UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 2013
o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-33961
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
HILL INTERNATIONAL, INC. 401(k)
RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
Hill International, Inc.
303 Lippincott Centre
Marlton, NJ 08053
The following financial statements of Hill International, Inc. 401(k) Retirement Savings Plan are being filed herewith:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator and Participants
of the Hill International, Inc. 401(k) Retirement Savings Plan
We have audited the accompanying statement of net assets available for benefits of the Hill International, Inc. 401(k) Retirement Savings Plan (the Plan) as of December 31, 2013, and the related statement of changes in net assets available for benefits for the year then ended. The 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 conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
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, 2013, 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.
Our audit was performed for the purpose of forming an opinion on the basic 2013 financial statements taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31, 2013 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplemental information required by the U.S. Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plans management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
/s/ EisnerAmper LLP
Iselin, New Jersey
June 30, 2014
Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of
Hill International, Inc. 401(k) Retirement Savings Plan
Report on the Financial Statements
We have audited the accompanying statement of net assets available for benefits of Hill International, Inc. 401(k) Retirement Savings Plan (the Plan) as of December 31, 2012.
Managements Responsibility for the Financial Statements
Plan management is responsible for the preparation and fair presentation of this financial statement in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of a financial statement that is free of material misstatements, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. These procedures selected depend on the auditors judgment, including the assessment of the risk of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Plans preparation and fair presentation of the financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the plans internal control. Accordingly, we express no such opinion. An audit includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statement referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2012 in accordance with accounting principles generally accepted in the United States of America.
/s/ Jennifer L. Anderson, LLC
Moorestown, New Jersey
June 4, 2013
HILL INTERNATIONAL, INC. 401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2013 and 2012
|
|
2013 |
|
2012 |
| ||
ASSETS |
|
|
|
|
| ||
Investments, at fair value: |
|
|
|
|
| ||
Money market fund |
|
$ |
1,201,267 |
|
$ |
1,597,074 |
|
Mutual funds |
|
48,147,553 |
|
35,809,878 |
| ||
Common stock |
|
4,023,978 |
|
3,173,171 |
| ||
Guaranteed investment contract |
|
8,847,724 |
|
9,470,068 |
| ||
Total investments |
|
62,220,522 |
|
50,050,191 |
| ||
|
|
|
|
|
| ||
Receivables: |
|
|
|
|
| ||
Notes receivable from participants |
|
1,590,321 |
|
1,445,170 |
| ||
|
|
|
|
|
| ||
NET ASSETS AVAILABLE FOR BENEFITS |
|
$ |
63,810,843 |
|
$ |
51,495,361 |
|
See accompanying notes to financial statements.
HILL INTERNATIONAL, INC. 401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 2013
ADDITIONS: |
|
|
| |
Investment income: |
|
|
| |
Net appreciation in fair value of investments |
|
$ |
8,842,364 |
|
Interest |
|
269,540 |
| |
Dividends |
|
2,239,375 |
| |
|
|
11,351,279 |
| |
|
|
|
| |
Interest income on notes receivable from participants |
|
50,728 |
| |
|
|
|
| |
Contributions: |
|
|
| |
Employer |
|
735,571 |
| |
Participants |
|
5,588,502 |
| |
Rollovers |
|
655,291 |
| |
TOTAL CONTRIBUTIONS |
|
6,979,364 |
| |
|
|
|
| |
TOTAL ADDITIONS |
|
18,381,371 |
| |
|
|
|
| |
DEDUCTIONS: |
|
|
| |
Benefits paid to participants |
|
5,975,988 |
| |
Administrative expenses |
|
89,901 |
| |
TOTAL DEDUCTIONS |
|
6,065,889 |
| |
|
|
|
| |
NET INCREASE |
|
12,315,482 |
| |
|
|
|
| |
NET ASSETS AVAILABLE FOR BENEFITS |
|
|
| |
Beginning of year |
|
51,495,361 |
| |
|
|
|
| |
END OF YEAR |
|
$ |
63,810,843 |
|
See accompanying notes to financial statements.
