Report of Independ
ent Registered Public Accounting Firm
Plan Administrator and Plan Participants
Acxiom Corporation
Retirement Savings Plan
Conway, Arkansas
Opinion on
the Financial Statements
We have audited the accompanying statement of net assets available for benefits of Acxiom Corporation Retirement Savings
Plan (the Plan) as of December 31, 2017, the related statement of changes in net assets available for benefits for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion,
the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2017, and the changes in net assets available for benefits for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
Basis of Opinion
These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements
based on our audit.
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 audit 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 audit 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 Plans internal control over financial reporting. Accordingly, we
express no such opinion.
Our audit 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 audit 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 audit provides a reasonable basis for our opinion.
Report on Supplemental Information
The
supplemental information in the accompanying Schedule of Assets (Held at End of Year) has been subjected to audit procedures performed in conjunction with the audit of the Plans financial statements. The supplemental schedule is the
responsibility of the Plans 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 its form and content, is presented in
conformity with the Department of Labors 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 basic financial statements taken as a whole.
/s/ BKD, LLP
We have served as the Plans auditor since 2017.
Little
Rock, Arkansas
June 8, 2018
1
Notes to Financial Statements
December 31, 2017 and 2016
The following description of the Acxiom Corporation Retirement Savings
Plan (Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plans provisions.
The Plan is a defined contribution plan covering substantially all
employees of Acxiom Corporation and its domestic subsidiaries (Acxiom, Company, or Employer). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended
(ERISA). The Administrative Committee, as appointed by the Chairman of the Internal Compensation Committee, is the administrator for the Plan.
Employees of the Company may participate in the Plan upon
commencement of employment, except for those employees, if any, who already receive retirement benefits in connection with a collective bargaining agreement, certain nonresident employees, and leased employees.
The Plan includes a 401(k) provision whereby each participant may
defer up to 30% of annual compensation, not to exceed limits determined under Section 415(c) of the Internal Revenue Code (IRC).
The Plan allows discretionary matching contributions up to 50% of deferrals not in excess of 6% of participants compensation. During the
current year the Company made matching contributions at the 50% level.
Participant contributions to the Plan are invested as directed by
participants into various investment options. The Companys matching contributions are made with Acxiom common stock and are recorded based on the fair value of the common stock at the date contributed. During the year ended December 31,
2017, the Company contributed 276,281 shares of Acxiom common stock. Immediately upon deposit into the Plan, the match shares are 100% diversifiable, at the election of the participant, among the other investment options within the Plan.
Each participants account is credited with the
participants contribution, rollovers, if any, the Companys matching contribution, and discretionary contributions, if any, and is adjusted for investment income/losses and expenses. Allocations of income/losses and expenses are made
according to formulas specified in the Plan based on participant compensation or account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participants vested account.
5
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(e)
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Notes Receivable from Participants
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Participants may borrow from their Plan
accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000, less the highest outstanding balance in the previous 12 months or 50% of their vested account balance. Loans are repayable through payroll deductions ranging up to five
years unless the loan is for the purchase of a primary residence, in which case the loan can be repaid over ten years. The loans are secured by the balance in the participants account and bear interest at the prime rate in effect at the date
of the loan plus 1.0%. The interest rates on outstanding participant loans at December 31, 2017 range from 4.25% to 6.00%, with maturity dates ranging from January 2018 to September 2027.
Participants are immediately vested in their voluntary contributions,
rollovers, if any, and the earnings thereon. Participants are vested in the remainder of their accounts based on years of service, whereby partial vesting occurs in 20% increments beginning after two years of service until participants become fully
vested after six years of service. Effective September 30, 2016, participants that complete an hour of service on or after September 30, 2016, are partially vested in 33% increments beginning after one year of service until participants
become fully vested after three years of service. If applicable, nonvested portions of Company contributions are forfeited when a terminated employee takes a distribution and are used to reduce future Company matching contributions or to pay plan
expenses.
