The Eleventh Farm Credit District Employees Retirement Plan. Financial Statements December 31, 2014 and 2013

Transcription

1 The Eleventh Farm Credit District Employees Retirement Plan Financial Statements December 31, 2014 and 2013

2 INDEPENDENT AUDITORS' REPORT Participants and Farm Credit Foundations Trust Committee The Eleventh Farm Credit District Employees Retirement Plan St. Paul, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of The Eleventh Farm Credit District Employees Retirement Plan (the Plan), which comprise the statements of net assets available for benefits as of December 31, 2014 and 2013, and the related statements of changes in net assets available for benefits for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Plan s preparation and fair presentation of the financial statements in order to design 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. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. An independent member of Nexia International

3 Participants and Farm Credit Foundations Trust Committee The Eleventh Farm Credit District Employees Retirement Plan Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial status of the Plan as of December 31, 2014 and 2013, and the changes in financial status for the years then ended, in accordance with accounting principles generally accepted in the United States of America. CliftonLarsonAllen LLP Minneapolis, Minnesota August 11, 2015

4 Statements of Net Assets Available for Benefits The Eleventh Farm Credit District Employees Retirement Plan December 31, 2014 and 2013 Assets Investments, at fair value Short-term investment funds $ 823,178 $ 656,318 Plan interest in Master Trust 161,470, ,653,322 Total assets 162,293, ,309,640 Liabilities Administrative and other expenses payable 93,558 69,156 Total liabilities 93,558 69,156 Net assets available for benefits $ 162,200,335 $ 157,240,484 See accompanying notes to the financial statements. 3

5 Statements of Changes in Net Assets Available for Benefits The Eleventh Farm Credit District Employees Retirement Plan Years Ended December 31, 2014 and Net assets available for benefits, beginning of year $ 157,240,484 $ 141,138,476 Net investment income Master Trust income 10,298,222 20,300,800 Contributions Employer 5,087,137 4,036,000 Deductions Benefits paid to participants 10,073,598 7,973,262 Administrative and other expenses 351, ,530 Total deductions 10,425,508 8,234,792 Net Increase 4,959,851 16,102,008 Net assets available for benefits, end of year $ 162,200,335 $ 157,240,484 See accompanying notes to the financial statements. 4

6 Notes to Financial Statements The Eleventh Farm Credit District Employees Retirement Plan December 31, 2014 and 2013 NOTE 1: DESCRIPTION OF THE PLAN The following description of The Eleventh Farm Credit District Employees Retirement Plan (the Plan) provides general information regarding the Plan. Refer to the Plan document for a complete description of Plan provisions. Plan Provisions The Plan is a noncontributory defined benefit pension plan offered to eligible employees of the former Western Farm Credit Bank and the Production Credit Associations, Federal Land Credit Associations, and Agricultural Credit Associations of the former Eleventh Farm Credit District (collectively, the Employers). Employees eligible to participate in the Plan are those employees hired before January 1, 1998, who had completed five years of service or attained age 45 as of January 1, 1998, and who elected not to participate in the money purchase component of the Eleventh Farm Credit District s Retirement Savings Plan (Savings Plan). Employees hired after January 1, 1998, are not eligible to participate in the Plan, but are enrolled in the enhanced employer contribution component of the Farm Credit Foundations Defined Contribution / 401(k) Plan (the 401(k) Plan). The Plan was closed on January 1, Since December 31, 1997, no new participants have joined the Plan; therefore, all Plan participants have completed five years of service and are fully vested in plan benefits they have earned based on current credited service. The Plan was most recently amended and restated effective January 1, The Farm Credit Foundations Plan Sponsor Committee approved amendments to the Plan document primarily to address Internal Revenue code requirements and conform provisions of the Plan with administrative practices. Plan benefits are paid from Plan assets based upon a pre-defined formula which considers salary and credited service, subject to certain limitations. Several benefit payment options are available, as defined in the Plan document. Plan Governance The Farm Credit Foundations Plan Sponsor and Trust Committees provide consideration and oversight of the benefit plans offered by participating employers of the AgriBank District, former Ninth and Eleventh District and Northwest Farm Credit Services, ACA as defined by the Farm Credit Foundations Administrative Agreement. As of December 31, 2014, Farm Credit Foundations served 44 participating employers across 29 states with over 8,400 active employees. The governance committees are either elected or appointed representatives (senior leadership and/or Board of Director members) from the participating organizations. The Plan Sponsor Committee is responsible for decisions regarding benefits at the direction of the participating employers. The Trust Committee is responsible for fiduciary and plan administrative functions. In addition, the Coordinating Committee (the Committee) was formed to govern the Ninth Farm Credit District Pension Plan, The Eleventh Farm Credit District Employees Retirement Plan and the former Ninth and Eleventh District Pension Restoration Plan. The Committee consists of the respective employers representatives to the Plan Sponsor Committee. The sole purpose of the Committee is to focus on the governance of its employers qualified and nonqualified retirement plans. Funding Policy The Employers contribute amounts necessary on an actuarial basis to provide the Plan with sufficient assets to meet the benefits to be paid to participants. The Plan s funding policy is to contribute amounts which represent normal cost, plus amortization of the unfunded accrued liability over five years, plus interest, subject to the full funding limitation or other Internal Revenue Service (IRS) limitations for each plan. The Plan Sponsor Committee approved an amendment to the funding policy that removes the full funding limitation effective January 1, Form of Distribution Each participant shall elect a form of retirement benefit by filing the prescribed forms with the Plan Administrator at any time within six months of the date his/her retirement benefit is to commence, and any such election may be changed or revoked at any time up to the date the participant s retirement commences. 5

