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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(MARK ONE)
☒ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2016
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-16707
Full title of the plan and the address of the plan, if different from
that of the issuer named below:
The Prudential Employee Savings Plan
Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Prudential Financial, Inc.
751 Broad Street
Newark, New Jersey 07102
Financial Statements and Exhibits
(a) | Financial Statements for the Year Ended December 31, 2016, and Independent Registered Public Accounting Firm’s Report. |
(b) | The financial statements required to be filed hereunder appear commencing at page 3 hereof. |
(c) | Exhibits |
(1) | Exhibit 23.1 — Consent of Independent Registered Public Accounting Firm (following financial statements). |
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The Prudential Employee Savings Plan
Financial Statements and Supplemental Information
(Modified Cash Basis)
December 31, 2016 and 2015 | ||
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The Prudential Employee Savings Plan
December 31, 2016 and 2015
Page | ||||
1 - 2 | ||||
Financial Statements | ||||
3 | ||||
4 | ||||
5 - 32 | ||||
Schedule I – Schedule of Assets Held for Investment Purposes | 33 - 37 |
* | Other schedules required by 29 CFR 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA are not included as they are not applicable. |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of
The Prudential Employee Savings Plan
We have audited the accompanying statements of net assets available for benefits (modified cash basis) of The Prudential Employee Savings Plan (the Plan) as of December 31, 2016 and 2015, and the related statement of changes in net assets available for benefits for the year ended December 31, 2016. 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 from 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.
As described in Note 2, the financial statements and supplemental schedule have been prepared on the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America.
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, 2016 and 2015, and the changes in net assets available for benefits for the year ended December 31, 2016, in conformity with the basis of accounting described in Note 2.
The supplemental information in the accompanying schedule of assets held for investment purposes (modified cash basis) as of December 31, 2016 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but include 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
1299 Pennsylvania Avenue NW • Suite 1120 • Washington • District of Columbia 20004 • P 202.803.2335 • F 202.821.1320
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presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, 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 is fairly stated, in all material respects, in relation to the financial statements as a whole.
Washington, DC June 9, 2017 |
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The Prudential Employee Savings Plan
Statements of Net Assets Available for Benefits
(Modified Cash Basis)
December 31, 2016 and 2015
2016 | 2015 | |||||||
Assets: | ||||||||
Investments at contract value | ||||||||
PESP Fixed Rate Fund (Note 3) | $ | 3,537,373,941 | $ | 3,308,570,646 | ||||
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Investments at fair value | ||||||||
Custom Plan Investments | ||||||||
Alliance Bernstein Core Opportunities Fund | 433,533,813 | 443,713,094 | ||||||
Delaware Small Cap Core Equity Fund | 222,792,188 | 197,706,869 | ||||||
Insurance Company Separate Accounts | ||||||||
Core Bond Enhanced Index/PGIM Fund | 156,786,443 | 133,081,668 | ||||||
Prudential Retirement Real Estate Fund | 181,207,413 | 121,097,186 | ||||||
QMA International Developed Markets Index Fund | 190,791,922 | 165,357,271 | ||||||
QMA U.S. Broad Market Index Fund | 1,107,792,132 | 971,621,412 | ||||||
Wells Capital International Bond Fund | 51,651,861 | 41,248,476 | ||||||
Common/Collective Trusts | ||||||||
Jennison Opportunistic Equity Fund CIT | 432,497,397 | 425,179,309 | ||||||
Prudential High Yield Collective Investment Trust | 75,100,718 | 62,505,254 | ||||||
Wellington Trust Co. International Opportunities Fund | 142,418,162 | 153,344,246 | ||||||
Registered Investment Companies | ||||||||
Prudential Jennison Natural Resources Fund, Class Q | 40,032,807 | 56,383,754 | ||||||
Vanguard Intermediate-Term Government Bond Index Fund | 25,871,685 | 22,601,239 | ||||||
Vanguard Short-Term Investment-Grade Fund | 3,915,275 | — | ||||||
Vanguard Small-Cap Index Fund | 259,966,891 | 218,910,645 | ||||||
Vanguard Emerging Markets Stock Index Fund | 64,149,642 | 42,909,164 | ||||||
Master Trust (Note 13) | ||||||||
Prudential Financial, Inc. Common Stock Fund | 94,342,698 | 99,052,766 | ||||||
Prudential Financial, Inc. Common Stock Fund - (ESOP) (Note 9) | 710,460,795 | 585,217,360 | ||||||
Prudential IncomeFlex Select | ||||||||
Aggressive Growth Fund | 97,215,754 | 97,141,335 | ||||||
Conservative Growth Fund | 17,696,883 | 17,176,050 | ||||||
Moderate Growth Fund | 38,248,659 | 36,525,029 | ||||||
Prudential IncomeFlex Target Balanced Fund | 29,278,413 | 19,525,365 | ||||||
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Total investments at fair value | 4,375,751,551 | 3,910,297,492 | ||||||
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Total investments | 7,913,125,492 | 7,218,868,138 | ||||||
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Notes receivable for participant loans | 48,198,044 | 48,642,726 | ||||||
Noninterest-bearing cash | 19 | 60 | ||||||
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Net assets available for benefits | $ | 7,961,323,555 | $ | 7,267,510,924 | ||||
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The accompanying notes are an integral part of these financial statements.
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The Prudential Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
(Modified Cash Basis)
For the Year Ended December 31, 2016
Additions to net assets: | ||||
Investment income: | ||||
Net appreciation in fair value of investments (Note 4) | $ | 554,871,030 | ||
Interest and dividend income | 147,476,392 | |||
Other income | 138,542 | |||
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Total investment income | 702,485,964 | |||
Investment expenses (Note 6) | — | |||
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Net investment income | 702,485,964 | |||
Interest income on notes receivable from participants | 1,953,504 | |||
Contributions: | ||||
Employer | 67,498,441 | |||
Employee | 196,756,635 | |||
Rollovers | 48,422,215 | |||
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Total contributions | 312,677,291 | |||
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Total additions | 1,017,116,759 | |||
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Deductions from net assets: | ||||
Benefits paid to participants | 359,998,283 | |||
Administrative expenses | 1,642,895 | |||
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Total deductions | 361,641,178 | |||
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Net increase | 655,475,581 | |||
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Plan-to-plan transfers (Note 10) | 38,337,050 | |||
Net assets available for benefits: | ||||
Beginning of year | 7,267,510,924 | |||
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End of year | $ | 7,961,323,555 | ||
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The accompanying notes are an integral part of these financial statements.
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The Prudential Employee Savings Plan
December 31, 2016 and 2015
1. | Description of the Plan |
The following description of The Prudential Employee Savings Plan (the “Plan” or “PESP”) provides only general information. Participants should refer to the Plan documents for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan generally covering all United States employees and statutory agents of The Prudential Insurance Company of America (the “Company”) and its participating affiliates. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
Participation
Each eligible employee may enroll in PESP at any time, starting on their first day of employment with the Company and its participating affiliates.
Employees who do not affirmatively elect either to participate or to decline participation in PESP within 30 days of hire, are enrolled automatically in PESP until they affirmatively elect otherwise.
Contributions
Employee Contributions. Participants can contribute from 1% to 50% of eligible earnings as defined in the Plan, in any combination of before-tax, Roth 401(k) (after-tax), and/or traditional after-tax contributions. Through automatic enrollment, participants contribute 4% of eligible earnings on a before-tax basis. Rollover contributions are allowed.
Participants may elect to increase, decrease or stop their contributions at any time, subject to the Company’s Personal Securities Trading Policy and Internal Revenue Service rules.
Roth In-Plan Rollovers. Participants may elect to rollover all or a portion of their vested Plan account that is then available for distribution or in-service withdrawal into Roth (after-tax) funds. Participants are required to pay income taxes on the amount rolled over and, assuming the applicable holding period and distribution requirements are satisfied, the Roth In-Plan Rollover held in the Plan together with subsequent investment earnings will not be subject to Federal income taxes at the time of distribution. Participants are permitted to make up to four (4) separate Roth In-Plan Rollovers in a single plan year.
Roth In-Plan Rollovers, totaling $876,267 in 2016, are included in Rollovers and Benefits paid to participants in the Statement of Changes in Net Assets Available for Benefits.
Company Matching Contributions. The Company matches 100% of before-tax and Roth 401(k) contributions up to a maximum of 4% of eligible earnings. Employees are required to complete one year of service prior to becoming eligible for Company matching contributions.
Catch-Up Contributions. Participants age 50 or older who will reach the 401(k) limit for contributions for the year or certain of the Plan’s other limits for contributions, may be eligible to make before-tax and Roth 401(k) catch-up contributions to the Plan during the plan year from eligible earnings. Catch-up contributions are not eligible for Company matching contributions. For 2016, catch-up contributions were limited to $6,000 per participant.
Contributions are subject to certain limitations imposed by applicable provisions of the Plan and the Internal Revenue Code of 1986, as amended (“IRC”), including compliance with applicable statutory limits and non-discrimination rules.
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The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
1. | Description of the Plan (Continued) |
Participant Account
Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s matching contributions, and (b) the Plan’s net earnings. Allocations are made pursuant to the terms of the Plan based on the participant’s eligible earnings and account balances. A participant is entitled to the benefit that can be provided from the participant’s vested account.
Vesting
Participants are immediately vested in their before-tax, Roth 401(k), after-tax, and rollover contributions plus earnings thereon. Generally, participants become 100% vested in Company matching contributions upon the completion of three years of vesting service.
Vesting will be accelerated and participants will be 100% vested in the Company’s matching contribution and earnings thereon upon reaching age 65, or as a result of death, or becoming totally disabled while an employee. A participant will be considered totally disabled for purposes of the Plan if he or she is eligible to receive long-term disability benefits under The Prudential Welfare Benefits Plan.
Forfeitures
If a participant terminates employment with the Company prior to full vesting, the non-vested portion of his or her account attributable to the Company matching contributions and earnings thereon is forfeited. If the participant is reemployed within five years from the date of termination, the forfeited amount may be reinstated, subject to certain Plan provisions. During the five-year period, as stated above, the pending forfeiture amounts will continue to be invested in accordance with the participant’s investment directions or the Plan’s default investment provisions, as applicable. Any amounts not reinstated to a participant, after the five-year period, are considered forfeitures that the Plan permits to be used to reduce future Company matching contributions or to pay administrative expenses.
As of December 31, 2016 and 2015, forfeiture amounts invested in the PESP Fixed Rate Fund amounted to $1,461,941 and $1,590,640, respectively. Forfeitures of $1,400,000 were used to reduce the Company’s matching contributions in 2016.
Investment Options
Employee Contributions. Participants may direct their current account balance and future contributions in 1% increments in any of the Plan’s investment options.
Participants who are automatically enrolled and do not direct investment of their accounts will be invested by default into the age-appropriate conservative portfolio mix available under GoalMaker®, a computer asset allocation program available to participants as described below.
Generally, there are no restrictions on the participant’s investment directions; however, participants are subject to the provisions of the PESP Market Timing Policy. Participant investment direction in regard to the Prudential Financial, Inc. Common Stock Fund is subject to the provisions of the Company’s Personal Securities Trading Policy. In addition, participants employed with affiliated service providers may be restricted as to investment directions in connection with certain funds and/or services being provided.
Company Matching Contributions. Half of the Company matching contributions are automatically invested in the Prudential Financial, Inc. Common Stock Fund. The remainder of the participant’s Company matching contributions are invested according to the participant’s current investment allocation direction or pursuant to the Plan’s default investment provisions, as applicable.
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The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
1. | Description of the Plan (Continued) |
Generally, there are no restrictions on transferring Company matching contributions from the Prudential Financial, Inc. Common Stock Fund to any of the other investment options under the Plan, except for certain limitations including, but not limited to, the provisions of the Company’s Personal Securities Trading Policy.
The following are the investment options under the Plan:
PESP Fixed Rate Fund - The goal of the PESP Fixed Rate Fund is to provide preservation of principal and stable competitive interest rates based on current market conditions. The fund credits interest on an annual effective rate basis. The interest crediting rate is reset periodically (currently on a quarterly basis) and is announced in advance. The PESP Fixed Rate Fund is offered under a group annuity contract issued by the Company. It is subject to the credit risk of the Company.
