RETIREMENT PLAN FOR NJ TRANSIT BUS …

1 RETIREMENT PLAN FORNJ TRANSIT BUS OPERATIONS, TRANSIT UNION EMPLOYEESFINANCIAL STATEMENTSAS OF AND FOR THE YEARS ENDEDJUNE 30, 2014 AND 2013 SUPPLEMENTAL SCHEDULEANDREPORT OF INDEPENDENT AUDITORSNJU RETIREMENT PLAN FOR NJ TRANSIT BUS OPERATIONS, INC. amalgamated TRANSIT UNION EMPLOYEES Financial Statements and Supplemental Schedule as of and for the Years Ended June 30, 2014 and 2013 TABLE OF CONTENTS PAGE REPORT OF INDEPENDENT 1-2 MANAGEMENT S DISCUSSION AND 3-6 FINANCIAL STATEMENTS: Statements of Net 7 Statements of Changes in Net 8 Notes to Financial 9-15 REQUIRED SUPPLEMENTARY 1 Report of Independent Auditors RETIREMENT Plan Committee RETIREMENT Plan for NJ TRANSIT Bus Operations, Inc. amalgamated TRANSIT Union Employees We have audited the accompanying financial statements of the RETIREMENT Plan for NJ TRANSIT Bus Operations, Inc.

2 amalgamated TRANSIT Union Employees (the Plan), which comprise the statements of net position as of June 30, 2014 and 2013, and the related statements of changes in net position for the years then ended and the related notes to the financial statements. Management s Responsibility for the Financial Statements The Plan s management is responsible for the preparation and fair presentation of these financial statements in conformity with generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States.

3 Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Plan s preparation and fair presentation of the financial statements 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 Plan s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management, as well as, evaluating the overall presentation of the financial statements.

4 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion. A member firm of Ernst & Young Global Limited Ernst & Young LLP 99 Wood Avenue South Metropark Box 751 Iselin, NJ 08830-0471 Tel: +1 732 516 4200 Fax: +1 732 516 4429 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the net position of the Plan as of June 30, 2014 and 2013, and the changes in its net position for the years then ended, in conformity with generally accepted accounting principles. Adoption of New Accounting Pronouncement As discussed in Note 2 to the financial statements, the Plan changed its method of financial reporting of pensions as a result of the adoption of Government Accounting Standards Board Statement No. 67, Financial Reporting for Pension Plans an Amendment of GASB Statement No.

5 25, effective July 1, 2013. Our opinion is not modified with respect to this matter. Required Supplementary Information Accounting principles generally accepted in the United States require that management s discussion and analysis and required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.

6 We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. EY December 21, 2015 A member firm of Ernst & Young Global Limited 3 RETIREMENT PLAN FOR NJ TRANSIT BUS OPERATIONS, INC. amalgamated TRANSIT UNION EMPLOYEES MANAGEMENT S DISCUSSION AND ANALYSIS The following overview of the financial activity of the RETIREMENT Plan for the New Jersey TRANSIT Corporation s amalgamated TRANSIT Union Employees (the Plan) is intended to provide the reader with the analysis of the Plan s overall financial position for the fiscal years ended June 30, 2014 and 2013. This Management s Discussion and Analysis should be read in conjunction with the basic financial statements of the Plan, which follow. Financial Highlights 2014-2013 The Plan s net position was $925,276,050 as of June 30, 2014.

7 This amount reflected an increase of $123,838,279 from the prior fiscal year. This change was the result of fiscal year 2014 operations. Additions for the year were $185,819,457 and were comprised of investment income of $134,531,989, employer and employee contributions of $51,283,275 and other receipts of $4,193. Deductions for the year were $61,981,178 and were comprised of benefit payments of $58,854,409, actuarial and professional fees of $3,121,809 and other disbursements of $4,960. 2013-2012 The Plan s net position was $801,437,771 as of June 30, 2013. This amount reflected an increase of $84,457,335 from the prior fiscal year. This change was the result of fiscal year 2013 operations. Additions for the year were $141,996,280 and were comprised of investment income of $94,079,415, employer and employee contributions of $47,879,411 and other receipts of $37,454. Deductions for the year were $57,538,945 and were comprised of benefit payments of $54,926,501, actuarial and professional fees of $2,603,764 and other disbursements of $8,680.

8 Overview of the Financial Statements This annual report consists of two financial statements: The Statements of Net Position and The Statements of Changes in Net Position. The financial statements were prepared using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized in the period they are earned, and expenses are recorded in the year they are incurred, regardless of when cash is received or paid. The Statements of Net Position show the balances in all of the assets and liabilities of the Plan at the end of the fiscal year. The difference between assets and liabilities represents the Plan s net position. Over time, increases or decreases in the Plan s net position may serve as a useful indicator of the Plan s financial position. The Statements of Changes in Net Position show the results of the financial operations for the year. The statements provide an explanation for the change in the Plan s net position since the prior fiscal year.

9 The Notes to the financial statements are an integral part of the financial statements and provide additional information that is essential to a full understanding of the data provided in the financial statements. The required supplementary information presents information regarding the funding status of the pension fund trust account and schedule of employer contributions. 4 Financial Analysis 2014-2013 Summary of Net Position _____ _ 2014 2013 $Increase/ (Decrease) %Increase/ (Decrease) Assets: Investments $953,097,209$830,744,101$122,353,108 Receivables 2,048,527 1,994,253 54,274 Total Assets 955,145,736 832,738,354 122,407,382 Liabilities.

10 Payables 29,869,686 31,300,583 (1,430,897) ( ) Total Liabilities 29,869,686 31,300,583 (1,430,897) ( ) Net Position $925,276,050$801,437,771 $123,838,279 Assets of the Plan consist primarily of investments, contributions due from employer and employees, and accrued interest and dividends. Total assets were $955,145,736 as of June 30, 2014, an increase of $122,407,382, or percent, from the prior fiscal year. This increase was primarily due to an increase in investments of $122,353,108, or percent, as a result of appreciation of the fair value of investments.