UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
(Mark One)
| x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended December 31, 2014
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-01520
| A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
Aerojet Rocketdyne Retirement Savings Plan
| B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
Aerojet Rocketdyne Holdings, Inc.
2001 Aerojet Road
Rancho Cordova, California 95742
Aerojet Rocketdyne Retirement Savings Plan
Financial Statements and Supplemental Schedule
As of December 31, 2014 and 2013
and for the Year Ended December 31, 2014
Contents
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Report of Independent Registered Public Accounting Firm
To the Administrator of
Aerojet Rocketdyne Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of Aerojet Rocketdyne Retirement Savings Plan (the “Plan”) at December 31, 2014 and 2013, and the changes in net assets available for benefits for the year ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
The supplemental Schedule of Assets (Held at End of Year) at December 31, 2014, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental schedule reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the supplemental schedule, we evaluated whether the supplemental schedule, including the 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 Schedule of Assets (Held at End of Year) is fairly stated, in all material respects, in relation to the financial statements as a whole.
/s/ PricewaterhouseCoopers LLP
Sacramento, California
June 26, 2015
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Aerojet Rocketdyne Retirement Savings Plan
Statements of Net Assets Available for Benefits
| | | | | | | | |
| | | December 31, | |
| | | 2014 | | | 2013 | |
Assets | | | | | | | | |
Investments, at fair value (Notes 3 and 4) | | $ | 609,876,477 | | | $ | 546,869,109 | |
| | | | | | | | |
Receivables: | | | | | | | | |
Company contributions (Note 1) | | | 1,333,738 | | | | 324,796 | |
Participant contributions | | | 1,000,332 | | | | 893,869 | |
Notes receivable from participants | | | 12,903,707 | | | | 12,283,654 | |
| | | | | | | | |
Total receivables | | | 15,237,777 | | | | 13,502,319 | |
| | | | | | | | |
Total assets | | | 625,114,254 | | | | 560,371,428 | |
Liabilities | | | | | | | | |
Administrative expenses payable | | | 68,668 | | | | 22,050 | |
| | | | | | | | |
Net assets reflecting investments at fair value | | | 625,045,586 | | | | 560,349,378 | |
Adjustment from fair value to contract value for fully benefit-responsive investment contracts | | | (794,025 | ) | | | (786,511 | ) |
| | | | | | | | |
Net assets available for benefits | | $ | 624,251,561 | | | $ | 559,562,867 | |
| | | | | | | | |
See accompanying notes to the financial statements.
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Aerojet Rocketdyne Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits
| | | | |
| | | Year Ended
December 31, 2014 | |
Additions | | | | |
Contributions: | | | | |
Participant | | $ | 50,146,406 | |
Company (Note 1) | | | 28,464,970 | |
Rollovers | | | 5,065,850 | |
| | | | |
Total contributions | | | 83,677,226 | |
| | | | |
Investment Income: | | | | |
Dividends and interest | | | 30,492,422 | |
Net appreciation in fair value of investments (Note 3) | | | 642,539 | |
| | | | |
Total investment income | | | 31,134,961 | |
| | | | |
Interest income on notes receivable from participants | | | 513,870 | |
| | | | |
Total additions | | | 115,326,057 | |
| | | | |
Deductions | | | | |
Benefits paid to participants | | | 50,439,465 | |
Administrative expenses (Notes 1 and 7) | | | 197,898 | |
| | | | |
Total deductions | | | 50,637,363 | |
| | | | |
Net increase during the year | | | 64,688,694 | |
Net assets available for benefits | | | | |
Beginning of year | | | 559,562,867 | |
| | | | |
End of year | | $ | 624,251,561 | |
| | | | |
See accompanying notes to the financial statements.