Custom Plan Investments
Alliance Bernstein Core Opportunities Fund - This separate account seeks to generate capital appreciation through superior stock selection which is a process rooted in research insight and portfolio manager skill. The portfolio is constructed of approximately sixty investments where the portfolio manager believes there is a significant discount between a company’s stock price and intrinsic economic value. The focus is on highly profitable businesses with strong fundamental prospects and above average capital flexibility. The separate account is offered by the Company and is advised by Alliance Bernstein L.P.
Delaware Small Cap Core Equity Fund - This separate account seeks long-term capital appreciation. The strategy invests in stocks of small companies believed to have a combination of attractive valuations, growth prospects, and strong cash flows. The separate account is offered by the Company and is advised by Delaware Investment Advisers.
Insurance Company Separate Accounts
Core Bond Enhanced Index/PGIM Fund - This separate account seeks to achieve performance results similar to the Barclays Capital U.S. Aggregate Bond Index. This fund invests primarily in corporate and government bonds. The separate account is offered under a group annuity contract issued by the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company, and is advised by PGIM, Inc. (previously, Prudential Investment Management, Inc.), also an affiliate of the Company.
Prudential Retirement Real Estate Fund - This separate account seeks to meet or exceed a customized real estate and real estate securities benchmark return after fees and expenses. This fund of funds invests primarily in existing private real estate funds, publicly traded real estate securities, including Real Estate Investment Trust (“REIT”) securities, and other real estate related investments. The manager seeks to provide maximum exposure to private real estate funds, while seeking to maintain liquidity for the purpose of meeting withdrawal requests through a combination of cash and cash equivalents, as well as investments in marketable real estate securities. The fund may, to the extent available in the market on reasonable terms, obtain a line of credit. The separate account is offered under a group annuity contract issued by the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company, and is advised by PGIM, Inc., also an affiliate of the Company.
QMA International Developed Markets Index Fund - This separate account seeks to provide investment results that track the Morgan Stanley Capital International Europe, Australasia, and Far East Index (“MSCI EAFE Index”). The fund will not hold actively managed stock positions as it does not attempt to outperform the market. The separate account is offered under a group annuity contract issued by the Company and is advised by Quantitative Management Associates, LLC, an affiliate of the Company.
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The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
1. | Description of the Plan (Continued) |
QMA U.S. Broad Market Index Fund - This separate account seeks to provide long-term growth of capital and investment results that approximate the performance of the Standard & Poor’s Composite 1500 Index (“S&P 1500 Index”). The separate account is offered under a group annuity contract issued by the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company, and is advised by Quantitative Management Associates, LLC, also an affiliate of the Company.
Wells Capital International Bond Fund - This separate account seeks to provide total return, consisting of a high level of current income and capital appreciation by investing principally in investment-grade securities of government, agency or corporate issuers worldwide, denominated in various currencies. The separate account is offered under a group annuity contract issued by the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company, and is advised by Wells Capital Management.
Common/Collective Trusts
Jennison Opportunistic Equity Fund CIT - This collective trust seeks long-term growth of capital. It is a multi-cap catalyst driven based investment style utilizing a fundamental bottom-up approach. It focuses on finding companies that are either undergoing a positive change in fundamentals or delivering good forward growth characteristics for which expectations are not fully reflected or appreciated by the market. The collective trust is offered by the Prudential Trust Company, an affiliate of the Company.
Prudential High Yield Collective Investment Trust - This collective trust seeks to outperform the Barclays U.S. High-Yield Ba/B 1% Issuer Capped Bond Index (“Bond Index”) by 150 basis points over a full market cycle. This fund uses a highly diversified, research-driven strategy targeting an excess return over the Bond Index. The strategy emphasizes the higher quality segment of the high yield market (BB and B-rated corporate bonds) with heavy emphasis on default avoidance. The collective trust is offered by the Prudential Trust Company, an affiliate of the Company.
Wellington Trust Co. International Opportunities Fund - This collective trust seeks to provide long-term total return in excess of the Morgan Stanley Capital International All Country World Index Ex-US (“MSCI ACWI Ex-US”). This fund invests in international large to mid-cap companies, with returns on capital underestimated by the market either on a value or a growth basis, with a split between 45% to 55% at any time. A cash position up to 10% may also be held. The collective trust is offered by the Wellington Trust Company, NA Multiple Collective Investment Funds Trust II.
Registered Investment Companies
Prudential Jennison Natural Resources Fund, Class Q - This mutual fund seeks long-term growth of capital. This fund generally invests at least 80% of assets in equity securities of natural resource companies and in asset-based securities, the values of which are related to natural resources. Natural resource companies are U.S. and foreign companies that own, explore, mine, process or otherwise develop, or provide goods and services with respect to natural resources. The principal type of equity and equity-related security in which the fund invests is common stock. The fund is non-diversified. The mutual fund is advised by Prudential Investments, LLC, and Jennison Associates, LLC serves as a sub-advisor; both are affiliates of the Company. The ticker symbol for this fund is PJNQX.
Vanguard Intermediate-Term Government Bond Index Fund - This mutual fund seeks to track the performance of a market-weighted government bond index with an intermediate-term dollar-weighted average maturity. The index includes fixed income securities issued by the U.S. Treasury and U.S. government agencies and instrumentalities, as well as corporate or dollar-denominated foreign debt guaranteed by the U.S. government, with maturities between three and ten years. The mutual fund is advised by Vanguard Group Inc. The ticker symbol for this fund is VIIGX.
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The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
1. | Description of the Plan (Continued) |
Vanguard Short-Term Investment-Grade Fund - This mutual fund was effective June 30, 2016, and seeks to provide current income while maintaining limited price volatility. The fund invests in a variety of high-quality and, to a lesser extent, medium-quality, fixed income securities, at least 80% of which will be short-term and intermediate-term investment-grade securities. The mutual fund is advised by Vanguard Group Inc. The ticker symbol for this fund is VFSUX.
Vanguard Small-Cap Index Fund - This mutual fund seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks. The fund employs an indexing investment approach designed to track the performance of the Center for Research in Security Prices (“CRSP”) U.S. Small Cap Index, a broadly diversified index of stocks of small U.S. companies. The advisor attempts to replicate the target index by investing all of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index. The mutual fund is advised by Vanguard Group Inc. The ticker symbol for this fund is VSCPX.
Vanguard Emerging Markets Stock Index Fund - This mutual fund seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in emerging market countries. The fund employs an indexing investment approach designed to track the performance of the Financial Times Stock Exchange (“FTSE”) Emerging Markets All Cap China A Transition Index, an interim index that will gradually increase exposure to small-capitalization stocks and China A-shares while proportionately reducing exposure to other stocks based on their weightings in the index. The index is a market-capitalization-weighted index. The mutual fund is advised by Vanguard Group Inc. The ticker symbol for this fund is VEMIX.
Master Trust
Prudential Financial, Inc. Common Stock Fund - This master trust invests in Prudential Financial, Inc. (“PFI”) common stock with a small portion invested in money market shares or other investments expected to be liquid. This fund’s goal is to approximate the returns of a direct investment in shares of PFI common stock in a fund that also seeks to provide modest liquidity. Values for fund units are not identical to the current values of shares of PFI common stock. This fund has an ESOP and non-ESOP portion (see Note 9).
Prudential IncomeFlex Select
Prudential IncomeFlex Select provides a guaranteed income for life without requiring an irrevocable election to receive PESP benefit payments as an annuity. Prudential IncomeFlex Select is designed to help invest the participant’s PESP accounts to provide future retirement income that is guaranteed for their lifetime. This investment option is only available to participants age 50 or older. Participants could choose to invest their money in one or more of the three Prudential IncomeFlex Select separate accounts (Aggressive Growth, Conservative Growth, and Moderate Growth), which are described in more detail below. Effective December 31, 2013, Prudential IncomeFlex Select was closed to new participants and to new contributions, loan repayments and transfers. The three Prudential IncomeFlex Select separate accounts (Aggressive Growth, Conservative Growth, and Moderate Growth) are offered by the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company, which also serves as the manager of these three separate accounts.
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The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
1. | Description of the Plan (Continued) |
Aggressive Growth Fund - The Prudential IncomeFlex Select Aggressive Growth Fund invests in a fixed asset allocation of underlying funds that are separate accounts available under group variable annuity contracts issued by the Company and the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company. The asset class mix for this fund is 70% stock (56% U.S. stocks and 14% international stocks) and 30% bonds. Each portfolio is rebalanced daily.
Conservative Growth Fund - The Prudential IncomeFlex Select Conservative Growth Fund invests in a fixed asset allocation of underlying funds that are separate accounts available under group variable annuity contracts issued by the Company and the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company. The asset class mix for this fund is 35% stock (28% U.S. stocks and 7% international stocks) and 65% bonds. Each portfolio is rebalanced daily.
Moderate Growth Fund - The Prudential IncomeFlex Select Moderate Growth Fund invests in a fixed asset allocation of underlying funds that are separate accounts available under group variable annuity contracts issued by the Company and the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company. The asset class mix for this fund is 55% stock (44% U.S. stocks and 11% international stocks) and 45% bonds. Each portfolio is rebalanced daily.
Prudential IncomeFlex Target Balanced Fund
Prudential IncomeFlex Target is a product that provides certain guarantees on retirement income. The investment option under Prudential IncomeFlex Target is the Prudential IncomeFlex Target Balanced Fund, which invests in a mix of the index funds currently offered in PESP. The index funds invest in bonds (40%), U.S. stocks (45%), and international stocks (15%) and are rebalanced daily. Unlike a target date fund, the Prudential IncomeFlex Target does not reduce exposure to the stock market as participants get older. In exchange for a guarantee fee of 0.95%, Prudential IncomeFlex Target provides guaranteed lifetime income, potential for income and asset growth, downside market protection for retirement income, and flexible access to market value. The guaranteed fee is applied only to those dollars invested in Prudential IncomeFlex Target. Prudential IncomeFlex Target does not guarantee market value, which will fluctuate with market volatility. The underlying index funds are separate accounts available under group variable annuity contracts issued by the Company and by Prudential Retirement Insurance and Annuity Company, an affiliate of the Company.
As of December 31, 2016, the asset allocation by the Plan’s investment options under the Prudential IncomeFlex Select and Prudential IncomeFlex Target are shown in the following chart:
Prudential IncomeFlex Select | Prudential | |||||||||||||||
IncomeFlex | ||||||||||||||||
Aggressive | Conservative | Moderate | Target Balanced | |||||||||||||
Fund | Fund | Fund | Fund | |||||||||||||
Large Cap Stocks | ||||||||||||||||
QMA U.S. Broad Market Index Fund | 56 | % | 28 | % | 44 | % | 45 | % | ||||||||
International Stocks | ||||||||||||||||
QMA International Developed Markets Index Fund | 14 | % | 7 | % | 11 | % | 15 | % | ||||||||
Bonds | ||||||||||||||||
Core Bond Enhanced Index/PGIM Fund | 30 | % | 65 | % | 45 | % | 40 | % |
GoalMaker®
GoalMaker® is a computer asset allocation program available to participants. It establishes 12 portfolios, each invested in a different asset allocation mix. Participants select a portfolio based on their completion of an investment risk profile and estimated time to retirement; defaulting participants are assigned to the conservative portfolio applicable to their current age, assuming retirement at age 65. GoalMaker® provides automatic rebalancing of investments once per quarter.
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The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
1. | Description of the Plan (Continued) |
Payment of Benefits
When employment with the Company and its affiliates ends, if the value of a vested participant’s account is in excess of $5,000, the participant may elect to (a) receive a lump sum distribution equal to the value of the participant’s vested interest in his or her account, (b) receive an annuity from the Company in the amount that can be purchased with the vested value in his or her account, (c) receive a combination of a single payment for less than the total vested value of his or her account plus an annuity, (d) receive partial distributions (no more than five withdrawals per Plan year, and the amount of any such withdrawal must equal at least $300), or (e) delay taking a distribution of the vested value of his or her account until it is required by law. If the value of a terminated vested participant’s account is $5,000 or less, the participant may not defer distribution of his or her account.
Actively employed participants can make in-service withdrawals from PESP. The amount available for in-service withdrawals includes amounts credited to a participant’s After-Tax Contributions Account, Rollover Contributions Account, and pre-2001 Company Matching Contributions Account. Participants who have attained age 59 1⁄2 can also withdraw amounts from their Before-Tax Contributions Account, Roth 401(k) Contributions Account and Roth In-Plan Rollover Contributions Account. Participants can make up to five withdrawals each calendar year, and the withdrawals are subject to a 10% Federal early distribution tax for participants less than 59 1⁄2 years of age, in addition to the regular income tax that applies, except for After-Tax Contribution amounts. Other penalties may apply to Roth 401(k) and Roth In-Plan Rollover amounts if the withdrawals are not qualified distributions.