7 Form of Distribution Except as otherwise provided in the Plan document, each participant may elect to have his/her retirement benefit paid in any of the following forms, each of which shall be actuarially equivalent: (A) Single life annuity (B) 100% joint and survivor annuity (C) 75% or 50% joint and survivor annuity (D) Lump sum payment, subject to the following: (1) The participant terminated his/her employment on or after January 1, 2006; (2) As of the date the participant terminated his/her employment, the participant was an active participant; (3) Immediately upon termination of his/her employment, the participant was either: a. Eligible to commence a normal annuity, a reduced early annuity, or an unreduced early annuity; or b. Entitled to receive reduced Early Annuity, provided the Participant s election to receive a lump sum distribution is made within twelve months following his/her termination of employment. If a retirement benefit or survivor annuity is payable in the form of a lump sum distribution under this Plan, and the amount of such lump sum distribution does not exceed $1,000, the Plan Administrator will direct distribution to the payee in a lump sum whether or not the payee has elected to receive such lump sum distribution. Regulatory Compliance The Department of Labor has determined the Plan to be a governmental plan; therefore, the Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Plan Administration The Plan provides that an employee of a participating employer who has satisfied the Plan's eligibility requirements, will have rights to benefits under the Plan. Farm Credit Foundations serves as Plan Administrator. The Farm Credit Foundations Trust Committee has primary responsibility for administration and interpretation of the Plan and investment of the Plan assets. The Farm Credit Foundations Trust Committee is the trustee for the Plan assets invested in the Master Trust. The trustee supervises and administers all investments and related activities, including such functions as purchases, sales, reinvestment, and collection of investment income. Certain income and expense items of the investments in the Master Trust are recorded at the Master Trust level. These include investment expenses, interest income, and dividends. Effective January 1, 2014, Bank of New York Mellon replaced Wells Fargo Bank, N.A. (Wells Fargo) as custodian for the Plan assets. As of December 31, 2014, Bank of New York Mellon was the custodian for the Plan assets and New York Life Trust Company was the third-party administrator for the Plan. Although the Master Trust still exists, effective January 1, 2014 each underlying plan in the Master Trust invests at the plan level and not at the Master Trust level. Each plan s assets are invested according to the plan s investment strategy. Plan Termination Although there has been no expression of intent to do so, the Plan Sponsor Committee at the direction of the former Eleventh District Employers Coordinating Committee, has the right under the Plan to discontinue contributions at any time and to terminate the Plan subject to the plan provisions. Upon either full or partial termination of the Plan, the present value of benefits due to participants would be distributed to participants. Plan assets in excess of obligations would be returned to the Employers. Obligations and liabilities in excess of assets would be the responsibility of the Employers. As the Plan is not subject to ERISA, the Plan s benefits are not insured by the Pension Benefit Guaranty Corporation. Accordingly, the amount of accumulated benefits that participants would receive in the event of the Plan s termination is contingent on the sufficiency of the Plan s net assets to provide benefits at that time. 6