HILL INTERNATIONAL, INC 401(k) RETIREMENT SAVINGS PLAN
December 31, 2013
NOTE 1 DESCRIPTION OF PLAN
The following brief description of the Hill International, Inc. 401(k) Retirement Savings Plan (the Plan) is provided for general information purposes only. Participants should refer to the Plan document for a more complete description of the Plans provisions.
General
The Plan is a defined contribution plan covering all domestic employees of Hill International, Inc. (the Sponsor) who have thirty days of service and are age twenty-one or older, excluding bona fide residents of Puerto Rico, as defined in Internal Revenue Code Section 937, who do not have to pay U.S. income taxes on their Puerto Rico source income. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). After meeting eligibility requirements, an employee can begin participating on the first day of the month coinciding with or next following the date on which the employee meets these requirements.
Contributions
Each participant may contribute up to 75% of pre-tax annual compensation up to a maximum of $17,500 per plan year. Participants who have attained the age of 50 before the end of the Plan year are eligible to make catch-up contributions up to an additional $5,500. These limits may change each year to correspond with the Internal Revenue Code. The plan includes an automatic deferral feature. The amount that is automatically contributed to eligible employees accounts is equal to 3% of compensation unless the employee selects an alternative deferral amount or elects not to defer under the plan. Through April 30, 2012, the Sponsor contributed fifty cents for every dollar contributed up to a maximum of six percent of gross wages. Effective May 1, 2012, the Sponsor suspended its contributions to the Plan. Effective May 7, 2012, the Plan was amended to permit the Sponsor to make a discretionary matching contribution equal to a uniform percentage or dollar amount of the participants elective contributions; each year, the Sponsor will determine the formula for the discretionary matching contribution. Effective January 1, 2013, the Sponsor elected to make matching contributions to the Plan. For 2013, the Sponsors matching contribution was equal to one percent of the participants gross wages up to a maximum contribution of $2,550. Half of the Sponsors contribution is used for open market purchases of the Sponsors common stock, which may be sold immediately by the participant. The Plan restricts participant direction to 50% of the Sponsors common stock. Contributions to the Plan by highly compensated employees are subject to certain limitations. Plan assets are maintained at Prudential Trust Company and The Prudential Insurance Company of America (Prudential) and are invested at the election of the participants.
Participant Accounts
Each participants account is credited with the participants contribution and allocations of (a) the Sponsors contribution and (b) Plan earnings, and charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participants vested account.
Vesting
Participants are immediately 100 percent vested in both employee contributions and employer contributions, plus actual earnings thereon.
HILL INTERNATIONAL, INC 401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2013
Notes Receivable from Participants
The Plan includes a loan provision that permits participants to borrow a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of the participants account balance, whichever is less. Notes receivable from participants are measured at their unpaid principal balance, plus any accrued but unpaid interest. These loans are secured by the balance in the participants account. Interest is based on the prime rate charged by local banks at the time of the loans initiation and is fixed for the term of the loan. Loans may not exceed five years unless they are used to buy a participants principal residence, in which case the loan term cannot exceed ten years. The loans are repaid ratably through payroll deductions. If a participant ceases to make loan repayments and the Plan Administrator deems the participant loan to be a distribution, the participant loan balance is reduced and a benefit payment is recorded. At December 31, 2013, the loans mature at various dates through 2023 and bear interest at 3.25%.
Payment of Benefits
Distributions under the Plan are allowed for termination of employment, hardship (as defined by the Plan), retirement, or attainment of age 59 ½. Distribution may also be made to the participant in the event of physical or mental disability or to a named beneficiary in the event of the participants death. Distributions are made in a lump sum payment or by installment payments.
Administrative Expenses
Certain of the Plans administrative expenses are paid by the Sponsor, and certain Plan expenses are paid by the Plan. On January 1, 2013, a Plan expense account (the ERISA account) was established to hold revenue sharing funds the Plan receives from Prudential, pursuant to an agreement. These funds are available to pay qualified plan administrative expenses. At December 31, 2013, the ERISA account balance was $28,280. During 2013, $89,901 was used to pay Plan expenses. Any amounts remaining in the ERISA account at the end of a Plan year are allocated to participants during the subsequent year.
