The financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and ERISA. Contributions from participants are recorded when withheld from the participant. Benefit payments are recorded when paid.
The preparation of financial statements in conformity with 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 could differ from those estimates.
The Plan’s investments are stated at fair value in accordance with Accounting Standards Codification Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (“exit price”) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Purchases and sales of investments are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
In the Statement of Changes in Net Assets Available for Benefits, the Plan presents the net appreciation (depreciation) in the fair value of its investments, which consists of realized gains or losses and unrealized appreciation or depreciation on investments. The cost of investments is determined using the average-cost basis for calculating realized gains or losses.
Administrative fees in the amount of $13,853 for the year ended December 31, 2017, reflected in the Statement of Changes in Net Assets Available for Benefits, include recordkeeping, investment advisory services and other administrative expenses and are paid directly by the Plan using forfeitures as permitted by the Plan.
Abaxis 401(K) Plan
Notes to Financial Statements
December 31, 2017 and 2016
3.
|
Investments and Fair Value Measurements
|
The following table summarizes the Plan’s assets that are measured at fair value on a recurring basis, within the fair value hierarchy as defined by ASC 820, as of December 31, 2017 and 2016.
|
|
Assets at Fair Value as of December 31, 2017
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Mutual funds
|
|
$
|
31,222,023
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
31,222,023
|
|
Common stock fund
|
|
|
2,129,651
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,129,651
|
|
Total assets in the fair value hierarchy
|
|
$
|
33,351,674
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
33,351,674
|
|
Investments measured at net asset value (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,102,876
|
|
Investments at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
36,454,550
|
|
|
|
Assets at Fair Value as of December 31, 2016
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Mutual funds
|
|
$
|
24,862,926
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
24,862,926
|
|
Common stock fund
|
|
|
2,287,195
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,287,195
|
|
Total assets in the fair value hierarchy
|
|
$
|
27,150,121
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
27,150,121
|
|
Investments measured at net asset value (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,087,718
|
|
Investments at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,237,839
|
|
|
(1)
|
Represents the collective investment fund, an indirect investment in fully benefit-responsive investment contracts, presented at fair value as determined by the investment’s net asset value (“NAV”) and has not been categorized in the fair value hierarchy.
|
There were no Plan assets and liabilities measured and recorded at fair value on a non-recurring basis as of December 31, 2017 and 2016. There were no transfers between Level 1 and Level 2 or transfers in or out of Level 3 fair value measurements during 2017 and 2016.
The following table summarizes investments measured at fair value based on NAV per share as of December 31, 2017 and 2016, respectively.
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Collective investment fund:
|
|
|
|
|
|
|
Fair value
|
|
$
|
3,102,876
|
|
|
$
|
3,087,718
|
|
Unfunded commitments
|
|
Not applicable
|
|
|
Not applicable
|
|
Redemption frequency (if eligible)
|
|
Daily
|
|
|
Daily
|
|
Redemption notice period
|
|
30 days
|
|
|
30 days
|
|
Abaxis 401(K) Plan
Notes to Financial Statements
December 31, 2017 and 2016
3.
|
Investments and Fair Value Measurements
, continued
|
Below is a description of the valuation methodologies used for the fair value measurements:
Mutual funds are publicly traded investments, valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open-end mutual funds that are registered with the U.S. Securities and Exchange Commission. These funds are required to publish their NAV and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.
The Abaxis Common Stock Fund consists of Abaxis, Inc. common stock. Fair value is based upon quoted market prices at year end as these instruments have active markets.
The collective investment fund is valued at the NAV of units of a bank collective trust. The NAV, as provided by the trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV. Participant transactions (purchased and sales) may occur daily. Were the Plan to initiate a full redemption of the collective trust, the investment adviser reserves the right to temporarily delay withdrawal from the trust in order to ensure that securities liquidations will be carried out in an orderly business manner.
4.
|
Related Party and Party-In-Interest Transactions
|
Certain Plan investments are managed by JP Morgan, an affiliate of JPMIH, the recordkeeper of the Plan. Any purchases and sales of these funds were performed equivalent to those that prevail in arm’s-length transactions. Such transactions, while considered party-in-interest transactions under ERISA regulations, are permitted under the provisions of the Plan and are specifically exempt from the prohibition of party-in-interest transactions under ERISA.