8 NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accompanying financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Accordingly, income is recorded in the year earned and expenses are recorded in the year incurred. Use of Estimates 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, as well as disclosures of contingent assets and liabilities. Actual results could differ from those estimates. Refer to Note 5 for a description of the method and assumptions used to determine the actuarial present value of accumulated plan benefits and any changes made to the method and assumptions between December 31, 2014 and Fair Value Measurements The accounting guidance describes three levels of inputs that may be used to measure fair value. Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the Plan has the ability to access at the measurement date. Level 2: Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. Level 2 inputs include the following: quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active so that they are traded less frequently than exchange-traded instruments, the prices are not current, or principal market information is not released publicly, inputs other than quoted prices that are observable for the asset or liability, and inputs derived principally from or corroborated by observable market data by correlation or other means. Level 3: Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities. These unobservable inputs reflect the Plan s own assumptions about assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. In addition, assets measured at net asset value (NAV) per share which the Plan does not have the ability to redeem at NAV per share at the measurement date are level 3 assets. The asset or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. There have been no changes in the valuation methodologies used at December 31, 2014 and Investment Valuation and Income Recognition The Plan s investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Short-term investment funds are valued at cost which approximates fair value. The fair value of the Plan s interest in the Master Trust is based on the beginning of year value of the Plan s interest in the trust plus actual contributions and allocated investment income or losses less actual distributions and allocated administrative expenses. Purchases and sales of investments are recorded on a trade date basis. Interest income is accrued based on the terms of the underlying investments and dividend income is recorded on the ex-dividend date. Net investment income includes the Plan s gains and losses on investments purchased and sold as well as held during the year. Benefits and Expenses Benefit payments to participants are recorded upon distribution. All benefit payments and eligible administrative expenses are paid from Plan assets. Administrative and other expenses of the Plan consist of legal, actuarial, auditing, recordkeeping, and custodial fees. 7

9 Recently Issued or Adopted Accounting Pronouncements We have assessed the potential impact of accounting standards that have been issued, but are not yet effective, and have determined that no such standards are expected to have a material impact to our consolidated financial statements. NOTE 3: INCOME TAX STATUS The IRS has determined and informed the Farm Credit Foundations Plan Sponsor and Trust Committees by a letter dated April 21, 2014, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). Although the Plan has been amended since receiving the determination letter, the Plan administrator and the Plan's tax counsel believe that the Plan is designed, and is currently being operated, in compliance with the applicable requirements of the IRC and, therefore, believe that the Plan is qualified, and the related trust is tax-exempt. U.S. GAAP requires the Trust Committee to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to NOTE 4: INVESTMENTS Interest in Master Trust The Plan s investments are in a master trust which holds the investment assets of the Plan, Northwest Farm Credit Services Retirement Plan, AgriBank District Retirement Plan, and Ninth Farm Credit District Pension Plan. Each plan s share of the Master Trust is determined by the use of accumulation units, with each unit representing an undivided interest in the Master Trust. The plans are credited with units purchased and charged with units to be paid or forfeited at the monthly accumulation unit value. Net assets, net investment income, gains and losses, and administrative expenses are allocated to the participating plans based upon the weighted average units held during the period. The Plan s interest in the Master Trust was approximately 13% and 5% at December 31, 2014 and 2013, respectively. The Plan s investment in the Master Trust was greater than 5% of net assets available for benefits at December 31, 2014 and The Master Trust also included investments owned by the 401(k) plan as of December 31, The 401(k) plan investments were removed from the Master Trust effective January 1, 2014 and were invested in a stand-alone trust. The following tables present the fair values of investments in the Master Trust as of December 31: 2014 Money market $ 20,380,311 Commingled trust funds Fixed-income funds 417,249,785 International equity funds 324,319,683 Domestic equity funds 204,847,048 Real estate funds 88,541,054 Total commingled trust funds 1,034,957,570 Investment insurance contract 6,736,607 Cayman Islands exempted companies 133,248,003 Total investments held by Master Trust $ 1,195,322,491 8