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Aerojet Rocketdyne Retirement Savings Plan
Notes to Financial Statements
December 31, 2014 and 2013
1. Description of the Plan
The following description of the Aerojet Rocketdyne Retirement Savings Plan (the “Plan”) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
General
Aerojet Rocketdyne Holdings, Inc. (the “Company” or the “Plan Administrator”) established the Plan effective July 1, 1989. Effective April 27, 2015, the Company changed its corporate name from “GenCorp Inc.” to “Aerojet Rocketdyne Holdings, Inc.” The Company’s common stock began trading on the New York Stock Exchange (“NYSE”) under its new name and the trading symbol “AJRD,” effective April 27, 2015. In connection with the Company name change, the Plan’s name was changed from “GenCorp Retirement Savings Plan” to “Aerojet Rocketdyne Retirement Savings Plan” and the “GenCorp Stock Fund” was renamed to “Aerojet Rocketdyne Holdings Stock Fund” (the “Company Stock Fund”), effective April 27, 2015.
The Plan is a defined contribution plan covering all eligible employees of the Company and its subsidiaries. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.
On June 14, 2013, the Company acquired the Pratt & Whitney Rocketdyne division (the “Rocketdyne Business”) from United Technologies Corporation (“UTC”) (the “Acquisition”) and approved amendments to allow former employees of the Rocketdyne Business to participate in the Plan. In addition, the Plan provisions for former represented employees of the Rocketdyne Business were amended to mirror the provisions under the UTC sponsored plan for represented employees. As a result of above amendments, the Plan consists of distinct provisions for the following four groups: (i) represented employees in Sacramento, California and all non-represented employees; (ii) represented employees in Canoga Park, California; (iii) represented employees in Carlstadt, New Jersey; and (iv) represented employees in West Palm Beach, Florida.
Effective April 1, 2014, the Plan was amended to allow for repayment of notes receivable from participants through automatic direct debits from participants’ personal bank accounts upon termination of employment.
Effective September 18, 2014, the Plan was amended to allow the Company, from time to time, to make discretionary contributions to the accounts of a designated class of participants, subject to satisfying applicable Internal Revenue Code (the “Code”) limitations and nondiscrimination testing. To satisfy the Company’s obligation to provide former employees of the Rocketdyne Business with compensation and benefits for the first 12 months after the Acquisition that are of the same or substantially same value as those in effect immediately prior to the Acquisition, the Company made three discretionary contributions totalling $8.3 million to the Plan on October 7, 2014, December 17, 2014, and January 27, 2015.
Effective November 1, 2014, the Plan was amended to allow represented employees in Canoga Park, California, pursuant to a salary reduction agreement, to contribute up to 100 percent (in $100 increments) of their 2014 ratification bonus to the Plan and have such contributions matched by the Company at 50 percent.
Contributions
Represented Employees in Sacramento, California and all non-represented Employees
Participants may elect to contribute to the Plan, on a pre-tax or after-tax basis, from 1% up to 50% of their eligible compensation as defined by the Plan. Contributions must be made in 1% increments. Pre-tax contributions are subject to annual deductibility limits specified under the Code. The Company makes matching contributions in cash equal to 100% of the first 3% of the participant’s compensation contributed and 50% of the next 3% of the compensation contributed. The Company, from time to time, may make
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discretionary contributions to the accounts of a designated class of participants, subject to satisfying applicable Code limitations and nondiscrimination testing. Investments are participant-directed. Participants may elect to direct both employee contributions and the Company’s matching contributions into any of the Plan’s investment alternatives except for the Company Stock Fund. Participants may also make rollover contributions to the Plan of amounts distributed from other qualified plans.
