index Fund, Vanguard Institutional Index Fund, Vanguard Mid-Cap Value Index Fund Admiral, and Wellington Mid-Cap Growth Fund.

 

In connection with the January 1, 2013 separation of Abbott into two publicly traded companies, Abbott shareholders received as a tax-free distribution 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.  Plan participants may continue to hold the AbbVie stock they received from the distribution that transferred from the Former Plan into their Plan accounts; however, they may not make new contributions or transfer new money to purchase AbbVie stock in the Plan.  In addition, participants who held Hospira, Inc. (“Hospira”) stock in the Former Plan that they received as a result of the spin-off of Hospira, Inc. from Abbott on April 30, 2004, may continue to hold the Hospira stock in their accounts in the Plan; however, they may not make new contributions or transfer new money to purchase Hospira stock in the Plan.

 

Participants may direct the Trustee to sell all or a portion of the Abbott, AbbVie and Hospira common shares held in their accounts and reinvest the proceeds in any of the other investment options available to the participants.

 

8



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE A - DESCRIPTION OF THE PLAN - Continued

 

Contributions and Vesting - Continued

 

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 2014, no forfeitures were used to reduce Abbott’s employer contributions or to pay plan expenses.  No forfeitures were available at the end of 2014 and 2013.

 

Distributions

 

Following retirement, termination or death, participants or their beneficiaries may elect to receive a distribution in installments or a single lump sum.  Participants may elect a direct rollover of their accounts.  Distributions are made in cash or, to the extent contained in the participant’s account, a participant may elect distribution of Abbott and AbbVie common shares.  Distribution must be made by the 1st of April following the year the participant reaches age 70 ½ or, if earlier, the 1st of April following the year in which the participant dies.  Interest, dividends and other earnings will continue to accrue on such deferred amounts.  Prior to separation from service, participants are permitted to withdraw their rollover contributions and their after-tax contributions, and after age 59 ½, may also withdraw pretax contributions; in each case, subject to certain limitations. Withdrawals may be made in shares or in cash.

 

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 Puerto Rico Internal Revenue 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

 

9



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE A - DESCRIPTION OF THE PLAN - Continued

 

Notes Receivable from Participants - Continued

 

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 Abbott 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.

 

Adoption of New Accounting Rules

 

On May 1, 2015 the Financial Accounting Standards Board issued updated guidance related to fair value measurement and the disclosures for investments in certain entities that calculate net asset value (“NAV”) per share (or its equivalent).  The updated guidance applies to reporting entities that elect to measure the fair value of certain investments using the NAV per share (or its equivalent) of the investment as a practical expedient.  Currently, investments valued using the practical expedient are categorized within the fair value hierarchy on the basis of when the investment is redeemable with the investee at NAV. The amendments remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the NAV per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure the fair value using that practical expedient.

 

The amendments are effective for the Plan for fiscal years beginning after December 15, 2015 and shall apply retrospectively to all periods presented. Earlier application is permitted. The Plan’s administrator is currently evaluating the impact the updated guidance will have on the Plan’s financial statement disclosures, but does not expect the effect to be material.

 

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.

 

10



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

Investment Valuation

 

Plan management uses the following methods and significant assumptions to estimate the fair value of investments:

 

Common stock and mutual funds - Valued at the published market price per unit multiplied by the number of shares or units held.

 

Collective trust fund - Valued at the NAV provided by the administrator of the fund.  The NAV is used as a practical expedient for fair value.  The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.

 

The following tables summarize the basis used to measure assets at fair value at December 31, 2014 and 2013 (dollars in thousands):

 

 

 

Basis of Fair Value Measurement

 

 

 

Quoted

 

Significant

 

 

 

 

 

 

 

Prices in

 

Other

 

Significant

 

 

 

 

 

Active

 

Observable

 

Unobservable

 

 

 

2014

 

Markets

 

Inputs

 

Inputs

 

Total

 

Common stock

 

 

 

 

 

 

 

 

 

Abbott

 

$

35,039

 

$

 

$

 

$

35,039

 

AbbVie

 

28,631

 

 

 

28,631

 

Hospira

 

625

 

 

 

625

 

Total common stock

 

64,295

 

 

 

64,295

 

Mutual funds

 

 

 

 

 

 

 

 

 

Growth

 

5,858

 

