cvs_11k

 

 

 

 

 

 

 

 

 

 

 

 

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________

FORM 11-K

_________________________________________

 

                ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

 

OR

 

                   TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to

 

Commission File Number:  001-01011

 

401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS HEALTH CORPORATION AND AFFILIATED COMPANIES

(Full title of the Plan)

_________________________________________

CVS HEALTH CORPORATION

(Name of issuer of the securities held pursuant to the plan)

Picture 1

One CVS Drive

Woonsocket, RI 02895

(Address of principal executive offices of issuer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS HEALTH CORPORATION AND AFFILIATED COMPANIES

YEARS ENDED DECEMBER 31, 2017 AND 2016

 

 

CONTENTS

 

 

 

 

 

 

Page

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

 

1

 

 

 

FINANCIAL STATEMENTS:

 

 

 

 

 

Statements of Net Assets Available for Benefits 

 

2

 

 

 

Statements of Changes in Net Assets Available for Benefits 

 

3

 

 

 

Notes to Financial Statements 

 

4

 

 

 

SUPPLEMENTAL SCHEDULE:

 

 

 

 

 

Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 

 

20

 

 

 

 

 

 

EXHIBIT INDEX 

 

31

 

 

 

SIGNATURE 

 

32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Report of Independent Registered Public Accounting Firm

 

To the Plan Participants and the Plan Administrator of

401(k) Plan and the Employee Stock Ownership

Plan of CVS Health Corporation and Affiliated Companies

 

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of 401(k) Plan and the Employee Stock Ownership Plan of CVS Health Corporation and Affiliated Companies (the Plan) as of December 31, 2017 and 2016, and the related statements of changes in net assets available for benefits for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2017 and 2016, and the changes in its net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.

 

Basis for Opinion

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. 

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Supplemental Schedule

The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2017, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The information in the supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the information, we evaluated whether such 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 information is fairly stated, in all material respects, in relation to the financial statements as a whole.

 

/s/ Ernst & Young LLP 

We have served as the Plan’s auditor since 2008.

Boston, Massachusetts 
June 22, 2018

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401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS HEALTH CORPORATION AND AFFILIATED COMPANIES

 

Statements of Net Assets Available for Benefits

December 31, 2017 and 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

    

2016

 

Assets:

 

 

 

 

 

 

 

Investments at fair value:

 

 

 

 

 

 

 

Cash

 

$

63,045

 

$

952

 

Mutual funds (Note 2 (b))

 

 

 

4,236,913,763

 

 

 

5,473,007,990

 

Common stock (Note 2 (b))

 

 

 

2,079,949,793

 

 

 

1,963,170,504

 

Common collective trust funds (Note 2 (b))

 

 

 

3,574,769,660

 

 

 

1,065,838,460

 

Total investments at fair value

 

9,891,696,261

 

8,502,017,906

 

Fully benefit-responsive investments at contract value:

 

 

 

 

 

 

 

Guaranteed investment contracts (Note 2 (b))

 

 

5,108,525

 

 

10,041,804

 

Synthetic guaranteed investment contracts (Note 2 (b))

 

374,357,966

 

327,623,711

 

Security-backed investment contracts (Note 2 (b))

 

409,734,820

 

383,746,214

 

Total fully benefit-responsive investments at contract value

 

789,201,311

 

721,411,729

 

Total investments

 

10,680,897,572

 

9,223,429,635

 

 

 

 

 

 

 

 

 

Receivables:

 

 

 

 

 

 

 

Interest and dividends (Note 2 (g))

 

891,252

 

2,316,132

 

Employer contributions (Note 1 (c))

 

11,518,660

 

10,572,288

 

Notes receivable from participants (Note 4)

 

218,673,141

 

206,594,433

 

Pending securities settlements (Note 2 (f))

 

20,827,046

 

 

Total receivables

 

251,910,099

 

219,482,853

 

 

 

 

 

 

 

 

 

Total assets

 

10,932,807,671

 

9,442,912,488

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Accrued expenses and other liabilities

 

(9,569,833)

 

(8,639,440)

 

 

 

 

 

 

 

 

 

Total liabilities

 

(9,569,833)

 

(8,639,440)

 

 

 

 

 

 

 

 

 

Net assets available for benefits

 

$

10,923,237,838

 

$

9,434,273,048

 

 

See accompanying notes to financial statements.

 

 

2

 


 

 

401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS HEALTH CORPORATION AND AFFILIATED COMPANIES

 

Statements of Changes in Net Assets Available for Benefits

Years Ended December 31, 2017 and 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017

    

2016

 

Investment activity:

 

 

 

 

 

 

 

Interest and dividend income (Note 2 (g))

 

$

149,545,013

 

$

167,420,878

 

Realized and unrealized gains (Notes 3 and 5)

 

 

 

1,252,565,286

 

 

 

142,830,007

 

Total investment activity

 

1,402,110,299

 

310,250,885

 

 

 

 

 

 

 

 

 

Participant loan interest (Note 4)

 

 

8,757,857

 

 

7,779,555

 

 

 

 

 

 

 

 

 

Contributions:

 

 

 

 

 

 

 

Employer contributions (Note 1 (c))

 

287,350,822

 

263,550,780

 

Employee contributions (Note 1 (c))

 

483,467,516

 

435,827,758

 

Rollovers

 

66,770,593

 

125,262,935

 

Total contributions

 

837,588,931

 

824,641,473

 

 

 

 

 

 

 

 

 

Deductions:

 

 

 

 

 

 

 

Benefits paid to participants (Notes 1 (f) and 2 (c))

 

738,187,015

 

602,708,027

 

Administrative expenses (Note 1 (g))

 

21,305,282

 

21,328,332

 

Total deductions

 

759,492,297

 

624,036,359

 

 

 

 

 

 

 

 

 

Net increase in net assets for the year before transfers

 

1,488,964,790

 

518,635,554

 

Omnicare assets transferred in (Note 1 (a))

 

 

503,810,387

 

Net increase in net assets for the year

 

1,488,964,790

 

1,022,445,941

 

 

 

 

 

 

 

 

 

Net assets beginning of the year

 

9,434,273,048

 

8,411,827,107

 

 

 

 

 

 

 

 

 

Net assets end of the year

 

$

10,923,237,838

 

$

9,434,273,048

 

 

See accompanying notes to financial statements.

 

 

 

 

 

3

 


 

 

401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS HEALTH CORPORATION AND AFFILIATED COMPANIES

 

Notes to Financial Statements

Years Ended December 31, 2017 and 2016

 

Note 1 - Plan Description

 

The following description of the 401(k) Plan and the Employee Stock Ownership Plan of CVS Health Corporation (“CVS Health” or the “Company”) and Affiliated Companies (the “Plan” or “Future Fund”) provides only general information. Participants should refer to the Plan documents for a more complete description of the Plan’s provisions.

 

(a)                    Background

 

The Plan was established as of January 1, 1989. The Plan is a defined contribution plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. The general administration of the Plan and the responsibility for carrying out the provisions of the Plan are maintained by a committee (the “Benefit Plans Committee”) of not less than three persons appointed by the Board of Directors of CVS Health, the sponsor of the Plan. In accordance with the provisions of the Plan, the Benefit Plans Committee has appointed an Administrative Subcommittee (the “Plan Administrator”) and an Investment Subcommittee and delegated certain fiduciary duties and responsibilities to each of the Subcommittees. The Benefit Plans Committee also appointed Conduent HR Services, LLC as the recordkeeper to assist with administering the Plan (the “Recordkeeper”) and the Bank of New York Mellon as the trustee (the “Trustee”). The Recordkeeper maintains participant account records and works with the Trustee to execute transactions such as benefit payments to participants. The Trustee holds the assets of the Plan and executes transactions at the direction of the Plan Administrator.