Represented Employees in Canoga Park, California
Participants may elect to contribute to the Plan, on a pre-tax or after-tax basis, from 1% up to 50% of their eligible compensation as defined by the Plan. Contributions must be made in 1% increments. Pre-tax contributions are subject to annual deductibility limits specified under the Code. The Company makes matching contributions in cash equal to 50% of the first 6% of the participant’s compensation contributed. In addition, participants can make Individual Medical Account (“IMA”) contributions of $1 to $17 per week based on their age. The Company makes matching IMA contributions in cash equal to 75% of participants’ IMA contributions. The Company, from time to time, may make discretionary contributions to the accounts of a designated class of participants, subject to satisfying applicable Code limitations and nondiscrimination testing. Except for IMA contributions, investments are participant-directed and participants may elect to direct both employee contributions and the Company’s matching contributions into any of the Plan’s investment alternatives except for the Company Stock Fund. All contributions to a participant’s IMA (including both participant contributions and Company’s matching contributions) are invested in the Fidelity Managed Income Portfolio II - Class 1. Participants may also make rollover contributions to the Plan of amounts distributed from other qualified plans.
Represented Employees in Carlstadt, New Jersey
Participants may elect to contribute to the Plan, on a pre-tax or after-tax basis, from 1% up to 50% of their eligible compensation as defined by the Plan. Contributions must be made in 1% increments. Pre-tax contributions are subject to annual deductibility limits specified under the Code. The Company makes matching contributions in cash equal to 50% of the first 6% of the participant’s compensation contributed or $100 per month, whichever is greater. In addition, the Company makes automatic, non-matching contributions of $238 per month per employee. The Company, from time to time, may make discretionary contributions to the accounts of a designated class of participants, subject to satisfying applicable Code limitations and nondiscrimination testing. Investments are participant-directed. Participants may elect to direct both employee contributions and the Company’s contributions into any of the Plan’s investment alternatives except for the Company Stock Fund. Participants may also make rollover contributions to the Plan of amounts distributed from other qualified plans.
Represented Employees in West Palm Beach, Florida
Participants may elect to contribute to the Plan, on a pre-tax or after-tax basis, up to $272 per week of their eligible compensation as defined by the Plan. Pre-tax contributions are subject to annual deductibility limits specified under the Code. The Company makes matching contributions in cash equal to 50% of participant contributions, up to $72. In addition, participants can make IMA contributions of $1 to $17 per week based on their age. The Company makes matching IMA contributions in cash equal to 75% of participants’ IMA contributions. The Company, from time to time, may make discretionary contributions to the accounts of a designated class of participants, subject to satisfying applicable Code limitations and nondiscrimination testing. Except for IMA contributions, investments are participant-directed and participants may elect to direct both employee contributions and the Company’s contributions into any of the Plan’s investment alternatives except for the Company Stock Fund. All contributions to a participant’s IMA (including both participant contributions and Company’s matching contributions) are invested in the Fidelity Managed Income Portfolio II - Class 1. Participants may also make rollover contributions to the Plan of amounts distributed from other qualified plans.
Participant Accounts
Each participant’s account is credited with the participant’s contribution, the Company’s matching contribution, and net earnings or losses associated with the participant’s investment election. Each participant’s account is also charged with an allocation of administrative expenses. Allocations of expenses are based on each participant’s account balance in proportion to all participants’ account balances.
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Vesting
A participant’s interest in employee contributions and rollover contributions, if any, are vested and not subject to forfeiture. The Company’s contributions may be subject to such forfeitures as may be required or permitted in order to meet the nondiscrimination provisions of the Code or other applicable provisions of law. A participant’s interest in contributions made by the Company is vested as follows: (i) represented employees in Sacramento, California and all non-represented employees – Company’s matching contributions are immediately vested and (ii) represented employees in Canoga Park, California, Carlstadt, New Jersey, and West Palm Beach, Florida – Company’s matching contributions, IMA matching contributions, and automatic non-matching contributions are vested upon the earliest to occur of the following: (i) employee completes two years of participation in the Plan; (ii) employee completes three years of continuous service; (iii) employee’s attainment of age 65; (iv) employee’s disability date; (v) employee’s death while employed by the Company; (vi) employee’s layoff due to lack of work; or (vii) employee’s entry into the military service of the United States. For former employees of the Rocketdyne Business, the Company carried over hire dates and UTC sponsored plan participation dates for purposes of vesting. Any Company’s contribution not meeting these vesting requirements is subject to forfeiture.
