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ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
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RIO
TINTO AMERICA INC. SAVINGS PLAN
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Financial
Statements and Supplemental Schedules
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As
of December 31, 2008 and 2007 and for the
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Year
Ended December 31, 2008
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Together
with Report of Independent Registered Public
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Accounting
Firm
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Page
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Report of
Independent Registered Public Accounting Firm
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3
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Financial
Statements:
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Statements of
Assets Available for Benefits as of
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December
31, 2008 and 2007
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4
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Statement of
Changes in Assets Available for Benefits
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for
the Year Ended December 31, 2008
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5
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Notes to
Financial Statements
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6 –
21
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Supplemental
Schedules:
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Schedule H,
Part IV, Line 4i –
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Schedule of
Assets (Held at End of Year)
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22 –
23
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Schedule H,
Part IV, Line 4a –
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Schedule of
Delinquent Contributions
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24
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2008
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2007
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Assets
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Investments, at fair
value
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$ | 372,688,968 | $ | 548,081,765 | ||||
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Receivables:
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Employee
contributions
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- | 408,949 | ||||||
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Employer
contributions
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1,296 | 409,721 | ||||||
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Total
receivables
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1,296 | 818,670 | ||||||
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Assets available for benefits, at
fair value
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372,690,264 | 548,900,435 | ||||||
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Adjustment from fair value to
contract value for fully benefit-responsive investment
contracts
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11,996,107 | 690,931 | ||||||
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Assets available for
benefits
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$ | 384,686,371 | $ | 549,591,366 | ||||
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See
accompanying notes to financial statements.
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4
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Investment income
(loss):
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Interest and
dividends
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$ | 20,155,928 | ||
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Net depreciation in fair value of
investments
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(175,937,449 | ) | ||
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Total investment loss,
net
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(155,781,521 | ) | ||
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Contributions:
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Employee
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26,211,130 | |||
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Employer
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23,006,704 | |||
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Total
contributions
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49,217,834 | |||
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Transfers:
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From the U.S. Borax Inc. 401(k)
Plan for Hourly
Employees
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534,580 | |||
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From the Kennecott Corporation
Savings Plan for Hourly
Employees
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125,147 | |||
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Total
transfers
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659,727 | |||
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Deductions from assets attributed
to:
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Benefits paid to
participants
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(58,929,664 | ) | ||
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Administrative
expenses
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(71,371 | ) | ||
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Total
deductions
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(59,001,035 | ) | ||
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Net decrease in assets available
for benefits
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(164,904,995 | ) | ||
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Assets available for
benefits:
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Beginning of
year
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549,591,366 | |||
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End of year
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$ | 384,686,371 | ||
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See
accompanying notes to financial statements.
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5
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1. Description
of
the
Plan
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The following
brief description of the Rio Tinto America Inc. Savings Plan (the Plan) is
provided for general information purposes only. Participants
should refer to the Plan document and summary plan description for more
complete information.
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General
The Plan is a
defined contribution plan covering (1) all non-represented employees of
Rio Tinto America Inc. and its affiliates (collectively, the Company or
the Employer), as defined in the Plan document, and (2) employees covered
by a collective bargaining agreement that provides for Plan
participation. All eligible full-time employees of the Company
can participate in the Plan immediately upon
employment. Temporary and part-time employees are eligible
after completing 1,000 hours of service during a 12-month
period. Rio Tinto America Inc. is an indirect wholly owned
subsidiary of Rio Tinto plc (the Parent). The Plan was created
effective January 1, 2003, by a merger of the Kennecott Savings and
Investment Plan, the U.S. Borax Inc. Thrift Plan for Salaried Employees,
and the Luzenac America, Inc. Investment Savings Plan. The Plan
is intended to be a qualified retirement plan under the Internal Revenue
Code (IRC) and is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA), as amended.
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Contributions
Each year,
participants may elect under a salary reduction agreement to contribute to
the Plan an amount not less than 1% and not more than 50% of their
eligible compensation on a before-tax basis through payroll
deductions. Contributions are limited by the IRC, which
established a maximum contribution of $15,500 ($20,500 for participants
over age 50) for the year ended December 31, 2008. Participants
may also elect to make an after-tax contribution not less than 1% and not
more than 50% of their eligible compensation. Total before-tax
and after-tax contributions cannot exceed 50% of each participant’s
eligible compensation. Participant contributions are recorded
in the period during which the amounts are withheld from participant
earnings. Participants may also contribute amounts representing
distributions from other qualified defined benefit or defined contribution
plans.