 

As part of the purchase of Omnicare, Inc. (“Omnicare”) on August 18, 2015, the Company assumed sponsorship of the Omnicare Employees’ Savings and Investment Plan (“S&I Plan”) and the NeighborCare, Inc. Union 401(k) Plan (“NeighborCare”). On December 31, 2016, the S&I Plan and NeighborCare were merged into the Plan. The S&I Plan was a defined contribution plan established in 1981 by Omnicare covering all full-time employees of Omnicare. NeighborCare was a defined contribution plan established in 2003 by NeighborCare, Inc., a subsidiary of Omnicare.

 

Omnicare employees who were eligible to participate in the S&I Plan and NeighborCare on or before

December 1, 2016, became eligible to participate in the Plan effective January 1, 2017.  The mergers resulted in a total transfer of assets with a value of $503,810,387 into the Plan on December 31, 2016, which have been included in the Statement of Net Assets Available for Benefits as of December 31, 2016 and the Statement of Changes in Net Assets Available for Benefits for the year then ended.

 

 

 

 

4

 


 

 

 (b)                     Eligibility

 

Employees are eligible to participate in the Plan upon attainment of age 21 and on the earliest of:

 

·

The first payroll of the month following 90 continuous days of service as a full-time employee;

 

·

The first payroll of the month following completion of 12 months of service beginning on the employee’s hire date with at least 1,000 hours worked; or

 

·

The first payroll of the month following completion of at least 1,000 hours of service in the course of one calendar year.

 

Employees referred to above are defined as regular employees of the Company other than:

 

·

A nonresident alien receiving no United States (“U.S.”) earned income from the Company;

 

·

A resident of Puerto Rico;

 

·

An individual covered under a collective bargaining agreement (unless the agreement provides for membership);

 

·

A leased employee (as defined in the Internal Revenue Code (the “Code”);

 

·

A temporary employee (as determined by the Company); or

 

·

An independent contractor or consultant (as defined by the Company).

 

(c)                      Contributions

 

Participants may direct the Company to contribute to their accounts from 1% to 85%, as a percentage or dollar amount, of the eligible compensation that would otherwise be due to them. Percentages can be elected in multiples of 1%, pursuant to a salary reduction agreement.  Each participant’s total elective deferrals for any calendar year may not exceed 85% of eligible compensation or the maximum elective deferral allowed by the Code, whichever is less, as specified in the Plan document. The maximum elective deferral allowed by the Code was $18,000 for 2017 and 2016.

 

Plan participants are eligible to receive Company matching contributions on the first payroll following the completion of one year of service with the Company. The Plan provides an annual match of 100% up to 5% of an employee’s eligible compensation contributed to the Plan.  The maximum annual match per participant was $13,500 for 2017 and $13,250 for 2016.

 

5

 


 

 

All employees that are age 50 or over, before December 31 of the calendar year and who contribute the maximum amount to the Plan (as dollar limit or percentage) are permitted to make additional catch-up contributions. Catch-up contributions may be made up to an additional $6,000 for 2017 and 2016.

 

(d)                    Participant’s Account

 

Each participant’s account is credited with an allocable share of the participant’s selected Plan investments and any unrealized appreciation or depreciation and interest and dividends of those investments.

 

(e)                    Vesting

 

Participants are 100% vested in participant and Company matching contributions.

 

Participants whose account balances have been transferred into the Plan from other defined contribution plans maintain at least the degree of vesting in the account that they had at the time of the transfer. Participants are always fully vested in and have a non-forfeitable right to (1) their accounts upon retirement, death or disability and (2) any elective deferrals described in Note 1(c) and any rollover amounts they make to the Plan.

 

(f)                        Payment of Benefits

 

Upon termination of service by a participant, the Recordkeeper works with the Trustee to pay to the participant his or her benefit under one or more options, such as a single lump sum (including a rollover) or in equal annual installments over a period not to exceed the participant’s expected lifetime.

 

(g)                     Administrative Expenses

 

Administrative expenses specifically attributable to the Plan and not covered by forfeitures were funded by the Plan for 2017 and 2016. Trustee’s fees were paid by the Plan for 2017 and 2016.

 

(h)                     Forfeitures

 

On a participant’s termination date, any unvested portion of the participant’s account is forfeited at the earlier of distribution or five years from the date of termination. As a result of the merger of the S&I Plan and NeighborCare into the Plan (see Note 1(a)), the Plan contains vesting schedules for Company matching contributions which could lead to forfeited matching contributions if a participant does not satisfy the criteria to vest the contributions on the termination date. If a former participant resumes employment and eligibility in the Plan within five years of termination, any amounts previously forfeited are restored to the participant’s account, but remain subject to the vesting provisions of the Plan. Forfeitures during any plan year are applied as follows: (i) to restore amounts previously forfeited by participants but required to be reinstated upon resumption of employment; (ii) to pay administrative expenses of the Plan; or (iii) to the extent allowed by law reduce future CVS Health contributions. If forfeitures for any plan year are insufficient to restore the required forfeitures, CVS Health shall contribute the balance required for that purpose.

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There were no cash forfeitures restored to participants upon resumption of employment in 2017 or 2016. The forfeitures for each year were applied to the administrative expenses of the Plan.

 

(i)                        Investment Options

 

Upon enrollment in the Plan, a participant elects to direct contributions or investment balances to the investment fund options offered by and subject to the restrictions under the Plan. Participants may modify investment elections daily thereafter, subject to certain restrictions. The Plan’s investments are composed of guaranteed insurance contracts, securities of CVS Health, marketable mutual funds, security-backed investment contracts, common collective trusts, and separately managed funds (composed of marketable securities). The following is a brief explanation of each fund’s investment objectives:

 

Aggressive Lifestyle Fund

 

This fund may be appropriate for those who can keep their money invested for at least 10 years or who are willing to accept a higher level of risk. The fund invests in other Future Fund investment options: Small Cap Growth, Small Cap Value, International Equity, International Equity Index, Large Cap Growth, Core Equity, Growth & Income, Diversified Bond, and Alternative Strategy Fund (Blackrock Global Allocation Collective Fund M). This fund has the following composite benchmark: Russell 1000 Index, Barclays Capital Aggregate Bond Index, Standard & Poors (“S&P”) 500 Index, Morgan Stanley Capital International (“MSCI”) All Country World Index excluding the United States (“MSCI ACWI EX US”) Index, MSCI ACWI Index, Barclays Global Aggregate, and the Russell 2000 Index.

 

Conservative Lifestyle Fund

 

This fund may be appropriate for investors who will need access to their money in less than five years or who want to minimize their investment risk. The fund invests in other Future Fund investment options: Small Cap Growth, Small Cap Value, International Equity, International Equity Index, Large Cap Growth, Core Equity, Growth & Income, Inflation-Protected Bond, Diversified Bond, U.S. Bond Index and Stable Value. This fund has the following composite benchmark: Russell 1000 Index, Barclays Capital Aggregate Bond Index, Barclays Capital US TIPS Index, S&P 500 Index, 3-Year U.S. Treasury Index, Russell 2000 Index, and the MSCI ACWI EX US Index.

 

Core Equity Fund

 

The Vanguard Institutional 500 Index Trust Fund (a common collective trust fund) seeks to replicate the total return of the S&P 500 Index by investing in stocks that make up the index. The S&P 500 Index consists mainly of large companies and represents approximately 75% of the U.S. stock market value.  During 2017, this Fund was changed from the Vanguard Institutional 500 Index Fund (a mutual fund).

 

 

 

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CVS Health Common Stock Fund

 

CVS Health Common Stock Fund seeks long-term growth and dividend income by purchasing shares of CVS Health common stock.

 

Diversified Bond Fund

 

The fund is co-managed by Loomis Sayles, Dodge & Cox, and Vanguard exclusively for Future Fund participants and seeks to outperform the Barclays Capital Aggregate Bond Index. Investments may include government and corporate debt securities, mortgage and other asset-backed securities, money market instruments, and derivatives.

 

Global Equity Fund

 

The American Funds New Perspective Fund seeks long-term growth of capital by investing in a variety of foreign and domestic companies. The fund tries to outperform the MSCI All Country World Index, which measures the performance of U.S. and international stock markets.