Forfeited Accounts
Forfeited balances are used to either reduce the cash payment of the Company’s matching contributions, or to offset administrative expenses. Unallocated forfeited balances as of December 31, 2014 and 2013 were approximately $0.1 million.
Notes Receivable from Participants
Eligible participants may borrow from their Plan accounts a minimum loan amount of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance, reduced by the participant’s highest aggregate loan balance in the previous 12 months. Eligible participants may have up to two loans outstanding at any given time. However, participants from the former Rocketdyne Business are limited to one loan outstanding at any given time. Account balances attributable to the Company’s matching contributions are not available for loans, but are included in computing the maximum loan amount. Loan terms range from 1 year to 5 years or up to 10 years for the purchase of a primary residence. The loans are secured by the balance in the participant’s account and bear interest at a fixed rate of 1% above the prevailing prime rate at time of issuance. Principal and interest are paid ratably through payroll deductions. The outstanding balance of a loan may be paid at any time before the end of the term of the loan. Upon termination of employment with the Company, participants may elect to continue making loan payments through automatic direct debits from his or her personal bank account if a total distribution has not been taken from the Plan account. A default will be deemed to have occurred if any loan payment has not been made within 90 days of when the payment is due to be paid by the participant. Participants who do not elect to repay an outstanding loan through direct debits have 90 days to repay outstanding loan balances. After 90 days, outstanding loan balances are treated as a distribution from the Plan and may have tax consequences to the participant.
In-Service Withdrawals
For the Company’s matching contributions made prior to January 1, 2004, participants who are active employees of the Company can elect a voluntary in-service withdrawal of their plan shares in each investment fund. In-service withdrawals are not allowed for the Company’s matching contributions made after December 31, 2003.
Payment of Benefits
Distribution of the pre-tax value of the participant’s account will be made available, in the form of full or partial lump sum payments, upon reaching age 59 1⁄2, termination of employment, financial hardship, or death.
Administrative Expenses
Expenses incurred in connection with the purchase or sale of securities are charged against the investment funds involved in such transactions. Investment funds remit a portion of their management fees to Fidelity Investments (“Fidelity”) for recordkeeping services. In connection with these recordkeeping fees, the Company has amended the trust agreement with Fidelity Management Trust Company (“Fidelity Trust”), the Plan’s Trustee, to establish a Revenue Credit Account (“RCA”) to share in excess recordkeeping fees paid to Fidelity. The Company may use proceeds in RCA to fund legal, accounting, and certain administrative
8
costs of the Plan that are paid by the Company but reimbursed by the Plan. The net administrative costs paid by the Plan are allocated to each participant’s account based upon account balance in proportion to all participants’ account balances. All other expenses, such as loan set up fees, loan maintenance fees, short term fees, overnight fees relating to participants’ transactions are deducted from those participants’ accounts as transactions occur.
New Accounting Pronouncement
In May 2015, the Financial Accounting Standards Board (“FASB”) issued amended guidance on disclosures for investments in certain entities that calculate net asset value per share (“NAV”) or its equivalent. The new guidance removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using NAV per share or its equivalent. The Company expects to adopt the new guidance for plan year ending December 31, 2015. The new guidance will be applied retrospectively to all periods presented. As the accounting standard only impacts disclosure, it will not have an impact on the Plan’s financial statements.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Investment Valuation and Income Recognition
The Plan’s investments are stated at fair value (see Note 4).
Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because the contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Statement of Net Assets Available for Benefits presents the fair value of the investment contract as well as the adjustment of the fully benefit-responsive investment contract from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan’s net gains and losses on investments bought and sold as well as held during the year.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance. The accrued but unpaid interest was not material and was not reflected in notes receivable from participants as of December 31, 2014 and 2013. No allowance for credit losses has been recorded as of December 31, 2014 or 2013. Delinquent notes receivable from participants are recorded as a distribution based upon the terms of the Plan documents.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Plan Administrator, who is a fiduciary of the Plan, to make estimates, assumptions, and valuations that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Benefit Payments
Benefit payments are recorded when paid.
