UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(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
| ¨ |
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
to
Commission
file number: 1-32258
| A. |
Full title of the plans and the address of the plans, if different from that of the issuer named below: |
RAI 401k Savings Plan
Puerto Rico Savings & Investment Plan
| B. |
Name of issuer of the securities held pursuant to the plans and the address of its principal executive office: |
Reynolds American Inc.
401 North Main Street
Winston-Salem, NC 27101
REQUIRED INFORMATION
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4. |
The RAI 401k Savings Plan and the Puerto Rico Savings & Investment Plan are subject to the requirements of the Employee Retirement Income Security Act of 1974, referred to as ERISA. A copy of the most recent
audited financial statements and supplemental schedules, as required, of the RAI 401k Savings Plan and the Puerto Rico Savings & Investment Plan, prepared in accordance with the financial reporting requirements of ERISA, is attached as
Exhibit 99.1 and Exhibit 99.2, respectively, to this report. |
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| Exhibits: |
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| 23.1 |
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Consent of KPMG LLP. |
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| 99.1 |
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Audited financial statements and supplemental schedule of the RAI 401k Savings Plan for the years ended December 31, 2014 and 2013. |
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| 99.2 |
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Audited financial statements and supplemental schedule of the Puerto Rico Savings & Investment Plan for the years ended December 31, 2014 and 2013. |
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit
plans) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
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RAI 401k Savings Plan |
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| Date: June 19, 2015 |
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/s/ Constantine E. Tsipis |
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Constantine E. Tsipis |
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Secretary, RAI Employee Benefits Committee |
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Puerto Rico Savings & Investment Plan |
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| Date: June 19, 2015 |
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/s/ Constantine E. Tsipis |
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Constantine E. Tsipis |
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Secretary, RAI Employee Benefits Committee |
EXHIBIT INDEX
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| Exhibits |
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| 23.1 |
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Consent of KPMG LLP. |
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| 99.1 |
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Audited financial statements and supplemental schedule of the RAI 401k Savings Plan for the years ended December 31, 2014 and 2013. |
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| 99.2 |
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Audited financial statements and supplemental schedule of the Puerto Rico Savings & Investment Plan for the years ended December 31, 2014 and 2013. |
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Reynolds American Inc.:
We consent to the incorporation by reference in the registration statements (No. 333-186618, 333-117813, 333-117814, and 333-159009) on Form S-8 of Reynolds
American Inc. of our reports dated June 19, 2015, with respect to the statements of net assets available for benefits of RAI 401k Savings Plan and Puerto Rico Savings & Investment Plan as of December 31, 2014 and 2013, the related
statements of changes in net assets available for benefits for the years then ended, and the supplemental schedules of Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2014, which reports appear in the
December 31, 2014 annual report for Form 11-K of RAI 401k Savings Plan and Puerto Rico Savings & Investment Plan.
/s/ KPMG LLP
Greensboro, North Carolina
June 19, 2015
Exhibit 99.1
RAI 401K SAVINGS PLAN
Financial Statements and Supplemental Schedule
December 31, 2014 and 2013
(With Report of Independent Registered Public Accounting Firm Thereon)
RAI 401K SAVINGS PLAN
Table of Contents
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Pages(s) |
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| Report of Independent Registered Public Accounting Firm |
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1 |
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| Financial Statements: |
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| Statements of Net Assets Available for Benefits as of December 31, 2014 and 2013 |
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2 |
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| Statements of Changes in Net Assets Available for Benefits for the Years ended December 31, 2014 and 2013 |
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3 |
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| Notes to Financial Statements |
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4–18 |
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| Supplemental Schedule – Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of
December 31, 2014 |
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19–23 |
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| Note: |
Supplemental schedules, other than the one listed above, are omitted because of the absence of conditions under which they are required by Department of Labor Rules and Regulations for Reporting and Disclosures
under the Employee Retirement Income Security Act of 1974. |
Report of Independent Registered Public Accounting Firm
RAI Employee Benefits Committee of RAI 401k Savings Plan:
We
have audited the accompanying statements of net assets available for benefits of RAI 401k Savings Plan (the Plan) as of December 31, 2014 and 2013, and the related statements of changes in net assets available for benefits for the years then
ended. 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Plan as of December 31, 2014 and 2013, and the changes in net assets available for benefits for years then ended, in conformity with U.S. generally accepted accounting principles.
The supplemental information in the accompanying schedule of Form 5500, Schedule H, Line 4i – 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 the Plan’s 2014 financial statements. The supplemental information is presented for the purpose of additional analysis and is not a
required part of the financial statements but includes 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 supplemental
information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other 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, 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 in the
accompanying schedule of Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2014 is fairly stated in all material respects in relation to the 2014 financial statements as a whole.
/s/ KPMG LLP
Greensboro, North Carolina
June 19, 2015
RAI 401K SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 2014 and 2013
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2014 |
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2013 |
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| Assets: |
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| Investments, at fair value: |
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| Cash and cash equivalents |
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$ |
11,683,816 |
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$ |
11,107,473 |
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| Reynolds Stock Fund |
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269,268,407 |
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198,145,952 |
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| Equity (common and preferred stock) |
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28,020,108 |
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24,723,566 |
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| Mutual funds |
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541,364,704 |
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532,500,082 |
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| Common/collective trust funds |
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474,914,652 |
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468,138,066 |
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| Investment contracts with insurance companies |
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350,842,194 |
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380,197,082 |
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| Other |
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3,354 |
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23,748 |
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| Total investments |
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1,676,097,235 |
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1,614,835,969 |
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| Receivables: |
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| Employer contributions |
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1,214,709 |
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394,380 |
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| Due from broker for securities sold |
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1,473,131 |
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1,179,340 |
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| Interest and dividends |
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2,698,378 |
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2,385,249 |
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| Notes receivable from participants |
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13,244,022 |
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13,388,971 |
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| Total receivables |
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18,630,240 |
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17,347,940 |
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| Total assets |
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1,694,727,475 |
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1,632,183,909 |
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| Liabilities: |
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| Accrued administrative expenses |
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252,664 |
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385,838 |
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| Due to broker for securities purchased |
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5,001,980 |
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6,107,584 |
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| Payable for securities purchased on a forward-commitment basis |
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1,433,250 |
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1,736,729 |
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| Total liabilities |
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6,687,894 |
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8,230,151 |
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| Net assets available for benefits before adjustment for fully benefit-responsive investment contracts |
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1,688,039,581 |
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1,623,953,758 |
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| Adjustment from fair value to contract value for fully benefit-responsive investment contracts |
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(887,532 |
) |
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1,615,772 |
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| Net assets available for benefits |
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$ |
1,687,152,049 |
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$ |
1,625,569,530 |
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See accompanying notes to financial statements.
2
RAI 401K SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2014 and 2013
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2014 |
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2013 |
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| Additions: |
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| Investment income: |
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| Net appreciation in fair value of investments |
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$ |
103,423,625 |
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$ |
179,192,694 |
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| Interest and dividends |
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33,309,349 |
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35,766,851 |
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| Total investment income |
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136,732,974 |
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214,959,545 |
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| Interest income on notes receivable from participants |
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554,258 |
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575,499 |
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| Contributions: |
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| Employer contributions |
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37,054,933 |
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33,941,005 |
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| Participant contributions |
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39,716,321 |
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35,842,417 |
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| Participant rollover contributions |
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2,090,887 |
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|
878,822 |
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| Total contributions |
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78,862,141 |
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70,662,244 |
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| Total additions |
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216,149,373 |
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286,197,288 |
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| Deductions: |
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| Benefits paid to participants |
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153,744,875 |
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166,245,617 |
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| Administrative expenses |
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|
821,979 |
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|
966,859 |
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|
|
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| Total deductions |
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154,566,854 |
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167,212,476 |
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| Net increase in net assets available for benefits |
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|
61,582,519 |
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|
118,984,812 |
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| Net assets available for benefits at beginning of year |
|
|
1,625,569,530 |
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|
|
1,506,584,718 |
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|
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| Net assets available for benefits at end of year |
|
$ |
1,687,152,049 |
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|
$ |
1,625,569,530 |
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See accompanying notes to financial statements.
3
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
The following brief description of the RAI 401k Savings Plan,
referred to as the Plan, is provided for general information purposes only. Participants should refer to the plan document for more complete information.
The Plan is a voluntary defined contribution retirement plan for
eligible employees of Reynolds American Inc., referred to as RAI or the Company, and participating subsidiaries: RAI Services Company, RAI International, Inc., R.J. Reynolds Tobacco Company, Reynolds Innovations Inc., Reynolds Finance Company, R.J.
Reynolds Global Products, Inc., R.J. Reynolds Vapor Company, Niconovum USA, Inc., Kentucky BioProcessing, Inc., Santa Fe Natural Tobacco Company, Inc., referred to as Santa Fe, and American Snuff Company, LLC, referred to as ASC. All eligible
employees become participants unless they elect not to participate. Kentucky BioProcesing, Inc. was a participating company effective January 1, 2014. RAI is the Plan Sponsor. The RAI Employee Benefits Committee controls and manages the
operation and administration of the Plan. Fidelity Investments Institutional Operations Company, Inc., referred to as Fidelity Operations or Recordkeeper, serves as the recordkeeper for the Plan. Fidelity Management Trust Company, referred to as
Fidelity or Trustee, serves as the Plan’s trustee. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, referred to as ERISA.
Participant Contributions
Each year, participants may make pre-tax and/or Roth 401(k) contributions to the Plan of up to 50%
of their compensation, as defined in the Plan document. The first 6% of such pre-tax and/or Roth contributions, referred to as match-eligible contributions, are
eligible for employer matching contributions as set forth below. In addition, participants may make after-tax contributions to the Plan of up to 50% of their compensation, either in lieu of or in combination
with pre-tax and/or Roth contributions, provided that the combined percentage of compensation for pre-tax, Roth and after-tax
contributions is a minimum of 1% and a maximum of 50% of compensation and shall not exceed the participant’s after-tax compensation. Upon an employee’s initial hire date, he or she is automatically
enrolled in the Plan with pre-tax contributions equal to 6% of compensation. A participant may elect a different contribution percentage (including 0%) at any time.
Employer Contributions
With respect to RAI Employees, as defined in the Plan document, the appropriate participating companies make matching contributions of 50% of a
participant’s match-eligible contributions with respect to participants who are accruing a benefit under a defined benefit plan sponsored by RAI, and 100% of a participant’s match-eligible contributions with respect to participants who are not accruing a benefit under a defined benefit plan sponsored by RAI. In addition, the appropriate participating companies make retirement
enhancement contributions to accounts of eligible RAI Employees equal to 3% to 9% of such participants’ eligible compensation, depending on the eligible participant’s hire date, age and years of service as of January 1, 2006.
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
With respect to ASC Employees, as defined in the Plan document, ASC makes matching
contributions of 100% of a participant’s match-eligible contributions. In addition, ASC makes retirement enhancement contributions to accounts of eligible ASC Employees equal to 3% or 6% of each
such participant’s eligible compensation, depending on the eligible participant’s hire or transfer date.
With respect to Santa
Fe Employees, as defined in the Plan document, Santa Fe makes matching contributions of 100% of a participant’s match-eligible contributions. In addition, Santa Fe makes retirement enhancement
contributions to accounts of eligible Santa Fe Employees equal to 3% of each such participant’s eligible compensation.
Each participant’s account is credited with the
participant’s contributions and allocations of the Company or participating subsidiaries’ contributions and Plan earnings, and charged with the participant’s withdrawals, Plan losses and an allocation of administrative expenses.
Allocations are based on participant contributions, account balances, or compensation, as defined in the Plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Participants are immediately vested in their contributions and actual
earnings thereon. Vesting in employer contributions and earnings thereon made to a participant’s account occurs upon the earlier of the completion of 24 months of service with the Company and its participating subsidiaries or upon the
occurrence of certain events as defined in the Plan document.
Plan investments are participant directed. Upon enrollment in
the Plan, a participant may direct contributions in 1% increments or in fractional increments in any of 22 investment fund options, or in a self-directed brokerage account managed by Fidelity.
Participants may change or transfer their investment options at any time via telephone or a secure internet website.
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(f) |
Notes Receivable from Participants |
Participants may borrow from their fund
accounts a minimum of $1,000 up to a maximum of the lesser of 50% of their vested account balance, reduced by the highest outstanding loan balance during the preceding 12 months, or $50,000, and limited by certain restrictions in the Plan
document. Generally, loan terms shall not be for more than five years, except that certain loans transferred shall continue in effect until paid off or defaulted under the terms of the loan instruments. The loans are secured by the balance in
the participant’s account and bear interest at a rate commensurate with prevailing rates as determined by the Plan administrator. Principal and interest are paid ratably through payroll deductions. Participants may continue to make loan
repayments via electronic funds transfer in order to prevent a default following termination of employment.
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
Upon termination of service, a participant is entitled to
receive a lump sum amount equal to the value of the participant’s vested interest in their account, or, if elected by the participant, monthly installments calculated in accordance with rules set forth in the Plan. Partial lump sum
distributions are also available after termination of service.
Expenses relating to the purchase or sale of investments are included
in the cost or deducted from the proceeds, respectively. Direct charges and expenses, including investment manager fees attributable to specific investment funds, may be charged against that investment fund. Administrative expenses such as trustee,
auditor, general Plan recordkeeping and Internal Revenue Service user fees may be paid directly from the Plan and are allocated to participant accounts.
Forfeitures are used to reduce future employer contributions.
Certain forfeitures may be restored if the participant is reemployed before accruing five consecutive break-in-service years, as defined in the Plan document. For
the years ended December 31, 2014 and 2013, employer contributions were reduced by $390,000 and $344,000, respectively, by forfeited nonvested accounts. At December 31, 2014 and 2013, forfeited nonvested accounts totaled $64,231 and
$41,751, respectively.
| (2) |
Summary of Significant Accounting Policies |
The accompanying financial statements of the Plan have been
prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
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(b) |
Investment Valuation and Income Recognition |
Investments are valued at fair
value. See note 4 for discussion of fair value measurement. 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. The Plan has entered into a pooled separate account and various fully benefit-responsive investment contracts with investment and insurance
companies, which maintain the contributions in general accounts. The accounts are credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses.
Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant
measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount
participants would receive if they were to initiate permitted transactions under the terms of the Plan. The statement of net assets available for benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The statement of changes in net assets available for benefits is prepared on a contract value basis.
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
The contracts are included in the financial statements at contract value after adjustments
from fair value. Contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may direct the withdrawal or transfer of all or a portion of their investment at
contract value. There are no reserves against contract value for credit risk of the contract issuer or otherwise. The average yield was 1.00% and 0.87% for the years ended December 31, 2014 and 2013, respectively. The contract rates ranged from
0.19% to 1.97% and 0.18% to 2.07% at December 31, 2014 and 2013, respectively. The crediting interest rate is based on a formula agreed upon with the issuer, but may not be less than certain percentages.
Certain events limit the ability of the Plan to transact at contract value with the insurance company and the financial institution issuer.
Such events include the following: (i) amendments to the plan documents, including complete or partial Plan termination or merger with another plan; (ii) changes to the Plan’s prohibition on competing investment options or deletion of
equity wash provisions; (iii) bankruptcy of the Plan Sponsor or other Plan Sponsor events, e.g., divestitures or spin-offs of a subsidiary, which cause a significant withdrawal from the Plan or
(iv) the failure of the Plan to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan administrator does not believe that the occurrence of any such event, which would limit the
Plan’s ability to transact at contract value with participants, is probable.
The guaranteed investment contract does not permit the
insurance company to terminate the agreement prior to the scheduled maturity date.
The following tables present the Plan’s investment
contracts with insurance companies as of December 31, 2014 and 2013:
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| |
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Major
credit ratings |
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Investments
at fair value |
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Adjustment
to contract
value |
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Investments
at contract
value |
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| December 31, 2014: |
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| Synthetic guaranteed investment contracts: |
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| Prudential Ins. Co. of America |
|
A1/AA- |
|
$ |
44,643,952 |
|
|
$ |
(192,725 |
) |
|
$ |
44,451,227 |
|
| Voya Ins. And Annuity Co. |
|
A3/A- |
|
|
10,053,254 |
|
|
|
(14,092 |
) |
|
|
10,039,162 |
|
| American General Life Ins. Co. |
|
A2/A+ |
|
|
10,053,254 |
|
|
|
(16,579 |
) |
|
|
10,036,675 |
|
| Voya Ins. And Annuity Co. |
|
A3/A- |
|
|
109,255,055 |
|
|
|
(153,145 |
) |
|
|
109,101,910 |
|
| Prudential Ins. Co. of America |
|
A1/AA- |
|
|
82,310,745 |
|
|
|
(355,330 |
) |
|
|
81,955,415 |
|
| American General Life Ins. Co. |
|
A2/A+ |
|
|
94,525,934 |
|
|
|
(155,661 |
) |
|
|
94,370,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investment contracts with insurance companies |
|
|
|
$ |
350,842,194 |
|
|
$ |
(887,532 |
) |
|
$ |
349,954,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
| |
|
Major
credit ratings |
|
Investments
at fair value |
|
|
Adjustment
to contract
value |
|
|
Investments
at contract
value |
|
|
|
|
|
|
| December 31, 2013: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Synthetic guaranteed investment contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Prudential Ins. Co. of America |
|
A1/AA- |
|
$ |
89,673,675 |
|
|
$ |
788,670 |
|
|
$ |
90,462,345 |
|
| ING Life Ins. and Annuity Co. |
|
A3/A- |
|
|
107,695,911 |
|
|
|
200,600 |
|
|
|
107,896,511 |
|
| Prudential Ins. Co. of America |
|
A1/AA- |
|
|
90,988,047 |
|
|
|
800,230 |
|
|
|
91,788,277 |
|
| American General Life Ins. Co. |
|
A2/A+ |
|
|
61,012,989 |
|
|
|
(59,805 |
) |
|
|
60,953,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
349,370,622 |
|
|
|
1,729,695 |
|
|
|
351,100,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Guaranteed investment contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Metropolitan Life Ins. Co. |
|
Aa3/AA- |
|
|
10,316,281 |
|
|
|
(51,221 |
) |
|
|
10,265,060 |
|
| Metropolitan Life Ins. Co. |
|
Aa3/AA- |
|
|
6,076,418 |
|
|
|
— |
|
|
|
6,076,418 |
|
| New York Life Ins. Co. |
|
Aaa/AA+ |
|
|
3,064,710 |
|
|
|
(40,009 |
) |
|
|
3,024,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,457,409 |
|
|
|
(91,230 |
) |
|
|
19,366,179 |
|
|
|
|
|
|
| Pooled separate account: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| BNP Income Plus Fund |
|
|
|
|
11,369,051 |
|
|
|
(22,693 |
) |
|
|
11,346,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investment contracts with insurance companies |
|
|
|
$ |
380,197,082 |
|
|
$ |
1,615,772 |
|
|
$ |
381,812,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(c) |
Valuation of Notes Receivable from Participants |
Notes receivable from
participants are valued at amortized cost plus accrued interest.
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, liabilities, and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates. The Plan utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. The funds
held by the Plan invest in securities with contractual cash flows, such as asset backed securities, collateralized mortgage obligations and commercial mortgage backed securities, including securities backed by subprime mortgage loans. The value,
liquidity and related income of these securities are sensitive to changes in economic conditions, including real estate value, delinquencies or defaults, or both, and may be adversely affected by shifts in the market’s perceptions of the
issuers and changes in interest rates. 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 the amounts reported in the financial statements.
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
Benefits are recorded when paid.
| |
(f) |
Securities Purchased on a Forward-Commitment Basis |
Delivery and payment for securities that have been purchased by the portfolios underlying the
security-backed contracts of the Interest Income Fund on a when-issued or other forward-commitment basis can take place a month
or more after the transaction date. During this period, these securities do not earn interest, are subject to market fluctuation, and may increase or decrease in value prior to their delivery. The purchase of securities on a when-issued or other forward-commitment basis may increase the volatility of the portfolios underlying the security-backed contracts if
such purchases are made while remaining substantially fully invested.
The following table presents investments that represent 5% or more of the
Plan’s net assets as of December 31, 2014 and 2013. Except for the Interest Income Fund, which is shown at contract value, all the funds are shown at fair value.
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| |
|
2014 |
|
|
2013 |
|
| Reynolds Stock Fund (4,108,430 and 3,897,293 shares, respectively) |
|
$ |
269,268,407 |
|
|
$ |
198,145,952 |
|
| Vanguard Total Stock (5,420,621 and 5,570,573 shares, respectively) |
|
|
253,630,874 |
|
|
|
235,746,654 |
|
| Interest Income Fund (3,960,095 and 4,513,220 units, respectively) (Fair value of $403,589,631* and $453,768,108* as of
December 31, 2014 and 2013, respectively) |
|
|
402,702,099 |
|
|
|
455,383,880 |
|
| Intech Large Capital Growth (28,413,128 and 30,421,529 shares, respectively) |
|
|
85,084,452 |
|
|
|
82,899,986 |
|
| |
* |
The fair value of the Interest Income Fund is presented net of the receivable and payable. The receivable represents the pending trades for securities sold of $950,180 and $796,358 as of December 31, 2014 and 2013,
respectively. The payable represents the securities purchased on a forward-commitment basis of $1,433,250 and $1,736,729 as of December 31, 2014 and 2013, respectively. |
The Interest Income Fund is an investment option for participants that is a stable value fund comprised of guaranteed investment contracts,
synthetic guaranteed investment contracts, a pooled separate account with an insurance company, collective trust funds and cash and cash equivalents, which are separately disclosed on the statement of net assets available for benefits. The Reynolds
Stock Fund consists primarily of shares of Reynolds American Inc. common stock. See note 4 for additional discussion regarding the Reynolds Stock Fund and detail of the investments in the Reynolds Stock Fund.
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
The Plan’s investments, including gains and losses on investments bought and sold, as
well as held during the year appreciated in value as follows:
|
|
|
|
|
|
|
|
|
| |
|
Years ended December 31 |
|
| |
|
2014 |
|
|
2013 |
|
|
|
|
| Reynolds Stock Fund |
|
$ |
55,088,901 |
|
|
$ |
31,125,518 |
|
| Equity (common and preferred stock) |
|
|
228,901 |
|
|
|
4,550,863 |
|
| Mutual funds |
|
|
19,544,445 |
|
|
|
82,816,429 |
|
| Common/collective trust funds |
|
|
25,199,426 |
|
|
|
56,717,399 |
|
| Investment contracts with insurance companies |
|
|
3,342,105 |
|
|
|
3,982,120 |
|
| Other |
|
|
19,847 |
|
|
|
365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net appreciation in fair value of investments |
|
$ |
103,423,625 |
|
|
$ |
179,192,694 |
|
|
|
|
|
|
|
|
|
|
| (4) |
Fair Value Measurement |
The fair value of assets and liabilities is determined by using
a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market participant assumptions
based on the best information available in the circumstances.
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, essentially an exit price.
The
three levels of the fair value hierarchy are described as follows:
| |
Level 1 – |
Inputs are quoted prices, unadjusted, in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
| |
Level 2 – |
Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. A Level 2 input must be observable for substantially the full term of
the asset or liability. |
| |
Level 3 – |
Inputs are unobservable and reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. |
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
The following table sets forth by level, within the fair value hierarchy, the Plan’s
assets at fair value as of December 31, 2014 and 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Assets at fair value as of December 31, 2014 |
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
|
|
|
| Mutual funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign equities |
|
$ |
62,252,309 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
62,252,309 |
|
| Diversified domestic equities |
|
|
253,630,874 |
|
|
|
— |
|
|
|
— |
|
|
|
253,630,874 |
|
| Intermediate-term bonds |
|
|
56,828,392 |
|
|
|
— |
|
|
|
— |
|
|
|
56,828,392 |
|
| Inflation indexed bonds |
|
|
8,865,246 |
|
|
|
— |
|
|
|
— |
|
|
|
8,865,246 |
|
| Large-cap value |
|
|
63,014,618 |
|
|
|
— |
|
|
|
— |
|
|
|
63,014,618 |
|
| Small-cap value |
|
|
40,672,409 |
|
|
|
— |
|
|
|
— |
|
|
|
40,672,409 |
|
| Mid-cap growth |
|
|
45,680,903 |
|
|
|
— |
|
|
|
— |
|
|
|
45,680,903 |
|
| Other |
|
|
10,419,953 |
|
|
|
— |
|
|
|
— |
|
|
|
10,419,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total mutual funds |
|
|
541,364,704 |
|
|
|
— |
|
|
|
— |
|
|
|
541,364,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Money market funds |
|
|
11,269,697 |
|
|
|
— |
|
|
|
— |
|
|
|
11,269,697 |
|
|
|
|
|
|
| Equities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. domestically traded equities |
|
|
28,020,108 |
|
|
|
— |
|
|
|
— |
|
|
|
28,020,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total equities |
|
|
28,020,108 |
|
|
|
— |
|
|
|
— |
|
|
|
28,020,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Certificates of deposit |
|
|
414,119 |
|
|
|
— |
|
|
|
— |
|
|
|
414,119 |
|
|
|
|
|
|
| Common/collective trust funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign equities |
|
|
— |
|
|
|
10,537,089 |
|
|
|
— |
|
|
|
10,537,089 |
|
| Large-cap growth |
|
|
— |
|
|
|
85,084,452 |
|
|
|
— |
|
|
|
85,084,452 |
|
| Short-term investment fund |
|
|
— |
|
|
|
53,230,507 |
|
|
|
— |
|
|
|
53,230,507 |
|
| Target date funds |
|
|
— |
|
|
|
326,062,604 |
|
|
|
— |
|
|
|
326,062,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total common/collective trust funds |
|
|
— |
|
|
|
474,914,652 |
|
|
|
— |
|
|
|
474,914,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reynolds Stock Fund: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| RAI Common Stock |
|
|
264,049,152 |
|
|
|
— |
|
|
|
— |
|
|
|
264,049,152 |
|
| Fidelity money market fund |
|
|
5,219,255 |
|
|
|
— |
|
|
|
— |
|
|
|
5,219,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Reynolds Stock Fund |
|
|
269,268,407 |
|
|
|
— |
|
|
|
— |
|
|
|
269,268,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Synthetic investment contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fixed income fund |
|
|
— |
|
|
|
64,750,460 |
|
|
|
— |
|
|
|
64,750,460 |
|
| Corporate securities |
|
|
— |
|
|
|
48,119,964 |
|
|
|
— |
|
|
|
48,119,964 |
|
| Government related securities |
|
|
— |
|
|
|
72,639,593 |
|
|
|
— |
|
|
|
72,639,593 |
|
| Other asset backed securities |
|
|
— |
|
|
|
76,771,903 |
|
|
|
— |
|
|
|
76,771,903 |
|
| Commercial mortgage-backed securities |
|
|
— |
|
|
|
20,943,124 |
|
|
|
— |
|
|
|
20,943,124 |
|
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Assets at fair value as of December 31, 2014 |
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
|
|
|
| Residential mortgage-backed securities |
|
$ |
— |
|
|
$ |
63,626,829 |
|
|
$ |
— |
|
|
$ |
63,626,829 |
|
| Short-term investment fund |
|
|
— |
|
|
|
3,990,321 |
|
|
|
— |
|
|
|
3,990,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total synthetic investment contracts |
|
|
— |
|
|
|
350,842,194 |
|
|
|
— |
|
|
|
350,842,194 |
|
|
|
|
|
|
| Other |
|
|
— |
|
|
|
3,354 |
|
|
|
— |
|
|
|
3,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investments at fair value |
|
$ |
850,337,035 |
|
|
$ |
825,760,200 |
|
|
$ |
— |
|
|
$ |
1,676,097,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Assets at fair value as of December 31, 2013 |
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
|
|
|
| Mutual funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign equities |
|
$ |
66,000,738 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
66,000,738 |
|
| Diversified domestic equities |
|
|
235,746,654 |
|
|
|
— |
|
|
|
— |
|
|
|
235,746,654 |
|
| Intermediate-term bonds |
|
|
59,065,447 |
|
|
|
— |
|
|
|
— |
|
|
|
59,065,447 |
|
| Inflation indexed bonds |
|
|
9,141,970 |
|
|
|
— |
|
|
|
— |
|
|
|
9,141,970 |
|
| Large-cap value |
|
|
60,440,640 |
|
|
|
— |
|
|
|
— |
|
|
|
60,440,640 |
|
| Small-cap value |
|
|
48,062,756 |
|
|
|
— |
|
|
|
— |
