Company: ABBV
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0001551152-25-000020
Chunk: 199

Company: AbbVie Inc.
Filing Date: 2025-02-14
Form: 10-K
Item: Item 3
Chunk 199
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 the following effects on AbbVie's calculation of net periodic benefit costs in 2025 and projected benefit obligations as of December 31, 2024:50 basis point(in millions) (brackets denote a reduction)IncreaseDecreaseDefined benefit plansNet periodic benefit cost$(25)$39 Projected benefit obligation(596)664 Other post-employment plansNet periodic benefit cost$(5)$6 Projected benefit obligation(46)51 

The expected long-term rate of return is based on the asset allocation, historical performance and the current view of expected future returns. AbbVie considers these inputs with a long-term focus to avoid short-term market influences. The current long-term rate of return on plan assets for each plan is supported by the historical performance of the trust's actual and target asset allocation. AbbVie's assumed expected long-term rate of return has a significant effect on the amounts reported for defined benefit pension plans as of December 31, 2024 and will be used in the calculation of net periodic benefit cost in 2025. A one percentage point change in assumed expected long-term rate of return on plan assets would increase or decrease the net period benefit cost of these plans in 2025 by $109 million.

The health care cost trend rate is selected by reviewing historical trends and current views on projected future health care cost increases. The current health care cost trend rate is supported by the historical trend experience of each plan. Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans as of December 31, 2024 and will be used in the calculation of net periodic benefit cost in 2025. 

Income Taxes

AbbVie accounts for income taxes under the asset and liability method. Provisions for federal, state and foreign income taxes are calculated on reported pre-tax earnings based on current tax laws. Deferred taxes are provided using enacted tax rates on the future tax consequences of temporary differences, which are the differences between the financial statement carrying amount of assets and liabilities and their respective tax bases and the tax benefits of carryforwards. A valuation allowance is established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized.

Litigation

The company is subject to contingencies, such as various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial, securities and other matters that arise in the normal course of business. See Note 15 to the Consolidated Financial Statements for