 

 

5,858

 

Blend

 

18,579

 

 

 

18,579

 

Value

 

9,116

 

 

 

9,116

 

Bond

 

9,615

 

 

 

 

 

9,615

 

Income

 

4,781

 

 

 

4,781

 

Total mutual funds

 

47,949

 

 

 

47,949

 

Collective trust fund

 

 

 

 

 

 

 

 

 

Growth (a)

 

 

1,864

 

 

1,864

 

Total assets at fair value

 

$

112,244

 

$

1,864

 

$

 

$

114,108

 

 

11



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

Investment Valuation - Continued

 

 

 

Basis of Fair Value Measurement

 

 

 

Quoted

 

Significant

 

 

 

 

 

 

 

Prices in

 

Other

 

Significant

 

 

 

 

 

Active

 

Observable

 

Unobservable

 

 

 

2013

 

Markets

 

Inputs

 

Inputs

 

Total

 

Common stock

 

 

 

 

 

 

 

 

 

Abbott

 

$

27,657

 

$

 

$

 

$

27,657

 

AbbVie

 

27,010

 

 

 

27,010

 

Hospira

 

514

 

 

 

514

 

Total common stock

 

55,181

 

 

 

55,181

 

Mutual funds

 

 

 

 

 

 

 

 

 

Growth

 

5,296

 

 

 

5,296

 

Blend

 

15,227

 

 

 

15,227

 

Value

 

6,879

 

 

 

6,879

 

Bond

 

7,291

 

 

 

 

 

7,291

 

Income

 

4,172

 

 

 

4,172

 

Total mutual funds

 

38,865

 

 

 

38,865

 

Collective trust fund

 

 

 

 

 

 

 

 

 

Growth (a)

 

 

1,563

 

 

1,563

 

Total assets at fair value

 

$

94,046

 

$

1,563

 

$

 

$

95,609

 

 


(a)         The collective trust fund does not have a readily determinable fair value and is valued at its NAV per share as provided by the fund’s administrators. The fund invests in small and midsize companies.  The investment objective of this fund is to achieve long-term total return in excess of the Russell Mid-Cap Growth Index.  Redemption from the fund is permitted daily.

 

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.

 

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.

 

12



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 

Administrative Expenses

 

Participants are charged transaction fees for loan and withdrawal processing and commissions on purchases and sales of Abbott shares and sales of AbbVie and Hospira shares.  Investment fees for mutual funds, collective trusts, and money market funds are charged against the net assets of the respective fund.  The Company pays other Mercer record-keeping and administration fees, where applicable.

 

Payment of Benefits

 

Benefits are recorded when paid.

 

NOTE C - INVESTMENTS

 

The following investments represented 5% or more of the Plan’s net assets at December 31, 2014 and 2013 (dollars in thousands):

 

 

 

2014

 

2013

 

 

 

 

 

 

 

 

 

Abbott Laboratories common shares

 

$

35,039

 

$

27,657

 

AbbVie Inc. common shares

 

28,631

 

27,010

 

PIMCO Short Asset Investment Fund

 

9,615

 

7,291

 

GMO Global Asset Allocation Series Fund, Class R6

 

6,929

 

6,112

 

American Funds The Growth Fund of America, Class R6

 

n/a

 

5,296

 

 

Distributions of Abbott common shares and conversions of participants’ common share account balances to participant loans or other investment options are recorded at fair market value.

 

A summary of Abbott common share data as of December 31, 2014 and 2013 is presented below:

 

 

 

2014

 

2013

 

 

 

 

 

 

 

 

 

Abbott common shares, 778,308 and 721,557 shares, respectively (dollars in thousands)

 

$

35,039

 

$

27,657

 

Market value per share

 

$

45.02

 

$

38.33

 

 

13



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE C — INVESTMENTS - Continued

 

During 2014, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows (dollars in thousands):

 

Common shares

 

$

11,383

 

Mutual funds

 

(382

)

Collective trust fund

 

65

 

 

 

$

11,066

 

 

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

 

A significant portion of the Plan’s assets is invested in Abbott common shares.

 

Participants pay fees to Mercer for loan and withdrawal transaction processing and for commissions on purchases and sales of Abbott shares and sales of AbbVie and Hospira stock.  These transactions qualify as permitted party-in-interest transactions.

