Washington, D.C. 20549
Note: Other schedules required by the Department of Labor’s (“DOL”) Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), have been omitted because they are not applicable.
Report of Independent Registered Public Accounting Firm
The Plan Administrator and Plan Participants
Old Dominion 401(k) Retirement Plan
Thomasville, North Carolina
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of the Old Dominion 401(k) Retirement Plan (the “Plan”) as of December 31, 2020 and 2019, and the related statement of changes in net assets available for benefits for the year ended December 31, 2020, and the related notes to the financial statements (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 as of December 31, 2020 and 2019 and the changes in net assets available for plan benefits for the year ended December 31, 2020, 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 audits 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.
Supplementary Information
The supplemental information in the accompanying schedule on page 9 as of December 31, 2020, has been subjected to audit procedures performed in conjunction with the audits of the Plan’s financial statements. The supplemental information is the responsibility of the Plan's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, as amended. In our opinion, the supplemental information in the accompanying schedule is fairly stated in all material respects in relation to the financial statements as a whole.
/s/ Dixon Hughes Goodman LLP
We have not been able to determine the specific year we began serving consecutively as the auditor of the Plan’s financial statements; however, we are aware that we have been the Plan’s auditor consecutively since at least 1996.
Charlotte, North Carolina
June 17, 2021
1
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF PLAN
The following description of the Old Dominion 401(k) Retirement Plan (the “Plan”) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan covering all eligible employees of Old Dominion Freight Line, Inc. (the “Company”) who have completed 60 days of service and are age 18 or older. The Old Dominion Retirement Committee manages the operation and administration of the Plan. Great-West Trust Company, LLC serves as the trustee of the Plan, and Great-West Financial Retirement Plan Services, LLC (d/b/a Empower Financial) serves as the recordkeeper of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
Contributions
Each year, participants may contribute from 1% to 60% of annual compensation, as defined in the Plan document, as pre-tax and/or Roth after-tax elective deferrals, subject to certain limitations set forth in the Internal Revenue Code of 1986, as amended (“IRC”). Participants who have attained age 50 before the end of the Plan year and have contributed the maximum allowable elective deferral contribution are also eligible to make catch-up contributions up to the maximum set forth in the IRC. Participants may also contribute certain amounts representing distributions from individual retirement accounts or other qualified defined benefit or defined contribution plans. Upon satisfying the Plan’s eligibility criteria, a participant will be automatically enrolled in the Plan to defer 3% of annual compensation on a pre-tax basis unless the participant (i) elects not to defer any annual compensation, (ii) elects to defer a different percentage of annual compensation, or (iii) elects to contribute Roth after-tax elective deferrals.
The Company matches 50% of the first 6% of compensation that a participant contributes to the Plan. Additional employer contributions may be made at the Company's discretion. Eligible Plan participants who have completed 1,000 hours of service and who (i) were actively employed on the last day of the Plan year, or (ii) terminated employment due to death, disability, or attainment of normal retirement age during the Plan year, are eligible to share in any Company discretionary contributions for that Plan year. For the year ended December 31, 2020, the Company awarded an additional $34,416,880 as an aggregate discretionary contribution.
Investment Options
Participants may direct the investment of their contributions into various investment options offered by the Plan. The Plan currently offers various mutual funds, an insurance contract, and Company common stock as investment options for participants. In addition, participants generally have the option of utilizing a self-directed brokerage account, through which participants are able to invest in a variety of securities, including mutual funds, equities, the Company's common stock or certain fixed-income securities, in accordance with the Plan document.
Participant Accounts
Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan earnings (losses). In addition, each participant’s account may be charged with benefit payments, transaction fees and allocations of administrative expenses. Allocations are based on participants’ compensation or account balances, as defined in the Plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Vesting
Participants are vested immediately in their contributions plus actual earnings thereon. Vesting in the Company’s contribution portion of the participants’ accounts plus actual earnings thereon is based on years of service in accordance with the following schedule:
|
Years of Service
|
|
Vested Percentage
|
|
|
Less than 2
|
|
0%
|
|
|
2
|
|
20%
|
|
|
3
|
|
40%
|
|
|
4
|
|
60%
|
|
|
5
|
|
80%
|
|
|
6
|
|
100%
|
|
4
Notes Receivable from Participants
Participants may borrow from their vested accounts a minimum of $500 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Pursuant to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, for loans taken between March 27, 2020 and September 22, 2020, participants could borrow from their vested accounts up to a maximum equal to the lesser of $100,000 or 100% of their vested account balance.
The loans are secured by the balance in the participant’s account and bear interest at the rate of prime, as published by the Wall Street Journal on the last business day of the month immediately preceding the month in which the loan is issued, plus 2%. Principal and interest are paid ratably through payroll deductions.