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Subsequent Events
Subsequent events have been evaluated through the date the financial statements were issued (see Note 11).
3. Investments
Investments that represent 5% or more of the Plan’s net assets at the end of the year are as follows:
| | | | | | | | |
| | | December 31, | |
| | | 2014 | | | 2013 | |
Vanguard Institutional Index Fund | | $ | 74,105,604 | | | $ | 64,708,559 | |
Fidelity Freedom 2020 – Class K | | | 58,066,170 | | | | 44,126,111 | |
Fidelity Managed Income Portfolio II – Class 1* | | | 54,375,350 | | | | 55,087,972 | |
Fidelity Growth Company Fund – Class K | | | 50,807,575 | | | | 42,596,291 | |
Fidelity Freedom 2030 – Class K | | | 42,238,051 | | | | 30,237,133 | |
Aerojet Rocketdyne Holdings, Inc. Common Stock | | | 39,096,029 | | | | 47,892,331 | |
Fidelity Low Priced Stock Fund – Class K | | | 36,615,004 | | | | 34,795,329 | |
Fidelity Diversified International Fund – Class K | | | ** | | | | 28,049,288 | |
| * | The Fidelity Managed Income Portfolio II – Class 1, a fully benefit-responsive investment contract, as listed above represents the contract value of the Plan’s investment. The fair value of the Plan’s investment in the fund was $55,169,375 and $55,874,483 at December 31, 2014 and 2013, respectively. |
During 2014, the Plan’s investments (including net gains on investments purchased and sold, as well as held during the year) (depreciated) appreciated in fair value as follows:
| | | | |
| | | Net (Depreciation) Appreciation
in Fair Value
of Investments | |
Registered investment companies | | $ | (272,847 | ) |
Common stocks | | | 463,370 | |
Aerojet Rocketdyne Holdings, Inc. Common Stock | | | 452,016 | |
| | | | |
| | $ | 642,539 | |
| | | | |
4. Fair Value
The accounting standards establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy. There have been no changes in the methodologies used at December 31, 2014 and 2013.
Registered investment companies
The shares of registered investment companies are invested in mutual funds which are valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open-end mutual funds that are registered with the Securities and Exchange Commission (“SEC”). These funds are required to publish their daily NAV and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded and are classified as Level 1 investments.
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Common/collective trust (“CCT”)
The CCT is composed of a fully benefit-responsive investment contract and classified as a Level 2 investment. The fully benefit-responsive CCT is valued at NAV and primarily invested in fixed income securities. The underlying investments of a fully benefit-responsive investment contract are fair valued using a discounted cash flow model which considers recent fee bids as determined by recognized dealers, discount rate, and the duration of the underlying portfolio securities or utilizing a matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer-supplied prices. The CCT is not available in an exchange and active market, however, the fair value is determined based on the observable inputs of underlying investments as traded in an exchange and active market. There is no restriction in place with respect to the daily redemption of the CCT.
Fixed income securities
The U.S. government securities and corporate bonds held in participant-directed brokerage accounts are valued using pricing models maximizing the use of observable inputs for similar securities and are classified as Level 2 investments.
Common stocks
The Company’s common stock held in the Company Stock Fund and common stocks held in participant-directed brokerage accounts are stated at fair value as quoted on a recognized securities exchange and are valued at the last reported sales price on the last business day of the Plan year and are classified as Level 1 investments.
Money market funds
Money market funds are valued at quoted market prices in an exchange and active markets, which represent the NAV of shares held by the Plan at year end and are classified as Level 1 investments.