10 2013 Money market $ 83,579,422 Corporate bonds 460,050 Government securities 71,175 Common stocks 809,736,638 Mutual funds 1,436,632,750 Commingled trust funds 463,457,703 Cayman Islands exempted company 4,549,417 Investment insurance contracts 86,952,339 Long/short equity limited partnership 77,845,517 Pending investment trades 21,634,587 Total investments held by Master Trust 2,984,919,598 Notes receivable from participants 21,138,235 Total Master Trust $ 3,006,057,833 Master Trust investment income for the years ended December 31 is as follows: 2014 Common stocks $ 8,367,996 Mutual funds (13,354,886) Commingled trust funds Fixed-income funds 36,140,919 International equity funds 2,926,280 Domestic equity funds 18,811,328 Real estate funds 9,886,321 Total commingled trust funds 67,764,848 Cayman Islands exempted companies 3,493,651 Long/short equity limited partnership 618,898 Total investments held by Master Trust 66,890,507 Interest and dividends 367,035 Total net investment income $ 67,257, Money market $ 2,027,258 Corporate bonds 72,110 Government securities 11,156 Common stocks 216,080,053 Mutual funds 199,618,059 Commingled trust funds 10,316,484 Cayman Islands exempted company 3,151,419 Investment insurance contracts 5,177,535 Long/short equity limited partnership 12,320,597 Securities lending cash collateral 44,228 Total net appreciation 448,818,899 Interest and dividends 19,320,480 Less: investment management expenses 15,698 Total net investment income $ 468,123,681 Securities Lending The Master Trust had a securities lending program with Wells Fargo. In July 2012, the Trust Committee formally requested to exit the securities lending program with Wells Fargo. In September 2012, a pro rata contribution was made by each pension plan to the Master Trust to satisfy the net obligation of the securities lending program with Wells Fargo. The total contribution was $6,456,043, of which the Plan contributed $858,769. Prior to the exit and liquidation, no collateral had been sold or repledged. The securities purchased from the securities lending program were valued at approximately $2,900,000, resulting in an approximate net unrealized loss of $3,500,000. During November 2012, a portion of the securities purchased were liquidated from the Master Trust at a realized loss of 9