When funds are not available from an in-service withdrawal or when a loan will create a hardship, participants may apply for a hardship withdrawal without first taking a loan. To qualify for a hardship withdrawal under the Plan, participants must demonstrate that they need the money to meet an immediate and heavy financial need for which they have no other resources available to them.
Participant Loans
Participants may take loans from their Before-Tax Contributions Account and/or Rollover Contributions Account.
Loans may range from a minimum of $500 up to a maximum equal to the lesser of:
a) | $50,000 reduced by the participant’s highest outstanding loan balance during the preceding twelve months in the Plan, or |
b) | 50% of their entire vested Plan account, or |
c) | 100% of the value of the sum of the balance, if any, of the participant’s Before-Tax Contribution Account and Rollover Contributions Account. |
The $50,000 maximum takes into account all loans to the participant from any Plan maintained by the Company or an affiliate of the Company.
Only one loan is permitted to be outstanding at any time. The loan repayment period may range from one to five years. Currently, the interest rate applicable to the loan is the prime rate as of the fifteenth business day of March, June, September or December and is effective for loans initiated during the following quarter.
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
2. | Summary of Significant Accounting Policies |
Basis of Accounting
The financial statements of the Plan are prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting other than generally accepted accounting principles in the United States of America (“U.S. GAAP”). The modified cash basis of accounting is a cash receipts and disbursements method of accounting unlike U.S. GAAP where information is reported on an accrual basis. However, under the modified basis of accounting investments are stated at fair value, which is consistent with U.S. GAAP.
Use of Estimates
The preparation of financial statements in conformity with a modified cash basis of accounting requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates.
Investment Valuation
The Plan’s investments are stated at fair value (see Note 5 for more information on fair value measurements), except for its investment contract (the “PESP Fixed Rate Fund”), which is valued at contract value (see Note 3).
The fair value of the participation units owned by the Plan in custom plan investments is based on quoted redemption values.
The fair value of the participation units owned by the Plan in insurance company separate accounts is based on quoted redemption values.
The fair value of the participation units owned by the Plan in common/collective trusts is based on quoted redemption values.
The fair value of the shares owned by the Plan in registered investment companies is based on quoted net asset value of shares.
The fair value of the participation units owned by the Plan in the master trust is based on quoted redemption values.
Purchases
Purchases of units of participation in custom plan investments are recorded on a trade-date basis.
Purchases of units of participation in insurance company separate accounts are recorded on a trade-date basis.
Purchases of units of participation in common/collective trusts are recorded on a trade-date basis.
Purchases of shares in registered investment companies are recorded on a trade-date basis.
Purchases of units of participation in the master trust are recorded on a trade-date basis.
Income Recognition
The Plan presents in the Statement of Changes in Net Assets Available for Benefits the net appreciation/(depreciation) in the fair value of its investments, which consists of the realized gains or losses and unrealized appreciation/(depreciation) on those investments.
Interest, dividend and other income is recorded when received.
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
2. | Summary of Significant Accounting Policies (Continued) |
Sales of units of participation in custom plan investments are recorded on a trade-date basis.
Sales of units of participation in insurance company separate accounts are recorded on a trade-date basis.
Sales of units of participation in common/collective trusts are recorded on a trade-date basis.
Sales of shares in registered investment companies are recorded on a trade-date basis.
Sales of units of participation in the master trust are recorded on a trade-date basis.
Payment of Benefits
Benefits are recorded when paid.
Participant Loans
Participant loans are funded directly from the participant’s account balance. Repayments of principal and interest related to the loan are credited to the participant’s account on a pro-rata basis based on their selected investment options. The carrying value is cost, which approximates fair value.
Recently Issued Accounting Pronouncements - Not Yet Adopted
In February 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965), Employee Benefit Plan Master Trust Reporting. ASU No. 2017-06 clarifies the presentation requirements for an employee benefit plan’s interest in a master trust and requires more detailed disclosures of the plan’s interest in the master trust. ASU No. 2017-06 also eliminates redundant investment disclosures related to 401(h) account assets. ASU No. 2017-06 is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. ASU No. 2017-06 should be applied retrospectively to each period for which financial statements are presented. Management is currently evaluating the implications of ASU 2016-01 and its effect on the Plan’s financial statements.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10). ASU No. 2016-01 requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. ASU No. 2016-01 also requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. ASU no. 2016-01 is effective for employee benefit plans for fiscal years beginning after December 15, 2018. Management is currently evaluating the implications of ASU 2016-01 and its effect on the Plan’s financial statements.
Newly Adopted Accounting Standards
In July 2015, the FASB issued ASU No. 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 (consensuses of the FASB Emerging Issues Task Force). Under the applicable parts of the new guidance, plans will disaggregate investments measured using fair value only by general type, either on the face of the financial statements or in the notes to the financial statements. Plans are exempt from the requirement to disaggregate assets by nature, characteristics and risks. Disaggregating investments that are measured using fair value by general type is consistent with the level of disaggregation provided by most trustees, custodians and insurance companies and with the information required in Form 5500. ASU 2015-12 is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. The Plan applied the provisions of ASU 2015-12 for 2015.
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
2. | Summary of Significant Accounting Policies (Continued) |
In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). ASU No. 2015-07 removes the requirement to include all investments in the fair value hierarchy for which the fair value is measured at net asset value (“NAV”) per share using the practical expedient, under Fair Value Measurements and Disclosures (Topic 820). ASU No. 2015-07 is effective for public business entities for annual reporting periods beginning after December 15, 2015. Management has adopted ASU 2015-07. Its effect is not material to the Plan’s financial statements.
3. | Investment Contract with Insurance Company |
The financial statement presentation and disclosure of the PESP Fixed Rate Fund (the “Fund”) complies with the FASB Accounting Standards Codification (“ASC”) 946 Financial Services - Investment Companies on the fair value reporting of fully benefit-responsive investment contracts as of December 31, 2016 and 2015.
The Fund is a fully benefit-responsive investment contract and is valued at contract value. Accordingly, the contract meets all of the following criteria:
a. | The investment contract is effected directly between the Fund and the issuer and prohibits the Fund from assigning or selling the contract or its proceeds to another party without the consent of the issuer. |
b. | The contract issuer is obligated to (i) repay principal and interest, or (ii) provide prospective crediting rate adjustments with assurance the crediting rate will not be less than zero. |
c. | The terms of the contract require all permitted participant-initiated transactions with the Fund to occur at contract value with no conditions, limits, or restrictions. Permitted participant-initiated transactions are those transactions allowed by the underlying defined-contribution plan, such as withdrawals for benefits, loans, or transfers to other funds within the Plan. |
d. | An event that limits the ability of the Fund to transact at contract value with the issuer (for example, premature termination of the contracts by the Fund, plant closings, layoffs, Plan termination, bankruptcy, mergers, and early retirement incentives), and that also limits the ability of the Fund to transact at contract value with the participants in the Fund must be probable of not occurring. |
e. | The Fund itself must allow participants reasonable access to their funds. |
The Fund represents the fixed dollar account under an unallocated group annuity contract. Contract value is based upon contributions made under the contract, plus interest credited, and less participant withdrawals. There are no reserves against contract value for credit risk of the contract issuer or otherwise.
The Fund credits interest on an annual effective rate basis. The interest crediting rate is reset periodically; currently, the reset occurs once each calendar quarter. The annual effective interest crediting rate for 2016 was 3.50%. The minimum crediting rate is 3.50%. The interest crediting rate was calculated based upon many factors, including current economic and market conditions, the general interest rate environment, and both the expected and actual experience of a reference portfolio within the issuer’s general account. Effective July 1, 2016, the crediting rate is based on a contract formula utilizing a number of factors. One of those factors will include a reference to the performance of a hypothetical investment portfolio consisting of public debt, private placement debt, and mortgage loans, net of a notional expense ratio of 0.23%. The resulting interest crediting rate is subject to the current contractual minimum crediting rate of 3.50%. Key factors that could influence future interest crediting rates are changes in interest rates, and default or credit failures of the reference portfolio.
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
3. | Investment Contract with Insurance Company (Continued) |
There is no event that limits the ability of the Plan to transact at contract value with the issuer. There are also no events and circumstances that would allow the issuer to terminate the fully benefit-responsive investment contract with the Plan and settle at an amount different from contract value.
4. | Investments |
The information regarding the Plan’s investments included in the Plan’s financial statements and schedules was prepared based on the information furnished to the Plan Administrator by the Company and Prudential Trust Company (the “Trustee”). The Plan Administrator has obtained certifications from the Company and the Trustee that such furnished information is complete and accurate in accordance with 29 CFR 2520.103-5 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA.
During 2016, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $554,871,030 as follows:
Year Ended | ||||
December 31, 2016 | ||||
Net Appreciation/(Depreciation) in Fair Value of Investments | ||||
Custom Plan Investments | ||||
Alliance Bernstein Core Opportunities Fund | $ | 40,627,520 | ||
Delaware Small Cap Core Equity Fund | 40,528,608 | |||
Insurance Company Separate Accounts | ||||
Core Bond Enhanced Index/PGIM Fund | 3,983,837 | |||
Prudential Retirement Real Estate Fund | 9,799,709 | |||
QMA International Developed Markets Index Fund | 3,446,415 | |||
QMA U.S. Broad Market Index Fund | 129,014,357 | |||
Wells Capital International Bond Fund | (9,767 | ) | ||
Common/Collective Trusts | ||||
Jennison Opportunistic Equity Fund CIT | 60,474,565 | |||
Prudential High Yield Collective Investment Trust | 7,768,042 | |||
Wellington Trust Co. International Opportunities Fund | 1,153,797 | |||
Registered Investment Companies | ||||
Prudential Jennison Natural Resources Fund, Class Q | 14,161,446 | |||
Vanguard Intermediate-Term Government Bond Index Fund | (212,342 | ) | ||
Vanguard Short-Term Investment-Grade Fund | (39,608 | ) | ||
Vanguard Small-Cap Index Fund | 36,112,208 | |||
Vanguard Emerging Markets Stock Index Fund | 4,177,418 | |||
Master Trust (Note 13) | ||||
Prudential Financial, Inc. Common Stock Fund | 191,940,792 | |||
Prudential IncomeFlex Select | ||||
Aggressive Growth Fund | 7,159,266 | |||
Conservative Growth Fund | 847,549 | |||
Moderate Growth Fund | 2,353,736 | |||
Prudential IncomeFlex Target Balanced Fund | 1,583,482 | |||
|
| |||
Net appreciation in fair value of investments | $ | 554,871,030 | ||
|
|
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
4. | Investments (Continued) |
The investment options bear expenses related to investment management and other fees. The above appreciation on investments reflects these expenses. The annual gross expense ratio as a percentage of net assets attributable to each investment option as of December 31, 2016 was as follows:
Gross Expense Ratio | ||||
PESP Fixed Rate Fund | 0.00 | %* | ||
Custom Plan Investments | ||||
Alliance Bernstein Core Opportunities Fund | 0.32 | % | ||
Delaware Small Cap Core Equity Fund | 0.50 | % | ||
Insurance Company Separate Accounts | ||||
Core Bond Enhanced Index/PGIM Fund | 0.14 | % | ||
Prudential Retirement Real Estate Fund | 0.80 | % | ||
QMA International Developed Markets Index Fund | 0.10 | % | ||
QMA U.S. Broad Market Index Fund | 0.03 | % | ||
Wells Capital International Bond Fund | 0.35 | % | ||
Common/Collective Trusts | ||||
Jennison Opportunistic Equity Fund CIT | 0.38 | % | ||
Prudential High Yield Collective Investment Trust | 0.34 | % | ||
Wellington Trust Co. International Opportunities Fund | 0.64 | % | ||
Registered Investment Companies | ||||
Prudential Jennison Natural Resources Fund, Class Q | 0.77 | % | ||
Vanguard Intermediate-Term Government Bond Index Fund | 0.05 | % | ||
Vanguard Short-Term Investment-Grade Fund | 0.10 | % | ||
Vanguard Small-Cap Index Fund | 0.05 | % | ||
Vanguard Emerging Markets Stock Index Fund | 0.12 | % | ||
Master Trust | ||||
Prudential Financial, Inc. Common Stock Fund | 0.00 | % | ||
Prudential IncomeFlex Select | ||||
Aggressive Growth Fund | 0.92 | % | ||
with Spouse Coverage | 1.42 | % | ||
Conservative Growth Fund | 0.96 | % | ||
with Spouse Coverage | 1.46 | % | ||
Moderate Growth Fund | 0.93 | % | ||
with Spouse Coverage | 1.43 | % | ||
Prudential IncomeFlex Target Balanced Fund | 1.04 | % |
* | See Note 3 for the potential for an expense ratio greater than 0.00%. |
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
5. | Fair Value Measurements |
Fair value represents 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.