As of December 31, 2014 and 2013, the Plan’s investments measured at fair value were as follows:
| | | | | | | | | | | | |
| | | Quoted Prices in Active
Markets for Identical
Assets
(Level 1) | | | Significant Other
Observable Inputs
(Level 2) | | | Significant
Unobservable
Inputs
(Level 3) | |
December 31, 2014 | | | | | | | | | | | | |
Assets | | | | | | | | | | | | |
Registered investment companies: | | | | | | | | | | | | |
U.S. large cap funds | | $ | 148,390,766 | | | $ | — | | | $ | — | |
U.S. mid-cap funds | | | 80,985,031 | | | | — | | | | — | |
U.S. small cap funds | | | 21,121,940 | | | | — | | | | — | |
International funds | | | 30,150,574 | | | | — | | | | — | |
Fixed income funds | | | 31,649,506 | | | | — | | | | — | |
Fidelity freedom target age funds | | | 148,169,730 | | | | — | | | | — | |
Common/collective trust: | | | | | | | | | | | | |
Fixed income | | | — | | | | 55,169,375 | | | | — | |
Aerojet Rocketdyne Holdings, Inc. Common Stock | | | 39,096,029 | | | | — | | | | — | |
Money market funds | | | 23,758,067 | | | | — | | | | — | |
Participant-directed brokerage accounts: | | | | | | | | | | | | |
Registered investment companies | | | 9,440,736 | | | | — | | | | — | |
Common stocks | | | 16,620,233 | | | | — | | | | — | |
Fixed income securities | | | — | | | | 134,979 | | | | — | |
Money market funds | | | 5,189,511 | | | | — | | | | — | |
| | | | | | | | | | | | |
Total Assets | | $ | 554,572,123 | | | $ | 55,304,354 | | | $ | — | |
| | | | | | | | | | | | |
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| | | | | | | | | | | | |
December 31, 2013 | | | | | | | | | | | | |
Assets | | | | | | | | | | | | |
Registered investment companies: | | | | | | | | | | | | |
U.S. large cap funds | | $ | 126,718,338 | | | $ | — | | | $ | — | |
U.S. mid-cap funds | | | 72,662,796 | | | | — | | | | — | |
U.S. small cap funds | | | 23,404,939 | | | | — | | | | — | |
International funds | | | 30,612,782 | | | | — | | | | — | |
Fixed income funds | | | 26,058,643 | | | | — | | | | — | |
Fidelity freedom target age funds | | | 115,029,917 | | | | — | | | | — | |
Common/collective trust: | | | | | | | | | | | | |
Fixed income | | | — | | | | 55,874,483 | | | | — | |
Aerojet Rocketdyne Holdings, Inc. Common Stock | | | 47,892,331 | | | | — | | | | — | |
Money market funds | | | 25,065,047 | | | | — | | | | — | |
Participant-directed brokerage accounts: | | | | | | | | | | | | |
Registered investment companies | | | 6,569,297 | | | | — | | | | — | |
Common stocks | | | 12,129,556 | | | | — | | | | — | |
Fixed income securities | | | — | | | | 194,620 | | | | — | |
Money market funds | | | 4,656,360 | | | | — | | | | — | |
| | | | | | | | | | | | |
Total Assets | | $ | 490,800,006 | | | $ | 56,069,103 | | | $ | — | |
| | | | | | | | | | | | |
5. Income Tax Status
The Plan received a determination letter from the Internal Revenue Service (the “IRS”) dated August 2, 2012, stating the Plan is qualified under Section 401(a) of the Code and, therefore, the related trust is exempt from taxation. Subsequent to this determination letter by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. The Plan is subject to routine audits by the IRS and/or Department of Labor; however, there are currently no audits for any tax periods in progress. The three-year statute of limitations has closed on Plan years prior to 2011.
6. Plan Termination
Although it has not expressed any intent to do so, the Company has the right to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in their employer contributions.