 

Growth and Income Fund

 

The fund is co-managed by Columbia Threadneedle, Mellon Capital, and Barrow Hanley exclusively for Future Fund participants and seeks long-term growth of capital and dividend income through participation in the stock market. This fund invests primarily in the common stock of U.S.-based, well-established, medium- to large-sized companies.

 

Inflation-Protected Fund

 

The Vanguard Inflation-Protected Securities Fund seeks to provide investors inflation protection and income, consistent with investments in inflation-indexed securities. This fund invests at least 80% of its assets in inflation-indexed bonds issued by the U.S. government, its agencies and instrumentalities, and corporations.

 

International Equity Fund

 

The fund is co-managed by Templeton, American Funds, and Vanguard exclusively for Future Fund participants and invests mainly in the common stock of companies based in international, developed-market countries, but will also include investments in developing, emerging-market countries.

 

International Equity Index Fund

 

The Vanguard Developed Markets Index Fund seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in the major markets of Europe and the Pacific region. The fund employs a passive management investment approach designed to track the performance of the

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FTSE Developed Markets EX North America Index, a broadly diversified index of foreign, developed-market stocks.

 

Large Cap Growth Fund

 

The fund is co-managed by Columbus Circle, T. Rowe Price, and Mellon Capital exclusively for Future Fund participants and seeks long-term growth of capital through participation in the stock market. The fund invests primarily in the common stock of established large companies that are based in the United States and that represent industries expected to out-perform the stock market as a whole.

 

Mid Cap Index Fund

 

The Vanguard Mid Cap Index Fund seeks to track the performance of a benchmark index that measures the investment return of mid-capitalization stocks. The fund employs a passive management investment approach designed to track the performance of the Center for Research in Security Prices (“CRSP”) Mid Cap Index, a broadly diversified index of the stocks of medium-size U.S. companies.

 

Moderate Lifestyle Fund

 

This fund may be appropriate for investors who can keep their money invested for at least five years. The fund invests in other Future Fund investment options: Small Cap Growth, Small Cap Value, International Equity, International Equity Index, Large Cap Growth, Core Equity, Growth & Income, Inflation-Protected Bond, Diversified Bond, U.S. Bond Index Fund, and Stable Value Fund. This fund has the following composite benchmark: Russell 1000 Index, Barclays Capital Aggregate Bond Index, Barclays Capital US TIPS Index, S&P 500 Index, MSCI ACWI EX US Index, Russell 2000 Index, and the 3-Year U.S. Treasury Index.

 

Small Cap Growth Fund

 

The Vanguard Explorer Fund Admiral Shares seeks long-term growth of capital and dividend income through participation in the stock market. The fund invests primarily in stocks of relatively small companies, making it a high-risk investment with potential for large rewards.

 

Small Cap Index Fund

 

The Vanguard Small Cap Index Fund seeks to track the performance of a benchmark index that measures the investment return of small capitalization stocks. This fund employs a passive management investment approach designed to track the performance of the CRSP US Small Cap Index, a broadly diversified index of the stocks of smaller U.S. companies.

 

Small Cap Value Fund

The fund is co-managed by Dimensional Fund Advisors, Sapience Investments, and Vanguard exclusively for Future Fund participants and seeks long-term growth by investing primarily in stocks of small- to medium-sized

9

 


 

 

companies, which either are believed to offer superior earnings growth or appear to be undervalued.  During 2017, Sapience Investments and Vanguard replaced Wells Fargo Pelican.

 

Stable Value Fund

 

The fund is managed by Galliard Capital Management exclusively for Future Fund participants and seeks to preserve capital while generating a steady rate of return higher than money market funds. The fund’s investments consist of highly rated insurance company contracts and bank investment contracts.

 

U.S. Bond Index Fund

 

The Vanguard Total Bond Market Index Trust Fund (a common collective trust fund) seeks to generate returns that track the performance of the Barclays Capital Aggregate Bond Index and will maintain a dollar-weighted average maturity consistent with that of the index.  During 2017, this Fund was changed from the Vanguard Total Bond Market Fund (a mutual fund).

 

Socially Responsible Fund

 

The Neuberger Berman Socially Responsive Fund seeks long-term growth of capital by investing primarily in securities of companies that meet its value-oriented financial, environmental, social and governance criteria.  The Fund invests primarily in the common stocks of mid- to large-capitalization companies across different industries.

 

 

Note 2 - Summary of Significant Accounting Policies

 

(a)                     Basis of Presentation

 

The Plan prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which include the application of accrual accounting.

(b)                      Investment Valuation

 

The value of the investments held at December 31, 2017 and 2016 are stated at fair value with the exception of the fully benefit-responsive investment contracts. Shares of mutual funds are valued at quoted market prices, which represent the net asset values of shares held by the Plan at year-end. CVS Health common stock and common stock owned directly in the Small Cap Value Fund, the Growth and Income Fund, and the Large Cap Growth Fund separately managed funds, are valued based upon quoted market prices.

 

The Plan invests in fully benefit-responsive Guaranteed Investment Contracts (“GICs”) and synthetic GICs, and fully benefit-responsive security-backed investment contracts. Synthetic GICs are investment contracts issued by an insurance company or other financial institution, backed by a portfolio of bonds that are owned by the Plan. GICs and security-backed contracts are investment contracts issued by an insurance company backed by a portfolio underlying the contract that is maintained separately from the contract issuer’s general assets. Contract

10

 


 

 

value is the relevant measurement attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The contract value of the fully benefit-responsive investment contracts represents contributions plus earnings, less participant withdrawals and administrative expenses.

 

Common Collective Trust (“CCT”) funds are valued at the net asset value (“NAV”) as permitted by practical expedient and reported by the respective funds at each valuation date. The use of NAV is deemed appropriate as these types of investments do not have finite lives or significant restrictions on redemptions.

 

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.

 

(c)                      Benefits Paid

 

Distributions of benefits are recorded when paid.

 

(d)                        Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates.

 

(e)                      Accrual Basis of Accounting

 

The Plan utilizes the accrual basis of accounting.

 

(f)                      Purchases and Sales of Securities

 

Purchases and sales of securities are made on a trade-date basis.  Due to timing of settlements, there may be pending transactions as of the financial statement date that result in a receivable or payable to the Plan.

 

(g)                      Investment Income

 

Dividend and interest income is recorded when earned. Net appreciation and depreciation include the Plan’s

gains and losses on investments bought and sold as well as held during the year.

 

 

 

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(h)      Notes Receivable from Participants

 

Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Notes receivable are collateralized by the participant’s account balance and bear interest at a market rate (Prime + 1%). If a participant ceases to make loan repayments, the outstanding loan balance will be deemed defaulted and result in a taxable event to the participant.

 

Note 3 - Fair Value Measurements

 

The Plan uses the three-level hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the fair value hierarchy consist of the following:

 

·

Level 1 — Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Plan has the ability to access at the measurement date.

 

·

Level 2 — Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument.

 

·

Level 3 — Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk.

 

The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level of input that is significant to the fair value measure in its entirety.

 

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, 2017 and 2016.

 

CCT funds: Valued at the NAV as permitted by practical expedient and reported by the respective funds at each valuation date. The use of NAV is deemed appropriate as these types of investments do not have finite lives or significant restrictions on redemptions.

 

GICs: These contracts meet the fully benefit-responsive investment contract criteria and are reported at contract value.

 

Security-backed investment contracts and synthetic GICs: These contracts meet the fully benefit-responsive investment contract criteria, and the underlying securities, collective funds, and wrapper contracts are reported at contract value.

 

12

 


 

 

Mutual funds: Valued at the NAV of shares held by the Plan at year-end which are reported on an active market.

 

Common stock: Valued at the closing price reported on the active market on which the individual securities are traded.