FASB ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. This framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (“Level 1” measurements), the next priority to quoted values based on observable inputs (“Level 2” measurements), and the lowest priority to unobservable inputs (“Level 3” measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:
Level 1 | Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access. For example, stocks listed on a recognized exchange or listed mutual funds. | |||
Level 2 | Inputs to the valuation methodology include: | |||
• | Quoted prices for similar assets or liabilities in active markets; | |||
• | Quoted prices for identical or similar assets or liabilities in inactive markets; | |||
• | Inputs other than quoted prices that are observable for the asset or liability; | |||
• | Inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |||
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. | ||||
Level 3 | Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
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 maximize the use of relevant observable inputs and minimize the use of unobservable inputs.
The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2016 and 2015.
Custom Plan Investments - Plan assets are represented by a “unit of account” and a per unit value whose value is the result of the accumulated values of underlying investments.
Equity securities (stock): Valued at the closing price reported on the active market on which individual securities are traded.
Insurance Company Separate Accounts - Plan assets are represented by a “unit of account” and a per unit value whose value is the result of the accumulated values of underlying investments. The underlying investments are valued in the following ways:
Equity securities (stock): Valued at the closing price reported on the active market on which individual securities are traded.
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
5. | Fair Value Measurements (Continued) |
Bonds: Securities are priced by industry standard vendors, such as Interactive Data Corporation, using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The pricing vendor also monitors market indices and industry and economic events, including credit rating agency actions. Prices are reviewed to ensure comfort and can be challenged with the vendor and/or overridden if the advisor believes that a different price would be more reflective of fair value.
Real estate: Values are determined through an independent appraisal process. The estimate of fair value is based on three approaches: (1) current cost of reproducing the property less deterioration and functional/economic obsolescence; (2) discounting a series of income streams and reversion at a specific yield or by directly capitalizing an income estimate by an appropriate factor; and (3) value indicated by recent sales of comparable properties in the market. Each approach requires the exercise of subjective judgment.
Significant increases/(decreases) in any unobservable inputs used in the fair value measurement of real estate would result in a significantly different fair value measurement. Generally, a change in the assumption used for reproducing the property, income streams, or the value of recent sales of comparable properties is accompanied by a directionally similar change in fair value, while changes in the discounting assumption are accompanied by a directionally opposite change in fair value.
Common/Collective Trusts - Plan assets are represented by a “unit of account” and a per unit value whose value is the result of the accumulated values of underlying investments. As the sponsor of the trusts, the Trustee specifies to the fund accountants the source(s) to use for underlying investment asset prices. The fund accountant values the fund using the protocol the Trustee has issued. The underlying investments are valued as follows:
Equity securities (stock): Securities are priced at the closing price reported on the active market on which individual securities are traded.
Bonds: Securities are priced by industry standard vendors, such as Interactive Data Corporation, using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The pricing vendor also monitors market indices and industry and economic events, including credit rating agency actions. Prices are reviewed to ensure comfort and can be challenged with the vendor and/or overridden if the advisor believes that a different price would be more reflective of fair value.
Registered Investment Companies - Valued at the net asset value (“NAV”) of shares held at year end.
Master Trust - Valued at the closing price reported on the active market on which individual securities are traded.
Prudential IncomeFlex Select and Prudential IncomeFlex Target - Plan assets are represented by a “unit of account” and a per unit value whose value is the result of the accumulated values of underlying investments. The underlying investments are valued in the following ways:
Equity securities (stock): Valued at the closing price reported on the active market on which individual securities are traded.
Bonds: Securities are priced by industry standard vendors, such as Interactive Data Corporation, using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The pricing vendor also monitors market indices and industry and economic events, including credit rating agency actions. Prices are reviewed to ensure comfort and can be challenged with the vendor and/or overridden if the advisor believes that a different price would be more reflective of fair value.
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
5. | Fair Value Measurements (Continued) |
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.
Plan investments may be redeemed by the participant or by the Plan. Participants redeem investments when they elect to receive a withdrawal, make a transfer to another investment, or take a loan. The Plan redeems investments when the fiduciaries determine that an investment will no longer be offered as a Plan investment. The following is a high-level summary of the terms and conditions related to the redemption of Plan investments as of a certain date. For more recent and detailed information on the terms and conditions under which participants may redeem investments, please see the relevant Plan and investment documentation (e.g., prospectus) for each investment.
Redemption | ||||||||
Terms | Conditions | |||||||
Participant * | Plan | Participant * | Plan | |||||
PESP Fixed Rate Fund (Only contractual values are payable) | Immediate except transfers to a competing fund which require 90 day notice. | 6 months notice. | None | Installment payments over 5 years with interest credit. | ||||
Custom Plan Investments | ||||||||
Alliance Bernstein Core Opportunities Fund | Immediate | 30 days prior written notice. | None | None | ||||
Delaware Small Cap Core Equity Fund | Immediate; redemption requests received in good order, on a business day and before the close of the NYSE will be executed same day. | 30 days prior written notice. | None | None |
* | For participants, notice periods and other conditions may be waived except for the PESP Fixed Rate Fund. Please see the relevant Plan and investment documentation (e.g., prospectus) or contact the Plan recordkeeper for more information. |
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
5. | Fair Value Measurements (Continued) |
Redemption | ||||||||
Terms | Conditions | |||||||
Participant * | Plan | Participant * | Plan | |||||
Insurance Company Separate Accounts | ||||||||
Core Bond Enhanced Index/PGIM Fund | Immediate | Immediate, termination date set at first of month following notice. | Under severe adverse economic conditions, delay up to 6 months. | 90 days after receipt of all required documents.
Under severe adverse economic conditions, delay up to 6 months. | ||||
Prudential Retirement Real Estate Fund | Immediate | Immediate, termination date set at first of month following notice. | May delay up to 12 months, if negative impact on other investors. May also delay for exchange closures, SEC restriction, or financial emergency. | |||||
QMA International Developed Markets Index Fund | Immediate | 60 days written notice. | Under severe adverse economic conditions, delay up to 6 months. | 90 days after receipt of all required documents.
Under severe adverse economic conditions, delay up to 6 months. | ||||
QMA U.S. Broad Market Index Fund | Immediate | Immediate, termination date set at first of month following notice. | Under severe adverse economic conditions, delay up to 6 months. | 90 days after receipt of all required documents.
Under severe adverse economic conditions, delay up to 6 months. | ||||
Wells Capital International Bond Fund | Immediate | Immediate, termination date set at first of month following notice. | Under severe adverse economic conditions, delay up to 6 months. | 90 days after receipt of all required documents.
Under severe adverse economic conditions, delay up to 6 months. | ||||
Common/Collective Trusts | ||||||||
Jennison Opportunistic Equity Fund CIT | Immediate | Immediate | Withdrawals may be limited to the greater of $2 million or 5% of the value of the assets in the Fund. May delay withdrawals when (i) any market or stock exchange is closed or dealings therein are restricted or suspended; (ii) an emergency exists; (iii) for any reason the prices or values of any investments cannot be promptly or accurately ascertained; (iv) transfer cannot be affected at normal rates of exchange. | |||||
Prudential High Yield Collective Investment Trust | Immediate | Ten-day notice period may be imposed on withdrawals. | Withdrawals may be limited to the greater of $2 million or 5% of the value of the assets in the Fund. | |||||
Wellington Trust Co. International Opportunities Fund | Written notice, honored same day if before 4 PM, otherwise next business day. | 30 days written notice. | Right to require longer notice period or delay payment if market disruption or other circumstances warrant such action. |
* | For participants, notice periods and other conditions may be waived. Please see the relevant Plan and investment documentation (e.g., prospectus) or contact the Plan recordkeeper for more information. |
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
5. | Fair Value Measurements (Continued) |
Redemption | ||||||||
Terms | Conditions | |||||||
Participant * | Plan | Participant * | Plan | |||||
Registered Investment Companies | ||||||||
Prudential Jennison Natural Resources Fund, Class Q | Written notice, honored same day if before 4 PM, otherwise next business day. | May delay for exchange closures, SEC or other trading restrictions. | ||||||
Vanguard Intermediate-Term Government Bond Index Fund | Immediate. If the redemption is received before 4pm on a business day, it will be honored the same day. | May delay or suspend beyond 7 days during any period that (1) the Exchange is closed or trading is restricted; (2) under certain circumstances when an emergency exists, as defined by the SEC or (3) for such other periods as the SEC may permit. | ||||||
Vanguard Short-Term Investment-Grade Fund | Immediate. If the redemption is received before 4pm on a business day, it will be honored the same day. | May delay or suspend beyond 7 days during any period that (1) the Exchange is closed or trading is restricted; (2) under certain circumstances when an emergency exists, as defined by the SEC or (3) for such other periods as the SEC may permit. | ||||||
Vanguard Small-Cap Index Fund | Immediate. If the redemption is received before 4pm on a business day, it will be honored the same day. | May delay or suspend beyond 7 days during any period that (1) the Exchange is closed or trading is restricted; (2) under certain circumstances when an emergency exists, as defined by the SEC or (3) for such other periods as the SEC may permit. | ||||||
Vanguard Emerging Markets Stock Index Fund | Immediate. If the redemption is received before 4pm on a business day, it will be honored the same day. | May delay or suspend beyond 7 days during any period that (1) the Exchange is closed or trading is restricted; (2) under certain circumstances when an emergency exists, as defined by the SEC or (3) for such other periods as the SEC may permit. | ||||||
Master Trust | ||||||||
Prudential Financial, Inc. Common Stock Fund | Immediate | None | If insufficient cash, may seek direction from Plan. | |||||
Prudential IncomeFlex Select | ||||||||
Aggressive Growth Fund
Conservative Growth Fund | Immediate | Immediate, termination date set at first of month following notice. | Under severe adverse economic conditions, delay up to 6 months. | 90 days after receipt of all required documents. Under severe adverse economic conditions, delay up to 6 months. | ||||
Moderate Growth Fund |
* | For participants, notice periods and other conditions may be waived. Please see the relevant Plan and investment documentation (e.g., prospectus) or contact the Plan recordkeeper for more information. |
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Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
5. | Fair Value Measurements (Continued) |
Redemption | ||||||||
Terms | Conditions | |||||||
Participant * | Plan | Participant * | Plan | |||||
Prudential IncomeFlex Target | ||||||||
Balanced Fund | Immediate | Immediate, termination date set at first of month following notice. | Under severe adverse economic conditions, delay up to 6 months. | 90 days after receipt of all required documents. Under severe adverse economic conditions, delay up to 6 months. |
* | For participants, notice periods and other conditions may be waived. Please see the relevant Plan and investment documentation (e.g., prospectus) or contact the Plan recordkeeper for more information. |
The following tables set forth by level, within the fair value hierarchy, the Plan’s investments carried at fair value as of December 31, 2016 and 2015:
Investments at Fair Value as of December 31, 2016 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Custom Plan Investments | $ | — | $ | 656,326,001 | $ | — | $ | 656,326,001 | ||||||||
Insurance Company Separate Accounts | — | 1,507,022,358 | 181,207,413 | 1,688,229,771 | ||||||||||||
Common/Collective Trusts | — | 650,016,277 | — | 650,016,277 | ||||||||||||
Registered Investment Companies | 393,936,300 | — | — | 393,936,300 | ||||||||||||
Master Trust (Note 13) | — | 804,803,493 | — | 804,803,493 | ||||||||||||
Prudential IncomeFlex | — | 182,439,709 | — | 182,439,709 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments at fair value | $ | 393,936,300 | $ | 3,800,607,838 | $ | 181,207,413 | $ | 4,375,751,551 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Investments at contract value PESP Fixed Rate Fund (Note 3) | 3,537,373,941 | |||||||||||||||
|
| |||||||||||||||
Total investments | $ | 7,913,125,492 | ||||||||||||||
|
| |||||||||||||||
Investments at Fair Value as of December 31, 2015 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Custom Plan Investments | $ | — | $ | 641,419,963 | $ | — | $ | 641,419,963 | ||||||||
Insurance Company Separate Accounts | — | 1,311,308,827 | 121,097,186 | 1,432,406,013 | ||||||||||||
Common/Collective Trust | — | 641,028,809 | — | 641,028,809 | ||||||||||||
Registered Investment Companies | 340,804,802 | — | — | 340,804,802 | ||||||||||||
Master Trust (Note 13) | — | 684,270,126 | — | 684,270,126 | ||||||||||||
Prudential IncomeFlex | — | 170,367,779 | — | 170,367,779 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total investments at fair value | $ | 340,804,802 | $ | 3,448,395,504 | $ | 121,097,186 | $ | 3,910,297,492 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Investments at contract value PESP Fixed Rate Fund (Note 3) | 3,308,570,646 | |||||||||||||||
|
| |||||||||||||||
Total investments | $ | 7,218,868,138 | ||||||||||||||
|
|
- 22 -
Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
5. | Fair Value Measurements (Continued) |
The following table sets forth a summary of changes in the fair value of the Plan’s Level 3 investments for the year ended December 31, 2016:
Insurance Company Separate Accounts | ||||
Additions to net assets | ||||
Investment income: | ||||
Net appreciation in fair value of investments * | $ | 9,799,709 | ||
Interest and dividend income | — | |||
Other income | — | |||
|
| |||
Total investment income | 9,799,709 | |||
Investment expenses (Note 6) | — | |||
|
| |||
Net investment income | 9,799,709 | |||
|
| |||
Contributions: | ||||
Employer | 1,522,582 | |||
Employee | 8,572,647 | |||
Rollover | 1,857,365 | |||
|
| |||
Total contributions | 11,952,594 | |||
|
| |||
Total additions | 21,752,303 | |||
|
| |||
Net transfers (to) from other investment options | 43,547,861 | |||
|
| |||
Deductions from net assets | ||||
Benefits paid to participants | 5,189,665 | |||
Administrative expenses | 272 | |||
|
| |||
Total deductions | 5,189,937 | |||
|
| |||
Net increase | 60,110,227 | |||
|
| |||
Net assets at fair value | ||||
Beginning of year | 121,097,186 | |||
|
| |||
End of year | $ | 181,207,413 | ||
|
| |||
* Actual return on assets: | ||||
Relating to assets still held at the reporting date | $ | 4,284,223 | ||
Relating to assets sold during the reporting period | $ | 5,515,486 |
During the year ended December 31, 2016, there were no transfers between levels.