|
|
|
48,062,756 |
|
| Mid-cap growth |
|
|
43,089,226 |
|
|
|
— |
|
|
|
— |
|
|
|
43,089,226 |
|
| Other |
|
|
10,952,651 |
|
|
|
— |
|
|
|
— |
|
|
|
10,952,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total mutual funds |
|
|
532,500,082 |
|
|
|
— |
|
|
|
— |
|
|
|
532,500,082 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Money market funds |
|
|
10,696,039 |
|
|
|
— |
|
|
|
— |
|
|
|
10,696,039 |
|
|
|
|
|
|
| Equities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. domestically traded equities |
|
|
24,723,566 |
|
|
|
— |
|
|
|
— |
|
|
|
24,723,566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total equities |
|
|
24,723,566 |
|
|
|
— |
|
|
|
— |
|
|
|
24,723,566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Certificates of deposit |
|
|
411,434 |
|
|
|
— |
|
|
|
— |
|
|
|
411,434 |
|
|
|
|
|
|
| Common/collective trust funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreign equities |
|
|
— |
|
|
|
11,671,800 |
|
|
|
— |
|
|
|
11,671,800 |
|
| Large-cap growth |
|
|
— |
|
|
|
82,899,986 |
|
|
|
— |
|
|
|
82,899,986 |
|
| Short-term investment fund |
|
|
— |
|
|
|
74,511,397 |
|
|
|
— |
|
|
|
74,511,397 |
|
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Assets at fair value as of December 31, 2013 |
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
|
|
|
| Target date funds |
|
$ |
— |
|
|
$ |
299,054,883 |
|
|
$ |
— |
|
|
$ |
299,054,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total common/collective trust funds |
|
|
— |
|
|
|
468,138,066 |
|
|
|
— |
|
|
|
468,138,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reynolds Stock Fund: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| RAI Common Stock |
|
|
194,825,877 |
|
|
|
— |
|
|
|
— |
|
|
|
194,825,877 |
|
| Fidelity money market fund |
|
|
3,320,075 |
|
|
|
— |
|
|
|
— |
|
|
|
3,320,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Reynolds Stock Fund |
|
|
198,145,952 |
|
|
|
— |
|
|
|
— |
|
|
|
198,145,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Synthetic investment contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fixed income fund |
|
|
— |
|
|
|
89,673,675 |
|
|
|
— |
|
|
|
89,673,675 |
|
| Corporate securities |
|
|
— |
|
|
|
45,776,856 |
|
|
|
— |
|
|
|
45,776,856 |
|
| Government related securities |
|
|
— |
|
|
|
39,651,622 |
|
|
|
— |
|
|
|
39,651,622 |
|
| Other asset backed securities |
|
|
— |
|
|
|
61,107,292 |
|
|
|
— |
|
|
|
61,107,292 |
|
| Commercial mortgage-backed securities |
|
|
— |
|
|
|
22,811,159 |
|
|
|
— |
|
|
|
22,811,159 |
|
| Residential mortgage-backed securities |
|
|
— |
|
|
|
57,900,255 |
|
|
|
— |
|
|
|
57,900,255 |
|
| Short-term investment fund |
|
|
— |
|
|
|
32,449,763 |
|
|
|
— |
|
|
|
32,449,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total synthetic investment contracts |
|
|
— |
|
|
|
349,370,622 |
|
|
|
— |
|
|
|
349,370,622 |
|
|
|
|
|
|
| Pooled separate account |
|
|
— |
|
|
|
11,369,051 |
|
|
|
— |
|
|
|
11,369,051 |
|
| Guaranteed investment contracts |
|
|
— |
|
|
|
19,457,409 |
|
|
|
— |
|
|
|
19,457,409 |
|
| Other |
|
|
— |
|
|
|
23,748 |
|
|
|
— |
|
|
|
23,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investments at fair value |
|
$ |
766,477,073 |
|
|
$ |
848,358,896 |
|
|
$ |
— |
|
|
$ |
1,614,835,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Following is a description of the valuation methodologies used for assets measured at fair value:
Money market funds, equities and mutual funds – Valued at the closing price reported on the active market on which the individual
securities are traded.
Common/collective trust funds – These funds are valued using the net asset value, referred to as NAV, as a
practical expedient, provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, less its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in a
market that is not active. The Plan has the ability to redeem its investments in the funds at the NAV at the valuation date. There are no significant restrictions, redemption terms, or holding periods which would limit the ability of the Plan or the
participants to transact at the NAV.
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
Reynolds Stock Fund – The fair value of the Reynolds Stock Fund is based on the combined
year end closing price of Reynolds American Inc. common stock and monies held in a Fidelity money market fund used to meet daily liquidity needs. Both securities are valued based on the quoted market price of shares trading in active markets held by
the Plan at year end. The Reynolds Stock Fund is tracked on a unitized basis, which allows for daily settling of trades by participants.
Pooled separate account – Valued using the NAV provided by the administrator of the fund. The NAV is based on the value of the underlying
assets owned by the fund, less its liabilities, and then divided by the number of shares outstanding. The net asset value of the unit class held in the pooled separate account is determined on a daily basis. Units can be issued and redeemed on any
business day at that day’s unit value. The class of units held in the pooled separate account maintains a constant NAV.
Synthetic
investment contracts – Synthetic investment contracts consists of a fixed income common/collective trust fund, a short-term investment common/collective trust fund and individual fixed income securities
whose value is guaranteed by wrapper contracts issued by high quality financial institutions. The common/collective trusts are valued using the net asset value (assets owned by the fund, less its liabilities, and then divided by the number of shares
outstanding). The net asset value is a quoted price in a market that is not active. The individual fixed income securities are valued at the closing price reported on the active market on which the securities are traded. The wrapper contracts are
valued based on the difference between the current wrapper fee and a re-bid provided by the financial institution that issued the contract, utilizing the current market discount rate, both of which are
observable inputs. The value of the wrapper contracts was $0 as of December 31, 2014 and 2013.
Guaranteed investment contracts –
Guaranteed investment contracts are valued at fair value utilizing the present value of future cash flows and the current market discount rate, both of which are observable inputs.
For the years ended December 31, 2014 and 2013, there were no transfers of assets into or out of Level 1 and Level 2 of the fair
value hierarchy described above.
| (5) |
Related Party Transactions |
Certain investments, within the Fidelity Brokeragelink and
Fidelity Retirement Money Market Fund, are managed by Fidelity and, therefore, those transactions qualified as party-in-interest transactions. Administrative fees paid
to Fidelity for the years ended December 31, 2014 and 2013 were $323,898 and $563,906, respectively.
The Reynolds Stock Fund (Fund)
is provided as an investment option for participants in the Plan. As RAI is the Plan Sponsor, these transactions qualify as party-in-interest transactions. Fund
dividends for the years ended December 31, 2014 and 2013 were $10,642,730 and $9,279,612, respectively. The Fund held 4,108,430 shares at $64.27 per share as of December 31, 2014 and 3,897,293 shares at $49.99 per share as of
December 31, 2013.
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
The Plan obtained its latest determination letter dated
December 16, 2013, in which the Internal Revenue Service stated that the Plan’s design was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving this determination letter.
The Company believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code, and the Plan and related trust continue to be tax exempt. Therefore, no provision for income
taxes has been included in the Plan’s financial statements.
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 (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue
Service. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or
asset) 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. The Plan administrator believes it is no longer subject to
income tax examinations for years prior to 2011.
Although it has not expressed any intent to do so, the RAI Employee
Benefits Committee has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of the Plan’s termination, the Plan provides that the net assets are to be
distributed to participating employees in amounts equal to their respective interests in such assets.
In May 2002, in Tatum v. The R.J.R. Pension Investment Committee of
the R. J. Reynolds Tobacco Company Capital Investment Plan, an employee of RJR Tobacco filed a class-action suit in the U.S. District Court for the Middle District of North Carolina, alleging that the
defendants, RJR, RJR Tobacco, the RJR Employee Benefits Committee and the RJR Pension Investment Committee, violated ERISA. The actions about which the plaintiff complains stem from a decision made in 1999 by RJR Nabisco Holdings Corp., subsequently
renamed Nabisco Group Holdings Corp., referred to as NGH, to spin off RJR, thereby separating NGH’s tobacco business and food business. As part of the spin-off, the 401(k) plan for the previously
related entities had to be divided into two separate plans for the now separate tobacco and food businesses. The plaintiff contends that the defendants breached their fiduciary duties to participants of the RJR 401(k) plan when the defendants
removed the stock funds of the companies involved in the food business, NGH and Nabisco Holdings Corp., referred to as Nabisco, as investment options from the RJR 401(k) plan approximately six months after the
spin-off. The plaintiff asserts that a November 1999 amendment (the 1999 Amendment) that eliminated the NGH and Nabisco funds from the RJR 401(k) plan on January 31, 2000, contained
sufficient discretion for the defendants to have retained the NGH and Nabisco funds after January 31, 2000, and that the failure to exercise such discretion was a breach of fiduciary duty. In his complaint, the plaintiff requests, among other
things, that the court require the defendants to pay as damages to the RJR 401(k) plan an amount equal to the subsequent appreciation that was purportedly lost as a result of the liquidation of the NGH and Nabisco funds.
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
In July 2002, the defendants filed a motion to dismiss, which the court granted in
December 2003. In December 2004, the U.S. Court of Appeals for the Fourth Circuit reversed the dismissal of the complaint, holding that the 1999 Amendment did contain sufficient discretion for the defendants to have retained the NGH
and Nabisco funds as of February 1, 2000, and remanded the case for further proceedings. The court granted the plaintiff leave to file an amended complaint and denied all pending motions as moot. In April 2007, the defendants moved to
dismiss the amended complaint. The court granted the motion in part and denied it in part, dismissing all claims against the RJR Employee Benefits Committee and the RJR Pension Investment Committee. The remaining defendants, RJR and RJR Tobacco,
filed their answer and affirmative defenses in June 2007. The plaintiff filed a motion for class certification, which the court granted in September 2008. The district court ordered mediation, but no resolution of the case was reached. In
September 2008, each of the plaintiffs and the defendants filed motions for summary judgment, and in January 2009, the defendants filed a motion to decertify the class. A second mediation occurred in June 2009, but again no resolution
of the case was reached. The district court overruled the motions for summary judgment and the motion to decertify the class.
A nonjury
trial was held in January and February 2010. During closing arguments, the plaintiff argued for the first time that certain facts arising at trial showed that the 1999 Amendment was not validly adopted, and then moved to amend his
complaint to conform to this evidence at trial. On June 1, 2011, the court granted the plaintiff’s motion to amend his complaint and found that the 1999 Amendment was invalid.
The parties filed their findings of fact and conclusions of law on February 4, 2011. On February 25, 2013, the district court
dismissed the case with prejudice. On March 8, 2013, the plaintiffs filed a notice of appeal. On August 4, 2014, the Fourth Circuit Court of Appeals, referred to as Fourth Circuit, reversed, holding that the district court applied the
wrong standard when it held that the defendants did not cause any loss to the plan and remanded the case back to the district court to apply the correct standard. On September 2, 2014, the Fourth Circuit denied the defendants’ request for
rehearing en banc. The mandate from the Fourth Circuit was issued on October 1, 2014. On November 19, 2014, the district court held a hearing and ordered briefing on various issues that remain pending on remand, with briefs due on various
dates in January and February 2015. On December 1, 2014, the defendants filed a petition for writ of certiorari with the U.S. Supreme Court, and briefing on the defendants’ petition has been completed. On March 9, 2015,
the Supreme Court invited the U.S. Solicitor General to express the views of the United States with respect to the defendants’ petition, and the U.S. Solicitor General filed his invitation brief on May 26, 2015. On June 9, 2015,
the defendants filed their response brief to the U.S. Solicitor General’s brief. The defendants’ petition will be considered by the U.S. Supreme Court on June 25, 2015.
RAI 401K SAVINGS PLAN
Notes to Financial Statements
December 31, 2014 and 2013
| (9) |
Reconciliation of Financial Statements to Form 5500 |
The following is a
reconciliation of net assets available for benefits per the financial statements to the Form 5500:
|
|
|
|
|
|
|
|
|
| |
|
December 31 |
|
| |
|
2014 |
|
|
2013 |
|
|
|
|
| Net assets available for benefits per the financial statements |
|
$ |
1,687,152,049 |
|
|
$ |
1,625,569,530 |
|
| Adjustment from fair value to contract value for fully benefit-responsive investment contracts |
|
|
887,532 |
|
|
|
(1,615,772 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets available for benefits per the Form 5500 |
|
$ |
1,688,039,581 |
|
|
$ |
1,623,953,758 |
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of investment income per the financial statements for the years ended
December 31, 2014 and 2013 to the Form 5500:
|
|
|
|
|
|
|
|
|
| |
|
2014 |
|
|
2013 |
|
|
|
|
| Total investment income per the financial statements |
|
$ |
136,732,974 |
|
|
$ |
214,959,545 |
|
| Adjustment from fair value to contract value for fully benefit-responsive investment contracts |
|
|
887,532 |
|
|
|
(1,615,772 |
) |
| Prior year adjustment from fair value to contract value for fully benefit-responsive investment contracts |
|
|
1,615,772 |
|
|
|
(3,843,628 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| Total investment income per the Form 5500 |
|
$ |
139,236,278 |
|
|
$ |
209,500,145 |
|
|
|
|
|
|
|
|
|
|
Plan management has evaluated subsequent events from the balance sheet
date through the date at which the financial statements were issued, and determined there are no other items to disclose.