Plan Termination
Although it has not expressed any intent to do so, the Sponsor has the right under the Plan to discontinue its contributions at any time and to terminate the plan subject to the provisions of ERISA.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying financial statements of the Plan are prepared using the accrual basis of accounting.
Investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan 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 fair value of fully benefit-responsive investment contracts approximates the contract value.
HILL INTERNATIONAL, INC 401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2013
Estimates
The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and when applicable, disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuation and Income Recognition
The Plans investments are presented 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. See Note 4 for a discussion of fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plans gains and losses on investments bought and sold as well as held during the year.
Payment of Benefits
Benefits are recorded when paid.
NOTE 3 INVESTMENTS
The following presents individual investments that represent 5% or more of the Plans net assets at December 31, 2013:
|
|
December 31, |
| ||||
|
|
2013 |
|
2012 |
| ||
Prudential Guaranteed Investment Contract |
|
$ |
8,847,724 |
|
$ |
9,470,068 |
|
Oppenheimer Global Opportunities Fund A |
|
6,795,815 |
|
4,428,661 |
| ||
American Funds Growth Fund of America A |
|
6,540,116 |
|
* |
| ||
MFS Funds Total Return Fund A |
|
5,750,320 |
|
4,402,564 |
| ||
Invesco Small Cap Value A |
|
5,507,655 |
|
3,641,626 |
| ||
Wells Fargo Advantage Growth Class A |
|
5,133,985 |
|
3,810,120 |
| ||
Prudential Stock Index Fund Z |
|
4,636,441 |
|
3,153,096 |
| ||
Lord Abbet Equity Fund A |
|
4,447,023 |
|
* |
| ||
Hill International, Inc. Common Stock |
|
4,023,978 |
|
3,173,171 |
| ||
PIMCO Total Return Fund A |
|
* |
|
3,318,370 |
| ||
JP Morgan Large Cap Growth Fund A |
|
* |
|
3,100,478 |
| ||
* amount does not exceed 5% of the Plans net assets at the specified date.
HILL INTERNATIONAL, INC 401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2013
During 2013, the Plans investments (including investments bought, sold, exchanged, as well as held during the year) appreciated in fair value as follows:
Mutual Funds |
|
$ |
8,475,008 |
|
Common Stock |
|
367,356 |
| |
Total |
|
$ |
8,842,364 |
|
NOTE 4 FAIR VALUE MEASUREMENTS
The Financial Accounting Standards Boards (FASB) Accounting Standard Codification (ASC) 820, Fair Value Measurements and Disclosures, 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 quote 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 the fair value hierarchy under FASB ASC 820 are described as follows:
Level 1 Fair Value Measurements
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.
Level 2 Fair Value Measurements
Inputs to the valuation methodology include:
· Quoted prices for similar assets or liabilities in active markets;
· Quoted prices for identical or similar assets or liabilities in inactive markets;
· Inputs other than quoted prices that are observable for the asset or liability;
· Inputs derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 Fair Value Measurements
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The assets or liabilitys fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.
Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes at December 31, 2013 from the methodologies used at December 31, 2012.
HILL INTERNATIONAL, INC 401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2013
Money market funds: Valued at face value, which approximates fair value.
Mutual funds: Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open-ended mutual funds that are registered with the U.S. Securities and Exchange Commission These funds are required to publish their daily net asset value (NAV) and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.
Sponsor Common stock: Valued at the closing price reported on the active market on which the individual securities are traded.
Guaranteed investment contract: Valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations considering the credit-worthiness of the issuer. Since the participants transact at contract value, fair value is determined annually for financial statement reporting purposes only.