At December 31, 2017 and 2016, forfeited nonvested accounts totaled $162,236 and $259,044, respectively. These accounts
will be used to reduce future Employer contributions. During 2017, $306,284 of participants accounts were forfeited. Forfeited nonvested accounts reduced Employer contributions by $416,612. During 2017, $11,635 of forfeited nonvested accounts
were used to fund missed employer match contributions and earnings. During 2017, the forfeiture account balance was increased by $24,919 on the fair market value of the investments held in the account.
Upon enrollment in the Plan, a participant may direct
employee contributions in any of 12 mutual funds, 17 common collective trust funds, or the Acxiom common stock fund. In addition, participants have the option to open a
self-directed
brokerage account with T.
Rowe Price Company (T. Rowe Price) in order to invest in numerous other stocks, bonds, and mutual funds.
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(h)
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Benefits Paid to Participants and Beneficiaries
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Benefits paid upon retirement,
death, or disability are made in the form of a
lump-sum
payment of cash or common stock of the Company. If a participant receives benefits prior to retirement, death, or disability, the benefits paid from the
participants Employer contribution account shall not exceed the participants vested balance therein.
(2)
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Summary of Significant Accounting Policies
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The financial statements of the Plan are prepared under the
accrual method of accounting.
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(b)
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Investment Valuation and Income Recognition
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The Plans investments are
reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Purchases and sales of securities are recorded on a
trade-date
basis. Dividends are recorded on the
ex-dividend
date. Interest is recorded as earned. Net appreciation/depreciation in fair value of investments represents realized gains (losses) on investments sold and unrealized appreciation (depreciation) on
investments held at
year-end.
6
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(c)
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Notes Receivable from Participants
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Notes receivable from participants are stated
at amortized cost, which represents the unpaid principal balance plus accrued interest.
The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Benefits are recorded when paid.
Certain expenses of maintaining the Plan are paid by the Plan, unless
otherwise paid by the Company. Expenses that are paid by the Company are excluded from these financial statements. Fees related to the administration of notes receivable from participants are charged directly to the participants account and
are included in administrative expenses. Investment related expenses are included in net appreciation of fair value of investments.
(3)
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Fair Value Measurements
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The Plan applies the provisions of Accounting Standards
Codification (ASC) 820,
Fair Value Measurements
. ASC 820 defines fair value, establishes a framework for measuring fair value, and requires disclosure about assets and liabilities measured at fair value. Specifically,
ASC 820:
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Defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, and establishes a framework for
measuring fair value;
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Establishes a
three-level
hierarchy based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and lowest priority to unobservable inputs (Level 3); and
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Expands disclosures about instruments measured at fair value.
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The three levels of the fair
value hierarchy under ASC 820 are described below:
Level 1 Unadjusted quoted prices in active markets that are accessible at
the measurement date for identical, unrestricted assets or liabilities.
Level 2 Inputs to the valuation methodology include
quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. These are inputs other than
Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the
assets or liabilities.
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant
to the fair value of the assets or liabilities.
7
The following tables present a summary of the Plans investments measured at fair value as
of December 31, 2017 and 2016:
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Investments at fair value as of December 31, 2017
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Quoted prices
in active
market
(Level 1)
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Significant other
observable inputs
(Level 2)
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Unobservable
inputs
(Level 3)
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Total carrying
value in
statement of
net assets
available for
benefits
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Acxiom Corporation common stock (i)
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$
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63,431,019
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63,431,019
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Common collective trusts (ii)
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253,514,818
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253,514,818
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Mutual funds (iii)
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190,410,860
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190,410,860
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Participant-directed brokerage accounts
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2,443,224
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2,443,224
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Total investment assets at fair value
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$
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256,285,103
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253,514,818
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509,799,921
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Investments at fair value as of December 31, 2016
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Quoted prices
in active
market
(Level 1)
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Significant other
observable inputs
(Level 2)
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Unobservable
inputs
(Level 3)
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Total carrying
value in
statement of
net assets
available for
benefits
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Acxiom Corporation common stock (i)
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$
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64,137,865
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64,137,865
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Common collective trusts (ii)
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217,497,124
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217,497,124
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Mutual funds (iii)
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163,917,816
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163,917,816
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Participant-directed brokerage accounts
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1,972,047
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1,972,047
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Total investment assets at fair value
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$
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230,027,728
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217,497,124
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447,524,852
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(i)
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Common stock:
Valued at the closing price reported in the active market in which the individual securities are traded.
