Notes to Financial Statements
December 31, 2015
and
2014
(1) Description of the Plan
The following description of the Ciber, Inc. Savings 401(k) Plan (the “Plan”) provides only general information. For a more complete description of the Plan, participants should refer to the Summary Plan Description or the Plan Agreement, which is available from the plan administrator.
The Plan is a defined contribution plan covering substantially all employees of Ciber, Inc. and certain of its subsidiaries (“Ciber” or the “Company”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Principal Life Insurance Company (“Principal”) is the recordkeeper of the Plan. Delaware Charter Guarantee & Trust Company, d/b/a Principal Trust Company serves as trustee of the Plan. Employees of the Company who are at least 21 years of age and are benefited are eligible to participate in the Plan.
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(b)
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Contributions and Vesting
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Participants may contribute up to 75% of pretax annual compensation, with the exception of employees considered “highly compensated.” Highly compensated employees are restricted to a maximum contribution of 9% of compensation. In addition, qualifying participants may make “catch-up” contributions. Contributions are subject to certain limitations of the Internal Revenue Code ("the Code"). Participants may also contribute amounts representing distributions from other qualified defined contribution or benefit plans (rollovers). Participants can change their contribution percentage at any time. The Company cash contribution is a match of 33% of the participant's salary deferral contribution each pay period, on up to 6% of the participant's qualified compensation. In no event will the Company make matching contributions in excess of $2,000. Catch-up contributions are not matched. Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company's matching contribution plus actual earnings thereon is based on years of service as follows:
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Completed Years of Service
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Vested Percentage
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Less than two years
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0
|
%
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Two years
|
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20
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%
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Three years
|
|
40
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%
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Four years
|
|
60
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%
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Five years
|
|
80
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%
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Six years
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100
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%
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Participants reach 100% vesting in the Company's matching contribution plus actual earnings thereon after six years of service. If a participant terminates prior to vesting, unvested amounts are forfeited and can be used to reduce future employer contributions or cover Plan administrative expenses.
At
December 31, 2015
and
2014
, unallocated forfeited accounts totaled $131,334 and $129,403, respectively. In
2015
, employer contributions were reduced by $464,278 from forfeited accounts.
The Plan's assets are invested in various investment options offered by Principal and in Ciber common stock, as directed by the participants. Participants may invest their account balance in the various investment options in 1% increments. Participants may change their investment options on a daily basis.
Participants are generally entitled to a distribution from the Plan upon termination of employment, retirement, disability, or death. Terminated participants are entitled to receive only the vested percentage of their account balance and the remainder of the account is forfeited. For other situations, there are various methods by which benefits may be distributed depending on date of employment, marital status, and participant elections.
In service withdrawals are available in certain limited circumstances, as defined by the Plan. Hardship withdrawals are allowed for participants incurring an immediate and heavy financial need, as defined by the Plan. Hardship withdrawals are strictly regulated by the Internal Revenue Service ("IRS") and a participant must exhaust all available loan options and available distributions prior to requesting a hardship withdrawal.
Participants may borrow from their account a minimum of $1,000 and up to a maximum of $50,000 or 50% of their vested account balance, whichever is less. Loan terms must not exceed five years, except for loans to acquire a principal residence, which must not exceed seven years. Interest on loans is charged at the prime rate as of the processing date of the loan, plus 1% and ranged from 4.25% to 9.25% as of
December 31, 2015
and
2014
. Principal and interest is paid ratably through payroll deductions. Participants pay a loan origination fee of $50 per loan to Principal.
The Plan's administrative expenses are paid by either the Plan or the Company, as provided by the Plan's provisions. In general, plan expenses, other than broker commissions, portfolio transaction fees, and administrative service fees on the accounts of non-employee participants, are paid by the Company. Expenses relating to purchases, sales or transfers of the Plan's investments are charged to the particular investment fund to which the expenses relate.
Each participant's account is credited with the participant's contributions and the Company's matching contributions and allocations of plan earnings. Plan earnings are allocated based on the participant's share of net earnings or losses of their respective elected investment options. Administrative expenses are based on the participant's investments and account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account.
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(h)
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Ciber, Inc. Stock Account
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The Plan invests in common stock of Ciber, Inc. through its Ciber, Inc. Stock Account. The Ciber, Inc. Stock Account does not hold cash or other short-term securities. Plan participants are not required to invest in the Ciber, Inc. Stock Account, and may exchange into or out of the Ciber, Inc. Stock Account on a daily basis. Trades within the Ciber, Inc. Stock Account involve a one cent per share broker commission for each transaction. The commission is netted from the trade and will have an effect on the share price used for the trade.
Each participant is entitled to exercise voting rights attributable to the shares allocated to their account and is notified by the Company prior to the time that such rights may be exercised. The trustee votes any shares in the plan allocated to participants that did not make a voting election in the same proportion as those shares for which the trustee did receive voting elections, unless the Committee directs the trustee otherwise. Participants have the same voting rights in the event of a tender or exchange offer. This investment option changed during 2016. As of March 1, 2016, this investment option was no longer available for election and investments are required to be transferred from this option by December 19, 2016.