RAI 401K SAVINGS PLAN
Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Identity of issue |
|
Maturity |
|
|
Cost** |
|
Par value or
number of
units |
|
|
Current value |
|
|
|
|
|
|
| Unitized Company Stock Fund: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * Reynolds Stock Fund-RAI Common Stock |
|
|
|
|
|
|
|
|
4,108,430 |
|
|
$ |
264,049,152 |
|
|
|
|
|
|
| Mutual funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Vanguard Total Stock Fund |
|
|
|
|
|
|
|
|
5,420,621 |
|
|
|
253,630,874 |
|
| Dodge and Cox International Stock |
|
|
|
|
|
|
|
|
700,787 |
|
|
|
29,510,149 |
|
| Vanguard Total International Stock IS |
|
|
|
|
|
|
|
|
314,889 |
|
|
|
32,742,161 |
|
| PIMCO Total Return Fund |
|
|
|
|
|
|
|
|
4,493,047 |
|
|
|
47,895,878 |
|
| Invesco Growth & Income R5 |
|
|
|
|
|
|
|
|
2,371,645 |
|
|
|
63,014,618 |
|
| TCM Small Mid Cap Growth |
|
|
|
|
|
|
|
|
2,883,895 |
|
|
|
45,680,903 |
|
| PIMCO Real Return Inst |
|
|
|
|
|
|
|
|
811,836 |
|
|
|
8,865,246 |
|
| WM Blair Small CP Val I |
|
|
|
|
|
|
|
|
2,238,437 |
|
|
|
40,672,409 |
|
| Vanguard Total BD Market Inst |
|
|
|
|
|
|
|
|
821,758 |
|
|
|
8,932,514 |
|
| * Brokeragelink External Fund |
|
|
|
|
|
|
|
|
444,203 |
|
|
|
7,138,849 |
|
| * Brokeragelink Unit |
|
|
|
|
|
|
|
|
84,146 |
|
|
|
1,031,742 |
|
| * Brokeragelink Fidelity Fund |
|
|
|
|
|
|
|
|
94,454 |
|
|
|
2,249,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total mutual funds |
|
|
|
|
|
|
|
|
|
|
|
|
541,364,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash management accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Money market fund: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * Brokeragelink Money Market Fund |
|
|
|
|
|
|
|
|
11,237,734 |
|
|
|
11,237,734 |
|
| * Reynolds Stock Fund-Fidelity Money Market Fund |
|
|
|
|
|
|
|
|
5,219,255 |
|
|
|
5,219,255 |
|
| * Fidelity Retirement Money Market Fund |
|
|
|
|
|
|
|
|
31,963 |
|
|
|
31,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
16,488,952 |
|
|
|
|
|
|
| * Brokeragelink Certificate of Deposit |
|
|
|
|
|
|
|
|
413,000 |
|
|
|
414,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total cash management accounts |
|
|
|
|
|
|
|
|
|
|
|
|
16,903,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common and preferred stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * Brokeragelink Common and Preferred Stock |
|
|
|
|
|
|
|
|
151,242,017 |
|
|
|
28,020,108 |
|
|
|
|
|
|
| Common/collective investment trusts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| BTC Lifepath Index Retire |
|
|
|
|
|
|
|
|
3,939,550 |
|
|
|
55,263,215 |
|
| BTC Lifepath Index 2020 |
|
|
|
|
|
|
|
|
4,291,842 |
|
|
|
58,201,235 |
|
| BTC Lifepath Index 2025 |
|
|
|
|
|
|
|
|
4,471,855 |
|
|
|
60,893,703 |
|
| BTC Lifepath Index 2030 |
|
|
|
|
|
|
|
|
3,009,406 |
|
|
|
40,926,422 |
|
| BTC Lifepath Index 2035 |
|
|
|
|
|
|
|
|
2,160,067 |
|
|
|
29,327,233 |
|
| BTC Lifepath Index 2040 |
|
|
|
|
|
|
|
|
1,991,864 |
|
|
|
26,977,013 |
|
| BTC Lifepath Index 2045 |
|
|
|
|
|
|
|
|
1,993,678 |
|
|
|
26,916,843 |
|
| BTC Lifepath Index 2050 |
|
|
|
|
|
|
|
|
1,589,337 |
|
|
|
21,719,249 |
|
| BTC Lifepath Index 2055 |
|
|
|
|
|
|
|
|
356,698 |
|
|
|
5,837,691 |
|
| Capital Guardian International Fund |
|
|
|
|
|
|
|
|
193,058 |
|
|
|
10,537,089 |
|
| Intech Large Capital Growth |
|
|
|
|
|
|
|
|
28,413,128 |
|
|
|
85,084,452 |
|
| Wells Fargo Short-term Investment Fund S (Interest Income Fund) |
|
|
|
|
|
|
|
|
53,230,507 |
|
|
|
53,230,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total common/collective investment trusts |
|
|
|
|
|
|
|
|
|
|
|
|
474,914,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Synthetic guaranteed investment contracts (Interest Income Fund): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Prudential Insurance Company of America, 1.51% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Wells Fargo Fixed Income Fund M |
|
|
|
|
|
|
|
|
43,317,874 |
|
|
|
44,643,952 |
|
| Voya Ins. And Annuity Co., 1.23% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Wells Fargo Fixed Income Fund L |
|
|
|
|
|
|
|
|
10,010,000 |
|
|
|
10,053,254 |
|
| American General Life Ins. Co. 1.35% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Wells Fargo Fixed Income Fund L |
|
|
|
|
|
|
|
|
10,010,000 |
|
|
|
10,053,254 |
|
|
|
|
|
|
| Voya Ins. And Annuity Co., Contract #60384, 1.23% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Prudential Insurance Company of America, Contract #GA-63102, 1.51% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| American General Life Ins. Co., Contract #1635559, 1.35% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Access Group Inc 2013-1 |
|
|
2/25/2036 |
|
|
|
|
|
914,993 |
|
|
|
903,907 |
|
| Ally Auto Receivables Trust 2014-2 |
|
|
4/15/2019 |
|
|
|
|
|
1,400,000 |
|
|
|
1,397,864 |
|
| Ally Auto Receivables Trust 2014-SN2 |
|
|
9/20/2017 |
|
|
|
|
|
1,400,000 |
|
|
|
1,396,703 |
|
| American Express Crdt Acct Mstr Trst AMXCA 2014-3 A 3.0-YR |
|
|
4/15/2020 |
|
|
|
|
|
1,400,000 |
|
|
|
1,401,270 |
|
| American Express Credit Corp |
|
|
6/12/2015 |
|
|
|
|
|
400,000 |
|
|
|
401,638 |
|
| American Express Credit Corp |
|
|
9/22/2017 |
|
|
|
|
|
250,000 |
|
|
|
250,489 |
|
| American Honda Finance Corp |
|
|
12/11/2017 |
|
|
|
|
|
710,000 |
|
|
|
713,027 |
|
| AmeriCredit Auto Receivables T |
|
|
1/8/2019 |
|
|
|
|
|
1,400,000 |
|
|
|
1,396,685 |
|
| AmeriCredit Auto Receivables Trust AMCAR 2014-4 A3 2.2-YR |
|
|
7/8/2019 |
|
|
|
|
|
1,400,000 |
|
|
|
1,394,466 |
|
| AmeriCredit Automobile Receivables Trust 2014-2 |
|
|
2/8/2019 |
|
|
|
|
|
1,400,000 |
|
|
|
1,394,478 |
|
| Anheuser-Busch Cos LLC |
|
|
1/15/2015 |
|
|
|
|
|
300,000 |
|
|
|
300,533 |
|
| Apple Inc |
|
|
5/6/2019 |
|
|
|
|
|
930,000 |
|
|
|
940,557 |
|
| Arizona School Facilities Board |
|
|
7/1/2017 |
|
|
|
|
|
735,000 |
|
|
|
733,207 |
|
RAI 401K SAVINGS PLAN
Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Identity of issue |
|
Maturity |
|
|
Cost** |
|
Par value or
number of
units |
|
|
Current value |
|
|
|
|
|
|
| AT&T Inc |
|
|
2/15/2017 |
|
|
|
|
|
800,000 |
|
|
$ |
801,635 |
|
| BA Credit Card Trust |
|
|
1/15/2020 |
|
|
|
|
|
1,400,000 |
|
|
|
1,399,748 |
|
| Banc of America Commercial Mortgage Trust 2006-2 |
|
|
5/10/2045 |
|
|
|
|
|
250,049 |
|
|
|
250,809 |
|
| Banc of America Commercial Mortgage Trust 2007-4 |
|
|
2/10/2051 |
|
|
|
|
|
1,398,373 |
|
|
|
1,525,074 |
|
| Bank of America Corp |
|
|
4/1/2019 |
|
|
|
|
|
530,000 |
|
|
|
533,888 |
|
| Bank of America Corp |
|
|
8/1/2016 |
|
|
|
|
|
500,000 |
|
|
|
538,663 |
|
| Bank of America NA |
|
|
11/14/2016 |
|
|
|
|
|
700,000 |
|
|
|
697,476 |
|
| Bank of Montreal |
|
|
1/30/2017 |
|
|
|
|
|
1,500,000 |
|
|
|
1,525,332 |
|
| Bank of Nova Scotia/The |
|
|
7/15/2016 |
|
|
|
|
|
790,000 |
|
|
|
795,284 |
|
| Bank of Nova Scotia/The |
|
|
3/22/2017 |
|
|
|
|
|
725,000 |
|
|
|
732,445 |
|
| Barclays Bank PLC |
|
|
5/10/2017 |
|
|
|
|
|
200,000 |
|
|
|
204,043 |
|
| Bayer US Finance LLC |
|
|
10/6/2017 |
|
|
|
|
|
430,000 |
|
|
|
430,276 |
|
| BB&T Corp |
|
|
3/22/2017 |
|
|
|
|
|
600,000 |
|
|
|
608,659 |
|
| Bear Stearns Commercial Mortgage Securities Trust 2006-PWR12 |
|
|
9/11/2038 |
|
|
|
|
|
977,619 |
|
|
|
1,026,118 |
|
| Becton Dickinson and Co |
|
|
12/15/2017 |
|
|
|
|
|
530,000 |
|
|
|
531,955 |
|
| BNP Paribas SA |
|
|
3/17/2017 |
|
|
|
|
|
930,000 |
|
|
|
927,387 |
|
| BP Capital Markets PLC |
|
|
5/10/2018 |
|
|
|
|
|
800,000 |
|
|
|
785,799 |
|
| Brazos Higher Education Authority |
|
|
7/25/2029 |
|
|
|
|
|
1,103,071 |
|
|
|
1,111,550 |
|
| Caisse Centrale Desjardins |
|
|
3/6/2017 |
|
|
|
|
|
1,600,000 |
|
|
|
1,614,638 |
|
| Capital Auto Receivables Asset Trust |
|
|
2/21/2017 |
|
|
|
|
|
1,000,000 |
|
|
|
1,000,425 |
|
| Capital Auto Receivables Asset Trust |
|
|
12/20/2017 |
|
|
|
|
|
1,500,000 |
|
|
|
1,500,014 |
|
| Capital One Multi-Asset Execut |
|
|
1/15/2020 |
|
|
|
|
|
1,400,000 |
|
|
|
1,398,293 |
|
| CarMax Auto Owner Trust 2014-2 |
|
|
1/15/2019 |
|
|
|
|
|
1,100,000 |
|
|
|
1,096,659 |
|
| Caterpillar Financial Services Corp |
|
|
8/18/2017 |
|
|
|
|
|
270,000 |
|
|
|
268,887 |
|
| Caterpillar Financial Services Corp |
|
|
8/1/2016 |
|
|
|
|
|
380,000 |
|
|
|
387,292 |
|
| Caterpillar Financial Services Corp |
|
|
12/1/2019 |
|
|
|
|
|
230,000 |
|
|
|
230,252 |
|
| Chase Issuance Trust |
|
|
1/15/2019 |
|
|
|
|
|
1,100,000 |
|
|
|
1,099,460 |
|
| Chase Issuance Trust |
|
|
11/15/2019 |
|
|
|
|
|
570,000 |
|
|
|
567,735 |
|
| Chevron Corp |
|
|
11/15/2017 |
|
|
|
|
|
280,000 |
|
|
|
279,674 |
|
| Chevron Corp |
|
|
6/24/2016 |
|
|
|
|
|
330,000 |
|
|
|
330,698 |
|
| Chevron Corp |
|
|
11/15/2017 |
|
|
|
|
|
370,000 |
|
|
|
370,300 |
|
| Chrysler Capital Auto Receivables Tr |
|
|
9/15/2017 |
|
|
|
|
|
1,400,000 |
|
|
|
1,401,471 |
|
| Cisco Systems Inc |
|
|
3/3/2017 |
|
|
|
|
|
360,000 |
|
|
|
360,152 |
|
| CIT Equipment Collateral 2014-VT1 |
|
|
10/21/2019 |
|
|
|
|
|
1,000,000 |
|
|
|
997,112 |
|
| Citibank Credit Card Issuance Trust |
|
|
4/9/2020 |
|
|
|
|
|
1,400,000 |
|
|
|
1,401,999 |
|
| Citigroup Inc |
|
|
11/24/2017 |
|
|
|
|
|
450,000 |
|
|
|
449,483 |
|
| Citigroup Inc |
|
|
7/29/2019 |
|
|
|
|
|