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(ii)
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Common collective trusts (CCT):
Valued daily at the net asset value (NAV) of the underlying CCT. The NAV is based on the fair value of the underlying investments held by the fund less its
liabilities. Participant transactions (purchases and sales) may occur daily. Were the Plan to initiate a full redemption of the collective trust, the investment advisor reserves the right to temporarily delay withdrawal from the trust in order to
ensure that securities liquidations will be carried out in an orderly business manner.
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8
(iii)
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Mutual Funds:
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 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.
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The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values.
Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in
a different fair value measurement as of the reporting date.
The Plan is administered by the administrative committee. T. Rowe
Price is the recordkeeper and trustee of the Plan.
The Internal Revenue Service (IRS) has determined and informed
the Company in a letter dated May 30, 2014, that the Plan is designed in accordance with applicable sections of the IRC. The Plan has been amended since receiving the determination letter. The amendments to the plan include: (1) the
definition of spouse; (2) the addition of a
year-end
true-up
to the discretionary matching contribution; (3) vesting of certain participants as a result
of corporate transactions; (4) allowing
in-service
distributions from rollover accounts at any time; (5) the addition of a Roth elective contribution feature; and (6) changing from
six-year
graded vesting of Employer contributions to three-year graded vesting. The plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements
of the IRC.
Management is required to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax
position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The plan administrator has analyzed the tax positions taken by the Plan and concluded that as of
December 31, 2017 and 2016, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions;
however, there are currently no audits for any tax periods in progress.
(6)
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Related Party Transactions
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Certain investments represent mutual funds and common and
collective trusts managed by T. Rowe Price, the trustee. Other related party transactions involve the common stock of the Company and notes receivable from participants. During 2017 and 2016, total fees paid to related parties were $517,378 and
$312,670, respectively.
(7)
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Reconciliation of Financial Statements to Form 5500
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The following is a reconciliation
of net assets available for benefits per the financial statements at December 31, 2017 and 2016 to the Form 5500:
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2017
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2016
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Net assets available for benefits per financial statements
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$
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515,042,406
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453,079,617
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Participant loans in default-deemed distributions
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(38,385
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)
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(37,052
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)
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Net assets available for benefits per Form 5500
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$
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515,004,021
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453,042,565
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9
The following is a reconciliation of net changes in net assets per the financial statements to
the Form 5500:
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December 31,
2017
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Net increase in net assets available for benefits per financial statements
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$
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61,962,789
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Adjustment for defaulted participant loans-deemed distributions as of December 31, 2017
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38,385
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Adjustment for defaulted participant loans-deemed distributions as of December 31, 2016
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(37,052
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)
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Total changes in net assets per Form 5500
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$
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61,964,122
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Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. Upon complete discontinuance of contributions, termination, or partial termination of the Plan, participants will become
100% vested in their accounts. Upon full termination of the Plan, the value of such accounts shall be distributed as provided in the Plan.
(9)
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Risks and Uncertainties
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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 those changes could materially affect the amounts reported in the statements of net assets available for benefits.
Market conditions may result in a high degree of volatility and increase the risks and
short-term
liquidity associated with certain investments held by the Plan, which could impact the value of investments after the date of these financial statements. Due to uncertainties inherent in the estimations and assumptions process, it is at least
reasonably possible that changes in these estimates and assumptions in the near term would be material to the financial statements.
10