11 $2,424,352, of which the Plan realized $322,484. As of December 31, 2012, the Master Trust held the remaining securities in a net loss position of $1,129,305 classified as Money market investments. No securities from this program were held as of December 31, The Trust Committee, which serves as the trustee of the Plan, is one of the plaintiff class members in a class action federal lawsuit in Minnesota alleging a variety of causes of action including breach of fiduciary duty against Wells Fargo for its handling of the securities lending program. See City of Farmington Hills Employees Retirement System v. Wells Fargo (Civ. No , D. Minn.). On August 14, 2014, the United States District Court for the District of Minnesota approved the settlement agreement reached between the parties to agreement. Settlement proceeds in the amount of $274,530 were received by the Master Trust on March 2, The Plan was allocated $33,401 from the settlement proceeds which are included in Plan Interest in Master Trust on the Statement of Net Assets Available for Benefits as of December 31, 2014 and Master Trust Income on the Statement of Changes in Net Assets Available for Benefits for the period ending December 31, NOTE 5: ACCUMULATED PLAN BENEFITS Accumulated plan benefits are those future periodic payments, including lump-sum distributions, which are attributable under the Plan s provisions to the service employees have rendered. Accumulated plan benefits include benefits expected to be paid to retired or terminated employees or their beneficiaries, beneficiaries of employees who have died, and present employees or their beneficiaries. The actuarial present value of accumulated plan benefits is determined by the Plan s actuary by applying actuarial assumptions to adjust the accumulated plan benefits to reflect the time value of money and the probability of payment between the valuation date and the expected date of payment. The significant assumptions used in the valuations as of December 31 are detailed below: Mortality RP-2014 Full Generational Table RP-2000 Full Generational Table Interest rate 7.25% per annum 7.25% per annum Compensation increases 5.0% per annum 5.0% per annum Lump sum interest rate 8.0% per annum 8.0% per annum The foregoing actuarial assumptions are based on the presumption that the Plan will continue. Were the Plan to terminate, different actuarial assumptions and other factors might be applicable in determining the actuarial present value of accumulated plan benefits. The actuarial present value of accumulated plan benefits at December 31 is summarized as follows: Actuarial present value of accumulated plan benefits Vested benefits Participants and beneficiaries currently receiving payments $ 98,676,368 $ 72,303,058 Other participants 62,296,392 74,942,743 Total vested benefits 160,972, ,245,801 Nonvested benefits 2,722,563 4,115,082 Actuarial present value of accumulated plan benefits $ 163,695,323 $ 151,360,883 Vested benefits reflect benefits based on current credited service. Nonvested benefits reflect benefits based on future events. 10

12 The changes in actuarial present value of accumulated plan benefits for the years ended December 31 are summarized as follows: Actuarial present value of accumulated plan benefits, beginning of year $ 151,360,883 $ 135,345,645 Increase (decrease) during the year attributable to: Interest 10,973,664 10,827,652 Benefits accumulated and experience changes 16,159,225 3,644,858 Plan amendments - 170,473 Changes in actuarial assumptions (4,717,968) 9,278,098 Benefits paid (10,080,481) (7,905,843) Net increase 12,334,440 16,015,238 Actuarial present value of accumulated plan benefits, end of year $ 163,695,323 $ 151,360,883 The actuarial present value of accumulated plan benefits increased in both 2014 and Changes in actuarial assumptions decreased accumulated plan benefits in 2014 primarily due to updated actuarial assumptions driven by an updated mortality table and the change in the rate of retirements observed in a comprehensive actuarial assumption study. Changes in actuarial assumptions increased accumulated plan benefits in 2013 primarily due to a change in the interest rate updated to reflect actuarial assumptions about returns on Plan assets. NOTE 6: RISKS AND UNCERTAINTIES The Plan provides for investment in a variety of investment funds. In general, investments are exposed to various risks, such as interest rate, credit, and overall market volatility risk. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the values of the investments will occur in the near term and that such changes could materially affect the amounts reported in the Statements of Net Assets Available for Benefits. Plan contributions and the actuarial present value of accumulated plan benefits are calculated based on certain assumptions pertaining to interest rates, inflation rates, long-term return on investments, and mortality, all of which are subject to change. Due to uncertainties inherent in the estimation process, it is at least reasonably possible that changes in these estimates in the near term would be material to the financial statements. NOTE 7: RELATED PARTY Farm Credit Foundations paid certain expenses on behalf of the Plan and was reimbursed by the participating employers for those expenses. NOTE 8: FAIR VALUE OF FINANCIAL INSTRUMENTS The Plan uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. For additional information on how the Plan measures fair value, refer to Note 2. In addition to assets held in the Master Trust, the Plan also held short-term investments of $823,178 and $656,318 at December 31, 2014 and 2013, respectively. The fair value measurements of these short-term investments were determined using Level 1 inputs and are measured on a recurring basis. 11