1,000,000 |
|
|
|
1,000,803 |
|
| City of Columbus OH |
|
|
2/15/2015 |
|
|
|
|
|
1,195,000 |
|
|
|
1,195,394 |
|
| City of Dallas TX |
|
|
2/15/2017 |
|
|
|
|
|
775,000 |
|
|
|
783,525 |
|
| City of Oklahoma City OK |
|
|
3/1/2018 |
|
|
|
|
|
790,000 |
|
|
|
801,621 |
|
| CNH Equipment Trust 2014-B |
|
|
5/15/2019 |
|
|
|
|
|
1,500,000 |
|
|
|
1,495,658 |
|
| CNH Equipment Trust 2014-C |
|
|
5/15/2018 |
|
|
|
|
|
1,400,000 |
|
|
|
1,392,747 |
|
| COMM 2012-CCRE4 Mortgage Trust |
|
|
10/15/2045 |
|
|
|
|
|
596,253 |
|
|
|
594,472 |
|
| COMM 2013-LC6 A1 |
|
|
1/10/2046 |
|
|
|
|
|
809,341 |
|
|
|
805,105 |
|
| Commonwealth Bank of Australia |
|
|
12/11/2018 |
|
|
|
|
|
950,000 |
|
|
|
948,163 |
|
| Commonwealth Edison Co |
|
|
4/15/2015 |
|
|
|
|
|
700,000 |
|
|
|
707,924 |
|
| Cooper US Inc |
|
|
1/15/2016 |
|
|
|
|
|
500,000 |
|
|
|
507,507 |
|
| Cooperatieve Centrale Rabobank Nederland |
|
|
10/13/2015 |
|
|
|
|
|
1,200,000 |
|
|
|
1,214,404 |
|
| County of King WA |
|
|
12/1/2016 |
|
|
|
|
|
345,000 |
|
|
|
357,185 |
|
| Credit Suisse Commercial Mortgage Trust Series 2006-C1 |
|
|
2/15/2039 |
|
|
|
|
|
1,050,000 |
|
|
|
1,080,261 |
|
| Credit Suisse/New York NY |
|
|
5/26/2017 |
|
|
|
|
|
250,000 |
|
|
|
249,264 |
|
| Daimler Finance North America LLC |
|
|
1/11/2016 |
|
|
|
|
|
450,000 |
|
|
|
451,224 |
|
| Daimler Finance North America LLC |
|
|
9/15/2016 |
|
|
|
|
|
350,000 |
|
|
|
358,553 |
|
| Dayton Metro Library |
|
|
12/1/2017 |
|
|
|
|
|
600,000 |
|
|
|
594,060 |
|
| Denton Independent School District |
|
|
8/15/2016 |
|
|
|
|
|
635,000 |
|
|
|
646,278 |
|
| Des Moines Area Community College |
|
|
6/1/2016 |
|
|
|
|
|
340,000 |
|
|
|
345,103 |
|
| Discover Card Execution Note Trus |
|
|
4/15/2020 |
|
|
|
|
|
1,700,000 |
|
|
|
1,696,450 |
|
| DNB Boligkreditt AS |
|
|
3/21/2018 |
|
|
|
|
|
950,000 |
|
|
|
945,808 |
|
| Ecolab Inc |
|
|
2/15/2015 |
|
|
|
|
|
924,000 |
|
|
|
928,375 |
|
| EdLinc Student Loan Funding Trust 2012-1 |
|
|
9/25/2030 |
|
|
|
|
|
858,710 |
|
|
|
868,438 |
|
| Edsouth Indenture No 4 LLC |
|
|
2/26/2029 |
|
|
|
|
|
844,393 |
|
|
|
844,003 |
|
| EFS Volunteer No 2 LLC |
|
|
7/26/2027 |
|
|
|
|
|
851,420 |
|
|
|
855,572 |
|
| EI du Pont de Nemours & Co |
|
|
1/15/2016 |
|
|
|
|
|
1,500,000 |
|
|
|
1,519,415 |
|
| Export Leasing 2009 LLC |
|
|
8/28/2021 |
|
|
|
|
|
1,140,274 |
|
|
|
1,139,246 |
|
| Extended Stay America Trust 2013-ESH |
|
|
12/5/2031 |
|
|
|
|
|
1,200,000 |
|
|
|
1,194,878 |
|
| Extended Stay America Trust 2013-ESH |
|
|
12/5/2031 |
|
|
|
|
|
1,200,000 |
|
|
|
1,190,520 |
|
| Fannie Mae Pool |
|
|
11/1/2022 |
|
|
|
|
|
1,582,793 |
|
|
|
1,608,935 |
|
| Fannie Mae Pool |
|
|
7/1/2034 |
|
|
|
|
|
260,159 |
|
|
|
280,041 |
|
| Fannie Mae Pool |
|
|
8/1/2044 |
|
|
|
|
|
1,308,206 |
|
|
|
1,343,163 |
|
| Fannie Mae Pool |
|
|
10/1/2024 |
|
|
|
|
|
1,357,489 |
|
|
|
1,396,068 |
|
RAI 401K SAVINGS PLAN
Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Identity of issue |
|
Maturity |
|
|
Cost** |
|
Par value or
number of
units |
|
|
Current value |
|
|
|
|
|
|
| Fannie Mae Pool |
|
|
7/1/2023 |
|
|
|
|
|
1,900,255 |
|
|
$ |
1,954,775 |
|
| Fannie Mae Pool |
|
|
11/1/2024 |
|
|
|
|
|
2,738,809 |
|
|
|
2,816,783 |
|
| Fannie Mae Pool |
|
|
1/1/2023 |
|
|
|
|
|
3,285,378 |
|
|
|
3,379,668 |
|
| Fannie Mae Pool |
|
|
9/1/2022 |
|
|
|
|
|
750,173 |
|
|
|
771,727 |
|
| Fannie Mae Pool |
|
|
5/1/2044 |
|
|
|
|
|
1,230,665 |
|
|
|
1,267,668 |
|
| Fannie Mae Pool |
|
|
4/1/2044 |
|
|
|
|
|
2,193,376 |
|
|
|
2,263,001 |
|
| Fannie Mae Pool |
|
|
5/1/2044 |
|
|
|
|
|
1,254,017 |
|
|
|
1,293,077 |
|
| Fannie Mae Pool |
|
|
7/1/2044 |
|
|
|
|
|
1,278,127 |
|
|
|
1,320,243 |
|
| Fannie Mae Pool |
|
|
9/1/2018 |
|
|
|
|
|
2,488,743 |
|
|
|
2,582,165 |
|
| Fannie Mae Pool |
|
|
11/1/2038 |
|
|
|
|
|
1,671,129 |
|
|
|
1,882,411 |
|
| Fannie Mae Pool |
|
|
1/1/2037 |
|
|
|
|
|
112,059 |
|
|
|
119,226 |
|
| Fannie Mae Pool |
|
|
8/1/2037 |
|
|
|
|
|
1,115,811 |
|
|
|
1,198,514 |
|
| Fannie Mae REMIC Trust 2004-W3 |
|
|
5/25/2034 |
|
|
|
|
|
787,174 |
|
|
|
857,191 |
|
| Fannie Mae REMICS |
|
|
10/25/2040 |
|
|
|
|
|
1,175,249 |
|
|
|
1,163,500 |
|
| Fannie Mae REMICS |
|
|
1/25/2027 |
|
|
|
|
|
1,162,213 |
|
|
|
1,190,057 |
|
| Fannie Mae REMICS |
|
|
3/25/2030 |
|
|
|
|
|
1,301,855 |
|
|
|
1,333,944 |
|
| Fannie Mae REMICS |
|
|
5/25/2038 |
|
|
|
|
|
1,315,421 |
|
|
|
1,335,643 |
|
| Fannie Mae-Aces |
|
|
5/25/2018 |
|
|
|
|
|
2,774,478 |
|
|
|
2,774,736 |
|
| Fannie Mae-Aces |
|
|
1/25/2017 |
|
|
|
|
|
3,360,553 |
|
|
|
3,362,260 |
|
| Fannie Mae-Aces |
|
|
11/25/2015 |
|
|
|
|
|
3,347,855 |
|
|
|
3,353,878 |
|
| Fannie Mae-Aces |
|
|
11/25/2016 |
|
|
|
|
|
3,830,482 |
|
|
|
3,839,993 |
|
| Fannie Mae-Aces |
|
|
2/25/2016 |
|
|
|
|
|
759,557 |
|
|
|
762,073 |
|
| Federal National Mortgage Association |
|
|
9/27/2017 |
|
|
|
|
|
1,700,000 |
|
|
|
1,696,576 |
|
| Fifth Third Auto Trust 2013-A |
|
|
9/15/2017 |
|
|
|
|
|
600,000 |
|
|
|
599,995 |
|
| Fifth Third Auto Trust 2014-2 |
|
|
11/15/2018 |
|
|
|
|
|
1,000,000 |
|
|
|
997,652 |
|
| FN 5/1 2.45 Hybrid FWD January 2015 |
|
|
1/1/2045 |
|
|
|
|
|
1,400,000 |
|
|
|
1,432,340 |
|
| FNA 2012 - M14 ASQ2 |
|
|
2/25/2017 |
|
|
|
|
|
1,168,018 |
|
|
|
1,170,533 |
|
| Ford Credit Auto Lease Trust 2014-A |
|
|
4/17/2017 |
|
|
|
|
|
1,500,000 |
|
|
|
1,498,638 |
|
| Ford Credit Auto Lease Trust 2014-B |
|
|
9/15/2017 |
|
|
|
|
|
1,900,000 |
|
|
|
1,897,243 |
|
| Ford Credit Auto Owner Trust 2013-D |
|
|
4/15/2018 |
|
|
|
|
|
1,000,000 |
|
|
|
998,699 |
|
| Ford Credit Auto Owner Trust 2014-A |
|
|
5/15/2018 |
|
|
|
|
|
1,300,000 |
|
|
|
1,298,996 |
|
| Ford Credit Auto Owner Trust 2014-C |
|
|
5/15/2019 |
|
|
|
|
|
1,400,000 |
|
|
|
1,395,957 |
|
| Freddie Mac Gold Pool |
|
|
10/1/2027 |
|
|
|
|
|
695,084 |
|
|
|
714,360 |
|
| Freddie Mac Gold Pool |
|
|
7/1/2026 |
|
|
|
|
|
489,810 |
|
|
|
524,440 |
|
| Freddie Mac Non Gold Pool |
|
|
1/1/2043 |
|
|
|
|
|
682,408 |
|
|
|
702,145 |
|
| Freddie Mac Non Gold Pool |
|
|
10/1/2035 |
|
|
|
|
|
380,656 |
|
|
|
408,258 |
|
| Freddie Mac Non Gold Pool |
|
|
8/1/2044 |
|
|
|
|
|
1,320,445 |
|
|
|
1,351,890 |
|
| Freddie Mac Non Gold Pool |
|
|
8/1/2044 |
|
|
|
|
|
1,301,815 |
|
|
|
1,333,359 |
|
| Freddie Mac Non Gold Pool |
|
|
10/1/2043 |
|
|
|
|
|
1,098,280 |
|
|
|
1,127,086 |
|
| Freddie Mac Non Gold Pool |
|
|
7/1/2044 |
|
|
|
|
|
1,341,525 |
|
|
|
1,378,866 |
|
| Freddie Mac Non Gold Pool |
|
|
11/1/2043 |
|
|
|
|
|
959,671 |
|
|
|
986,238 |
|
| Freddie Mac Non Gold Pool |
|
|
5/1/2044 |
|
|
|
|
|
927,282 |
|
|
|
958,756 |
|
| Freddie Mac Non Gold Pool |
|
|
6/1/2044 |
|
|
|
|
|
1,475,029 |
|
|
|
1,525,990 |
|
| Freddie Mac Non Gold Pool |
|
|
5/1/2041 |
|
|
|
|
|
1,029,731 |
|
|
|
1,103,789 |
|
| Freddie Mac REMICS |
|
|
3/15/2040 |
|
|
|
|
|
1,082,722 |
|
|
|
1,068,168 |
|
| Freddie Mac REMICS |
|
|
6/15/2041 |
|
|
|
|
|
1,978,668 |
|
|
|
1,922,850 |
|
| Freddie Mac REMICS |
|
|
12/15/2040 |
|
|
|
|
|
870,219 |
|
|
|
882,995 |
|
| Freddie Mac REMICS |
|
|
3/15/2026 |
|
|
|
|
|
1,088,257 |
|
|
|
1,115,816 |
|
| Freddie Mac REMICS |
|
|
10/15/2027 |
|
|
|
|
|
1,136,497 |
|
|
|
1,169,857 |
|
| Freddie Mac REMICS |
|
|
9/15/2028 |
|
|
|
|
|
1,757,336 |
|
|
|
1,836,216 |
|
| Freddie Mac REMICS |
|
|
4/15/2040 |
|
|
|
|
|
932,737 |
|
|
|
956,118 |
|
| Freddie Mac REMICS |
|
|
3/15/2028 |
|
|
|
|
|
1,437,713 |
|
|
|
1,481,949 |
|
| GE Equipment Small Ticket LLC Series 2014-1 |
|
|
9/25/2017 |
|
|
|
|
|
1,100,000 |
|
|
|
1,097,953 |
|
| GE Equipment Transportation LLC Series 2014-1 |
|
|
4/23/2018 |
|
|
|
|
|
1,700,000 |
|
|
|
1,698,706 |
|
| General Electric Capital Corp |
|
|
7/12/2016 |
|
|
|
|
|
500,000 |
|
|
|
503,407 |
|
| General Electric Capital Corp |
|
|
1/9/2017 |
|
|
|
|
|
500,000 |
|
|
|
517,415 |
|
| General Mills Inc |
|
|
3/17/2015 |
|
|
|
|
|
650,000 |
|
|
|
656,101 |
|
| Ginnie Mae II pool |
|
|
3/20/2058 |
|
|
|
|
|
849,353 |
|
|
|
857,837 |
|
| Ginnie Mae II pool |
|
|
6/20/2058 |
|
|
|
|
|
1,726,754 |
|
|
|
1,765,938 |
|
| Ginnie Mae II pool |
|
|
10/20/2039 |
|
|
|
|
|
444,299 |
|
|
|
469,459 |
|
| Ginnie Mae II pool |
|
|
11/20/2039 |
|
|
|
|
|
483,530 |
|
|
|
512,772 |
|
| Ginnie Mae II pool |
|
|
9/20/2060 |
|
|
|
|
|
1,347,246 |
|
|
|
1,457,771 |
|
| Ginnie Mae II pool |
|
|
5/20/2059 |
|
|
|
|
|
1,100,116 |
|
|
|
1,152,629 |
|
| Ginnie Mae II pool |
|
|
4/20/2060 |
|
|
|
|
|
1,117,604 |
|
|
|
1,219,690 |
|
| Ginnie Mae II pool |
|
|
12/20/2059 |
|
|
|
|
|
1,017,238 |
|
|
|
1,093,680 |
|
| Ginnie Mae II pool |
|
|
9/20/2059 |
|
|
|
|
|
1,138,096 |
|
|
|
1,207,788 |
|
| Goldman Sachs Group Inc/The |
|
|
1/22/2018 |
|
|
|
|
|
800,000 |
|
|
|
808,079 |
|
| GS Mortgage Securities Corp II |
|
|
2/10/2046 |
|
|
|
|
|
549,115 |
|
|
|
547,027 |
|
| GS Mortgage Securities Trust 2006-GG8 |
|
|
11/10/2039 |
|
|
|
|
|
1,022,726 |
|
|
|
1,082,724 |
|
| GS Mortgage Securities Trust 2012-GCJ7 |
|
|
5/10/2045 |
|
|
|
|
|
430,054 |
|
|
|
431,349 |
|
RAI 401K SAVINGS PLAN
Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Identity of issue |
|
Maturity |
|
|
Cost** |
|
Par value or
number of
units |
|
|
Current value |
|
|
|
|
|
|
| Harley-Davidson Motorcycle Trust 2013-1 |
|
|
7/15/2016 |
|
|
|
|
|
940,779 |
|
|
$ |
940,809 |
|