 

The market value of CVS Health Common Stock was $72.50 and $78.91 per share at December 31, 2017 and 2016, respectively. The following tables set forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2017 and 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments at December 31, 2017

 

 

Investments at

fair value as

determined by

quoted prices

in active markets

 (Level I)

 

Valuation techniques

based on

observable

market data

(Level II)

 

Valuation 

techniques

incorporating

information other

 than observable

market data

(Level III)

 

Total

Cash

 

$

63,045

 

$

 

$

 

$

63,045

Mutual funds

 

 

4,236,913,763

 

 

 

 

 

 

4,236,913,763

Common stock

 

 

2,079,949,793

 

 

 

 

 

 

2,079,949,793

Total investments at fair value

 

$

6,316,926,601

 

$

 

$

 

 

6,316,926,601

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents (1)

 

 

 

 

 

 

 

 

 

 

 

201,904,330

Stable value funds (2)

 

 

 

 

 

 

 

 

 

 

 

327,041,410

Bond funds (3)

 

 

 

 

 

 

 

 

 

 

 

747,715,020

Large cap funds (3)

 

 

 

 

 

 

 

 

 

 

 

2,298,108,900

Total common collective trust funds at NAV

 

 

 

 

 

 

 

 

 

 

 

3,574,769,660

 

 

 

 

 

 

 

 

 

 

 

 

 

GICs

 

 

 

 

 

 

 

 

 

 

 

5,108,525

Synthetic GICs

 

 

 

 

 

 

 

 

 

 

 

374,357,966

Security-backed contracts

 

 

 

 

 

 

 

 

 

 

 

409,734,820

Total investments at contract value

 

 

 

 

 

 

 

 

 

 

 

789,201,311

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments

 

 

 

 

 

 

 

 

 

 

$

10,680,897,572

13

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments at December 31, 2016

 

 

Investments at

fair value as

determined by

quoted prices

in active markets

 (Level I)

 

Valuation techniques

based on

observable

market data

(Level II)

 

Valuation 

techniques

incorporating

information other

 than observable

market data

(Level III)

 

Total

Cash

 

$

952

 

$

 

$

 

$

952

Mutual funds

 

 

5,473,007,990

 

 

 

 

 

 

5,473,007,990

Common stock

 

 

1,963,170,504

 

 

 

 

 

 

1,963,170,504

Total investments at fair value

 

$

7,436,179,446

 

$

 

$

 

 

7,436,179,446

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents (1)

 

 

 

 

 

 

 

 

 

 

 

235,844,273

Stable value funds (2)

 

 

 

 

 

 

 

 

 

 

 

320,982,209

Large cap funds (3)

 

 

 

 

 

 

 

 

 

 

 

416,709,536

Target retirement funds (4)

 

 

 

 

 

 

 

 

 

 

 

92,302,442

Total common collective trust funds at NAV

 

 

 

 

 

 

 

 

 

 

 

1,065,838,460

 

 

 

 

 

 

 

 

 

 

 

 

 

GICs

 

 

 

 

 

 

 

 

 

 

 

10,041,804

Synthetic GICs

 

 

 

 

 

 

 

 

 

 

 

327,623,711

Security-backed contracts

 

 

 

 

 

 

 

 

 

 

 

383,746,214

Total investments at contract value

 

 

 

 

 

 

 

 

 

 

 

721,411,729

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments

 

 

 

 

 

 

 

 

 

 

$

9,223,429,635

 

 

(1)  This category includes common collective trust funds that are designed to seek as high of a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. Participant-directed redemptions and the Plan have no restrictions across the funds.

 

(2)   This category includes common collective trust funds that are designed to deliver safety and stability by preserving principal and accumulating earnings. Participant-directed redemptions and the Plan have no restrictions across the funds; however, the Plan is required to provide a one-year redemption notice for the Galliard Managed Income Fund and the Putnam Stable Value Fund to liquidate its entire share.

 

(3)  These categories include common collective trust funds that are designed to track the performance of various indices. Participant-directed redemptions and the Plan have no restrictions across the funds; however, the Plan is required to provide a 60-day redemption notice for the BlackRock Global Allocation Collective Fund to liquidate its entire share.

 

(4)  This category includes common collective trust funds that are age-based and allocate investments based on target retirement date. There are no redemption restrictions on these funds.

 

 

 

 

 

 

 

14

 


 

 

Note 4 - Notes Receivable from Participants

 

Participants may obtain loans from the Plan utilizing funds accumulated in their accounts. The minimum amount that may be borrowed is $1,000. Participants can borrow up to 50% of their vested account balance but not more than $50,000, less their highest outstanding loan balance during the previous twelve months. The loans are repaid to the Plan through after-tax payroll deductions. The term of the loan is selected at the discretion of the participant, but may not exceed five years for a general loan and twenty-five years for a primary residence loan, except that primary residence loans initiated under the former CareSave plan, which transferred into the Plan as of December 31, 2012, were permitted to have a maximum loan repayment period of up to ten years only. Participants may have two loans outstanding at any time, but no more than one primary residence loan. Interest on loans is equal to the Prime Rate as of the prior month-end plus 1%.

 

Note 5 - Investment Policy

 

At December 31, 2017 and 2016, most of the Plan’s 401(k)-related assets were allocated among the investment options discussed in Note 1(i) based on employees’ elections. The investment options are recommended by an independent investment consultant and approved by the Investment Subcommittee. Employee contributions that are waiting to be processed are temporarily invested in a CCT fund. This CCT fund is also used to account for and administer notes receivable from participants. The note repayments and interest earned are allocated to each of the investment funds based upon the participants’ contribution election percentages.

 

Note 6 - Plan Termination and Related Commitments

 

Although it has not expressed any intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. If the Company terminates the Plan, all participants in the Plan become fully vested.

 

Note 7 - Federal Income Taxes

 

The Plan was amended and restated as of January 1, 2016. The Plan has received a determination letter from the Internal Revenue Service (“IRS”) dated February 16, 2017, stating that the Plan as amended and restated as of January 1, 2016, is qualified under Section 401(a) of the Code and, therefore, the related trust is exempt from taxation.  Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification.  Subsequent to this determination by the IRS, the Plan has been further amended.  The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes the Plan, as amended, is qualified and the related trust is tax exempt.

 

U.S. GAAP requires plan management to evaluate uncertain 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 IRS. The Plan Administrator has analyzed the tax positions taken by the Plan and has concluded that, as of December 31, 2017, there are no uncertain tax positions taken or expected to be taken. The Plan has recognized no interest related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

15


 

 

Note 8 - Transactions with Parties-In-Interest

 

As of December 31, 2017 and 2016, certain Plan investments are investment funds managed by the Plan’s Trustee, The Bank of New York Mellon.  The Plan also invests in shares of CVS Health’s common stock and records associated dividend income.  Although these transactions qualify as party-in-interest transactions, they are exempt from the prohibited transaction rule under ERISA.

 

Note 9 - Reconciliation of Financial Statements to Form 5500

 

The following is a reconciliation of the net assets available for benefits per the financial statements to the Form 5500 as of December 31, 2017 and 2016:

 

 

 

 

 

 

 

 

 

 

 

2017

 

2016

Net assets available for benefits per the financial statements

 

$

10,923,237,838

 

$

9,434,273,048

Adjustment from contract value to fair value for certain fully benefit-responsive  investment contracts

 

 

(1,351,827)

 

 

(1,430,498)

Net assets available for benefits per the Form 5500

 

$

10,921,886,011

 

$

9,432,842,550

 

The following is a reconciliation of total additions per the financial statements to total income per the Form 5500 for the year ended December 31, 2017:

Total additions per the financial statements

 

$

2,248,457,087

Add: Adjustment from contract value to fair value for certain fully benefit-responsive investment contracts as of December 31, 2017

 

 

(1,351,827)

Less: Adjustment from contract value to fair value for certain fully benefit-responsive investment contracts as of December 31, 2016

 

 

1,430,498

Total income per the Form 5500

 

$

2,248,535,758

 

Note 10 - Investment Contracts with Insurance Companies

 

The Plan invests in fully benefit-responsive GICs and security-backed investment contracts. The issuer maintains the contributions in a general account. The account is credited with participant contributions plus earnings and charged for participant withdrawals and administrative expenses. The issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan. The crediting interest rate is fixed at the time the contract is entered into with the issuer and does not reset.