The preceding methods 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 those used by other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following tables present by level, within the fair value hierarchy, the Plans investments at fair value as of December 31, 2013 and 2012:
|
|
Fair Value Measurements at December 31, 2013 |
| ||||||||||
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
Investment assets: |
|
|
|
|
|
|
|
|
| ||||
Money market fund |
|
$ |
1,201,267 |
|
$ |
|
|
$ |
|
|
$ |
1,201,267 |
|
Mutual funds: |
|
|
|
|
|
|
|
|
| ||||
Global Stock - Blend |
|
6,795,815 |
|
|
|
|
|
6,795,815 |
| ||||
Balanced Value |
|
5,750,320 |
|
|
|
|
|
5,750,320 |
| ||||
Large Cap - Growth |
|
11,674,101 |
|
|
|
|
|
11,674,101 |
| ||||
Large Cap - Target Date |
|
43,037 |
|
|
|
|
|
43,037 |
| ||||
Large Cap - Blend |
|
11,841,670 |
|
|
|
|
|
11,841,670 |
| ||||
Mid Cap - Value |
|
102,238 |
|
|
|
|
|
102,238 |
| ||||
Mid Cap - Growth |
|
3,164,342 |
|
|
|
|
|
3,164,342 |
| ||||
Small Cap - Value |
|
5,507,655 |
|
|
|
|
|
5,507,655 |
| ||||
Small Cap - Growth |
|
76,990 |
|
|
|
|
|
76,990 |
| ||||
Fixed Income - Intermediate Bond |
|
2,518,679 |
|
|
|
|
|
2,518,679 |
| ||||
Retirement Income - Blend |
|
672,706 |
|
|
|
|
|
672,706 |
| ||||
Sponsor Common Stock |
|
4,023,978 |
|
|
|
|
|
4,023,978 |
| ||||
Guaranteed Investment Contract |
|
|
|
|
|
8,847,724 |
|
8,847,724 |
| ||||
Total assets at fair value |
|
$ |
53,372,798 |
|
$ |
|
|
$ |
8,847,724 |
|
$ |
62,220,522 |
|
HILL INTERNATIONAL, INC 401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2013
|
|
Fair Value Measurements at December 31, 2012 |
| ||||||||||
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
Investment assets: |
|
|
|
|
|
|
|
|
| ||||
Money market fund |
|
$ |
1,597,074 |
|
$ |
|
|
$ |
|
|
$ |
1,597,074 |
|
Mutual funds: |
|
|
|
|
|
|
|
|
| ||||
Global Stock - Blend |
|
528,228 |
|
|
|
|
|
528,228 |
| ||||
Global Stock - Growth |
|
4,428,661 |
|
|
|
|
|
4,428,661 |
| ||||
Balanced Value |
|
4,402,564 |
|
|
|
|
|
4,402,564 |
| ||||
Large Cap - Growth |
|
8,594,359 |
|
|
|
|
|
8,594,359 |
| ||||
Large Cap - Value |
|
2,299,619 |
|
|
|
|
|
2,299,619 |
| ||||
Large Cap - Blend |
|
6,382,146 |
|
|
|
|
|
6,382,146 |
| ||||
Mid Cap - Growth |
|
2,214,305 |
|
|
|
|
|
2,214,305 |
| ||||
Small Cap - Value |
|
3,641,626 |
|
|
|
|
|
3,641,626 |
| ||||
Fixed Income - Intermediate Bond |
|
3,318,370 |
|
|
|
|
|
3,318,370 |
| ||||
Sponsor Common Stock |
|
3,173,171 |
|
|
|
|
|
3,173,171 |
| ||||
Guaranteed Investment Contract |
|
|
|
|
|
9,470,068 |
|
9,470,068 |
| ||||
Total assets at fair value |
|
$ |
40,580,123 |
|
$ |
|
|
$ |
9,470,068 |
|
$ |
50,050,191 |
|
The table below sets forth a summary of the changes in the fair value of the Plans level 3 assets, the Guaranteed Investment Account, for the year ended December 31, 2013:
Balance, beginning of year |
|
$ |
9,470,068 |
|
Purchases |
|
895,052 |
| |
Sales |
|
(1,786,936 |
) | |
Interest credited |
|
269,540 |
| |
Balance, end of year |
|
$ |
8,847,724 |
|
Investment gains and losses (realized and unrealized) for the year ended December 31, 2013 are reported in net realized/unrealized appreciation in fair value of investments in the statement of changes in net assets available for benefits, with the exception of unrealized gains or losses from the guaranteed investment contract because the contract is recorded at contract value for purposes of the statement of net assets available for benefits.
Valuation Processes Used in Level 3 Measurements
The Plan Sponsor has a process in place whereby the Plans Investment Committee meets on a consistent basis and reports to management and those charged with Plan governance. The investment committee reviews individual investments, investment performance, as well as the underlying Guaranteed Investment Contract.