| Hays Consolidated Independent School District |
|
|
8/15/2016 |
|
|
|
|
|
600,000 |
|
|
|
626,628 |
|
| Hilton USA Trust 2013-HLF |
|
|
11/5/2030 |
|
|
|
|
|
1,226,904 |
|
|
|
1,226,967 |
|
| HSBC Bank PLC |
|
|
5/15/2018 |
|
|
|
|
|
600,000 |
|
|
|
593,458 |
|
| HSBC USA Inc |
|
|
1/16/2018 |
|
|
|
|
|
450,000 |
|
|
|
448,267 |
|
| Hyundai Auto Receivables Trust 2013-C |
|
|
2/15/2018 |
|
|
|
|
|
1,000,000 |
|
|
|
1,002,875 |
|
| Indiana University |
|
|
8/1/2016 |
|
|
|
|
|
600,000 |
|
|
|
598,848 |
|
| Jackson County School District No 6 Central Point |
|
|
6/15/2017 |
|
|
|
|
|
500,000 |
|
|
|
495,865 |
|
| John Deere Owner Trust 2014-A |
|
|
4/16/2018 |
|
|
|
|
|
1,200,000 |
|
|
|
1,199,450 |
|
| JP Morgan Chase Commercial Mortgage Securities Corp |
|
|
12/15/2047 |
|
|
|
|
|
410,883 |
|
|
|
410,814 |
|
| JP Morgan Chase Commercial Mortgage Securities Trust 2006-LDP7 |
|
|
4/15/2045 |
|
|
|
|
|
1,000,000 |
|
|
|
1,044,170 |
|
| JP Morgan Chase Commercial Mortgage Securities Trust 2007-LDP10 |
|
|
1/15/2049 |
|
|
|
|
|
1,062,313 |
|
|
|
1,135,415 |
|
| JPMorgan Chase & Co, 2.2%, $380,000 par, due 10/22/2019 |
|
|
10/22/2019 |
|
|
|
|
|
380,000 |
|
|
|
376,723 |
|
| JPMorgan Chase & Co, 3.45%, $1,000,000 par, due 3/1/2016 |
|
|
3/1/2016 |
|
|
|
|
|
1,000,000 |
|
|
|
1,026,403 |
|
| Kentucky Higher Education Student Loan Corp |
|
|
6/1/2026 |
|
|
|
|
|
888,421 |
|
|
|
886,058 |
|
| KeyBank NA/Cleveland OH |
|
|
12/15/2019 |
|
|
|
|
|
250,000 |
|
|
|
251,024 |
|
| Kimco Realty Corp |
|
|
2/1/2018 |
|
|
|
|
|
500,000 |
|
|
|
535,324 |
|
| LB-UBS Commercial Mortgage Trust 2006-C1 |
|
|
2/15/2031 |
|
|
|
|
|
1,049,975 |
|
|
|
1,075,354 |
|
| LB-UBS Commercial Mortgage Trust 2006-C6 |
|
|
9/15/2039 |
|
|
|
|
|
1,175,000 |
|
|
|
1,242,121 |
|
| Liberty Property LP |
|
|
10/1/2017 |
|
|
|
|
|
750,000 |
|
|
|
840,446 |
|
| M&T Bank Auto Receivables Trust 2013-1 |
|
|
11/15/2017 |
|
|
|
|
|
1,000,000 |
|
|
|
1,003,117 |
|
| Marathon Oil Corp |
|
|
3/15/2018 |
|
|
|
|
|
735,000 |
|
|
|
816,949 |
|
| MassMutual Global Funding II |
|
|
9/28/2015 |
|
|
|
|
|
1,476,000 |
|
|
|
1,496,106 |
|
| Medtronic Inc |
|
|
3/15/2020 |
|
|
|
|
|
290,000 |
|
|
|
290,761 |
|
| Micron Semiconductor Asia Pte Ltd |
|
|
1/15/2019 |
|
|
|
|
|
1,399,500 |
|
|
|
1,397,237 |
|
| Missouri Higher Ed Loan Authority |
|
|
1/26/2026 |
|
|
|
|
|
759,043 |
|
|
|
762,344 |
|
| Missouri Higher Education Loan Authority |
|
|
8/27/2029 |
|
|
|
|
|
810,063 |
|
|
|
814,576 |
|
| Morgan Stanley BAML Trust |
|
|
2/15/2046 |
|
|
|
|
|
854,178 |
|
|
|
854,772 |
|
| Morgan Stanley Bank of America Merrill Lynch Trust 2012-C6 |
|
|
11/15/2045 |
|
|
|
|
|
646,371 |
|
|
|
642,758 |
|
| Morgan Stanley Capital I Trust 2006-HQ9 |
|
|
7/12/2044 |
|
|
|
|
|
1,149,817 |
|
|
|
1,215,937 |
|
| Morgan Stanley Capital I Trust 2006-IQ12 |
|
|
12/15/2043 |
|
|
|
|
|
1,241,085 |
|
|
|
1,310,417 |
|
| Morgan Stanley |
|
|
1/5/2018 |
|
|
|
|
|
560,000 |
|
|
|
557,950 |
|
| Mortgage-Linked Amortizing Notes |
|
|
1/15/2022 |
|
|
|
|
|
316,993 |
|
|
|
323,035 |
|
| National Australia Bank Ltd |
|
|
6/20/2017 |
|
|
|
|
|
1,125,000 |
|
|
|
1,141,757 |
|
| NCUA Guaranteed Notes Trust 2010-C1 |
|
|
10/29/2020 |
|
|
|
|
|
1,054,305 |
|
|
|
1,056,061 |
|
| NCUA Guaranteed Notes Trust 2010-R2 |
|
|
11/6/2017 |
|
|
|
|
|
806,878 |
|
|
|
809,109 |
|
| Nevada Power Co |
|
|
8/1/2018 |
|
|
|
|
|
805,000 |
|
|
|
932,710 |
|
| New York Life Global Funding |
|
|
1/2/2019 |
|
|
|
|
|
400,000 |
|
|
|
401,432 |
|
| New York State Dormitory Authority |
|
|
2/15/2016 |
|
|
|
|
|
550,000 |
|
|
|
551,958 |
|
| Norfolk Southern Corp |
|
|
4/1/2018 |
|
|
|
|
|
700,000 |
|
|
|
785,557 |
|
| North Orange County Community College District/CA |
|
|
8/1/2016 |
|
|
|
|
|
500,000 |
|
|
|
498,985 |
|
| Northstar Education Finance Inc |
|
|
12/26/2031 |
|
|
|
|
|
880,847 |
|
|
|
884,580 |
|
| Oracle Corp |
|
|
7/7/2017 |
|
|
|
|
|
500,000 |
|
|
|
499,501 |
|
| Oracle Corp |
|
|
10/15/2017 |
|
|
|
|
|
440,000 |
|
|
|
438,434 |
|
| Oracle Corp |
|
|
1/15/2019 |
|
|
|
|
|
160,000 |
|
|
|
162,769 |
|
| Pennsylvania Higher Ed Assistance |
|
|
4/25/2030 |
|
|
|
|
|
647,540 |
|
|
|
648,957 |
|
| Plano Independent School District |
|
|
2/15/2017 |
|
|
|
|
|
700,000 |
|
|
|
731,479 |
|
| PNC Bank NA |
|
|
10/18/2017 |
|
|
|
|
|
940,000 |
|
|
|
938,945 |
|
| Porsche Innovative Lease Owner Trust 2012-1 |
|
|
12/21/2015 |
|
|
|
|
|
90,019 |
|
|
|
90,015 |
|
| Procter & Gamble Co/The |
|
|
2/15/2015 |
|
|
|
|
|
800,000 |
|
|
|
802,915 |
|
| Ridgewood Board of Education |
|
|
10/1/2015 |
|
|
|
|
|
500,000 |
|
|
|
501,035 |
|
| Rio Tinto Alcan Inc |
|
|
6/1/2015 |
|
|
|
|
|
500,000 |
|
|
|
508,797 |
|
| Royal Bank of Canada |
|
|
10/30/2015 |
|
|
|
|
|
415,000 |
|
|
|
416,006 |
|
| Royal Bank of Canada |
|
|
9/19/2017 |
|
|
|
|
|
550,000 |
|
|
|
546,860 |
|
| Royal Bank of Canada |
|
|
7/20/2016 |
|
|
|
|
|
800,000 |
|
|
|
816,432 |
|
| Schlumberger Investment SA |
|
|
9/14/2016 |
|
|
|
|
|
530,000 |
|
|
|
539,645 |
|
| South Carolina Student Loan Corp |
|
|
8/25/2034 |
|
|
|
|
|
926,189 |
|
|
|
917,242 |
|
| Southern California Edison Co |
|
|
1/15/2016 |
|
|
|
|
|
670,000 |
|
|
|
699,700 |
|
| St Charles School District |
|
|
3/1/2018 |
|
|
|
|
|
800,000 |
|
|
|
860,816 |
|
| State of Arkansas |
|
|
7/1/2016 |
|
|
|
|
|
915,000 |
|
|
|
911,898 |
|
| State of New York |
|
|
3/1/2018 |
|
|
|
|
|
440,000 |
|
|
|
468,684 |
|
| State of Ohio |
|
|
5/1/2017 |
|
|
|
|
|
475,000 |
|
|
|
495,088 |
|
| State of Oregon |
|
|
8/1/2018 |
|
|
|
|
|
625,000 |
|
|
|
621,938 |
|
| State of Wisconsin |
|
|
5/1/2016 |
|
|
|
|
|
250,000 |
|
|
|
250,628 |
|
| State of Wisconsin |
|
|
5/1/2018 |
|
|
|
|
|
750,000 |
|
|
|
831,015 |
|
| Statoil ASA |
|
|
11/9/2017 |
|
|
|
|
|
630,000 |
|
|
|
626,162 |
|
| Sun Prairie Area School District/WI |
|
|
3/1/2016 |
|
|
|
|
|
450,000 |
|
|
|
449,303 |
|
| Sysco Corp |
|
|
10/2/2017 |
|
|
|
|
|
320,000 |
|
|
|
319,648 |
|
| Toronto-Dominion Bank/The |
|
|
11/5/2019 |
|
|
|
|
|
690,000 |
|
|
|
691,372 |
|
| Total Capital International SA |
|
|
6/28/2017 |
|
|
|
|
|
1,300,000 |
|
|
|
1,304,434 |
|
RAI 401K SAVINGS PLAN
Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Identity of issue |
|
Maturity |
|
|
Cost** |
|
Par value or
number of
units |
|
|
Current value |
|
|
|
|
|
|
| Township of Dundee IL |
|
|
12/1/2015 |
|
|
|
|
|
1,000,000 |
|
|
$ |
1,001,480 |
|
| Toyota Auto Receivables 2013-B Owner Trust |
|
|
7/17/2017 |
|
|
|
|
|
1,000,000 |
|
|
|
1,001,874 |
|
| Toyota Auto Receivables 2014-A Owner Trust |
|
|
12/15/2017 |
|
|
|
|
|
1,400,000 |
|
|
|
1,398,466 |
|
| UBS AG/London |
|
|
3/30/2017 |
|
|
|
|
|
1,125,000 |
|
|
|
1,150,216 |
|
| Ukraine Government AID Bonds |
|
|
5/16/2019 |
|
|
|
|
|
500,000 |
|
|
|
503,375 |
|
| United States Treasury Inflation Indexed Bonds |
|
|
4/15/2019 |
|
|
|
|
|
5,411,000 |
|
|
|
5,422,512 |
|
| United States Treasury Inflation Indexed Bonds |
|
|
4/15/2018 |
|
|
|
|
|
77,000 |
|
|
|
78,793 |
|
| United States Treasury Note/Bond |
|
|
2/29/2016 |
|
|
|
|
|
23,150,000 |
|
|
|
23,121,063 |
|
| United States Treasury Note/Bond |
|
|
3/15/2016 |
|
|
|
|
|
5,275,000 |
|
|
|
5,275,411 |
|
| United States Treasury Note/Bond |
|
|
9/30/2017 |
|
|
|
|
|
3,000,000 |
|
|
|
2,967,891 |
|
| United States Treasury Note/Bond |
|
|
6/15/2017 |
|
|
|
|
|
2,850,000 |
|
|
|
2,848,441 |
|
| United States Treasury Note/Bond |
|
|
7/15/2017 |
|
|
|
|
|
5,725,000 |
|
|
|
5,718,290 |
|
| United States Treasury Note/Bond |
|
|
9/30/2016 |
|
|
|
|
|
3,700,000 |
|
|
|
3,727,173 |
|
| United States Treasury Note/Bond |
|
|
11/30/2019 |
|
|
|
|
|
2,875,000 |
|
|
|
2,856,807 |
|
| University of Michigan |
|
|
4/1/2017 |
|
|
|
|
|
520,000 |
|
|
|
534,758 |
|
| US Bank NA/Cincinnati OH |
|
|
9/11/2017 |
|
|
|
|
|
650,000 |
|
|
|
650,397 |
|
| Verizon Communications Inc |
|
|
9/15/2016 |
|
|
|
|
|
384,000 |
|
|
|
392,515 |
|
| Vermont Student Assistance Corp |
|
|
4/30/2035 |
|
|
|
|
|
986,932 |
|
|
|
989,271 |
|
| Volkswagen Auto Lease Trust 2014-A |
|
|
4/20/2017 |
|
|
|
|
|
1,000,000 |
|
|
|
996,810 |
|
| Walt Disney Co/The |
|
|
9/15/2016 |
|
|
|
|
|
1,700,000 |
|
|
|
1,837,635 |
|
| World Omni Auto Receivables Trust 2013-A |
|
|
4/16/2018 |
|
|
|
|
|
1,450,000 |
|
|
|
1,449,085 |
|
| Wells Fargo Short Term Investment Fund S |
|
|
|
|
|
|
|
|
3,990,321 |
|
|
|
3,990,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
286,091,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total synthetic investment contracts |
|
|
|
|
|
|
|
|
|
|
|
|
350,842,194 |
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
904 |
|
|
|
3,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investments |
|
|
|
|
|
|
|
|
|
|
|
|
1,676,097,235 |
|
|
|
|
|
|
| * Notes receivable from participants (1,415 loans with interest rates ranging from 4.25% to 9.25% and maturity dates ranging from
1/1/2015 – 12/16/2029). |
|
|
|
|
|
|
|
|
|
|
|
|
13,244,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
|
|
|
|
|
|
|
|
|
$ |
1,689,341,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * |
Denotes a party-in-interest. |
| ** |
Cost information is not required for participant-directed investments and therefore, is not included. |
See
accompanying independent auditors’ report.