- 23 -
Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
5. | Fair Value Measurements (Continued) |
Quantitative Information about Significant Unobservable Inputs Used in Level 3 Fair Value Measurements
The following table represents the Plan’s Level 3 financial instruments, the valuation techniques used to measure the fair value of those financial instruments, and the significant unobservable inputs and the ranges of values for those inputs:
As of December 31, 2016 | ||||||||||||||||||||||||||
Instrument | Fair Value | Valuation Technique | Inputs | Minimum | Maximum | Weighted Average | ||||||||||||||||||||
Prudential Retirement Real Estate Fund | $ | 181,207,413 | | Independent Appraisal Process | | Current cost of reproducing less deterioration | ||||||||||||||||||||
Discounted income streams or estimate of capitalization multiplied by factor |
|
Discount rate:
Capitalization rate: 4.25% |
|
|
-
- |
|
|
Discount rate:
Capitalization 9.00% |
|
|
Discount rate:
Capitalization 6.22% |
| ||||||||||||||
Value of recent sales of comparable properties | ||||||||||||||||||||||||||
As of December 31, 2015 | ||||||||||||||||||||||||||
Valuation | Weighted | |||||||||||||||||||||||||
Instrument | Fair Value | Technique | Inputs | Minimum | Maximum | Average | ||||||||||||||||||||
Prudential Retirement Real Estate Fund | $ | 121,097,186 | | Independent Appraisal Process | | Current cost of reproducing less deterioration | ||||||||||||||||||||
Discounted income streams or estimate of capitalization multiplied by factor |
|
Discount rate:
Capitalization rate: 4.25% |
|
|
-
- |
|
|
Discount rate:
Capitalization 10.00% |
|
|
Discount rate:
Capitalization 5.76% |
| ||||||||||||||
Value of recent sales of comparable properties |
6. | Related Party Transactions |
The Company (or an affiliate of the Company) acts as the investment manager for each of the investment options currently offered by the Plan, except for the Alliance Bernstein Core Opportunities Fund, the Delaware Small Cap Core Equity Fund, the Wells Capital International Bond Fund, the Wellington Trust Co. International Opportunities Fund, the Vanguard Intermediate-Term Government Bond Index Fund, the Vanguard Short-Term Investment-Grade Fund, the Vanguard Small-Cap Index Fund and the Vanguard Emerging Markets Stock Index Fund.
The Plan has an ERISA Budget Account (described below). The funding of this account ceased in 2016. Previously, on a quarterly basis, certain revenue sharing payments (e.g., 12b-1 fees, etc.) received by an affiliate of the Company from certain of the Plan’s investment
- 24 -
Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
6. | Related Party Transactions (Continued) |
options are deposited into a dedicated account in the Plan, known as the “ERISA Budget Account”. Revenue sharing payments are reported as “Other income” in the Statement of Changes in Net Assets Available for Benefits. Amounts deposited in the ERISA Budget Account are used to pay on going administrative expenses of the Plan in accordance with ERISA and guidance issued by the U.S. Department of Labor (“DOL Guidance”). Deposits to the ERISA Budget Account ceased in 2016.
The administrative expenses shown in the Statement of Changes in Net Assets Available for Benefits were direct expenses (as defined in the DOL Guidance) paid by the Plan. Most of these expenses were paid to the Company’s affiliate for recordkeeping services.
The Company also paid certain expenses of the Plan. Some of these expenses were paid to the Company (or an affiliate of the Company). Such expenses are not reflected in the Plan’s financial statements.
The Company paid administrative fees for trustee services in the amount of $5,000 for the year ended December 31, 2016, which are not reflected in the Plan’s financial statements.
7. | Reconciliation of Financial Statements to Form 5500 |
The following is a reconciliation of net assets per the financial statements to Form 5500 at December 31, 2016:
Net assets available for benefits per the financial statements | $ | 7,961,323,555 | ||
Less: Notes receivable for participant loans per the financial statements | (48,198,044 | ) | ||
Add: Notes receivable for participant loans per Form 5500 | 47,442,965 | |||
|
| |||
Net assets per Form 5500 | $ | 7,960,568,476 | ||
|
|
The following is a reconciliation of participant loans and benefit payments per the financial statements to Form 5500:
December 31, | ||||||||
2016 | 2015 | |||||||
Notes receivable for participant loans per the financial statements | $ | 48,198,044 | $ | 48,642,726 | ||||
Less: Certain cumulative deemed distributions of participant loans | (755,079 | ) | (808,019 | ) | ||||
|
|
|
| |||||
Participant loans per Form 5500 | $ | 47,442,965 | $ | 47,834,707 | ||||
|
|
|
| |||||
Benefits paid to participants per the financial statements | $ | 359,998,283 | ||||||
Less: Prior period active loan defaults foreclosed | (274,935 | ) | ||||||
|
| |||||||
Total benefit payments per Form 5500 | 359,723,348 | |||||||
Add: Certain deemed distributions of participant loans per Form 5500 | 221,995 | |||||||
|
| |||||||
Total benefit payments and deemed distributions | $ | 359,945,343 | ||||||
|
|
- 25 -
Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
7. | Reconciliation of Financial Statements to Form 5500 (Continued) |
The following is a reconciliation of assets of the Single Client Custom Plan Investments per the Statements of Net Assets Available for Benefits to Form 5500 at December 31, 2016:
Single Client | ||||||||||||
Custom Plan Investments | ||||||||||||
Alliance Bernstein Core Opportunities Fund | Delaware Small Cap Core Equity Fund | Total per Form 5500 | ||||||||||
Per Financial Statements | $ | 433,533,813 | $ | 222,792,188 | ||||||||
Per Form 5500 | ||||||||||||
Receivables Other | 3,975,871 | 1,741 | $ | 3,977,612 | ||||||||
Interest-bearing Cash | 38,337,866 | 6,325,864 | $ | 44,663,730 | ||||||||
Common Stock | 392,367,754 | 218,531,081 | $ | 610,898,835 | ||||||||
Other Liabilities | (1,147,678 | ) | (2,066,498 | ) | $ | (3,214,176 | ) | |||||
|
|
|
| |||||||||
Total | $ | 433,533,813 | $ | 222,792,188 | ||||||||
|
|
|
|
- 26 -
Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
7. | Reconciliation of Financial Statements to Form 5500 (Continued) |
The following is a reconciliation of a component of the Statements of Net Assets Available for Benefits per the financial statements to Form 5500 at December 31, 2016 due to the Prudential IncomeFlex investment options:
Reallocation | ||||||||||||||||||||||||
Prudential | ||||||||||||||||||||||||
Prudential | IncomeFlex | |||||||||||||||||||||||
IncomeFlex Select | Target | |||||||||||||||||||||||
Per Financial | Aggressive | Conservative | Moderate | Balanced | Per | |||||||||||||||||||
Statements | Fund | Fund | Fund | Fund | Form 5500 | |||||||||||||||||||
Insurance Company Separate Accounts | ||||||||||||||||||||||||
Core Bond Enhanced Index/PGIM Fund | $ | 156,786,443 | $ | 29,164,726 | $ | 11,502,974 | $ | 17,211,897 | $ | 11,711,365 | $ | 226,377,405 | ||||||||||||
Prudential Retirement Real Estate Fund | 181,207,413 | — | — | — | — | 181,207,413 | ||||||||||||||||||
QMA International Developed Markets Index Fund | 190,791,922 | 13,610,205 | 1,238,782 | 4,207,353 | 4,391,762 | 214,240,024 | ||||||||||||||||||
QMA U.S. Broad Market Index Fund | 1,107,792,132 | 54,440,823 | 4,955,127 | 16,829,409 | 13,175,286 | 1,197,192,777 | ||||||||||||||||||
Wells Capital International Bond Fund | 51,651,861 | — | — | — | — | 51,651,861 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 1,688,229,771 | $ | 97,215,754 | $ | 17,696,883 | $ | 38,248,659 | $ | 29,278,413 | $ | 1,870,669,480 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Prudential IncomeFlex Select | ||||||||||||||||||||||||
Aggressive Growth Fund | $ | 97,215,754 | $ | (97,215,754 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Conservative Growth Fund | 17,696,883 | — | (17,696,883 | ) | — | — | — | |||||||||||||||||
Moderate Growth Fund | 38,248,659 | — | — | (38,248,659 | ) | — | — | |||||||||||||||||
Prudential IncomeFlex Target Balanced Fund | 29,278,413 | — | — | — | (29,278,413 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 182,439,709 | $ | (97,215,754 | ) | $ | (17,696,883 | ) | $ | (38,248,659 | ) | $ | (29,278,413 | ) | $ | — | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of interest and dividend income per the Statement of Changes in Net Assets Available for Benefits to Form 5500 for the year ended December 31, 2016:
Interest and dividend income per the financial statements | $ | 147,476,392 | ||
Add: Interest income on notes receivable from participants | 1,953,504 | |||
Add: Interest on interest-bearing cash | 220,302 | |||
Less: Dividends on registered investment company shares | (6,761,866 | ) | ||
Less: Master Trust dividends | (23,643,178 | ) | ||
|
| |||
Total interest per Form 5500 | $ | 119,245,154 | ||
|
|
- 27 -
Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
7. | Reconciliation of Financial Statements to Form 5500 (Continued) |
The following is a reconciliation of net appreciation/(depreciation) of the Custom Plan Investments included in the Statement of Changes in Net Assets Available for Benefits to Form 5500 for the year ended December 31, 2016:
Custom Plan Investments | ||||||||||||
Alliance Bernstein Core Opportunities Fund | Delaware Small Cap Core Equity Fund | Total per Form 5500 | ||||||||||
Per Financial Statements | $ | 40,627,520 | $ | 40,528,608 | ||||||||
Per Form 5500 | ||||||||||||
Interest-bearing Cash | $ | 195,406 | $ | 24,896 | $ | 220,302 | ||||||