Changes in Fair Value Levels
The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation
HILL INTERNATIONAL, INC 401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2013
techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. There were no transfers between levels during the year ended December 31, 2013.
Quantitative Information about Significant Unobservable Inputs Used in Level 3 Fair Value Measurements
The following table represents the Guaranteed Investment Contract, the Plans Level 3 financial instruments, the valuation techniques used to measure the fair value of those financial instruments, and the significant unobservable inputs and the ranges of values for those inputs.
|
|
|
|
Principal |
|
Unobservable |
|
Range of Significant |
|
Weighted | |
Instrument |
|
Fair Value |
|
Valuation Technique |
|
Inputs |
|
Input Values |
|
Average | |
Guaranteed Investment Contract |
|
$ |
8,847,724 |
|
Discounted cash flow |
|
Contract Duration |
|
1 - 2 Years |
|
1.5 Years |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Contract minimum interest rate credited to new deposits for plans with similar features |
|
Contract minimum interest rate of 3.00% |
|
3.00% | |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Insurance Company General Account |
|
|
|
| |
Changes in unobservable inputs may result in a different fair value amount. An increase in the input for interest rates credited to new deposits for plans with similar features would result in a decrease in the fair value of this investment. An increase in the duration input would result in an increase in the fair value of the investment.
NOTE 5 GUARANTEED INVESTMENT CONTRACT
The Plan has a fully benefit-responsive investment contract with the Prudential Insurance Company of America (Prudential). Prudential maintains the contributions in a general account, which is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. Prudential may not terminate the contract at any amount less than contract value.
Prudential is contractually obligated to pay the principal and specified interest rate that is guaranteed to the Plan. Interest is credited on contract balances using an old money/new money or bucketed approach. Under this methodology, different interest crediting rates are applied to contributions based on the calendar quarter in which the contributions were made. An interest crediting rate (New Money Rate) is established at the beginning of each calendar quarter. The New Money Rate is applied to all contributions made to the product during that quarter. Four New Money Rates and corresponding buckets are established each year. These New Money Rates are guaranteed through December 31 of the following calendar year. Upon the expiration of the New Money Rate guarantees, the rates for each of these buckets are reset and are then known as Old Money
HILL INTERNATIONAL, INC 401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2013
Rates. Old Money Rates for each bucket are reset on an annual basis thereafter. When establishing interest crediting rates for this product, Prudential considers many factors, including current economic and market conditions, the general interest rate environment and both the expected and actual experience of a reference portfolio within the issuers general account. These rates are established without the use of a specific formula. The minimum crediting rate under the contract is 3.00%. Withdrawals and transfers out are made on a pro-rata basis from all buckets. The Plan may terminate the contract at any time subject to a market value adjustment as specified in the contract, however, under certain emergency conditions, the issuer may defer payment for a period of up to 365 days. Additionally, the Plan may also terminate the contract without a market value adjustment by making withdrawals of the entire amount over a four-year period.
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|
2013 |
|
2012 |
|
Average yields: |
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|
|
|
|
Based on annualized earnings (1) |
|
3.00 |
% |
3.00 |
% |
Based on interest rate credited to participants (2) |
|
3.00 |
% |
3.00 |
% |
(1) Computed by dividing the earnings credited to the Plan on the last day of the Plan year by the end of the Plan year Fair Value and then annualizing the results.
(2) Computed by dividing the earnings credited to the participants on the last day of the Plan year by the end of the Plan year Fair Value and then annualizing the results.
Because the guaranteed interest contract is fully benefit-responsive, contract value is the relevant measurement attribute. The fair value of the guaranteed investment contract approximates contract value. Contract value, as reported to the Plan by Prudential, represents contributions made under the contract, plus earnings, minus participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.
Certain events may limit the ability of the Plan to transact at contract value with Prudential. Such events include the following: (1) amendments to the Plan documents (including complete or partial Plan termination or merger with another plan), (2) changes to the Plans prohibition on competing investment options or deletion of equity wash provisions, (3) bankruptcy of the Sponsor or other Sponsor events (for example, divestitures or spin-offs of a subsidiary) that cause a significant withdrawal for the Plan, or (4) the failure of the trust to qualify for exemption under ERISA. The Plan administrator does not believe that the occurrence of any such events, which would limit the Plans ability to transact at contract value with participants, is probable.