Although the Company has not expressed any intent to terminate the Plan, it retains 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 termination, participants will become 100% vested in their accounts.
(2) Summary of Significant Accounting Policies
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(a)
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Basis of Accounting and Presentation
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The accompanying financial statements have been prepared on the accrual basis of accounting. Distributions are recorded when paid.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates that affect the amounts reported in the financial statements, accompanying notes to the financial statements, and supplemental schedules. Actual results could differ from those estimates.
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(c)
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Notes Receivable from Participants
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Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of
December 31, 2015
or
2014
. If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be a distribution, the participant loan balance is reduced and a benefit payment is recorded.
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(d)
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New Accounting Pronouncements
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In May 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-07, Disclosures for Investments in Certain Entities that Calculate Net Asset Value Per Share
(or its Equivalent), ("ASU 2015-07"). ASU 2015-07 removes the requirement to categorize within the fair value hierarchy investments for which fair values are estimated using the net asset value practical expedient provided by Accounting Standards Codification 820, Fair Value Measurement. Disclosures about investments in certain entities that calculate net asset value per share are limited under ASU 2015-07 to those investments for which the entity has elected to estimate the fair value using the net asset value practical expedient. ASU 2015-07 is effective for entities (other than public business entities) for fiscal years beginning after December 15, 2016, with retrospective application to all periods presented. Early application is permitted. Management has elected to adopt ASU 2015-07 early.
In July 2015, the FASB issued ASU 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): ("Part I") Fully Benefit-Responsive Investment Contracts, ("Part II") Plan Investment Disclosures, ("Part III") Measurement Date Practical Expedient. Part I of the ASU eliminates the requirements to measure the fair value of fully benefit-responsive investment contracts and provide certain disclosures. Contract value is the only required measure for fully benefit-responsive investment contracts. Part II of the ASU eliminates the requirements to disclose individual investments that represent 5% or more of net assets available for benefits and the net appreciation or depreciation in fair value of investments by general type. It also simplifies the level of disaggregation of investments that are measured using fair value. Plans will continue to disaggregate investments that are measured using fair value by general type; however, plans are no longer required to also disaggregate investments by nature, characteristics and risks. Further, the disclosure of information about fair value measurements shall be provided by general type of plan asset. Part III of the ASU is not applicable to the Plan. The ASU is effective for fiscal years beginning after December 15, 2015. Parts I and II are to be applied retrospectively. Management has elected to adopt Parts I and II early.
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(e)
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Investment Valuation and Income Recognition
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Investments are stated at fair value, except for fully benefit-responsive investment contracts. Fair value is defined as 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 (an exit price).
Marketable securities (Ciber, Inc. stock) are valued at the closing price reported on the active market on which the individual securities are traded. Mutual funds are valued at the net asset value (“NAV”) of shares held by the Plan at year-end, as determined by the last published market price on the last day of each year as quoted by the investment company. The quoted price is that which is reported by the active market on which the fund is traded. Pooled separate accounts and collective investments are valued at NAV as determined by the issuers. The NAV is used as a practical expedient to estimate fair value. See Note 3 for further discussion and disclosures related to fair value measurements.
Investment transactions are recorded on the date of purchase or sale (“trade-date”). Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Net depreciation includes the Plan's gains and losses on investments bought and sold, as well as held during the year.
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(f)
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Risks and Uncertainties
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The Plan provides for various investment options. The Plan's exposure to credit loss in the event of nonperformance of investments is limited to the carrying value of such investments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risk. 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 statements of net assets available for benefits and participant account balances.
(3) Fair Value Measurements
The Plan performs fair value measurements in accordance with Accounting Standards Codification Topic 820 (“ASC 820”), which defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the Plan's principal or most advantageous market for the asset or liability. ASC 820 establishes a fair value hierarchy that requires the Plan to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset's or liability's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs within the fair value hierarchy are defined as follows:
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Level 1 -
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Unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access at the measurement date.
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Level 2 -
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Significant other observable inputs other than Level 1 prices, such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data, either directly or indirectly, for substantially the full term of the asset or liability.
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Level 3 -
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Significant unobservable inputs that reflect management's judgment about the assumptions that a market participant would use in pricing the investment and are based on the best available information, some of which may be internally developed.