7. Related Party Transactions
Aerojet Rocketdyne Holdings, Inc. Common Stock
Transactions in shares of the Company’s common stock qualify as party-in-interest transactions under the provisions of ERISA for which a statutory exemption exists. During the year ended December 31, 2014, the Plan made sales of $9.3 million of the Company’s common stock (see Note 8). The Plan’s Trustee did not make any purchases of the Company’s common stock during the Plan Year. Effective April 15, 2009, the Company Stock Fund was closed to new investments. At December 31, 2014 and 2013, the Plan held 2,136,395 and 2,657,732 shares of the Company’s common stock, respectively, through the Company Stock Fund, representing 6% and 9%, respectively, of the total net assets of the Plan.
Mutual Funds Managed by Fidelity
Certain Plan investments are shares of mutual funds managed by Fidelity, the holding company of Fidelity Trust. Fidelity Trust is the Trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. Fees paid by the Plan to Fidelity for investment management services were deducted from the NAV of shares of mutual funds held by the Plan. The funds’ operating expense ratios ranged from 0.42% to 0.78% based on the funds’ most recent prospectuses.
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RCA with Fidelity Trust
During the year ended December 31, 2014, a portion of the administrative expenses incurred by the Plan were paid through RCA, which totaled approximately $0.1 million. As reflected on the Statement of Changes in Net Assets Available for Benefits, the Plan made a direct payment of $0.2 million for the remaining expenses incurred during the year ended December 31, 2014.
8. Issuance of Unregistered Shares
The Company inadvertently failed to register with the SEC certain shares of its common stock issued under the Plan. As a result, certain participants as purchasers of the Company’s common stock pursuant to the Plan may have the right to rescind their purchases for an amount equal to the purchase price paid for the shares (or if such security has been disposed of, to receive consideration with respect to any loss on such disposition) plus interest from the date of purchase (the “Rescission Offer”). The Company may also be subject to civil and other penalties by regulatory authorities as a result of the failure to register. In June 2008, the Company filed a registration statement on Form S-8 with the SEC to register future transactions in the Company Stock Fund in the Plan. As of December 31, 2014, the Plan Administrator estimated the net losses incurred by Plan participants related to the transactions involving the Company’s unregistered common stock to be approximately $4.4 million, including $1.9 million of interest. As there is no executed Rescission Offer currently in place, realization of this gain contingency is not reasonably assured; and therefore the Plan has not recorded a receivable from the Company as of December 31, 2014.
9. 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 balances 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 and Statement of Changes in Net Assets Available for Benefits.
10. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
| | | | | | | | |
| | | December 31, | |
| | | 2014 | | | 2013 | |
Net assets available for benefits per the financial statements | | $ | 624,251,561 | | | $ | 559,562,867 | |
Adjustment from contract value to fair value for fully benefit-responsive investment contracts | | | 794,025 | | | | 786,511 | |
| | | | | | | | |
Net assets available for benefits per the Form 5500 | | $ | 625,045,586 | | | $ | 560,349,378 | |
| | | | | | | | |
The following is a reconciliation of investment income per the financial statements to the Form 5500:
| | | | |
| | | Year Ended
December 31, 2014 | |
Total investment income per the financial statements | | $ | 31,134,961 | |
Change in adjustment from contract value to fair value for fully benefit-responsive investment contracts | | | 7,514 | |
| | | | |
Total investment income per the Form 5500 | | $ | 31,142,475 | |
| | | | |
11. Subsequent Events
Effective January 1, 2015, the Plan provisions for represented employees in Canoga Park, California were amended to mirror the Plan provisions for represented employees in Sacramento, California and all non-represented employees. Effective January 1, 2015, the Plan provisions for represented employees in Carlstadt, New Jersey were amended and as a result of the amendment, the Company makes matching contributions in cash equal to 100% of the first 3% of the participant’s compensation contributed and 50% of the next 3% of the compensation contributed with a minimum matching contribution of $100 per month per participant.