The Plan invests in common stock of the Company and transactions in this common stock are related-party transactions. The Plan held the following investments in the Abaxis Common Stock Fund as of December 31, 2017 and 2016:
|
|
Shares
|
|
|
Fair Value
|
|
December 31, 2017
|
|
|
43,006
|
|
|
$
|
2,129,651
|
|
December 31, 2016
|
|
|
43,343
|
|
|
$
|
2,287,195
|
|
Participants may invest participant contributions in the Abaxis Common Stock Fund, and may transfer funds from the Abaxis Common Stock Fund to other Plan investment options. The participant investment election into the Abaxis Common Stock Fund is limited to 20%. The value of a participant’s investment in the Abaxis Common Stock Fund may exceed 20% of the participant’s total investment portfolio. However, once a participant’s investment in the Abaxis Common Stock Fund exceeds 20% of the participant’s total portfolio, transfers to the Abaxis Common Stock Fund via exchange from other investments will be prohibited. During 2017, the Plan received cash dividends of $25,642 on shares of the Company’s common stock held.
The Company’s matching contribution is made either in the Company’s common stock or cash, as elected by the Company’s Board of Directors.
Abaxis 401(K) Plan
Notes to Financial Statements
December 31, 2017 and 2016
In April 2015, the Plan adopted a Prototype Nonstandardized 401(k) Plan, which has received a favorable opinion letter from the Internal Revenue Service (“IRS”) dated March 31, 2014. The Prototype Nonstandardized 401(k) Plan has been amended subsequent to the receipt of the IRS opinion letter; however, the Plan Administrative Committee believes that the adopted prototype, as amended, is currently designed and being operated in compliance with the applicable requirements of the IRC.
6.
|
Risk and Uncertainties
|
The Plan provides for various investment options in any combination of investment securities. In addition, the Company’s common stock is included as an investment option in the Plan. Investment securities are exposed to various risks, such as those associated with interest rates, market conditions, and credit-worthiness of the securities’ issuers. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in market values, interest rates, or other factors will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits.
In accordance with accounting standards affecting disclosures of subsequent events, the Plan Administrative Committee evaluated subsequent events for recognition and disclosure through the date which these financial statements were issued.
On May 15, 2018, the Company entered into a definitive agreement with Zoetis Inc., a Delaware corporation (“Zoetis”), and Zeus Merger Sub, Inc., a California corporation and an indirect wholly-owned subsidiary of Zoetis (“Merger Sub”), pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity and indirect wholly-owned, subsidiary of Zoetis (the “Merger”). As a result of the Merger, each share of common stock, no par value, of the Company issued and outstanding immediately prior to the effective time of the Merger (other than shares, if any, held by the Company, Zoetis, Merger Sub or any of their subsidiaries and shares with respect to which dissenters rights have been properly demanded in accordance with the Corporations Code of the State of California), including shares of the Company’s common stock in the Abaxis Common Stock Fund, will be converted into the right to receive $83.00 in cash, without interest, per share. Subject to the satisfaction or waiver of various closing conditions, including the approval of the Merger by the Company’s shareholders, the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of applicable competition law approvals in Germany, the Merger is expected to be completed in the second half of calendar year 2018. The Plan is expected to remain in place after completion of the Merger.
The Plan Administrative Committee concluded that no
other material subsequent event has occurred since December 31, 2017 that requires recognition or disclosure in the financial statements.
Supplemental Schedules
Abaxis 401(K) Plan
Schedule H, Line 4
a
– Schedule of Delinquent Participant Contributions
(Plan Number 001 EIN 77-0213001)
For the Year Ended December 31, 2017
Participant
Contributions
Transferred
Late to Plan
|
|
|
Total that Constitute Nonexempt Prohibited Transactions
|
|
|
|
|
Check here if
Late Participant
Loan Repayments
are included:
☐
|
|
|
Contributions
Not
Corrected
|
|
|
Contributions
Corrected
Outside VFCP
|
|
|
Contributions
Pending
Correction
in VFCP
|
|
|
Total Fully
Corrected Under
VFCP and
Prohibited
Transaction
Exemption
2002-51
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
218(1)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
(1)
|
Represents delinquent participant contributions in 2017. The Company remitted the delinquent participant contributions to the Plan in 2017.