Pursuant to the CARES Act, Plan participants could elect to defer loan repayments between March 27, 2020 and December 31, 2020.
Payment of Benefits
On termination of service due to disability or retirement at age 65, a participant may elect to receive an amount equal to the vested value of his or her account in installment payments or a lump sum. For termination of service for other reasons, a participant may receive the vested value of his or her account as a lump-sum distribution or may elect, subject to minimum balances as defined by the Plan document, to leave the vested portion of the account with the Plan. In addition, amounts contributed may be withdrawn upon demonstration of financial hardship or after a participant reaches the age of 59.5 years.
Pursuant to the CARES Act, Plan participants were permitted to take coronavirus-related distributions between March 27, 2020 and December 30, 2020 in an amount up to $100,000 of the participant's vested balance from the Plan, with optional repayment terms of up to three years.
Forfeited Accounts
At December 31, 2020 and 2019, forfeited non-vested accounts totaled $1,804,064 and $1,741,568, respectively. These accounts may be used to pay Plan expenses or reduce future Company contributions. Forfeitures for the year ended December 31, 2020 totaled $2,069,631. Forfeitures used to reduce Company contributions during the year ended December 31, 2020 totaled $2,007,135.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared using the accrual method of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”).
Estimates
The preparation of financial statements in conformity with GAAP requires the Plan's management to make estimates and assumptions that affect certain reported amounts of assets, liabilities and changes therein, and disclosures. Actual results may differ from those estimates.
Investment Valuation and Income Recognition
The Plan’s investments are stated at fair value, except for fully benefit-responsive investment contracts, which are reported at contract 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. The Plan's management utilizes information provided by the trustee to determine the valuation of the Plan's investments. See the “Fair Value Measurements” disclosure in Note 3 for a discussion of fair value measurements.
The Plan's insurance contract investment is a fully benefit-responsive investment contract that is reported at contract value. Because contract value is the amount participants normally would receive if they were to initiate permitted transactions under the terms of the Plan, it is the relevant measure for the portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on an accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan’s gains and losses on investments bought and sold, as well as held during the year.
5
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent participant loans are reclassified as distributions based upon the terms of the Plan.
Payment of Benefits
Benefits paid to participants are recorded upon distribution.
Administrative Expenses
Administrative expenses of the Plan are paid by either the Plan or the Company, as provided in the Plan document. Certain administrative functions are performed by the employees of the Company. No such employee receives compensation from the Plan. Expenses relating to specific participant transactions, such as participant loans and distributions, are charged directly to the participant’s account.
Recent Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The ASU removes, modifies, and adds certain disclosure requirements to fair value measurements provided by Accounting Standards Codification 820, Fair Value Measurement. The Plan adopted ASU 2018-13 on January 1, 2020. The adoption did not have a material impact to the financial statements of the Plan.
NOTE 3. FAIR VALUE MEASUREMENTS
GAAP defines fair value and establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs are described as follows:
|
|
Level 1:
|
Unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access;
|
|
|
Level 2:
|
Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable; and inputs that are derived from or corroborated by observable market data by correlation or other means.
|
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability; and
|
|
Level 3:
|
Unobservable inputs used to the extent that observable inputs are unavailable, which typically reflect the Plan’s assumptions of the assumptions that would be used by market participants in pricing the asset or liability.
|
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques that are used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Plan’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
A description of the valuation methodologies used for assets measured at fair value for December 31, 2020 and 2019 is presented below.
Mutual Funds
Mutual funds are public investment vehicles valued using the net asset value ("NAV") provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in an active market and classified within Level 1 of the valuation hierarchy.
Old Dominion Freight Line, Inc. Common Stock
Common stock is valued at the closing price reported on the active market on which the individual security is traded and is classified within Level 1 of the valuation hierarchy.
6
Self-Directed Brokerage Accounts
Self-directed brokerage accounts may include mutual funds, equities, the Company's common stock or certain fixed-income securities. These investments are valued by the administrator of the fund based on quoted market prices and are classified within Level 1 of the valuation hierarchy.