 

The synthetic guaranteed investment contracts held by the Plan include a wrapper contract that provides a guarantee that the credit rate will not fall below 0%. Cash flow volatility (e.g., timing of benefit payments) as well as asset under-performance can be passed through to the Plan through adjustments to future contract crediting rates. Formulas are provided in the contracts that adjust renewal crediting rates to recognize the difference between the fair value and the book value of the underlying assets. Crediting rates are reviewed monthly for resetting.

 

16


 

 

The Plan also invests in fully benefit-responsive security-backed investment contracts that credit a stated interest rate for a specified period of time. Investment gains and losses are amortized over the expected duration through the calculation of the interest rate applicable to the Plan on a prospective basis. Security-backed investment contracts provide for a variable crediting rate that resets at least quarterly, and the issuer of the wrap contract provides assurance that future adjustments to the crediting rate cannot result in a crediting rate less than 0%. The crediting rate is primarily based on the current yield to maturity of the covered investments, plus or minus amortization of the difference between the market value and contract value of the covered investments over the duration of the covered investments at the time of computation. The crediting rate is most affected by the change in the annual effective yield to maturity of the underlying securities, but is also affected by the difference between the contract value and the market value of the covered investments. This difference is amortized over the duration of the covered investments. Depending on the change in duration from reset period to reset period, the magnitude of the impact to the crediting rate of the contract to market difference is heightened or lessened. The crediting rate can be adjusted periodically and is usually adjusted either monthly or quarterly, but in no event is the crediting rate less than 0%.

 

The traditional investment contracts held by the Plan are GICs. The contract issuer is contractually obligated to repay the principal and interest at a specified interest rate that is guaranteed to the Plan. The crediting rate is based on a formula established by the contract issuer. The crediting rate is reviewed on a quarterly basis for resetting. The contract cannot be terminated before the scheduled maturity dates.

The Plan’s ability to receive amounts due in accordance with fully benefit-responsive investment contracts is dependent on the third-party issuers’ ability to meet their financial obligations. The issuers’ ability to meet their contractual obligations may be affected by future economic and regulatory developments.

Certain events limit the ability of the Plan to transact at contract value with the issuers. Such events may include

(i) amendments to the plan documents (including complete or partial plan termination or merger with another plan), (ii) changes to the Plan’s prohibition on competing investment options or deletion of equity wash provisions, (iii) bankruptcy of the plan sponsor or other plan sponsor events (for example, divestitures or spin-offs of a subsidiary) that cause a significant withdrawal from the Plan, or (iv) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan Administrator does not believe that the occurrence of any such events that would limit the Plan’s ability to transact at contract value with participants is probable.

 

The GICs generally do not permit issuers to terminate the agreement prior to the scheduled maturity date; however, the security-backed investment contracts generally impose conditions on both the Plan and the issuer. If an event of default occurs and is not cured, the non-defaulting party may terminate the contract. The following may cause the Plan to be in default: a breach of material obligation under the contract, a material misrepresentation, or a material amendment to the plan agreement. The issuer may be in default if it breaches a material obligation under the investment contract, makes a material misrepresentation, has a decline in its long-term credit rating below a threshold set forth in the contract, or is acquired or reorganized and the successor issuer does not satisfy the investment or credit guidelines applicable to issuers. If, in the event of default of an issuer, the Plan were unable to obtain a replacement investment contract, withdrawing participants may experience losses if the value of the Plan’s assets no longer covered by the contract is below contract value. The Plan may seek to add additional issuers over time to diversify the Plan’s exposure to such risk, but there is no assurance the Plan may be able to do so. The combination of the default of an issuer and an inability to obtain a

17


 

 

replacement agreement could render the Plan unable to achieve its objective of maintaining a stable contract value. For GICs and security-backed investment contracts, payments for participant withdrawals would generally be made pro rata, based on the percentage of investments covered by each issuer. Contract termination occurs whenever the contract value or market value of the covered investments reaches zero or upon certain events of default. If the contract terminates due to issuer default (other than a default occurring because of a decline in its rating), the issuer will generally be required to pay to the Plan the excess, if any, of contract value over market value on the date of termination. If a security-backed investment contract terminates due to a decline in the ratings of the issuer, the issuer may be required to pay to the Plan the cost of acquiring a replacement contract (that is, replacement cost) within the meaning of the contract. If the contract terminates when the market value equals zero, the issuer will pay the excess of contract value over market value to the Plan to the extent necessary for the Plan to satisfy outstanding contract value withdrawal requests. Contract termination also may occur by either party upon election and notice. As GICs and security-backed investment contracts are fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the GICs and security-backed investment contracts. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. Additionally, the Plan can make deposits or redeem investments in security-backed investment contracts, with the issuer’s consent, for portfolio reallocation as part of the ongoing management of the Plan’s assets. No deposits may be made to a GIC. Except for benefit-responsive participant withdrawals, no redemptions may be made to a GIC other than any payments scheduled in the contract before the maturity date.

18


 

 

 

 

SUPPLEMENTAL SCHEDULE

 

 

 

 

19


 

 

401(k) PLAN AND THE EMPLOYEE STOCK OWNERSHIP PLAN

OF CVS HEALTH CORPORATION AND AFFILIATED COMPANIES

Plan Number: 017

EIN 05-0494040

Schedule H, Line 4i - Schedule of Assets (Held at End of Year)

December 31, 2017

 

 

 

 

 

 

 

 

Fund

 

Par value /number of shares

Identity of issue

 

Description

 

Current Value**

Small Cap Growth Fund

 

3,070,076

Vanguard Explorer Fund

 

Mutual Fund

$

271,425,427

Small Cap Index Fund

 

1,184,273

Vanguard Small Cap Index Fund

 

Mutual Fund

 

241,947,024

Mid Cap Index Fund

 

3,639,956

Vanguard Mid Cap Index Fund

 

Mutual Fund

 

759,622,352

International Equity Index Fund

 

46,932,239

Vanguard Developed Markets Index Fund Institutional Shares

 

Mutual Fund

 

1,058,791,310

Inflation-Protected Bond Fund

 

20,127,038

Vanguard Inflation-Protected Securities Admiral Fund

 

Mutual Fund

 

209,925,003

Socially Responsible Fund

 

236,712

Large Cap Equity Neuberger Berman

 

Mutual Fund

 

9,004,537

Global Equity Fund

 

8,044,557

American Funds-New Perspective Fund

 

Mutual Fund

 

347,283,531

Alternative Strategy Fund

 

5,173,775

Blackrock Global Allocation Collective Fund

 

Common Collective Trust Fund

 

62,890,335

Core Equity Fund

 

15,250,379

Vanguard Institutional 500 Index Trust Fund

 

Common Collective Trust Fund

 

1,747,845,969

U.S. Bond Index Fund

 

6,871,581

Vanguard Total Bond Market Index Trust Fund

 

Common Collective Trust Fund

 

706,604,642

 

 

 

 

 

 

 

 

CVS Health Common Stock Fund

 

10,755,472

CVS Health Common Stock

 

CVS Health Corporation Common Stock

 

779,771,720

 

 

9,472,899

EB Temporary Investment Fund II

 

Common Collective Trust Fund

 

9,472,899

 

 

 

CVS Health Common Stock Fund Subtotal

 

 

 

789,244,619

 

 

 

 

 

 

 

 

 

 

2,697,283

EB Temporary Investment Fund II

 

Common Collective Trust Fund

 

2,634,140

 

 

57,349,595

BNY Mellon Cash Reserve Fund

 

Common Collective Trust Fund

 

57,349,595

 

 

 

 

 

 

 

 

Stable Value Fund

 

 

 

 

Separately Managed Fund

 

 

 

 

9,113,569

Wells Fargo Fixed Income Fund F

 

Synthetic Contract

 

128,416,573

 

 

10,405,061

Wells Fargo Fixed Income Fund L

 

Synthetic Contract

 

132,343,011

 

 

9,314,062

Wells Fargo Fixed Income Fund N

 

Synthetic Contract

 

112,246,555

 

 

5,108,525

Metropolitan Life Ins Co. - GICS

 

GIC

 

5,108,525

 

 

726,859

Metropolitan Life Ins Co. - Short

 

Security-backed Contract

 

78,301,127

 

 

1,244,985

Metropolitan Life Ins Co. - Intermediate

 

Security-backed Contract

 

141,032,250

 

 

63,102

Massachusetts Mutual Life Ins., - Short

 

Security-backed Contract

 

65,836,360

 

 

112,493

Massachusetts Mutual Life Ins.