NOTE 6 RELATED PARTIES AND PARTIES IN INTEREST TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Prudential Trust Company along with a guaranteed investment contract with the Prudential Insurance Company of America. The Prudential Trust Company is the trustee as defined by the Plan. These transactions qualify as exempt party-in-interest transactions.
As of December 31, 2013, the Plan owned 1,018,729 shares of the Sponsors common stock with a fair value of $4,023,978 and, as of December 31, 2012, the Plan owned 866,987 shares of the Sponsors common stock with a fair value of $3,173,171. The Sponsor does not pay dividends on its common stock.
HILL INTERNATIONAL, INC 401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2013
NOTE 7 TAX STATUS
The Plan has adopted the Prudential Retirement Defined Contribution Prototype and Volume Submitter Plan. On March 31, 2008, the Internal Revenue Service stated in an opinion letter that the prototype adopted by the Plan, as then designed, was in compliance with applicable requirement of the Internal Revenue Code (IRC) and therefore, the related trust is exempt from taxation. The Plan has been amended since receiving the letter. However, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. Therefore, the Plan administrator believes that the Plan is qualified and the related trust is tax-exempt.
Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain tax position that more likely than not would not be sustained upon examination by the Internal Revenue Service. The Plan Administrator has analyzed the tax positions taken by the Plan and has concluded that as of December 31, 2013, there are no uncertain tax positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine examinations by taxing jurisdictions; however, there are currently no examinations for any tax periods in progress. The Plan administrator believes the Plan is no longer subject to income tax examinations for years prior to 2010.
NOTE 8 RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investments in general are exposed to various risks, such as interest rate, credit, and overall volatility risk, as well as risks related to the financial strength of the insurance company. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect the participants account balances and the amounts reported in the statement of net assets available for benefits.
Users of these financial statements should be aware that the financial markets volatility may significantly impact the subsequent valuation of the Plans investments. Accordingly, the valuation of investments at December 31, 2013 may not necessarily be indicative of the amounts that could be realized in a current market exchange.
NOTE 9 MUTUAL FUND FEES
Investments in mutual funds are subject to sales charges in the form of front-end loads, back-end loads or 12b-1 fees. 12b-1 fees are ongoing fees allowable under Section 12b-1 of the Investment Company Act of 1940. These annual fees are used to pay for marketing and distribution costs of the funds. These fees are deducted prior to the allocation of the Plans investment earnings activity, and thus not separately identifiable as an expense.
NOTE 10 PLAN OPERATIONS
Subsequent to December 31, 2013, it was discovered that certain of the Plans provisions were not properly applied in the daily operation of the Plan. The definition of compensation for participant and employer contributions as per the Plan document was not properly applied to certain types of compensation when calculating contribution amounts. The Plan administrator is in the process of determining affected participants and intends to make the Plan whole, as appropriate, for any amounts due, including earnings, in accordance with the applicable Internal Revenue Service guidance. Amounts due to the Plan as a
HILL INTERNATIONAL, INC 401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2013
result of this error are not expected to exceed one percent of net assets available for benefits at December 31, 2013.