23
Exhibit 99.2
PUERTO RICO SAVINGS & INVESTMENT PLAN
Financial Statements and Supplemental Schedule
December 31, 2014 and 2013
(With Report of Independent Registered Public Accounting Firm Thereon)
PUERTO RICO SAVINGS & INVESTMENT PLAN
Table of Contents
|
|
|
|
|
| |
|
Page(s) |
|
|
|
| Report of Independent Registered Public Accounting Firm |
|
|
1 |
|
|
|
| Financial Statements: |
|
|
|
|
|
|
| Statements of Net Assets Available for Benefits as of December 31, 2014 and 2013 |
|
|
2 |
|
|
|
| Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2014 and 2013 |
|
|
3 |
|
|
|
| Notes to Financial Statements |
|
|
4–12 |
|
|
|
| Supplemental Schedule – Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of
December 31, 2014 |
|
|
13 |
|
| Note: |
Supplemental schedules, other than the one listed above, are omitted because of the absence of conditions under which they are required by Department of Labor Rules and Regulations for Reporting and Disclosures under
the Employee Retirement Income Security Act of 1974. |
Report of Independent Registered Public Accounting Firm
RAI Employee Benefits Committee of Puerto Rico Savings & Investment Plan:
We have audited the accompanying statements of net assets available for benefits of Puerto Rico Savings & Investment Plan (the Plan) as of
December 31, 2014 and 2013, and the related statements of changes in net assets available for benefits for the years then ended. 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. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 Plan as of December 31, 2014 and 2013, and the changes in net assets available for benefits for the years then ended, in conformity with U.S. generally accepted
accounting principles.
The supplemental information in the accompanying schedule of Form 5500, Schedule H, Line 4i – 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 the Plan’s 2014 financial statements. The supplemental information is presented for the purpose of additional analysis and
is not a required part of the financial statements but includes 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
supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other 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, 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
in the accompanying schedule of Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2014 is fairly stated in all material respects in relation to the 2014 financial statements as a whole.
/s/ KPMG LLP
Greensboro, North Carolina
June 19, 2015
PUERTO RICO SAVINGS & INVESTMENT PLAN
Statements of Net Assets Available for Benefits
December 31, 2014 and 2013
|
|
|
|
|
|
|
|
|
| |
|
2014 |
|
|
2013 |
|
|
|
|
| Assets: |
|
|
|
|
|
|
|
|
| Investments, at fair value: |
|
|
|
|
|
|
|
|
| Mutual funds: |
|
|
|
|
|
|
|
|
| Vanguard LifeStrategy Conservative Growth Fund |
|
$ |
1,685,150 |
|
|
$ |
1,568,111 |
|
| Vanguard LifeStrategy Growth Fund |
|
|
321,530 |
|
|
|
264,773 |
|
| Vanguard LifeStrategy Moderate Growth Fund |
|
|
468,935 |
|
|
|
472,927 |
|
| Vanguard Total International Stock Index Fund |
|
|
189,701 |
|
|
|
232,863 |
|
| Vanguard Total Stock Market Index Fund |
|
|
1,219,851 |
|
|
|
1,618,938 |
|
| Common/collective trust fund: |
|
|
|
|
|
|
|
|
| Vanguard Retirement Savings Trust |
|
|
1,551,881 |
|
|
|
1,612,122 |
|
| RAI Common Stock Fund |
|
|
936,422 |
|
|
|
224,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investments |
|
|
6,373,470 |
|
|
|
5,994,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash |
|
|
11 |
|
|
|
2,316 |
|
|
|
|
| Receivables: |
|
|
|
|
|
|
|
|
| Employer contribution |
|
|
10,703 |
|
|
|
12,131 |
|
| Dividends receivable |
|
|
8,025 |
|
|
|
2,653 |
|
| Notes receivable from participants |
|
|
151,719 |
|
|
|
126,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total receivables |
|
|
170,447 |
|
|
|
141,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
6,543,928 |
|
|
|
6,138,067 |
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
|
| Accrued administrative expenses |
|
|
37,495 |
|
|
|
34,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets available for benefits before adjustment for fully benefit-responsive investments |
|
|
6,506,433 |
|
|
|
6,103,310 |
|
|
|
|
| Adjustment from fair value to contract value for fully benefit-responsive investments |
|
|
(46,220 |
) |
|
|
(43,709 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets available for benefits |
|
$ |
6,460,213 |
|
|
$ |
6,059,601 |
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
2
PUERTO RICO SAVINGS & INVESTMENT PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2014 and 2013
|
|
|
|
|
|
|
|
|
| |
|
2014 |
|
|
2013 |
|
|
|
|
| Additions: |
|
|
|
|
|
|
|
|
| Investment income: |
|
|
|
|
|
|
|
|
| Net appreciation in fair value of investments |
|
$ |
291,634 |
|
|
$ |
707,564 |
|
| Interest and dividend income |
|
|
179,512 |
|
|
|
129,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investment income |
|
|
471,146 |
|
|
|
837,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income on notes receivable from participants |
|
|
5,960 |
|
|
|
5,960 |
|
|
|
|
| Contributions: |
|
|
|
|
|
|
|
|
| Employer contributions |
|
|
299,126 |
|
|
|
290,362 |
|
| Participant contributions |
|
|
249,028 |
|
|
|
231,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total contributions |
|
|
548,154 |
|
|
|
521,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total additions |
|
|
1,025,260 |
|
|
|
1,365,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deductions: |
|
|
|
|
|
|
|
|
| Benefits paid to participants |
|
|
521,830 |
|
|
|
817,141 |
|
| Administrative expenses |
|
|
102,818 |
|
|
|
78,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total deductions |
|
|
624,648 |
|
|
|
896,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net increase in net assets available for benefits |
|
|
400,612 |
|
|
|
469,320 |
|
|
|
|
| Net assets available for benefits at beginning of year |
|
|
6,059,601 |
|
|
|
5,590,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets available for benefits at end of year |
|
$ |
6,460,213 |
|
|
$ |
6,059,601 |
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
3
PUERTO RICO SAVINGS & INVESTMENT PLAN
Notes to the Financial Statements
December 31, 2014 and 2013
The following brief description of Puerto Rico Savings &
Investment Plan, referred to as the Plan, is provided for general information purposes only. Participants should refer to the Plan document for more complete information.
The Plan is a voluntary defined contribution retirement plan covering
all regular, full-time employees, and nonregular employees, as defined in the Plan document, of R.J. Reynolds Tobacco (CI), Co., a Cayman Islands corporation, referred to as the Company, in Puerto Rico.
Reynolds American Inc., referred to as RAI, is the Plan Sponsor. The RAI Employee Benefits Committee, referred to as the Committee, controls and manages the operation and administration of the Plan. Banco Popular de Puerto Rico serves as the trustee
and Fidelity Employer Services Company, LLC, referred to as Fidelity Investments, serves as the recordkeeper for the Plan.
The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974, referred to as ERISA.
Each year, participants may make basic contributions of up to 6%
of pre-tax annual compensation, as defined in the Plan document. In addition, participants may make supplemental contributions on a pre-tax or after-tax basis of up to 16% of compensation, including the basic contribution. The Company or participating subsidiaries contribute an amount equal to 50% of basic contributions made by participants who are
accruing a benefit under a defined benefit plan sponsored by RAI, and 100% of basic contributions made by participants who are not accruing a benefit under a defined benefit plan sponsored by RAI. In addition, the Company or participating
subsidiaries make Retirement Enhancement Contributions to accounts of eligible participants equal to 3% to 9% of such participants’ eligible compensation, depending on the eligible participant’s hire date, age and years of service as of
January 1, 2006. Contributions are subject to certain Puerto Rico Internal Revenue Code limitations.
Each participant’s account is credited with the
participant’s contributions and allocations of the Company’s contributions and Plan earnings, and charged with the participant’s withdrawals, Plan losses and an allocation of administrative expenses. Allocations are based on
participant contributions, account balances, or compensation, as defined in the Plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
PUERTO RICO SAVINGS & INVESTMENT PLAN
Notes to the Financial Statements
December 31, 2014 and 2013
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in Company contributions occurs upon the earlier of completion of 24 months of Plan participation, 36 months of service with the Company or affiliated companies, age 65, or upon the occurrence of certain events as defined
in the Plan document.
Plan investments are participant directed. Upon enrollment in
the Plan, a participant may direct contributions in 1% increments to any of seven investment fund options. Participants may change or transfer their investment options at any time via telephone or a secure internet website.
| |
(f) |
Notes Receivable from Participants |
Participants may borrow from their fund
accounts a minimum of $1,000 up to a maximum of the lesser of 50% of their vested account balance reduced by the highest outstanding loan balance during the preceding 12 months, or $50,000 and limited by certain restrictions in the Plan document.
Loan terms shall not be for more than five years, except for the purchase of a primary residence, which shall not exceed fifteen years. The loans are secured by the balance in the participant’s account and bear interest at a rate commensurate
with local prevailing rates as determined by the Plan administrator. Principal and interest are paid ratably through payroll deductions. Participants may continue to make loan repayments via electronic funds transfer in order to prevent a default
following termination of employment.
Upon termination of service, a participant is entitled to
receive a lump-sum amount equal to the value of the participant’s vested interest in his or her account, or monthly installments calculated annually over a period not to exceed the lesser of 15 years
or the participant’s life expectancy.
Expenses relating to the purchase or sale of investments are included
in the cost or deducted from the proceeds, respectively. Direct charges and expenses, including investment manager fees attributable to specific investment funds, may be charged against that investment fund. Administrative expenses such as trustee,
auditor, and general plan recordkeeping fees may be paid directly from the Plan and are allocated to participant accounts.
Forfeitures are used to reduce future employer contributions.
Certain forfeitures may be restored if the participant is reemployed before accruing five consecutive break-in-service years, as defined in the Plan document. During
2014 and 2013, forfeitures were not used. At December 31, 2014 and 2013, forfeited nonvested accounts totaled $2,876 and $81, respectively.
PUERTO RICO SAVINGS & INVESTMENT PLAN
Notes to the Financial Statements
December 31, 2014 and 2013
| (2) |
Summary of Significant Accounting Policies |
The accompanying financial statements of the Plan have been
prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
| |
(b) |
Investment Valuation and Income Recognition |
Investments are reported at fair
value. See note 6 for discussion of fair value measurement.
Investment contracts held by a defined contribution plan are required to
be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully
benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The statement of net assets
available for benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The statement of
changes in net assets available for benefits is prepared on a contract value basis.
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 appreciation includes the Plan’s gains and losses
on investments purchased and sold as well as held during the year.
| |
(c) |
Valuation of Notes Receivable from Participants |
Notes receivable from
participants are valued at amortized cost plus accrued interest.
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 net assets available for benefits and changes therein. Actual results could differ
from those estimates.
| |
(e) |
Risks and Uncertainties |
The Plan utilizes various investment instruments.
Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. The funds held by the Plan invest in securities with contractual cash flows, such as asset backed securities,
collateralized mortgage obligations and commercial mortgage backed securities, including securities backed by subprime mortgage loans. The value, liquidity and related income of these securities are sensitive to changes in economic conditions,
including real estate value, delinquencies or defaults, or both, and may be adversely affected by shifts in the market’s perceptions of the issuers and changes in interest rates. 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 the amounts reported in the financial statements and schedule.
