5. Fully Benefit-Responsive Investment Contracts (continued)
The Synthetic GICs do not permit the insurance companies to terminate the agreement prior to the scheduled
maturity date. Each contract is subject to early termination penalties that may be significant.
6. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated July 7, 2017, stating that the Plan is qualified under
Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Subsequent to receiving the determination letter, the Plan was amended and restated. Once qualified, the Plan is required to
operate in conformity with the Code to maintain its qualification. The Plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended and restated,
will remain qualified and the related trust will remain tax exempt.
Accounting principles generally accepted in the United States require plan management
to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The Plan
administrator has analyzed the tax positions taken by the Plan and has concluded that, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is
subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
7. Related Parties and Party-In-Interest Transactions
As of December 31, 2019 the Plan held
2,142,869 shares of the Companys common stock with a fair value of $582,796,209. As of December 31, 2018, the Plan held 2,117,373 shares of the Companys common stock with a fair value of $477,086,484. During the year, the Plan
purchased and sold 82,198 shares for $18,514,226 and 56,702 shares for $14,110,763, respectively, of the Companys common stock and received $6,964,947 in dividends on the shares of common stock.
Northern Trust funds of the Trust are managed by Northern Trust, whereas Black Rock funds are managed by Black Rock, Inc., and Fidelity funds are managed by
the trustee (Fidelity Management Trust Company) and Vanguard funds are managed by The Vanguard Group, Inc. These transactions qualify as party-in-interest transactions;
however, they are exempt from the prohibited transactions rules under ERISA.
8. Risks and Uncertainties
The Trust and the Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit
risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect
14