There were no changes made in the valuation methodologies used to determine the fair value of financial assets during the year ended December 31, 2020. Financial assets measured at fair value on a recurring basis are listed below and are categorized by level of the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Financial Assets:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
2020
|
|
|
Mutual funds
|
|
$
|
870,469,681
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
870,469,681
|
|
|
Old Dominion Freight Line, Inc. common stock
|
|
|
364,667,491
|
|
|
|
—
|
|
|
|
—
|
|
|
|
364,667,491
|
|
|
Self-directed brokerage accounts
|
|
|
9,295,784
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,295,784
|
|
|
Total investments at fair value
|
|
$
|
1,244,432,956
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,244,432,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Financial Assets:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
2019
|
|
|
Mutual funds
|
|
$
|
744,286,511
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
744,286,511
|
|
|
Old Dominion Freight Line, Inc. common stock
|
|
|
271,370,697
|
|
|
|
—
|
|
|
|
—
|
|
|
|
271,370,697
|
|
|
Self-directed brokerage accounts
|
|
|
5,508,256
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,508,256
|
|
|
Total investments at fair value
|
|
$
|
1,021,165,464
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,021,165,464
|
|
The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
NOTE 4. INVESTMENT IN INSURANCE FUND
As of December 31, 2020 and 2019, the Plan held a fully benefit-responsive group annuity contract, the Great-West Select Guaranteed Fund, with Great-West Life & Annuity Insurance Company. The Great-West Select Guaranteed Fund is a general account product of Great-West Life & Annuity Insurance Company. The methodology for calculating the interest crediting rate is based on the earnings of the underlying assets in the entire medium-long term new portfolio compared to the minimum interest crediting rate, and prevailing market conditions. The interest crediting rate is reset quarterly. As described in Note 2, contract value is the relevant measurement attribute for this fund.
Certain events limit the ability of the Plan to transact at contract value with Great-West Life & Annuity Insurance Company. Such events include premature termination of the contracts by the Plan, layoffs, Plan termination, bankruptcy, mergers and early retirement incentives. The Plan does not believe that any events which would limit the Plan's ability to transact at contract value with participants are probable. There are no reserves against contract value for credit risk of Great-West Life & Annuity Insurance Company or otherwise.
NOTE 5. EXEMPT PARTY-IN-INTEREST TRANSACTIONS
Plan investments include shares of the Company's common stock. Transactions in the Company's common stock qualify as exempt party-in-interest transactions. The Company's common stock reported on the Statements of Net Assets Available for Benefits was $364,667,491 and $271,370,697 at December 31, 2020 and 2019, respectively, which represented 1,868,365 and 2,144,884 shares, respectively.
The Plan’s recordkeeper, trustee and their subsidiaries, as well as the Company and Plan participants, are each a “party-in-interest” to the Plan as defined by ERISA. Fees charged to the Plan for investment management services are reflected as a reduction of the return
7
on each fund or included in administrative fees. Participants are also charged for certain transactions, such as the processing of a loan or a distribution. Each of these transactions qualifies as an exempt party-in-interest transaction under ERISA.
NOTE 6. FEDERAL INCOME TAX STATUS
The Plan is a prototype non-standardized profit sharing plan with a cash or deferred arrangement. The Plan has not obtained a determination letter from the Internal Revenue Service (“IRS”), as it relies on the IRS approval of the prototype plan being utilized. The IRS has determined and informed the prototype plan sponsor by an opinion letter dated March 31, 2014 that the prototype plan was designed in accordance with applicable sections of the IRC. The Plan administrator believes the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. Therefore, the Plan administrator believes the Plan was qualified and the related trust was tax-exempt as of December 31, 2020 and 2019.
GAAP requires the Plan's management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan 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, 2020 and 2019, there are no uncertain positions taken or expected to be taken that would require recognition of a liability, asset or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
NOTE 7. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities, in general, 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.
NOTE 8. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would be deemed 100% vested in Company contributions.
NOTE 9. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the accompanying financial statements to the IRS Form 5500 Annual Return/Report of Employee Benefit Plans at December 31, 2020 and 2019:
|
|
|
December 31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Net assets per financial statements
|
|
$
|
1,482,420,936
|
|
|
$
|
1,267,857,214
|
|
|
Deemed defaulted loans
|
|
|
(3,482,179
|
)
|
|
|
(2,693,569
|
)
|
|
Net assets available for benefits per the Form 5500
|
|
$
|
1,478,938,757
|
|
|
$
|
1,265,163,645
|
|
The following is a reconciliation of the increase in net assets per the financial statements to the Form 5500 for the year ended December 31, 2020:
|
Increase in net assets per the financial statements
|
$
|
214,563,722
|
|
|
Current year deemed defaulted loans
|
|
(1,164,223
|
)
|
|
Interest on deemed defaulted loans
|
|
(127,514
|
)
|
|
Prior year deemed defaulted loans – paid through termination
|
|
503,127
|
|
|
Increase in net assets per the Form 5500
|
$
|
213,775,112
|
|
NOTE 10. SUBSEQUENT EVENTS
The Plan administrator has evaluated all events subsequent to December 31, 2020, through the date the Plan’s financial statements were filed with the Securities and Exchange Commission. The Plan administrator has determined none of these events were required to be recognized or disclosed based on this evaluation.
8