 

Security-backed Contract

 

124,565,083

 

 

104,938,911

*EB Temporary Investment Fund II

 

Common Collective Trust Fund

 

105,071,293

 

 

173,225,030

Putnam Stable Value Fund

 

Common Collective Trust Fund

 

173,548,272

 

 

6,797,203

Stable Value Fund D

 

Common Collective Trust Fund

 

153,493,139

 

 

 

Stable Value Fund Subtotal

 

 

$

1,219,962,188

 

 

 

 

 

 

 

 

20


 

 

Diversified Bond Fund

 

 

Loomis Sayles, Dodge & Cox and Vanguard

 

Separately Managed Fund

 

 

 

 

14,944,731

Dodge & Cox Income Fund

 

Mutual Fund

$

205,639,507

 

 

15,811,891

Loomis Sayles Core Plus Bond Fund 1

 

Mutual Fund

 

206,117,870

 

 

399,790

Vanguard Total Bond Market Index Trust Fund

 

Common Collective Trust Fund

 

41,110,378

 

 

 

Diversified Bond Fund Subtotal

 

 

$

452,867,755

 

 

 

 

 

 

 

 

International Equity Fund

 

 

Templeton, American Funds, and Vanguard

 

Separately Managed Fund

 

 

 

 

3,881,388

EuroPacific Growth Fund

 

Mutual Fund

$

217,901,146

 

 

9,533,988

Templeton Foreign Equity Series-Primary Shares Fund

 

Mutual Fund

 

209,652,395

 

 

544,683

Vanguard Total International Stock Index Fund

 

Mutual Fund

 

66,467,666

 

 

2,345,631

Vanguard International Growth Fund Admiral

 

Mutual Fund

 

224,195,364

 

 

 

International Equity Fund Subtotal

 

 

$

718,216,571

 

 

 

 

 

 

 

 

Small Cap Value Fund

 

 

Sapience Investments, Vanguard, and Dimensional Fund Advisor Small Cap Value Fund

 

Separately Managed Fund

 

 

 

 

33,800

ACADIA HEALTHCARE CO INC

 

Common Stock

$

1,102,894

 

 

19,600

AIR LEASE CORP

 

Common Stock

 

944,524

 

 

10,084

ALTRA INDUSTRIAL MOTION CORP

 

Common Stock

 

509,948

 

 

15,250

AMEDISYS INC

 

Common Stock

 

803,827

 

 

21,700

ARGO GROUP INTERNATIONAL HOLDI

 

Common Stock

 

1,337,805

 

 

26,050

ARTISAN PARTNERS ASSET MANAGEM

 

Common Stock

 

1,028,975

 

 

555,100

ASCENA RETAIL GROUP INC

 

Common Stock

 

1,304,485

 

 

39,500

ASPEN INSURANCE HOLDINGS LTD

 

Common Stock

 

1,603,700

 

 

33,647

BANK OF NT BUTTERFIELD & SON L

 

Common Stock

 

1,221,050

 

 

55,350

CARS.COM INC

 

Common Stock

 

1,596,294

 

 

15,750

CATHAY GENERAL BANCORP

 

Common Stock

 

664,178

 

 

32,450

CONTINENTAL BUILDING PRODUCTS

 

Common Stock

 

913,467

 

 

38,400

CORECIVIC INC

 

Common Stock

 

880,128

 

 

77,500

DIEBOLD NIXDORF INC

 

Common Stock

 

1,267,125

 

 

26,850

EDUCATION REALTY TRUST INC

 

Common Stock

 

937,602

 

 

11,450

ENPRO INDUSTRIES INC

 

Common Stock

 

1,070,690

 

 

95,900

ENVISION HEALTHCARE CORP

 

Common Stock

 

3,314,304

 

 

117,850

EVERTEC INC

 

Common Stock

 

1,608,652

 

 

13,450

FIRST AMERICAN FINANCIAL CORP

 

Common Stock

 

753,738

 

 

50,900

FIRST HAWAIIAN INC

 

Common Stock

 

1,485,262

 

 

126,350

FORUM ENERGY TECHNOLOGIES INC

 

Common Stock

 

1,964,742

 

 

15,100

GENESEE & WYOMING INC

 

Common Stock

 

1,188,823

 

 

20,850

HANCOCK HOLDING CO

 

Common Stock

 

1,032,075

 

 

54,830

INC RESEARCH HOLDINGS INC

 

Common Stock

 

2,390,588

 

 

14,110

INTEGER HOLDINGS CORP

 

Common Stock

 

639,183

21


 

 

 

 

26,109

KAR AUCTION SERVICES INC

 

Common Stock

 

1,327,904

 

 

11,700

KIRBY CORP

 

Common Stock

 

781,560

 

 

17,100

KNIGHT-SWIFT TRANSPORTATION HO

 

Common Stock

 

747,612

 

 

23,130

LIBERTY GLOBAL PLC LILAC

 

Common Stock

 

466,069

 

 

72,600

MICHAELS COS INC/THE

 

Common Stock

 

1,756,194

 

 

16,700

NORTHWESTERN CORP

 

Common Stock

 

996,990

 

 

138,200

OASIS PETROLEUM INC

 

Common Stock

 

1,162,262

 

 

63,000

OUTFRONT MEDIA INC

 

Common Stock

 

1,461,600

 

 

129,850

PARTY CITY HOLDCO INC

 

Common Stock

 

1,811,407

 

 

55,650

PHYSICIANS REALTY TRUST

 

Common Stock

 

1,001,144

 

 

30,000

POPULAR INC

 

Common Stock

 

1,072,200

 

 

15,450

POST HOLDINGS INC

 

Common Stock

 

1,224,104

 

 

65,900

REDWOOD TRUST INC

 

Common Stock

 

976,638

 

 

58,050

RESOURCES CONNECTION INC

 

Common Stock

 

896,872

 

 

33,250

RITCHIE BROS AUCTIONEERS INC

 

Common Stock

 

995,172

 

 

45,900

RSP PERMIAN INC

 

Common Stock

 

1,867,212

 

 

80,000

SALLY BEAUTY HOLDINGS INC

 

Common Stock

 

1,500,800

 

 

48,005

SIGNET JEWELERS LTD

 

Common Stock

 

2,714,683

 

 

28,500

SILGAN HOLDINGS INC

 

Common Stock

 

837,615

 

 

38,650

STEELCASE INC

 

Common Stock

 

592,408

 

 

83,250

STERLING BANCORP/DE

 

Common Stock

 

2,047,950

 

 

17,100

TEREX CORP

 

Common Stock

 

824,562

 

 

12,000

TEXAS CAPITAL BANCSHARES INC

 

Common Stock

 

1,066,800

 

 

47,839

TREEHOUSE FOODS INC

 

Common Stock

 

2,366,117

 

 

39,900

VERIFONE SYSTEMS INC

 

Common Stock

 

706,629

 

 

30,150

WASHINGTON FEDERAL INC

 

Common Stock

 

1,032,637

 

 

252,350

WEATHERFORD INTERNATIONAL PLC

 

Common Stock

 

1,052,300

 

 

15,300

WINTRUST FINANCIAL CORP

 

Common Stock

 

1,260,261

 

 