13 The following table presents the fair value hierarchy for the balances of the assets of the Master Trust measured at fair value on a recurring basis as of December 31: 2014 Level 1 Level 2 Level 3 Total Money market $ 20,380,311 $ - $ - $ 20,380,311 Commingled trust funds Fixed-income funds - 417,249, ,249,785 International equity funds - 324,319, ,319,683 Domestic equity funds - 204,847, ,847,048 Real estate funds - 88,541,054-88,541,054 Total commingled trust funds - 1,034,957,570-1,034,957,570 Investment insurance contract - 6,736,607-6,736,607 Cayman Islands exempted companies - 132,516, , ,248,003 Total investments at fair value $ 20,380,311 $ 1,174,210,595 $ 731,585 $ 1,195,322, Level 1 Level 2 Level 3 Total Money market $ 83,579,422 $ - $ - $ 83,579,422 Corporate bonds - 460, ,050 Government securities - 71,175-71,175 Common stocks: Information technology 129,264, ,264,190 Industrials 104,592, ,592,872 Financial 120,391, ,391,270 Health care 82,862, ,862,380 Consumer 158,311, ,311,452 Energy 59,946, ,946,300 Other 72,328, ,328,309 Material 45,243, ,243,227 Telecomunications 19,640, ,640,288 Utilities 17,156, ,156,350 Total common stocks 809,736, ,736,638 Mutual funds: Fixed income funds 310,836, ,836,391 Domestic funds 830,936, ,936,584 International funds 276,059, ,059,984 Other 18,799, ,799,791 Total mutual funds 1,436,632, ,436,632,750 Commingled trust funds: Stable value funds - 322,587, ,587,202 Index collective funds - 89,643,055-89,643,055 Real Estate Funds - 51,227,446-51,227,446 Total commingled trust funds - 463,457, ,457,703 Cayman Islands exempted company - - 4,549,417 4,549,417 Investment insurance contracts - 7,235,880 79,716,459 86,952,339 Long/short equity limited partnership ,845,517 77,845,517 Pending investment trades 21,634, ,634,587 Total investments at fair value $ 2,351,583,397 $ 471,224,808 $ 162,111,393 $ 2,984,919,598 12

14 The following table presents changes in Master Trust assets measured at fair value using Level 3 inputs on a recurring basis for the years ended December 31, 2014 and 2013: Investment insurance contract Cayman Islands exempted companies Long/short equity limited partnership Total Beginning Balance, 1/1/2014 $ 79,716,459 $ 4,549,417 $ 77,845,517 $ 162,111,393 Actual return on Plan assets: Still held at the reporting date - 36,037-36,037 Sold during the period , ,898 Purchases Sales - (4,549,416) (78,464,415) (83,013,831) Transfers out of Master Trust (79,716,459) - - (79,716,459) Transfers into Level 3-695, ,547 Ending Balance, 12/31/2014 $ - $ 731,585 $ - $ 731,585 Investment insurance contracts Cayman Islands exempted company Long/short equity limited partnership Total Beginning Balance, 1/1/2013 $ 76,674,749 $ 23,032,585 $ 65,524,920 $ 165,232,254 Actual return on Plan assets: Still held at the reporting date 4,412,615 3,151,419 12,320,597 19,884,631 Sold during the period 626, ,135 Purchases 43, ,484 Sales (2,040,524) (21,634,587) - (23,675,111) Ending Balance, 12/31/2013 $ 79,716,459 $ 4,549,417 $ 77,845,517 $ 162,111,393 The investment insurance contract noted in the tables above was removed from the Master Trust effective January 1, 2014 and placed in a standalone trust with the assets of the 401(k) plan. See Note 4 for additional information about the change in Master Trust assets due to removal of 401(k) plan assets. The Cayman Islands exempted company balance transferred into level 3 represents a pending sale of the remaining balance of one of the two Cayman Islands exempted company investments. The balance was classified as level 1 in 2013 as it was considered an unsettled trade. Full trade settlement did not occur in 2013, however, due to lack of liquidity when the trade was initiated. See additional information about this investment following the chart below. There were no significant transfers into or out of Level 1 or Level 2 during the Plan years ended December 31, 2014 or