Benefits are recorded when paid.
PUERTO RICO SAVINGS & INVESTMENT PLAN
Notes to the Financial Statements
December 31, 2014 and 2013
The following table presents investments that represent 5% or more of the
Plan’s net assets as of December 31, 2014 and 2013. Except for Vanguard Retirement Savings Trust, which is shown at contract value, all the funds are shown at fair value.
|
|
|
|
|
|
|
|
|
| |
|
December 31 |
|
| |
|
2014 |
|
|
2013 |
|
|
|
|
| Vanguard LifeStrategy Conservative Growth Fund, 91,386 and 86,876 shares, respectively |
|
$ |
1,685,150 |
|
|
$ |
1,568,111 |
|
| Vanguard LifeStrategy Moderate Growth Fund, 19,474 and 20,464 shares, respectively |
|
|
468,935 |
|
|
|
472,927 |
|
| Vanguard Total Stock Market Index Fund, 26,071 and 38,255 shares, respectively |
|
|
1,219,851 |
|
|
|
1,618,938 |
|
| Vanguard Retirement Savings Trust, 1,505,661 and 1,568,413 shares, respectively (Fair Value of $1,551,881 and $1,612,122 as of
December 31, 2014 and 2013, respectively) |
|
|
1,505,661 |
|
|
|
1,568,413 |
|
| RAI Common Stock Fund, 14,563 and 4,490 shares, respectively |
|
|
936,422 |
|
|
|
224,953 |
|
The Plan’s investments, including gains and losses on investments bought and sold, and those held during
the period, appreciated in value as follows:
|
|
|
|
|
|
|
|
|
| |
|
Year ended December 31 |
|
| |
|
2014 |
|
|
2013 |
|
|
|
|
| Mutual funds |
|
$ |
212,373 |
|
|
$ |
663,499 |
|
| RAI Common Stock Fund |
|
|
79,261 |
|
|
|
44,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net appreciation in fair value of investments |
|
$ |
291,634 |
|
|
$ |
707,564 |
|
|
|
|
|
|
|
|
|
|
| (4) |
Related Party Transactions |
The RAI Common Stock Fund is provided as an investment
option for participants in the Plan. As RAI is the Plan Sponsor, these transactions qualify as party-in-interest transactions. See note 3 for a description of the
net appreciation in value of the RAI Common Stock Fund included in Plan assets. RAI Common Stock Fund dividends for the years ended December 31, 2014 and 2013 were $15,906 and $12,010, respectively. The RAI common stock shares held in the fund
as of December 31, 2014 and 2013 were 14,563 valued at $64.27 per share and 4,490 valued at $49.99 per share, respectively.
PUERTO RICO SAVINGS & INVESTMENT PLAN
Notes to the Financial Statements
December 31, 2014 and 2013
| (5) |
Collective Trust with Asset Management Company |
The Plan is party to a benefit-responsive collective trust with Vanguard. Vanguard maintains the contributions in a general account. The account is credited with earnings on the underlying investments and charged for participant
withdrawals and administrative expenses. The collective trust issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan.
The collective trust is included in the financial statements at fair value and adjusted to contract value as reported to the Plan by Vanguard.
Contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at
contract value.
There are no reserves against contract value for credit risk of the contract issuer or otherwise. The average yield was
approximately 2.30% and 1.98% for the years ended December 31, 2014 and 2013, respectively. The contract rates ranged from 0.71% to 1.69% and 0.85% to 4.75% at December 31, 2014 and 2013, respectively. The crediting interest rate is based
on a formula agreed upon with the issuer but may not be less than certain percentages.
Certain events limit the ability of the Plan to
transact at contract value with the issuer. Such events include the following: (i) amendments to the Plan documents (including complete or partial Plan terminations or merger with another plan), (ii) changes to Plan’s prohibition on
competing investment options or deletion of equity wash provisions, (iii) bankruptcy of the Plan Sponsor or other Plan Sponsor events (e.g. divestitures or spin-offs of a subsidiary) which cause a
significant withdrawal from the Plan, or (iv) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemptions under ERISA. The Plan administrator does not believe that the occurrence
of any such event, which would limit the Plan’s ability to transact at contract value with participants, has occurred or is probable of occurring.
| (6) |
Fair Value Measurement |
The fair value of assets and liabilities is determined by using
a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market participant assumptions
based on the best information available in the circumstances.
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, essentially an exit price.
The
three levels of the fair value hierarchy are described as follows:
Level 1: Inputs are quoted prices, unadjusted, in active
markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
PUERTO RICO SAVINGS & INVESTMENT PLAN
Notes to the Financial Statements
December 31, 2014 and 2013
Level 2: Inputs are other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly. A Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3: Inputs are unobservable and reflect the reporting entity’s own assumptions about the assumptions that market participants
would use in pricing the asset or liability.
The asset’s 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.
The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2014 and
2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Assets at fair value as of December 31, 2014 |
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
|
|
|
| Mutual funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Growth funds |
|
$ |
2,475,615 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,475,615 |
|
| Index funds |
|
|
1,409,552 |
|
|
|
— |
|
|
|
— |
|
|
|
1,409,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total mutual funds |
|
|
3,885,167 |
|
|
|
— |
|
|
|
— |
|
|
|
3,885,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common/collective trust fund |
|
|
— |
|
|
|
1,551,881 |
|
|
|
— |
|
|
|
1,551,881 |
|
|
|
|
|
|
| RAI Common Stock Fund: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| RAI Common Stock |
|
|
935,934 |
|
|
|
— |
|
|
|
— |
|
|
|
935,934 |
|
| Fidelity Money Market Fund |
|
|
488 |
|
|
|
— |
|
|
|
— |
|
|
|
488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total RAI Common Stock Fund |
|
|
936,422 |
|
|
|
— |
|
|
|
— |
|
|
|
936,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investments at fair value |
|
$ |
4,821,589 |
|
|
$ |
1,551,881 |
|
|
$ |
— |
|
|
$ |
6,373,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PUERTO RICO SAVINGS & INVESTMENT PLAN
Notes to the Financial Statements
December 31, 2014 and 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Assets at fair value as of December 31, 2013 |
|
| |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
|
|
|
|
| Mutual funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Growth funds |
|
$ |
2,305,811 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,305,811 |
|
| Index funds |
|
|
1,851,801 |
|
|
|
— |
|
|
|
— |
|
|
|
1,851,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total mutual funds |
|
|
4,157,612 |
|
|
|
— |
|
|
|
— |
|
|
|
4,157,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common/collective trust fund |
|
|
— |
|
|
|
1,612,122 |
|
|
|
— |
|
|
|
1,612,122 |
|
|
|
|
|
|
| RAI Common Stock Fund: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| RAI Common Stock |
|
|
224,457 |
|
|
|
— |
|
|
|
— |
|
|
|
224,457 |
|
| Fidelity Money Market Fund |
|
|
496 |
|
|
|
— |
|
|
|
— |
|
|
|
496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total RAI Common Stock Fund |
|
|
224,953 |
|
|
|
— |
|
|
|
— |
|
|
|
224,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investments at fair value |
|
$ |
4,382,565 |
|
|
$ |
1,612,122 |
|
|
$ |
— |
|
|
$ |
5,994,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Following is a description of the valuation methodologies used for assets measured at fair value:
Mutual funds are valued based on the quoted market prices of shares held by the Plan at year end.
Investments in common/collective trust are stated at fair value on the statement of net assets available for benefits with an adjustment from
fair value to contract value for fully benefit-responsive collective trusts. The valuation at year end is based on audited financial statements of the common collective trust, and are valued using the net
asset value, referred to as NAV, provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, less its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted
price in a market that is not active. The Plan has the ability to redeem its investments in the funds at NAV at the valuation date. There are no significant restrictions, redemptions terms, or holding periods which would limit the Plan or the
participants to transact at NAV.
Investments in the RAI Common Stock Fund consist of shares of Reynolds American Inc. common stock and
monies held in a Fidelity money market fund both of which are valued based on the quoted market price of shares trading in active markets held by the Plan at year end. When participants exchange into or out of this stock fund, the transaction is
processed on a real-time basis. Trades in the real-time trading environment settle in three business days. Other purchase and sale requests, such as contributions or
distributions, are aggregated and typically sent to market on the following business day. These transactions, which may take multiple days to complete, are valued based on the volume-weighted average trade
price.
PUERTO RICO SAVINGS & INVESTMENT PLAN
Notes to the Financial Statements
December 31, 2014 and 2013
The methods described above may produce a fair value calculation that may not be indicative
of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the
fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
For the years ended
December 31, 2014 and 2013, there were no transfers of assets into or out of Level 1 and Level 2 of the fair value hierarchy described above.
The Plan’s latest determination letter issued by the Puerto Rico
Treasury Department is dated October 5, 2004. The Plan has been amended since receiving this determination letter. The Plan is intended to comply with Section 1081.01 of the Puerto Rico Internal Revenue Code of 2011, referred to as the PR
Code. The Plan is required to operate in conformity with the PR Code to maintain its qualified status. The United States qualification of the Plan was dropped, effective with the 1995 plan year. The Committee is not aware of any course of action or
series of events that have occurred that might adversely affect the Plan’s qualified status. The Committee believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the PR Code, and the
Plan and related trust continue to be tax-exempt. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
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 (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Puerto Rico Treasury Department. The Plan administrator has analyzed the tax positions
taken by the Plan, and has concluded that as of December 31, 2014, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) 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. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2011.
On October 1, 2012, the Committee authorized amendments to the Plan to incorporate changes intended to comply with the requirements of the
Puerto Rico Internal Revenue Code of 2011, effective January 1, 2011.
An application for an updated determination letter was made to
the Puerto Rico Treasury Department on April 4, 2014.
Although it has not expressed any intent to do so, the Committee has
the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of the Plan’s termination, participants will become 100% vested in their employer contributions and
earnings thereon.
PUERTO RICO SAVINGS & INVESTMENT PLAN
Notes to the Financial Statements
December 31, 2014 and 2013
| (9) |
Reconciliation of Financial Statements to Form 5500 |
The following is a reconciliation
of net assets available for benefits per the financial statements to the Form 5500:
|
|
|
|
|
|
|
|
|
| |
|
December 31 |
|
| |
|
2014 |
|
|
2013 |
|
|
|
|
| Net assets available for benefits per the financial statements |
|
$ |
6,460,213 |
|
|
$ |
6,059,601 |
|
| Adjustment to increase contract value to fair value for fully benefit-responsive investment
contracts |
|
|
46,220 |
|
|
|
43,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net assets available for benefits per the Form 5500 |
|
$ |
6,506,433 |
|
|
$ |
6,103,310 |
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of investment income per the financial statements to the Form 5500:
|
|
|
|
|
|
|
|
|
| |
|
2014 |
|
|
2013 |
|
|
|
|
| Total investment income per the financial statements |
|
$ |
471,146 |
|
|
$ |
837,463 |
|
| Adjustment from fair value to contract value for fully benefit-responsive investment
contracts |
|
|
46,220 |
|
|
|
43,709 |
|
| Reversal of prior year adjustment from fair value to contract value for fully benefit-responsive investment contracts |
|
|
(43,709 |
) |
|
|
(71,568 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
| Total investment income per the Form 5500 |
|
$ |
473,657 |
|
|
$ |
809,604 |
|
|
|
|
|
|
|
|
|
|
Plan management has evaluated subsequent events from the balance
sheet date through the date at which the financial statements were issued, and determined there are no other items to disclose.
12
PUERTO RICO SAVINGS & INVESTMENT PLAN
Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Identity of issue, borrower, lessor or similar party |
|
Description of investment, including
maturity date, rate of
interest,
collateral, par or maturity value |
|
Number of
shares
or units |
|
|
Cost |
|
|
Current
value |
|
|
|
|
|
|
| Vanguard LifeStrategy Conservative Growth Fund |
|
Mutual Fund |
|
|
91,386 |
|
|
|
|
** |
|
$ |
1,685,150 |
|
| Vanguard LifeStrategy Growth Fund |
|
Mutual Fund |
|
|
11,160 |
|
|
|
|
** |
|
|
321,530 |
|
| Vanguard LifeStrategy Moderate Growth Fund |
|
Mutual Fund |
|
|
19,474 |
|
|
|
|
** |
|
|
468,935 |
|
| Vanguard Total International Stock Index Fund |
|
Mutual Fund |
|
|
12,199 |
|
|
|
|
** |
|
|
189,701 |
|
| Vanguard Total Stock Market Index Fund |
|
Mutual Fund |
|
|
26,071 |
|
|
|
|
** |
|
|
1,219,851 |
|
| Vanguard Retirement Savings Trust |
|
Common/Collective Trust Fund |
|
|
1,505,661 |
|
|
|
|
** |
|
|
1,551,881 |
|
| * RAI Common Stock Fund-RAI Common Stock |
|
Equity |
|
|
14,563 |
|
|
|
|
** |
|
|
935,934 |
|
| * RAI Common Stock Fund-Fidelity Money Market Fund |
|
Money Market Fund |
|
|
488 |
|
|
|
|
** |
|
|
488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investments |
|
|
|
|
|
|
|
|
|
|
|
|
6,373,470 |
|
|
|
|
|
|
| Banco Popular de Puerto Rico Time Deposit Open Account |
|
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
| * Notes Receivable from Participants |
|
Participant loans, 30 loans with interest rate at 4.25% and maturity dates ranging from January 5, 2015 to December 9,
2019. |
|
|
— |
|
|
|
— |
|
|
|
151,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
|
|
|
|
|
|
|
|
|
$ |
6,525,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| * |
Denotes a party-in-interest. |
| ** |
Cost information is not required for participant-directed investments and, therefore, is not included. |
See
accompanying independent auditors’ report.
13
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