Dividends on Common Stock | 5,687,610 | 2,341,399 | $ | 8,029,009 | ||||||||
Net Realized Gains | 5,713,427 | 2,457,503 | $ | 8,170,930 | ||||||||
Unrealized Appreciation of Assets | 30,357,969 | 36,674,890 | $ | 67,032,859 | ||||||||
Investment Advisory and | ||||||||||||
Management Fees | (1,326,892 | ) | (970,080 | ) | $ | (2,296,972 | ) | |||||
|
|
|
| |||||||||
Total | $ | 40,627,520 | $ | 40,528,608 | ||||||||
|
|
|
|
- 28 -
Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
7. | Reconciliation of Financial Statements to Form 5500 (Continued) |
The following is a reconciliation of a component of net appreciation/(depreciation) in fair value of investments included in the Statement of Changes in Net Assets Available for Benefits to Form 5500 for the year ended December 31, 2016 due to the Prudential IncomeFlex investment options:
Reallocation | ||||||||||||||||||||||||
Prudential | Prudential | |||||||||||||||||||||||
IncomeFlex Select | IncomeFlex | |||||||||||||||||||||||
Per Financial | Aggressive | Conservative | Moderate | Target | Per | |||||||||||||||||||
Statements | Fund | Fund | Fund | Balanced Fund | Form 5500 | |||||||||||||||||||
Insurance Company Separate Accounts | ||||||||||||||||||||||||
Core Bond Enhanced Index/PGIM Fund | $ | 3,983,837 | $ | 2,147,780 | $ | 550,907 | $ | 1,059,181 | $ | 633,393 | $ | 8,375,098 | ||||||||||||
Prudential Retirement Real Estate Fund | 9,799,709 | — | — | — | — | 9,799,709 | ||||||||||||||||||
QMA International Developed Markets Index Fund | 3,446,415 | 1,002,297 | 59,328 | 258,911 | 237,522 | 5,004,473 | ||||||||||||||||||
QMA U.S. Broad Market Index Fund | 129,014,357 | 4,009,189 | 237,314 | 1,035,644 | 712,567 | 135,009,071 | ||||||||||||||||||
Wells Capital International Bond Fund | (9,767 | ) | — | — | — | — | (9,767 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 146,234,551 | $ | 7,159,266 | $ | 847,549 | $ | 2,353,736 | $ | 1,583,482 | $ | 158,178,584 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Prudential IncomeFlex Select | ||||||||||||||||||||||||
Aggressive Growth Fund | $ | 7,159,266 | $ | (7,159,266 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Conservative Growth Fund | 847,549 | — | (847,549 | ) | — | — | — | |||||||||||||||||
Moderate Growth Fund | 2,353,736 | — | — | (2,353,736 | ) | — | — | |||||||||||||||||
Prudential IncomeFlex Target Balanced Fund | 1,583,482 | — | — | — | (1,583,482 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 11,944,033 | $ | (7,159,266 | ) | $ | (847,549 | ) | $ | (2,353,736 | ) | $ | (1,583,482 | ) | $ | — | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of net appreciation of the Master Trust included in the Statement of Changes in Net Assets Available for Benefits to Form 5500 for the year ended December 31, 2016:
Net appreciation of Master Trust investment per the financial statements | $ | 191,940,792 | ||
Add: Master Trust dividends | 23,643,178 | |||
|
| |||
Net investment gain from Master Trust investment accounts per Form 5500 | $ | 215,583,970 | ||
|
|
- 29 -
Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
7. | Reconciliation of Financial Statements to Form 5500 (Continued) |
The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500 Supplemental Information, Schedule I - Schedule of Assets Held for Investment Purposes as of December 31, 2016:
Net assets available for benefits per the financial statements | $ | 7,961,323,555 | ||
Less: Notes receivable for participant loans per the financial statements | (48,198,044 | ) | ||
Add: Notes receivable for participant loans per Form 5500 | 47,442,965 | |||
Less: Receivables of Alliance Bernstein Core Opportunities Fund | (3,975,871 | ) | ||
Add: Liabilities of Alliance Bernstein Core Opportunities Fund | 1,147,678 | |||
Less: Receivables of Delaware Small Cap Core Equity Fund | (1,741 | ) | ||
Add: Liabilities of Delaware Small Cap Core Equity Fund | 2,066,498 | |||
|
| |||
Total per the Schedule of Assets Held for Investment Purposes | $ | 7,959,805,040 | ||
|
|
8. | Plan Termination |
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and amend or terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in their Company matching contributions account.
9. | Employee Stock Ownership Plan (“ESOP”) |
The Employee Stock Ownership Plan (“ESOP”) portion of the Plan was established in accordance with sections 401(a), 4975(e)(7) of the IRC and section 407(d)(6) of ERISA. The ESOP invests primarily in qualifying employer securities in accordance with IRC section 4975(e)(8). An ESOP account is established for each participant in the Plan, and is invested in the PFI Common Stock Fund. To fund the ESOP, the recordkeeper, annually, transfers (“sweeps”) to the ESOP portion all of the participant’s fully vested amounts in the non-ESOP portion of the PFI Common Stock Fund. Participants may redirect the amounts credited to the ESOP account into any other investment option subject to certain limitations including, but not limited to, the provisions of the Company’s personal securities trading policy. Funds that are swept into the ESOP portion are treated the same as funds in the non-ESOP portion for purposes of distributions, reallocations, and transfers. Cash dividends are paid to the ESOP, and thereafter, either distributed to participants or reinvested into participants’ ESOP accounts. All participants have a choice of either reinvesting the cash dividends into the ESOP account or receiving cash on a yearly basis. Participants cannot contribute directly to the ESOP.
The trustee of the Plan purchases shares of PFI common stock on behalf of the PFI Common Stock Fund at fair value or by private purchase (including from an affiliate). Voting rights in shares of PFI common stock held by the Plan shall be exercised by the trustee in a timely manner and by the direction of the participants. Dividends and other income credited to the PFI Common Stock Fund are allocated to all participants with units in the PFI Common Stock Fund when such amounts are received by the Plan.
10. | Plan-to-Plan Transfers |
Effective January 1, 2016, the MullinTBG Savings and Investment Plan (“MullinTBG Plan”) was merged into the Plan. Prior to the merger, MullinTBG Insurance Agency Services, LLC, an affiliate of the Company, maintained the MullinTBG Plan for the benefit of its eligible employees. All applicable legal requirements were satisfied with respect to the merger and transfer of account balances from the MullinTBG Plan into the Plan.
- 30 -
Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
11. | Tax Status |
In response to the Company’s application dated January 29, 2016, the Internal Revenue Service issued a favorable determination letter dated April 20, 2017, confirming that the Plan, as amended and restated effective January 1, 2016, continues to satisfy the requirements for tax-qualified status under Section 401(a) of the IRC. The Plan had been amended and restated effective as of January 1, 2016, to incorporate previously adopted amendments, reflect plan design changes and comply with applicable law. The favorable determination letter also covers the most recent amendment to the Plan which was adopted on December 15, 2016. The Plan Administrator and the Company’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC, and no provision for income tax is necessary (see Note 14).
U.S. GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the organization has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. 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 2014.
12. | Risks and Uncertainties |
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 participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.
13. | Interest in Master Trust |
A portion of the Plan’s investments are in the Master Trust which was established for the investment of assets of the Plan and other defined contribution plans sponsored by affiliated companies. The assets of the Master Trust are held by the “Trustee”. As of December 31, 2016 and 2015, the Plan’s interest in the net assets of the Master Trust was 100%.
14. | Subsequent Events |
The Plan Administrator has evaluated events subsequent to December 31, 2016, and through June 9, 2017, the date the financial statements were available to be issued, and determined there have not been any events that occurred that require adjustments to these financial statements and there were no events or transactions that required disclosure other than those listed below.
During the first quarter of 2017, the Company made the PESP True-Up contributions for 2016 under the PESP Company Match True-Up feature adopted in 2016. This feature ensures that participants receive the maximum company matching contributions for which they are eligible, subject to applicable legal and Plan requirements. The PESP True-Up contributions are processed in the first quarter of the current year based on prior year contributions and earnings.
Effective January 1, 2017:
The one year service requirement for eligibility for Company matching contributions was eliminated for employees, except for Prudential Advisors Financial Professionals and Financial Professional Associates.
- 31 -
Table of Contents
The Prudential Employee Savings Plan
Notes to Financial Statements
December 31, 2016 and 2015
14. | Subsequent Events (Continued) |
100% of all future Company matching contributions are invested according to each participant’s investment allocation selections.
Automatic enrollment contributions switched from before-tax to Roth 401(k) for new hires.