105,010

WPX ENERGY INC

 

Common Stock

 

1,477,491

 

 

3,439,839

*EB Temporary Investment Fund II

 

Common Collective Trust Fund

 

3,442,693

 

 

2,045,949

Vanguard Explorer Value Fund

 

Mutual Fund

 

75,004,509

 

 

5,381,122

DFA US Targeted Value Portfolio

 

Mutual Fund

 

133,936,122

 

 

 

Small Cap Value Fund Subtotal

 

 

$

279,972,575

 

 

 

 

 

 

 

 

Growth & Income Fund

 

 

Columbia Threadneedle, Mellon Capital Management Growth & Income Fund, and Barrow, Hanley, Mewhinney & Strauss

 

Separately Managed Fund

 

 

 

 

22,100

AIR PRODUCTS & CHEMICALS INC

 

Common Stock

$

3,647,163

 

 

45,400

ALTRIA GROUP INC

 

Common Stock

 

3,271,978

 

 

7,200

AMERCO

 

Common Stock

 

2,724,552

 

 

41,000

AMERICAN EXPRESS CO

 

Common Stock

 

4,071,710

 

 

33,100

AMERICAN INTERNATIONAL GROUP I

 

Common Stock

 

1,972,098

 

 

20,100

ANTHEM INC

 

Common Stock

 

4,522,701

 

 

161,376

BANK OF AMERICA CORP

 

Common Stock

 

4,763,820

22


 

 

 

 

17,000

BERKSHIRE HATHAWAY INC

 

Common Stock

 

3,369,740

 

 

17,796

BLACK KNIGHT INC

 

Common Stock

 

785,693

 

 

79,400

BP PLC

 

Common Stock

 

3,337,182

 

 

8,400

BROADCOM LTD

 

Common Stock

 

2,157,960

 

 

39,000

CAPITAL ONE FINANCIAL CORP

 

Common Stock

 

3,883,620

 

 

29,000

CARDINAL HEALTH INC

 

Common Stock

 

1,790,240

 

 

32,700

CARNIVAL CORP

 

Common Stock

 

2,170,299

 

 

32,100

CELANESE CORP

 

Common Stock

 

3,437,268

 

 

27,000

CHEVRON CORP

 

Common Stock

 

3,380,130

 

 

16,600

CIGNA CORP

 

Common Stock

 

3,371,294

 

 

69,100

CITIGROUP INC

 

Common Stock

 

5,141,731

 

 

76,200

COCA-COLA EUROPEAN PARTNERS PL

 

Common Stock

 

3,036,570

 

 

75,100

COMCAST CORP

 

Common Stock

 

3,007,755

 

 

63,000

CONOCOPHILLIPS

 

Common Stock

 

3,458,070

 

 

31,400

CVS HEALTH CORP

 

Common Stock

 

2,276,500

 

 

39,600

DOLLAR GENERAL CORP

 

Common Stock

 

3,683,196

 

 

49,485

DOWDUPONT INC

 

Common Stock

 

3,524,322

 

 

56,246

E*TRADE FINANCIAL CORP

 

Common Stock

 

2,788,114

 

 

36,100

EXPRESS SCRIPTS HOLDING CO

 

Common Stock

 

2,694,504

 

 

170,300

FAIRMOUNT SANTROL HOLDINGS INC

 

Common Stock

 

890,669

 

 

53,800

FNF GROUP

 

Common Stock

 

2,111,112

 

 

10,000

GENERAL DYNAMICS CORP

 

Common Stock

 

2,034,500

 

 

177,800

GENERAL ELECTRIC CO

 

Common Stock

 

3,123,946

 

 

91,700

HANESBRANDS INC

 

Common Stock

 

1,917,447

 

 

58,600

HESS CORP

 

Common Stock

 

2,781,742

 

 

208,100

HEWLETT PACKARD ENTERPRISE CO

 

Common Stock

 

3,003,923

 

 

15,480

JOHNSON & JOHNSON

 

Common Stock

 

2,162,866

 

 

71,393

JOHNSON CONTROLS INTERNATIONAL

 

Common Stock

 

2,739,349

 

 

46,270

JPMORGAN CHASE & CO

 

Common Stock

 

4,948,114

 

 

143,800

KEYCORP

 

Common Stock

 

2,900,446

 

 

248,070

KOSMOS ENERGY LTD

 

Common Stock

 

1,699,280

 

 

43,600

LOWE'S COS INC

 

Common Stock

 

4,052,184

 

 

21,700

LYONDELLBASELL INDUSTRIES NV

 

Common Stock

 

2,393,944

 

 

38,700

MEDTRONIC PLC

 

Common Stock

 

3,142,827

 

 

48,100

MERCK & CO INC

 

Common Stock

 

2,729,675

 

 

62,570

MICRO FOCUS INTERNATIONAL PLC

 

Common Stock

 

2,101,726

 

 

41,800

MICROCHIP TECHNOLOGY INC

 

Common Stock

 

3,673,384

 

 

40,400

MICROSOFT CORP

 

Common Stock

 

3,455,816

 

 

141,100

NAVIENT CORP

 

Common Stock

 

1,879,452

 

 

168,300

NEW YORK COMMUNITY BANCORP INC

 

Common Stock

 

2,191,266

 

 

38,500

NEWELL BRANDS INC

 

Common Stock

 

1,189,650

 

 

47,800

NIELSEN HOLDINGS PLC

 

Common Stock

 

1,739,920

 

 

49,700

NORWEGIAN CRUISE LINE HOLDINGS

 

Common Stock

 

2,646,525

23


 

 

 

 

40,500

OCCIDENTAL PETROLEUM CORP

 

Common Stock

 

3,014,415

 

 

69,100

ORACLE CORP

 

Common Stock

 

3,267,048

 

 

37,400

OWENS CORNING

 

Common Stock

 

3,446,410

 

 

92,522

PFIZER INC

 

Common Stock

 

3,351,147

 

 

23,300

PHILIP MORRIS INTERNATIONAL IN

 

Common Stock

 

2,486,576

 

 

31,400

PHILLIPS 66

 

Common Stock

 

3,176,110

 

 

24,400

PNC FINANCIAL SERVICES GROUP I

 

Common Stock

 

3,520,676

 

 

59,000

QUALCOMM INC

 

Common Stock

 

3,777,180

 

 

22,300

ROYAL CARIBBEAN CRUISES LTD

 

Common Stock

 

2,673,324

 

 

49,800

SANOFI

 

Common Stock

 

2,141,400

 

 

47,200

SEAWORLD ENTERTAINMENT INC

 

Common Stock

 

640,504

 

 

383,800

SLM CORP

 

Common Stock

 

4,336,940

 

 

46,700

SPIRIT AEROSYSTEMS HOLDINGS IN

 

Common Stock

 

4,079,245

 

 

21,800

STANLEY BLACK & DECKER INC

 

Common Stock

 

3,699,242

 

 

34,900

STATE STREET CORP

 

Common Stock

 

3,421,247

 

 

60,169

TEVA PHARMACEUTICAL INDUSTRIES

 

Common Stock

 

1,140,202

 

 

34,800

TEXAS INSTRUMENTS INC

 

Common Stock

 

3,634,512

 

 

110,300

TWENTY-FIRST CENTURY FOX INC

 

Common Stock

 

3,808,659

 

 

26,325

UNITED TECHNOLOGIES CORP

 

Common Stock

 

3,358,280

 

 

19,000

UNITEDHEALTH GROUP INC

 

Common Stock

 

4,188,740

 

 

64,910

VERIZON COMMUNICATIONS INC

 

Common Stock

 

3,435,686

 

 

62,000

VERMILION ENERGY INC

 

Common Stock

 

2,262,481

 

 

37,000

VERSUM MATERIALS INC

 

Common Stock

 

1,400,450

 

 

61,900

WELLS FARGO & CO

 

Common Stock

 

3,755,473

 

 

17,500

WILLIS TOWERS WATSON PLC

 

Common Stock

 