13
Supplemental
Schedule
14
Aerojet Rocketdyne Retirement Savings Plan
EIN 34-0244000, Plan #334
Schedule H, Line 4i — Schedule of Assets (Held At End of Year)**
December 31, 2014
| | | | | | | | |
(a) Party in interest | | (b) Identity of Issue, Borrower, Lessor, or Similar Party | | (c) Description of Investment including Maturity Date, Rate of Interest, Collateral, Par, or Maturity Value | | (e)
Current Value | |
| | Morgan Stanley Institutional Fund Small Company Growth Portfolio Class IS Shares | | Registered investment company | | $ | 14,677,540 | |
| | American Beacon Large Cap Value Institutional Class | | Registered investment company | | | 23,477,587 | |
| | Wells Fargo Small Cap Value Fund | | Registered investment company | | | 6,444,400 | |
| | Goldman Sachs Mid Cap Value Fund Institutional Class | | Registered investment company | | | 8,658,688 | |
| | PIMCO Total Return Institutional Class | | Registered investment company | | | 25,801,442 | |
| | Vanguard Total Bond Market Index Fund Admiral Shares | | Registered investment company | | | 5,848,064 | |
| | Vanguard Institutional Index Fund | | Registered investment company | | | 74,105,604 | |
| | Vanguard Extended Market Index Fund Institutional Shares | | Registered investment company | | | 7,196,397 | |
| | Vanguard Total International Stock Index Fund Admiral Shares | | Registered investment company | | | 3,977,786 | |
* | | Fidelity Growth Company Fund - Class K | | Registered investment company | | | 50,807,575 | |
* | | Fidelity Low-Priced Stock Fund - Class K | | Registered investment company | | | 36,615,004 | |
* | | Fidelity Diversified International Fund - Class K | | Registered investment company | | | 26,172,788 | |
* | | Fidelity Mid-Cap Stock Fund - Class K | | Registered investment company | | | 28,514,942 | |
* | | Fidelity Freedom Income - Class K | | Registered investment company | | | 11,822,909 | |
* | | Fidelity Freedom 2010 - Class K | | Registered investment company | | | 9,439,736 | |
* | | Fidelity Freedom 2020 - Class K | | Registered investment company | | | 58,066,170 | |
* | | Fidelity Freedom 2030 - Class K | | Registered investment company | | | 42,238,051 | |
* | | Fidelity Freedom 2040 - Class K | | Registered investment company | | | 17,320,095 | |
* | | Fidelity Freedom 2050 - Class K | | Registered investment company | | | 9,282,769 | |
* | | Fully benefit-responsive investment contract Fidelity Managed Income Portfolio II - Class 1 | | Common/collective trust fund | | | 55,169,375 | |
* | | Fidelity Retirement Money Market Fund | | Money market fund | | | 23,010,729 | |
* | | Fidelity Institutional Cash Portfolio | | Money market fund | | | 747,338 | |
| | Participant-directed Brokerage Accounts Brokerage Link | | Various investments | | | 31,385,459 | |
* | | Notes receivable from participants | | Annual interest rates from 4.25% to 10.5% maturing through 2024 | | | 12,903,707 | |
* | | Aerojet Rocketdyne Holdings, Inc. Common Stock | | Common Stock; 2,136,395 shares | | | 39,096,029 | |
| | | | | | | | |
| | Total investments | | | | $ | 622,780,184 | |
| | | | | | | | |
| * | Indicates a party-in-interest to the Plan. |
| ** | Column (d), cost, has been omitted, as all investments are participant-directed. |
15
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, Aerojet Rocketdyne Holdings, Inc., as Plan Administrator, has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | |
| | | | | AEROJET ROCKETDYNE RETIREMENT SAVINGS PLAN |
| | | |
| Date: June 26, 2015 | | | | By | | /s/ Kathleen E. Redd |
| | | | | | Kathleen E. Redd |
| | | | | | Vice President, Chief Financial Officer and Assistant Secretary |
16
EXHIBIT INDEX
| | |
Exhibit No. | | Description |
| |
| Exhibit 23.1 | | CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
17