- 32 -
Table of Contents
The Prudential Employee Savings Plan | ||
Schedule of Assets Held for Investment Purposes | Supplemental Information | |
December 31, 2016 | Schedule I |
Identity of Issue, Borrower Lessor or Similar Party | Description of Investment | Cost | Current Value | |||||||||
* | PESP Fixed Rate Fund | Insurance Co. General Account | $ | 3,537,373,941 | $ | 3,537,373,941 | ||||||
|
|
|
| |||||||||
* | Core Bond Enhanced Index/PGIM Fund | Insurance Co. Pooled Separate Account | 197,339,562 | 226,377,405 | ||||||||
* | Prudential Retirement Real Estate Fund | Insurance Co. Pooled Separate Account | 146,912,920 | 181,207,413 | ||||||||
* | QMA International Developed Markets Index Fund | Insurance Co. Pooled Separate Account | 191,898,193 | 214,240,024 | ||||||||
* | QMA U.S. Broad Market Index Fund | Insurance Co. Pooled Separate Account | 934,219,673 | 1,197,192,777 | ||||||||
* | Wells Capital International Bond Fund | Insurance Co. Pooled Separate Account | 55,495,560 | 51,651,861 | ||||||||
|
|
|
| |||||||||
Sub-Total | 1,525,865,908 | 1,870,669,480 | ||||||||||
|
|
|
| |||||||||
Jennison Opportunistic Equity Fund CIT | Common/Collective Trust | 390,914,261 | 432,497,397 | |||||||||
Prudential High Yield Collective Investment Trust | Common/Collective Trust | 66,336,098 | 75,100,718 | |||||||||
Wellington Trust Co. International Opportunities Fund | Common/Collective Trust | 141,880,390 | 142,418,162 | |||||||||
|
|
|
| |||||||||
Sub-Total | 599,130,749 | 650,016,277 | ||||||||||
|
|
|
| |||||||||
Prudential Jennison Natural Resources Fund, Class Q | Registered Investment Company | 40,528,343 | 40,032,807 | |||||||||
Vanguard Intermediate-Term Government Bond Index Fund | Registered Investment Company | 26,264,144 | 25,871,685 | |||||||||
Vanguard Short-Term Investment-Grade Fund | 3,955,290 | 3,915,275 | ||||||||||
Vanguard Small-Cap Index Fund | Registered Investment Company | 239,897,241 | 259,966,891 | |||||||||
Vanguard Emerging Markets Stock Index Fund | Registered Investment Company | 67,536,016 | 64,149,642 | |||||||||
|
|
|
| |||||||||
Sub-Total | 378,181,034 | 393,936,300 | ||||||||||
|
|
|
| |||||||||
* | Prudential Financial, Inc. Common Stock Fund | Master Trust Investment Account | 436,494,172 | *** | 804,803,493 | |||||||
|
|
|
| |||||||||
* | Participant Loans | 3.25% - 5.25%** | — | 47,442,965 | ||||||||
|
|
|
| |||||||||
Time Warner Inc | Common Stock, shares: 192,973 | 17,010,274 | 18,627,684 | |||||||||
Biogen Indec Inc | Common Stock, shares: 63,874 | 18,629,537 | 18,113,389 | |||||||||
Alphabet Inc | Common Stock, shares: 23,136 | 15,483,377 | 17,856,828 | |||||||||
Facebook Inc-A | Common Stock, shares: 153,110 | 14,824,299 | 17,615,305 | |||||||||
Raytheon Co. | Common Stock, shares: 97,928 | 11,568,208 | 13,905,776 | |||||||||
JP Morgan Chase & Co | Common Stock, shares: 159,980 | 10,075,838 | 13,804,674 | |||||||||
Danaher Corp | Common Stock, shares: 160,994 | 12,159,186 | 12,531,773 | |||||||||
Berkshire Hathaway Inc | Common Stock, shares: 71,848 | 10,591,768 | 11,709,787 | |||||||||
Intl Business Machines Corp | Common Stock, shares: 69,080 | 10,743,653 | 11,466,589 | |||||||||
Xilinx Inc. | Common Stock, shares: 186,088 | 8,771,198 | 11,234,133 | |||||||||
United Health Group Inc | Common Stock, shares: 63,820 | 7,714,023 | 10,213,753 | |||||||||
Intuitive Surgical Inc. | Common Stock, shares: 14,620 | 8,567,372 | 9,271,565 | |||||||||
Aetna Inc | Common Stock, shares: 71,370 | 8,322,099 | 8,850,594 | |||||||||
Apple Inc | Common Stock, shares: 73,392 | 8,469,421 | 8,500,261 | |||||||||
Chubb Ltd | Common Stock, shares: 63,236 | 7,043,752 | 8,354,740 | |||||||||
Gilead Sciences | Common Stock, shares: 111,593 | 10,972,090 | 7,991,175 | |||||||||
Intel Corp | Common Stock, shares: 206,910 | 6,980,273 | 7,504,626 | |||||||||
Visa Inc-Class A Shares | Common Stock, shares: 92,408 | 7,083,471 | 7,209,672 |
- 33 -
Table of Contents
The Prudential Employee Savings Plan | ||
Schedule of Assets Held for Investment Purposes December 31, 2016 | Supplemental Information Schedule I |
Identity of Issue, Borrower Lessor or Similar Party | Description of Investment | Cost | Current Value | |||||||||
Fortive Corporation | Common Stock, shares: 128,170 | $ | 7,028,426 | $ | 6,873,757 | |||||||
Home Depot Inc. | Common Stock, shares: 51,183 | 6,070,880 | 6,862,617 | |||||||||
VMWare Ince Class A | Common Stock, shares: 84,960 | 6,595,312 | 6,688,901 | |||||||||
Comcast Corp | Common Stock, shares: 90,298 | 5,689,791 | 6,235,077 | |||||||||
Ellie Mae Inc | Common Stock, shares: 73,040 | 6,169,533 | 6,111,987 | |||||||||
Edwards Lifesciences Corp | Common Stock, shares: 65,150 | 5,439,021 | 6,104,555 | |||||||||
CitiGroup Inc | Common Stock, shares: 100,450 | 4,882,402 | 5,969,743 | |||||||||
Delphi Automotive Plc | Common Stock, shares: 86,810 | 5,955,221 | 5,846,654 | |||||||||
Hologic Inc | Common Stock, shares: 134,420 | 4,949,564 | 5,392,930 | |||||||||
Mohawk Industries | Common Stock, shares: 26,180 | 5,279,266 | 5,227,622 | |||||||||
Mastercard Inc | Common Stock, shares: 49,730 | 5,204,211 | 5,134,622 | |||||||||
IPG Photonics Corp | Common Stock, shares: 51,810 | 4,723,957 | 5,114,165 | |||||||||
Discovery Communications Inc | Common Stock, shares: 186,090 | 4,992,235 | 5,100,727 | |||||||||
Carlisle Cos Inc | Common Stock, shares: 45,391 | 4,550,985 | 5,006,173 | |||||||||
Vista Outdoor Inc | Common Stock, shares: 133,800 | 5,850,810 | 4,937,220 | |||||||||
Allstate Corp | Common Stock, shares: 55,520 | 3,492,872 | 4,115,142 | |||||||||
Littelfuse Inc. | Common Stock, shares: 26,782 | 3,281,879 | 4,064,704 | |||||||||
Wells Fargo & Co. | Common Stock, shares: 73,206 | 3,722,827 | 4,034,383 | |||||||||
Goldman Sachs Group Inc | Common Stock, shares: 16,449 | 2,815,441 | 3,938,713 | |||||||||
Cigna Corp | Common Stock, shares: 28,804 | 4,004,783 | 3,842,166 | |||||||||
Bruker Corporation | Common Stock, shares: 179,823 | 3,919,472 | 3,808,651 | |||||||||
Parker Hannifin Corp | Common Stock, shares: 27,130 | 3,101,482 | 3,798,200 | |||||||||
D.R. Horton Inc | Common Stock, shares: 138,860 | 3,886,822 | 3,795,044 | |||||||||
Arista Networks Inc | Common Stock, shares: 39,151 | 2,313,289 | 3,788,642 | |||||||||
Autozone Inc | Common Stock, shares: 4,260 | 3,408,949 | 3,364,505 | |||||||||
Alexion Pharmaceuticals Inc | Common Stock, shares: 27,265 | 3,405,968 | 3,335,873 | |||||||||
Enersys | Common Stock, shares: 42,630 | 2,674,622 | 3,329,403 | |||||||||
Vantiv Inc | Common Stock, shares: 55,651 | 2,517,532 | 3,317,913 | |||||||||
Nvidia Corp. | Common Stock, shares: 30,910 | 626,639 | 3,299,333 | |||||||||
General Dynamics Corp. | Common Stock, shares: 18,947 | 2,719,654 | 3,271,389 | |||||||||
Noble Energy | Common Stock, shares: 85,450 | 3,018,007 | 3,252,227 | |||||||||
AMC Network | Common Stock, shares: 58,062 | 3,477,009 | 3,038,965 | |||||||||
Texas Instruments Inc | Common Stock, shares: 40,440 | 2,486,052 | 2,950,907 | |||||||||
Esco Technologies Inc. | Common Stock, shares: 51,004 | 1,917,406 | 2,889,377 | |||||||||
Liberty Media Corp | Common Stock, shares: 141,283 | 3,695,426 | 2,822,834 | |||||||||
Hexcel Corp. | Common Stock, shares: 54,770 | 2,383,057 | 2,817,369 | |||||||||
Microsemi Corp | Common Stock, shares: 50,880 | 1,747,238 | 2,745,994 | |||||||||
Tesaro Inc | Common Stock, shares: 20,398 | 1,122,356 | 2,743,123 | |||||||||
Minerals Technologies | Common Stock, shares: 35,363 | 2,164,774 | 2,731,792 | |||||||||
Webster Financial Corp. | Common Stock, shares: 50,312 | 1,885,550 | 2,730,935 | |||||||||
Sterling Bancorp/DE | Common Stock, shares: 116,280 | 1,754,070 | 2,720,952 | |||||||||
J2 Global Commmunications Inc. | Common Stock, shares: 33,155 | 2,447,976 | 2,712,079 | |||||||||
Prosperity Bancshares Inc | Common Stock, shares: 37,696 | 2,085,480 | 2,705,819 | |||||||||
Barnes Group | Common Stock, shares: 56,692 | 2,206,837 | 2,688,335 | |||||||||
Tenneco Automotive Inc. | Common Stock, shares: 41,705 | 2,081,929 | 2,605,311 | |||||||||
Hubbell Inc. | Common Stock, shares: 22,290 | 2,227,021 | 2,601,243 | |||||||||
Validus Holdings Ltd | Common Stock, shares: 46,153 | 2,147,252 | 2,538,877 | |||||||||
City Holdings Co | Common Stock, shares: 37,541 | 1,826,817 | 2,537,772 | |||||||||
Activision Blizzard Inc | Common Stock, shares: 69,273 | 1,767,847 | 2,501,448 |
- 34 -
Table of Contents
The Prudential Employee Savings Plan | ||
Schedule of Assets Held for Investment Purposes December 31, 2016 | Supplemental Information Schedule I |
Identity of Issue, Borrower Lessor or Similar Party | Description of Investment | Cost | Current Value | |||||||||
Cognizant Technology Solutions | Common Stock, shares: 44,310 | $ | 2,695,644 | $ | 2,482,689 | |||||||
Primerica | Common Stock, shares: 35,529 | 1,503,613 | 2,456,830 | |||||||||
Neenah Paper Inc | Common Stock, shares: 28,740 | 1,772,585 | 2,448,648 | |||||||||
Quaker Chemical Corp. | Common Stock, shares: 19,099 | 1,793,862 | 2,443,526 | |||||||||
Granite Construction | Common Stock, shares: 43,513 | 1,478,046 | 2,393,215 | |||||||||
Jack in the Box | Common Stock, shares: 20,895 | 1,905,613 | 2,332,718 | |||||||||
Tetra Technologies | Common Stock, shares: 53,916 | 1,426,713 | 2,326,475 | |||||||||
Old Natl Bancorpind | Common Stock, shares: 126,922 | 1,873,728 | 2,303,634 | |||||||||
AAON Inc | Common Stock, shares: 69,347 | 1,586,196 | 2,291,918 | |||||||||
Kadant Inc. | Common Stock, shares: 36,456 | 1,702,469 | 2,231,107 | |||||||||
Continental Buildings Products | Common Stock, shares: 96,042 | 1,965,050 | 2,218,570 | |||||||||
Umpqua Holdings Corporation | Common Stock, shares: 117,437 | 1,761,835 | 2,205,467 | |||||||||
Gramercy Property Trust | Common Stock, shares: 240,202 | 2,249,488 | 2,205,054 | |||||||||
Hope Bancorp Inc | Common Stock, shares: 100,490 | 1,591,288 | 2,199,726 | |||||||||
On Assignment | Common Stock, shares: 49,779 | 1,953,289 | 2,198,241 | |||||||||
Proofpoint Inc | Common Stock, shares: 30,940 | 1,952,317 | 2,185,911 | |||||||||
Worthington Indus | Common Stock, shares: 45,768 | 1,313,077 | 2,171,234 | |||||||||
XPO Logistics Inc | Common Stock, shares: 49,504 | 2,053,207 | 2,136,593 | |||||||||
Semtech Corp. | Common Stock, shares: 67,237 | 1,173,767 | 2,121,327 | |||||||||
Exlservice Holdings Inc | Common Stock, shares: 41,975 | 1,596,159 | 2,117,219 | |||||||||
Carrizo Oil & Gas Inc | Common Stock, shares: 56,372 | 2,037,807 | 2,105,494 | |||||||||
Applied Industrial Tech Inc | Common Stock, shares: 35,052 | 1,364,546 | 2,082,089 | |||||||||
Great Western Bancorp Inc | Common Stock, shares: 47,131 | 1,302,456 | 2,054,440 | |||||||||
Northwestern Corp. | Common Stock, shares: 35,558 | 1,917,813 | 2,022,183 | |||||||||
Ligand Pharmaceuticals | Common Stock, shares: 19,767 | 2,036,296 | 2,008,525 | |||||||||