Hill International, Inc. 401(k) Retirement Savings Plan
Year Ended December 31, 2013
EIN # 20-0953973
Plan # 003
Schedule H, Line 4i, SCHEDULE OF ASSETS (HELD AT END OF YEAR)
a. Parties |
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b. Identity of issuer, |
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c. Description |
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|
|
|
| |
in |
|
borrower, lessor, |
|
of |
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|
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e. Current |
| |
interest |
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or similar party |
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investment |
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d. Cost |
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value |
| |
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|
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|
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| |
|
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Money Market Fund |
|
|
|
|
|
|
| |
|
|
Reich & Tang |
|
Daily Income Fund Fiduciary Class Shares |
|
** |
|
$ |
1,201,267 |
|
|
|
|
|
|
|
|
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| |
|
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Mutual Funds |
|
|
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|
|
|
| |
* |
|
Prudential Mutual Funds |
|
Prudential Stock Index Fund Z |
|
** |
|
4,636,441 |
| |
* |
|
Prudential Mutual Funds |
|
Prudential Jennison Equity Income Fund A |
|
** |
|
2,758,206 |
| |
* |
|
Prudential Mutual Funds |
|
Prudential Jennison Mid Cap Growth Fund A |
|
** |
|
3,164,342 |
| |
|
|
PIMCO |
|
PIMCO Total Return Fund A |
|
** |
|
2,518,679 |
| |
|
|
American Funds |
|
Amcap Fund |
|
** |
|
6,540,116 |
| |
|
|
Invesco Ltd. |
|
Invesco Small Cap Value Fund A |
|
** |
|
5,507,655 |
| |
|
|
Lord, Abbet & Co. LLC |
|
Lord Abbet Equity Fund A |
|
** |
|
4,447,023 |
| |
|
|
MFS Funds |
|
MFS Total Return Fund A |
|
** |
|
5,750,320 |
| |
|
|
Oppenheimer Funds |
|
Oppenheimer Global Opportunities Fund A |
|
** |
|
6,795,815 |
| |
|
|
Wells Fargo & Co. |
|
Wells Fargo Adv Growth Class A |
|
** |
|
5,133,985 |
| |
|
|
Ivy Funds |
|
Ivy Small Cap Growth I |
|
** |
|
76,990 |
| |
|
|
Hotchkis & Wiley Funds |
|
Hotchkis & Wiley Value Opportunities A |
|
** |
|
102,238 |
| |
|
|
Blackrock |
|
Blackrock Lifepath Retirement Investor A |
|
** |
|
200,848 |
| |
|
|
Blackrock |
|
Blackrock Lifepath Index 2020 A |
|
** |
|
43,037 |
| |
|
|
Blackrock |
|
Blackrock Lifepath Index 2025 A |
|
** |
|
189,392 |
| |
|
|
Blackrock |
|
Blackrock Lifepath Index 2030 A |
|
** |
|
136,521 |
| |
|
|
Blackrock |
|
Blackrock Lifepath Index 2035 A |
|
** |
|
29,319 |
| |
|
|
Blackrock |
|
Blackrock Lifepath Index 2040 A |
|
** |
|
27,484 |
| |
|
|
Blackrock |
|
Blackrock Lifepath Index 2045 A |
|
** |
|
21,123 |
| |
|
|
Blackrock |
|
Blackrock Lifepath Index 2050 A |
|
** |
|
30,698 |
| |
|
|
Blackrock |
|
Blackrock Lifepath Index 2055 A |
|
** |
|
37,321 |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Common Stock |
|
|
|
|
|
|
| |
* |
|
Hill International, Inc.. |
|
Common stock |
|
** |
|
4,023,978 |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Guaranteed Investment Contract |
|
|
|
|
|
|
| |
* |
|
The Prudential Insurance Co of America |
|
Guaranteed Interest Account |
|
** |
|
8,847,724 |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Notes Receivable from Participants |
|
|
|
|
|
|
| |
|
|
Notes receivable from participants, with interest at 3.25% maturing through 2023 |
|
|
|
1,590,321 |
| |||
|
|
|
|
|
|
|
|
|
| |
|
|
Total investments per Schedule H, Line 1f |
|
|
|
|
|
$ |
63,810,843 |
|
* Indicates party-in-interest to the Plan
** Not required for participant-directed investments
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
|
HILL INTERNATIONAL, INC. 401(K) RETIREMENT SAVINGS PLAN | |||
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| |||
Dated: June 30, 2014 |
|
By: |
/s/ Catherine H. Emma | |
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|
Printed Name: |
Catherine H. Emma | |
|
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Title: |
Plan Administrator | |
Hill International, Inc. 401(k) Retirement Savings Plan
Annual Report on Form 11-K
For the Year Ended December 31, 2013
Exhibit No. |
|
Description |
|
|
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23.1 |
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Consent of EisnerAmper LLP, Independent Registered Public Accounting Firm |
23.2 |
|
Consent of Jennifer L. Anderson, LLC |