2,646,350

 

 

68,300

XL GROUP LTD

 

Common Stock

 

2,416,454

 

 

 

 

 

 

 

222,856,724

 

 

 

 

 

 

 

 

 

 

904,100

AES CORP/VA

 

Common Stock

 

9,791,403

 

 

167,600

ALTRIA GROUP INC

 

Common Stock

 

12,090,944

 

 

203,300

AMERICAN INTERNATIONAL GROUP I

 

Common Stock

 

12,112,614

 

 

219,942

ANADARKO PETROLEUM CORP

 

Common Stock

 

11,797,689

 

 

228,500

APPLIED MATERIALS INC

 

Common Stock

 

11,680,920

 

 

651,700

BANK OF AMERICA CORP

 

Common Stock

 

19,238,184

 

 

143,000

BAXTER INTERNATIONAL INC

 

Common Stock

 

9,267,456

 

 

169,000

BRISTOL-MYERS SQUIBB CO

 

Common Stock

 

10,356,320

 

 

246,600

CSX CORP

 

Common Stock

 

13,565,466

 

 

89,641

CHEVRON CORP

 

Common Stock

 

11,222,157

 

 

183,300

CITIGROUP INC

 

Common Stock

 

13,639,353

 

 

318,600

CORNING INC

 

Common Stock

 

10,192,014

 

 

36,600

COSTCO WHOLESALE CORP

 

Common Stock

 

6,811,992

 

 

85,000

EXPRESS SCRIPTS HOLDING CO

 

Common Stock

 

6,344,400

24


 

 

 

 

180,300

FMC CORP

 

Common Stock

 

17,098,317

 

 

200,200

HALLIBURTON CO

 

Common Stock

 

9,783,774

 

 

86,600

HONEYWELL INTERNATIONAL INC

 

Common Stock

 

13,280,976

 

 

55,400

HUMANA INC

 

Common Stock

 

13,766,278

 

 

127,400

JPMORGAN CHASE & CO

 

Common Stock

 

13,624,156

 

 

201,700

JUNIPER NETWORKS INC

 

Common Stock

 

5,748,450

 

 

137,200

LOWE'S COS INC

 

Common Stock

 

12,751,368

 

 

128,500

MARATHON PETROLEUM CORP

 

Common Stock

 

8,478,430

 

 

204,000

METLIFE INC

 

Common Stock

 

10,314,240

 

 

238,700

MORGAN STANLEY

 

Common Stock

 

12,524,589

 

 

106,700

NEXTERA ENERGY INC

 

Common Stock

 

16,665,473

 

 

94,000

PHILIP MORRIS INTERNATIONAL IN

 

Common Stock

 

10,031,680

 

 

233,789

QUALCOMM INC

 

Common Stock

 

14,967,172

 

 

367,900

TERADATA CORP

 

Common Stock

 

14,149,434

 

 

179,873

TYSON FOODS INC

 

Common Stock

 

14,582,304

 

 

81,400

UNION PACIFIC CORP

 

Common Stock

 

10,915,740

 

 

78,400

UNITED TECHNOLOGIES CORP

 

Common Stock

 

10,001,488

 

 

285,600

UNUM GROUP

 

Common Stock

 

15,676,584

 

 

122,100

VALERO ENERGY CORP

 

Common Stock

 

11,222,211

 

 

351,500

VERIZON COMMUNICATIONS INC

 

Common Stock

 

18,604,895

 

 

229,000

WELLS FARGO & CO

 

Common Stock

 

13,893,430

 

 

356,800

WILLIAMS COS INC/THE

 

Common Stock

 

10,878,832

 

 

 

 

 

 

 

437,070,733

 

 

 

 

 

 

 

 

 

 

 

Cash

 

Cash

 

14,700

 

 

740,831

CVS Mellon Capital Management Fund

 

Common Collective Trust Fund

 

197,675,898

 

 

5,201,049

*EB Temporary Investment Fund II

 

Common Collective Trust Fund

 

5,206,883

 

 

12,875,521

*EB Temporary Investment Fund II

 

Common Collective Trust Fund

 

12,889,243

 

 

 

 

 

 

 

 

 

 

 

Growth & Income Fund Subtotal

 

 

$

875,714,181

 

 

 

 

 

 

 

 

Large Cap Growth Fund

 

 

TRowe Price, Mellon Capital Fund and Columbus Circle Core Equity Fund

 

Separately Managed Fund

 

 

 

 

60,800

ACTIVISION BLIZZARD INC

 

Common Stock

$

3,849,856

 

 

17,700

AIR PRODUCTS & CHEMICALS INC

 

Common Stock

 

2,921,031

 

 

23,100

ALEXION PHARMACEUTICALS INC

 

Common Stock

 

2,762,529

 

 

27,300

ALIBABA GROUP HOLDING LTD

 

Common Stock

 

4,707,339

 

 

12,000

ALIGN TECHNOLOGY INC

 

Common Stock

 

2,666,280

 

 

12,163

ALPHABET INC-CL A

 

Common Stock

 

12,812,504

 

 

11,593

AMAZON.COM INC

 

Common Stock

 

13,557,666

 

 

82,375

APPLE INC

 

Common Stock

 

13,940,321

 

 

131,200

APPLIED MATERIALS INC

 

Common Stock

 

6,706,944

 

 

15,800

ARISTA NETWORKS INC

 

Common Stock

 

3,722,164

25


 

 

 

 

86,000

BAXTER INTERNATIONAL INC

 

Common Stock

 

5,570,880

 

 

16,526

BROADCOM LTD

 

Common Stock

 

4,245,529

 

 

28,800

CAPITAL ONE FINANCIAL CORP

 

Common Stock

 

2,867,904

 

 

61,900

CATERPILLAR INC

 

Common Stock

 

9,754,202

 

 

123,000

CHARLES SCHWAB CORP/THE

 

Common Stock

 

6,318,510

 

 

62,300

CHEMOURS CO/THE

 

Common Stock

 

3,118,738

 

 

116,800

CITIZENS FINANCIAL GROUP INC

 

Common Stock

 

4,903,264

 

 

41,900

CONTINENTAL RESOURCES INC/OK

 

Common Stock

 

2,219,443

 

 

18,500

CUMMINS INC

 

Common Stock

 

3,267,840

 

 

32,800

DEERE & CO

 

Common Stock

 

5,153,208

 

 

44,263

DIAMONDBACK ENERGY INC

 

Common Stock

 

5,588,204

 

 

57,000

DOLLAR TREE INC

 

Common Stock

 

6,116,670

 

 

52,600

ESTEE LAUDER COS INC/THE

 

Common Stock

 

6,692,824

 

 

67,180

FACEBOOK INC

 

Common Stock

 

11,854,583

 

 

18,586

FEDEX CORP

 

Common Stock

 

4,647,243

 

 

32,061

FLEETCOR TECHNOLOGIES INC

 

Common Stock

 

6,169,498

 

 

49,200

FMC CORP

 

Common Stock

 

4,665,390

 

 

15,977

IDEXX LABORATORIES INC

 

Common Stock

 

2,498,483

 

 

16,957

INTUITIVE SURGICAL INC

 

Common Stock

 

6,188,288

 

 

75,100

KNIGHT-SWIFT TRANSPORTATION HO

 

Common Stock

 

3,283,372

 

 

23,221

LAM RESEARCH CORP

 

Common Stock

 

4,285,900

 

 

40,931

MASTERCARD INC

 

Common Stock

 

6,195,316

 

 

68,700

MICRON TECHNOLOGY INC

 

Common Stock

 

2,824,944

 

 

103,300

MICROSOFT CORP

 

Common Stock

 

8,836,282

 

 

37,730

NETFLIX INC

 

Common Stock

 

7,242,651

 

 

29,400

PVH CORP

 

Common Stock

 

4,033,974

 

 

26,100

RED HAT INC

 

Common Stock

 

3,134,610

 

 

18,800

ROCKWELL AUTOMATION INC

 

Common Stock

 

3,691,380