Mack Cali Realty Corp. | Common Stock, shares: 68,092 | 1,671,145 | 1,976,030 | |||||||||
RSP Permian Inc | Common Stock, shares: 43,953 | 1,124,497 | 1,961,183 | |||||||||
Catalent Inc | Common Stock, shares: 72,612 | 2,259,428 | 1,957,620 | |||||||||
Steven Madden Ltd. | Common Stock, shares: 54,121 | 2,111,740 | 1,934,826 | |||||||||
Merit Medical Systems | Common Stock, shares: 72,874 | 1,775,213 | 1,931,161 | |||||||||
ABM Industries Inc | Common Stock, shares: 46,977 | 1,554,877 | 1,918,541 | |||||||||
Conmed Corp | Common Stock, shares: 43,347 | 2,347,654 | 1,914,637 | |||||||||
Essent Group Ltd | Common Stock, shares: 58,880 | 1,463,321 | 1,905,946 | |||||||||
Eastgroup Properties Inc | Common Stock, shares: 25,721 | 1,519,196 | 1,899,239 | |||||||||
Columbus McKinnon Corp | Common Stock, shares: 69,809 | 1,489,663 | 1,887,635 | |||||||||
Shutterfly Inc | Common Stock, shares: 37,381 | 1,561,590 | 1,875,779 | |||||||||
Western Alliance Bancorp | Common Stock, shares: 38,349 | 1,297,248 | 1,867,980 | |||||||||
Stifel Financial Corp | Common Stock, shares: 37,250 | 1,917,932 | 1,860,638 | |||||||||
Selective Insurance Group | Common Stock, shares: 43,097 | 1,348,635 | 1,855,326 | |||||||||
Cryolife Inc | Common Stock, shares: 95,863 | 1,050,360 | 1,835,776 | |||||||||
Petroleum Development Corp | Common Stock, shares: 25,165 | 1,533,227 | 1,826,476 | |||||||||
Anixter International Inc | Common Stock, shares: 22,322 | 1,425,040 | 1,809,198 | |||||||||
Cardinal Financial Corp | Common Stock, shares: 54,633 | 1,315,732 | 1,791,416 | |||||||||
KLX Inc | Common Stock, shares: 39,410 | 1,497,182 | 1,777,785 | |||||||||
Wageworks Inc | Common Stock, shares: 24,320 | 1,188,951 | 1,763,200 | |||||||||
Convergys Corp | Common Stock, shares: 71,479 | 1,727,996 | 1,755,524 | |||||||||
Evercore Partners | Common Stock, shares: 25,516 | 1,476,594 | 1,752,949 | |||||||||
Spire Inc | Common Stock, shares: 26,852 | 1,681,535 | 1,733,297 | |||||||||
Ramco Gershenson Properites | Common Stock, shares: 104,386 | 1,719,179 | 1,730,720 |
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Table of Contents
The Prudential Employee Savings Plan | ||
Schedule of Assets Held for Investment Purposes December 31, 2016 | Supplemental Information Schedule I |
Identity of Issue, Borrower Lessor or Similar Party | Description of Investment | Cost | Current Value | |||||||||
Icon PLC | Common Stock, shares: 22,911 | $ | 1,849,233 | $ | 1,722,907 | |||||||
J & J Snack Foods Corp | Common Stock, shares: 12,819 | 1,464,656 | 1,710,439 | |||||||||
Myr Group Inc | Common Stock, shares: 45,216 | 1,337,523 | 1,703,739 | |||||||||
American Equity | Common Stock, shares: 75,536 | 1,846,458 | 1,702,581 | |||||||||
Teladoc Inc | Common Stock, shares: 102,853 | 1,700,043 | 1,697,075 | |||||||||
Northern Trust Company | Common Stock, shares: 19,030 | 1,292,750 | 1,694,622 | |||||||||
First Industrial Realty Trust | Common Stock, shares: 60,396 | 1,634,289 | 1,694,108 | |||||||||
Kforce Inc | Common Stock, shares: 72,383 | 1,910,230 | 1,672,047 | |||||||||
ATN International Inc | Common Stock, shares: 20,617 | 1,478,701 | 1,652,040 | |||||||||
Independent Bank Corp | Common Stock, shares: 23,445 | 1,150,609 | 1,651,700 | |||||||||
Liberty Tripadvisor Hdg | Common Stock, shares: 109,510 | 2,336,131 | 1,648,125 | |||||||||
Popeyes Louisiana Kitchen | Common Stock, shares: 27,132 | 1,593,400 | 1,640,943 | |||||||||
Synaptics Inc. | Common Stock, shares: 30,544 | 2,186,546 | 1,636,548 | |||||||||
Lasalle Hotel Properties | Common Stock, shares: 53,494 | 1,687,630 | 1,629,962 | |||||||||
Kite Realty Group Trust | Common Stock, shares: 69,381 | 1,795,129 | 1,629,066 | |||||||||
Malibu Boats Inc A | Common Stock, shares: 85,187 | 1,535,024 | 1,625,368 | |||||||||
Callidus Software Inc | Common Stock, shares: 96,708 | 1,579,900 | 1,624,694 | |||||||||
Prestige Brands | Common Stock, shares: 31,112 | 1,491,921 | 1,620,935 | |||||||||
Synaptics Inc. | Common Stock, shares: 30,194 | 1,614,968 | 1,617,795 | |||||||||
Oil States International Inc. | Common Stock, shares: 41,359 | 1,028,495 | 1,613,001 | |||||||||
Kaiser Aluminum | Common Stock, shares: 20,707 | 1,759,344 | 1,608,727 | |||||||||
Air Methods Corp | Common Stock, shares: 49,502 | 1,942,631 | 1,576,639 | |||||||||
Quidel Corp | Common Stock, shares: 73,299 | 1,516,896 | 1,570,065 | |||||||||
Flushing Financial Corp. | Common Stock, shares: 53,400 | 1,117,794 | 1,569,426 | |||||||||
Maxlinear Inc | Common Stock, shares: 71,807 | 869,313 | 1,565,393 | |||||||||
Silicon Laboratories Inc. | Common Stock, shares: 24,074 | 1,072,022 | 1,564,810 | |||||||||
Pebblebrook Hotel Trust | Common Stock, shares: 52,361 | 1,801,340 | 1,557,740 | |||||||||
WSFS Financial Corporation | Common Stock, shares: 33,582 | 1,082,755 | 1,556,526 | |||||||||
Netgear Inc | Common Stock, shares: 28,506 | 1,062,023 | 1,549,301 | |||||||||
Vanda Pharmaceuticals Inc | Common Stock, shares: 97,110 | 1,190,658 | 1,548,905 | |||||||||
US Ecology Inc | Common Stock, shares: 31,427 | 1,450,702 | 1,544,637 | |||||||||
Helmerich & Payne | Common Stock, shares: 19,940 | 1,139,605 | 1,543,356 | |||||||||
Del Friscos Restaurant Group | Common Stock, shares: 90,506 | 1,391,783 | 1,538,602 | |||||||||
Swift Transportation Co | Common Stock, shares: 61,771 | 1,372,928 | 1,504,742 | |||||||||
Medicines Company | Common Stock, shares: 44,327 | 1,397,698 | 1,504,458 | |||||||||
WNS Holdings Ltd | Common Stock, shares: 54,503 | 1,594,256 | 1,501,558 | |||||||||
Synergy Resources Corp | Common Stock, shares: 164,515 | 1,203,383 | 1,465,829 | |||||||||
Infinity PPTY & Casualty Corp. | Common Stock, shares: 16,572 | 1,306,236 | 1,456,679 | |||||||||
United Fire Group Inc | Common Stock, shares: 29,314 | 1,084,251 | 1,441,369 | |||||||||
Healthsouth Corp | Common Stock, shares: 34,378 | 1,387,243 | 1,417,749 | |||||||||
Brooks Automation Inc | Common Stock, shares: 81,221 | 1,040,263 | 1,386,442 | |||||||||
Grubhub Inc | Common Stock, shares: 36,265 | 1,112,053 | 1,364,289 | |||||||||
Cheesecake Factory | Common Stock, shares: 22,697 | 1,283,347 | 1,359,096 | |||||||||
Fiesta Restaurant Group | Common Stock, shares: 45,480 | 2,131,277 | 1,357,578 | |||||||||
South Jersey Indus | Common Stock, shares: 40,057 | 1,076,850 | 1,349,520 | |||||||||
Plantronicas Inc. | Common Stock, shares: 24,391 | 1,367,518 | 1,335,651 | |||||||||
Trinet Group Inc | Common Stock, shares: 51,281 | 1,158,400 | 1,313,819 | |||||||||
Balchem Corp | Common Stock, shares: 15,109 | 942,803 | 1,267,947 | |||||||||
Five Below | Common Stock, shares: 31,499 | 1,328,521 | 1,258,700 |
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Table of Contents
The Prudential Employee Savings Plan | ||
Schedule of Assets Held for Investment Purposes December 31, 2016 | Supplemental Information Schedule I |
Identity of Issue, Borrower Lessor or Similar Party | Description of Investment | Cost | Current Value | |||||||||
MA-COM Technology Solutions | Common Stock, shares: 27,066 | $ | 1,053,509 | $ | 1,252,614 | |||||||
Wright Medical Group NV | Common Stock, shares: 54,246 | 1,070,051 | 1,246,573 | |||||||||
Retrophin Inc | Common Stock, shares: 65,319 | 1,588,199 | 1,236,489 | |||||||||
Federal Signal | Common Stock, shares: 78,504 | 1,131,819 | 1,225,447 | |||||||||
Houlihan Lokey Inc | Common Stock, shares: 39,028 | 869,689 | 1,214,551 | |||||||||
National Cinemedia Inc | Common Stock, shares: 80,724 | 1,221,957 | 1,189,065 | |||||||||
Cobiz Financial Inc | Common Stock, shares: 68,281 | 873,829 | 1,153,266 | |||||||||
Interxion Holding NV | Common Stock, shares: 32,815 | 942,964 | 1,150,822 | |||||||||
Keyw Holding Corp | Common Stock, shares: 93,423 | 956,151 | 1,101,457 | |||||||||
Bryn Mawr Bank Corp | Common Stock, shares: 25,570 | 746,609 | 1,077,776 | |||||||||
Boise Cascade Co | Common Stock, shares: 47,879 | 1,369,516 | 1,077,277 | |||||||||
Twilio Inc | Common Stock, shares: 37,230 | 1,102,901 | 1,074,086 | |||||||||
Team Health Holdings Inc | Common Stock, shares: 24,190 | 1,279,070 | 1,051,056 | |||||||||
Express Inc | Common Stock, shares: 96,724 | 1,781,047 | 1,040,750 | |||||||||
Applied Micro Circuits Corp | Common Stock, shares: 112,445 | 711,287 | 927,671 | |||||||||
Acorda Therapeutics Inc | Common Stock, shares: 47,899 | 1,547,148 | 900,501 | |||||||||
Esterline Technologies | Common Stock, shares: 9,683 | 814,921 | 863,724 | |||||||||
Chemtura Corp | Common Stock, shares: 24,696 | 662,480 | 819,907 | |||||||||
Q2 Holdings Inc | Common Stock, shares: 27,952 | 776,680 | 806,415 | |||||||||
Chuy’s Holdings Inc | Common Stock, shares: 24,537 | 798,081 | 796,226 | |||||||||
Repligen Corp | Common Stock, shares: 23,937 | 696,966 | 737,738 | |||||||||
II-VI Inc. | Common Stock, shares: 22,657 | 604,432 | 671,780 | |||||||||
Superior Energy Services Inc | Common Stock, shares: 39,732 | 735,855 | 670,676 | |||||||||
Spectrum Pharmaceuticals Inc | Common Stock, shares: 142,081 | 973,492 | 629,419 | |||||||||
Life Storage Inc | Common Stock, shares: 6,032 | 572,699 | 514,288 | |||||||||
Guidewire Software Inc | Common Stock, shares: 10,366 | 597,097 | 511,355 | |||||||||
GIII Apparel Group Ltd | Common Stock, shares: 13,787 | 583,766 | 407,544 | |||||||||
Pioneer Drilling Company | Common Stock, shares: 57,777 | 276,913 | 395,772 | |||||||||
Entertainment Properties Trust | Common Stock, shares: 4,363 | 240,383 | 313,133 | |||||||||
|
|
|
| |||||||||
Sub-Total | 546,067,627 | 610,898,835 | ||||||||||
|
|
|
| |||||||||
Pru Core Ultra Short Bond Fund | Interest-bearing Cash | 44,378,479 | 44,378,479 | |||||||||
Alliance Bernstein Core Opportunities Fund - Short Term Account | Interest-bearing Cash | 58,042 | 58,042 | |||||||||
Delaware Small Cap Core Equity Fund - Short Term Account | Interest-bearing Cash | 227,209 | 227,209 | |||||||||
|
|
|
| |||||||||
Sub-Total | 44,663,730 | 44,663,730 | ||||||||||
|
|
|
| |||||||||
Other | Noninterest-bearing Cash | 19 | 19 | |||||||||
|
|
|
| |||||||||
Grand Total | $ | 7,067,777,180 | $ | 7,959,805,040 | ||||||||
|
|
|
|
* | Party-in-interest. |
** | Represents range of annual interest rates on outstanding loans. |
*** | No cost was attributed to the PFI common stock that the Plan received as a result of demutualization. The value of the shares was credited to eligible participants’ accounts as units in Prudential Financial, Inc. Common Stock Fund on April 26, 2002. |
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Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Prudential Administrative Committee (or other persons who administer the Prudential Employee Savings Plan) has duly caused this annual report to be signed on their behalf by the undersigned thereunto duly authorized.
THE PRUDENTIAL EMPLOYEE SAVINGS PLAN
By: /s/ Kevin Prue
Kevin Prue
Vice President, Human Resources
Chairperson of the Prudential Administrative Committee
Dated: June 16, 2017