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The following table sets forth, by level within the fair value hierarchy, the Plan's assets measured at fair value on a recurring basis as of
December 31, 2015
:
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December 31, 2015
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Level 1
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Level 2
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Level 3
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Total
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Mutual Funds
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$
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88,489,661
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|
$
|
—
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|
$
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—
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|
$
|
88,489,661
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|
Ciber, Inc. Common Stock
|
2,301,301
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|
—
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—
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|
2,301,301
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|
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$
|
90,790,962
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|
$
|
—
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|
$
|
—
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|
$
|
90,790,962
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|
Investments measured at net asset value:
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Pooled Separate Accounts:
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Domestic Equity:
|
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|
|
|
|
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Small Cap
|
|
|
|
|
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|
8,797,929
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Mid Cap
|
|
|
|
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7,321,677
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Large Cap
|
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|
|
|
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13,535,496
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International Equity
|
|
|
|
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3,151,859
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Real Estate
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5,883,020
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Balanced
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150,316
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Fixed Income
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5,572,634
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Collective Investment Trusts:
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Target Retirement
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36,346,989
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Balanced
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596,671
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Total assets at fair value
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$
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172,147,553
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The following table sets forth, by level within the fair value hierarchy, the Plan's assets measured at fair value on a recurring basis as of
December 31, 2014
:
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December 31, 2014
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Level 1
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Level 2
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Level 3
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Total
|
Mutual Funds
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$
|
90,512,910
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|
$
|
—
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|
$
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—
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$
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90,512,910
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Common Stock
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2,515,035
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—
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—
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|
2,515,035
|
|
|
$
|
93,027,945
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|
$
|
—
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|
$
|
—
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|
$
|
93,027,945
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|
Investments measured at net asset value:
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Pooled Separate Accounts:
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Domestic Equity:
|
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Small Cap
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9,247,814
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Mid Cap
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8,919,262
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Large Cap
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14,449,865
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International Equity
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|
4,498,607
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Real Estate
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|
6,882,874
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Balanced
|
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129,297
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Fixed Income
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|
5,870,732
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Collective Investment Trusts:
|
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Target Retirement
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37,618,369
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Balanced
|
|
|
|
816,540
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Total assets at fair value
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$
|
181,461,305
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The pooled separate account investments allow one transfer per 30 day period. The transfer restriction applies to all participant directed transfers out of the investment. Once the number of allowed transfers out is met, participants are not allowed to transfer back into this investment option until the holding period elapses. Contributions into the investment option are not impacted. In general, certain transfer restrictions also apply to the mutual fund investments. The collective investment trust investments allow one transfer per 30 day period.
(4) Fully Benefit-Responsive Investment Contract
The Plan holds a traditional investment contract, the Principal Fixed Income Guaranteed Option. This contract meets the fully benefit-responsive investment contract criteria and therefore is reported at contract value. Contract value is the relevant measure for fully benefit-responsive investment contracts because this is the amount received by participants if they were to initiate permitted transactions under the terms of the Plan. Contract value represents contributions made under each contract, plus earnings, less participant withdrawals, and administrative expenses.
There were no unfunded commitments related to any of these investments.
The traditional investment contract held by the Plan is a guaranteed investment contract ("GIC"). The contract issuer is contractually obligated to repay the principal and interest at a specified interest rate that is guaranteed to the Plan. The crediting rate is based on a formula established by the contract issuer but may not be less than 0%. The crediting rate is reviewed on a quarterly basis for resetting. The contract cannot be terminated before the scheduled maturity date.
The Plan’s ability to receive amounts due in accordance with fully benefit-responsive investment contracts is dependent on the third-party issuers’ ability to meet their financial obligations. The issuers’ ability to meet their contractual obligations may be affected by future economic and regulatory developments.
Certain events might limit the ability of the Plan to transact at contract value with the contract issuers. These events may be different under each contract. Examples of such events include the following:
|
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•
|
The Plan’s failure to qualify under Section 401(a) of the Code or the failure of the trust to be tax-exempt under Section 501(a) of the Code
|
•
Premature termination of the contracts
•
Plan termination or merger
•
Changes to the Plan’s prohibition on competing investment options
|
|
•
|
Bankruptcy of the plan sponsor or other plan sponsor events (e.g., divestitures or spinoffs of a subsidiary) that significantly affect the Plan’s normal operations
|
No events are probable of occurring that might limit the ability of the Plan to transact at contract value with the contract issuers and that also would limit the ability of the Plan to transact at contract value with the participants.
In addition, certain events allow the issuers to terminate the contracts with the Plan and settle at an amount different from contract value. Those events may be different under each contract. Examples of such events include the following:
•
An uncured violation of the Plan’s investment guidelines
•
A breach of material obligation under the contract
•
A material misrepresentation
•
A material amendment to the agreements without the consent of the issuer
(5) Tax Status
The underlying non-standardized prototype plan has received an opinion letter from the IRS dated March 31, 2008, stating that the form of the plan is qualified under Section 401(a) of the Code, and therefore, the related trust is tax-exempt. In accordance with Revenue Procedures 2015-6 and 2011-49, the plan administrator has determined that it is eligible to and has chosen to rely on the current IRS prototype plan opinion letter. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualified status. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and therefore believes the Plan is qualified and the related trust is 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 as of
December 31, 2015
, there are no gross unrecognized tax benefits taken or expected to be taken. The Plan has recognized no interest or penalties related to gross unrecognized tax benefits. 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 2012.
(6) Party-in-Interest Transactions
Certain plan investments are shares of stock of Ciber, Inc., insurance contracts, common/collective trust investments, or units of pooled separate accounts, managed either by Principal or by outside fund managers hired by Principal. Principal is the service provider who executes the investment transactions for the Plan and, therefore, these transactions are considered party-in-interest transactions for which a statutory exemption exists.