15 The following table sets forth additional disclosures of the Master Trust for the fair value measurement of investments in certain entities that calculate NAV per share (or its equivalent) as of December 31: Redemption Redemption Investment Type Fair Value Frequency Notice Period 2014 Commingled trust funds Fixed-income funds $ 417,249,787 Daily 15 days International equity funds 324,319,683 Daily 15 days Domestic equity funds 204,847,048 Daily 15 days Real estate fund - US 56,386,717 Quarterly 45 days Real estate fund - global 32,154,337 Daily 15 days Total commingled trust funds 1,034,957,572 Cayman Islands exempted companies 133,248,003 Quarterly-Annually Days 2013 Commingled trust funds Stable value funds $ 322,587,202 Daily Daily Index collective funds 89,643,055 Daily Daily Real estate funds 51,227,446 Quarterly 45 days Total commingled trust funds 463,457,703 Long/short equity limited partnership 77,845,517 Semi-annually 95 days Cayman Islands exempted company 4,549,417 Quarterly 100 Days There were no investments that calculate NAV per share in the Master Trust with unfunded commitments at December 31, 2014 or Events that may restrict the ability to transact with funds that calculate NAV per share were not considered probable as of December 31, 2014, except for restrictions on investment redemptions instituted during the 2013 plan year by the Cayman Islands exempted company. The Master Trust s received a final distribution in June 2015 for the remaining investment in the Cayman Islands investment company. Objectives The commingled trust fund fixed-income funds include separately managed investment funds with objectives that include achieving: A high level of current income from a diversified portfolio of domestic and foreign debt securities which are rated investment grade or below investment grade or are unrated. A total return from current income and capital appreciation by investing in a diversified portfolio of fixed income securities with maturities generally ranging between 1-10 years. A total return from current income and capital appreciation by investing in a diversified portfolio of fixed-income securities with maturities generally exceeding 10 years. The commingled trust fund international equity funds include separately managed investment funds with objectives that include: Achieving growth of capital by investing in a diversified portfolio of primarily non-u.s. equity securities. Replicating, before investment fund expenses, the total return of the Morgan Stanley Capital International All- Country World Ex-U.S. Index over the long term. Achieving long-term growth of capital by investing in a diversified portfolio of primarily U.S. and non-u.s. equity securities. The commingled trust fund domestic equity funds include separately managed investment funds with objectives that include achieving: 14

16 Long-term growth of capital by investing in a diversified portfolio of primarily large-capitalization U.S. companies. Long-term growth of capital by investing in a diversified portfolio of primarily small and mid-sized U.S. companies. Replicate, before investment fund expenses, the total return of the S&P 500 Index over the long term. The commingled trust fund real estate fund - US owns and seeks improved real estate projects, such as office, retail, residential, and industrial investments with stabilized occupancies that produce a relatively high level of current income combined with moderate appreciation potential. The commingled trust fund real estate fund global investment objective is to achieve a high total return, consisting of capital appreciation and current income. The Cayman Islands exempted companies investments held at December 31, 2014 consisted of two investments, each with different investment objectives. The first has an objective to generate consistent long-term capital appreciation with diversification of risk through the use of a multi-manager, multi-strategy global investment approach. The second has an investment objective to generate superior, long-term return with less risk than equity markets. The following are investment objectives for certain investments held at December 31, 2013 but were no longer held as of December 31, 2014: The stable value fund is designed for investors seeking stable returns and competitive rates over the long-term. The investment objective of the index collective fund is to match the return of the Barclays Capital Aggregate Bond Index. The real estate fund owns and seeks improved real estate projects, such as office, retail, residential, and industrial investments with stabilized occupancies that produce a relatively high level of current income combined with moderate appreciation potential. The long/short equity limited partnership generally implements non-traditional or alternative investment strategies. NOTE 9: SUBSEQUENT EVENTS The Plan has evaluated subsequent events through August 11, 2015, the date the financial statements were available to be issued. There have been no material subsequent events that would require recognition in these financial statements or disclosure in the Notes to Financial Statements. 15