|
Abaxis 401(K) Plan
Schedule H, Line 4
i
– Schedule of Assets (Held at End of Year)
(Plan Number 001 EIN 77-0213001)
December 31, 2017
(a)
|
|
(b)
Identity of issuer, borrower, lessor
or similar party
|
|
(c)
Description of investment, including maturity date, rate of interest, collateral,
par, or maturity value
|
|
(e)
Fair Value
|
|
*
|
|
Abaxis Common Stock Fund
|
|
Common stock
|
|
$
|
2,129,651
|
|
*
|
|
JPMCB Stable Asset Income Fund
|
|
Collective investment fund
|
|
|
3,102,876
|
|
|
|
American Funds EuroPacific Growth
|
|
Mutual fund
|
|
|
960,688
|
|
|
|
American Funds Small Cap World
|
|
Mutual fund
|
|
|
407,920
|
|
|
|
American Funds the Growth Fund of America
|
|
Mutual fund
|
|
|
1,462,934
|
|
|
|
Brown Advisory Small Cap Growth
|
|
Mutual fund
|
|
|
425,429
|
|
|
|
Columbia Mid Cap Growth
|
|
Mutual fund
|
|
|
1,046,280
|
|
|
|
Dodge & Cox International Stock
|
|
Mutual fund
|
|
|
853,608
|
|
|
|
Dodge & Cox Stock
|
|
Mutual fund
|
|
|
729,442
|
|
|
|
Fidelity Spartan 500 Index
|
|
Mutual fund
|
|
|
2,646,690
|
|
|
|
Fidelity Spartan Extended Market Index
|
|
Mutual fund
|
|
|
551,460
|
|
*
|
|
JPMorgan Large Cap Growth
|
|
Mutual fund
|
|
|
562,769
|
|
*
|
|
JPMorgan U.S. Research Enhanced Equity
|
|
Mutual fund
|
|
|
1,248,588
|
|
|
|
Pimco Total Return
|
|
Mutual fund
|
|
|
1,063,014
|
|
|
|
T Rowe Price Small Cap Value
|
|
Mutual fund
|
|
|
589,730
|
|
|
|
Vanguard Intermediate-Term U.S. Treasury
|
|
Mutual fund
|
|
|
414,360
|
|
|
|
Vanguard Mid-Cap Value Index Admiral
|
|
Mutual fund
|
|
|
913,613
|
|
|
|
Vanguard Target Retirement 2015
|
|
Mutual fund
|
|
|
1,459,585
|
|
|
|
Vanguard Target Retirement 2020
|
|
Mutual fund
|
|
|
3,146,567
|
|
|
|
Vanguard Target Retirement 2025
|
|
Mutual fund
|
|
|
2,103,823
|
|
|
|
Vanguard Target Retirement 2030
|
|
Mutual fund
|
|
|
3,271,323
|
|
|
|
Vanguard Target Retirement 2035
|
|
Mutual fund
|
|
|
2,391,707
|
|
|
|
Vanguard Target Retirement 2040
|
|
Mutual fund
|
|
|
1,420,273
|
|
|
|
Vanguard Target Retirement 2045
|
|
Mutual fund
|
|
|
1,272,028
|
|
|
|
Vanguard Target Retirement 2050
|
|
Mutual fund
|
|
|
648,259
|
|
|
|
Vanguard Target Retirement 2055
|
|
Mutual fund
|
|
|
424,343
|
|
|
|
Vanguard Target Retirement Income
|
|
Mutual fund
|
|
|
756,816
|
|
|
|
Vanguard Total Bond Market Index
|
|
Mutual fund
|
|
|
450,774
|
|
*
|
|
Participant Loans
|
|
Interest rates of 3.25% to 6.25% with maturities ranging from 2018 to 2032
|
|
|
686,369
|
|
|
|
Total
|
|
|
|
$
|
37,140,919
|
|
All investments are participant directed; therefore, cost information has not been presented.
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
|
Abaxis 401(K) Plan
|
|
|
|
|
|
Date: June 28, 2018
|
By:
|
/s/ Ross Taylor
|
|
|
|
Ross Taylor
|
|
|
|
Chief Financial Officer and Vice President of Finance
|
|
|
|
Member of Abaxis 401(k) Plan Administrative
|
|
|
|
Committee, as Plan Administrator
|
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|