 

NOTE E - PLAN TERMINATION

 

The Plan may be terminated at any time by Abbott upon written notice to the Trustee and Committee, and will be terminated if Abbott 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, Abbott has no intention of terminating the Plan.

 

14



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

December 31, 2014 and 2013

 

NOTE F - TAX STATUS

 

On December 10, 2013, a request was filed with the Department of the Treasury of the Commonwealth of Puerto Rico for the issuance of a letter to the effect that the Plan, as written, qualifies under Section 1081.01(a) of the Puerto Rico Internal Revenue Code of 2011, as amended and, consequently, its enabling trust is exempt from local income tax.  The Plan received a response on March 25, 2015 with a request for additional information.  On April 6, 2015 the requested information was submitted and the Plan is waiting for the ruling.  The Plan’s management believes that the Plan is designed and is currently being operated, in all material respects, in accordance with the applicable Puerto Rico Internal Revenue Code.

 

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 as of December 31, 2014 and 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements.  The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits in progress.

 

NOTE G — SUBSQUENT EVENTS

 

The Company has evaluated subsequent events from December 31, 2014 through the date these financial statements were available to be issued.  There were no subsequent events that require recognition or additional disclosure in these financial statements.

 

15



Table of Contents

 

SUPPLEMENTAL SCHEDULE

 



Table of Contents

 

Abbott Laboratories Stock Retirement Plan (Puerto Rico)

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

December 31, 2014

(Dollars in thousands)

 

Identity of party involved/

 

 

 

Current

 

description of asset

 

Cost (a)

 

value

 

 

 

 

 

 

 

*Abbott Laboratories, common stock

 

 

 

$

35,039

 

 

 

 

 

 

 

AbbVie Inc., common stock

 

 

 

28,631

 

 

 

 

 

 

 

Hospira, Inc., common stock

 

 

 

625

 

 

 

 

 

 

 

Mutual funds

 

 

 

 

 

American Funds EuroPacific Growth Fund, Class R6

 

 

 

4,124

 

American Funds The Growth Fund of America, Class R6

 

 

 

5,858

 

American Funds The Investment Company of America Fund, Class R6

 

 

 

5,249

 

American Funds Washington Mutual Investors Fund, Class R6

 

 

 

1,870

 

Blackrock International Opportunities Fund

 

 

 

1,042

 

GMO Global Asset Allocation Series Fund, Class R6

 

 

 

6,929

 

PIMCO All Asset Fund

 

 

 

2,241

 

PIMCO Short Asset Investment Fund

 

 

 

9,615

 

PIMCO Total Return Fund

 

 

 

2,540

 

Vanguard Extended Market Index Fund

 

 

 

2,505

 

Vanguard Developed Markets Index Fund

 

 

 

500

 

Vanguard Institutional Index Fund

 

 

 

3,479

 

Vanguard Mid-Cap Value Index Fund Admiral

 

 

 

1,997

 

 

 

 

 

 

 

Collective trust fund

 

 

 

 

 

Wellington Mid-Cap Growth Fund

 

 

 

1,864

 

 

 

 

 

 

 

*Loans to participants, 3.25% to 9.50%

 

 

 

8,199

 

 

 

 

 

 

 

 

 

 

 

$

122,307

 

 


*Represents a party-in-interest transaction.

 

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

 

17



Table of Contents

 

EXHIBITS

 

23.1

 

Consent of Independent Registered Public Accounting Firm — Abbott Laboratories Stock Retirement Plan.

 

 

 

23.2

 

Consent of Independent Registered Public Accounting Firm — Abbott Laboratories Stock Retirement Plan (Puerto Rico).

 



Table of Contents

 

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.

 

ABBOTT LABORATORIES STOCK RETIREMENT PROGRAM

 

 

Date:

June 26, 2015

By:

/s/ Mary K. Moreland

 

 

 

Mary K. Moreland

 

 

 

Plan Administrator

 



Table of Contents

 

EXHIBIT INDEX

 

Exhibit No.

 

Exhibit

 

 

 

23.1

 

Consent of Independent Registered Public Accounting Firm — Abbott Laboratories Stock Retirement Plan.

 

 

 

23.2

 

Consent of Independent Registered Public Accounting Firm — Abbott Laboratories Stock Retirement Plan (Puerto Rico).