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1. Description
of
the
Plan
Continued
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Contributions
- Continued
Investment Partnership
Plan
Effective
April 1, 2007 for new participants in the Plan (including new hires and
transfers) and October 1, 2007 for current electing employees, the Company
contributes 6% of eligible compensation (which includes ½ of compensation
earned under a short-term bonus program) up to the Social Security Wage
Base ($102,000 for 2008) and 11.7% of eligible compensation over the
Social Security Wage Base. For communication purposes, the Company refers
to this Company contribution as the Investment Partnership Plan
(IPP). To be eligible for the IPP, current employees as of
March 31, 2007, were required to elect not to continue to be credited with
future benefit service under the Company-sponsored defined benefit pension
plan, the Rio Tinto America Inc. Retirement Plan. Participants are not
required to contribute to the Plan to receive IPP contributions.
Participants are vested in IPP contributions based upon the following
schedule:
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Completed
Years of
Vesting
Service
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Vested
%
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One
year
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33.33 | % | ||
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Two
years
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66.67 | % | ||
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Three
years
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100.00 | % | ||
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Effective
April 15, 2008, as a result of the sale of the Kennecott Greens Creek
Mining Company and the Kennecott Juneau Mining Company, the affected
participants who terminated employment with the Company were 100% vested
in the Company IPP contributions.
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Matching
In addition,
the Company matches participants’ contributions to the Plan at 100%, up to
the first 6% of their eligible compensation, for all locations other than
the represented hourly employees of Luzenac America,
Inc. Participants are immediately vested in their contributions
and Company matching contributions plus actual earnings
thereon.
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1. Description
of
the
Plan
Continued
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Contributions
– Continued
The Company
matches the participants’ contributions to the Plan for the represented
hourly employees of Luzenac America, Inc., based on the
following:
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·
hourly employees of Luzenac America, Inc. at the Three Forks Mill
who are represented by the United Cement, Lime, Gypsum and Allied Workers’
Division of the International Brotherhood of Boilermakers (Local Union
D-239) who made contributions after August 1, 2006 receive a match of 65%,
up to the first 6% of eligible compensation; and
·
hourly employees of Luzenac America, Inc. at the Windsor Mine who
are represented by the United Cement, Lime, Gypsum and Allied Workers’
Division of the International Brotherhood of Boilermakers (Local Lodge No.
D449)
(a) who
made contributions after May 12, 2004 and prior to May 12, 2006 received a
match of 40%, up to the first 6% of eligible compensation;
and
(b) who
made contributions on or after May 12, 2006 received a match of 45% up to
the first 6% of eligible compensation.
The
represented hourly employees of Luzenac America, Inc. are not eligible for
the IPP Company contributions. Matching contributions are
recorded on the date the related participant contributions are
withheld.
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Participant
Accounts
Individual
accounts are maintained for each Plan participant. Each participant’s
account is credited with the participant’s contributions, the Company’s
matching contributions, Company’s contributions, and an allocation of the
Plan’s earnings, and is charged with withdrawals and an allocation of the
Plan’s losses and 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 participant’s vested
account.
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Participant-Directed
Options for Investments
Participants
direct the investment of their contributions, Company matching
contributions and Company IPP contributions (if applicable) into various
investment options offered by the Plan. Investment options include
mutual funds, a common collective trust, common stock of the
Parent in the form of American Depositary Receipts (ADRs), and a stable
value fund consisting of a money market fund, a common collective trust
and synthetic guaranteed investment
contracts.
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1. Description
of
the
Plan
Continued
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Payment
of Benefits
On
termination of service due to death, disability, or retirement,
participants or their beneficiaries may elect to receive lump-sum
distributions or annual, semi-annual, quarterly or monthly installments in
amounts equal to the value of the participants’ vested interests in their
accounts. Under certain circumstances, participants may
withdraw their contributions prior to the occurrence of these
events.
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Transfers
Certain U.S.
Subsidiaries of Rio Tinto plc also sponsor other 401(k) plans that cover
represented employees. If those employees are changed from
union to non-union status during the year, their account balances are
transferred from those union plans to this Plan. For the year
ended December 31, 2008, transfers into the Plan totaled
$659,727. For the year ended December 31, 2008, transfers from
the U.S. Borax Inc. 401(k) Plan for Hourly Employees totaled $534,580 and
transfers from the Kennecott Corporation Savings Plan for Hourly Employees
totaled $125,147.
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Forfeited
Accounts
As of January
1, 2003, the effective date of the Rio Tinto America Inc. Savings Plan,
there was a balance in the forfeiture account related to predecessor
plans’ non-vested participant account balances. Under the Plan
document, forfeiture amounts related to terminated participants are
required to be held for five years after termination in the event that the
individual is re-hired and becomes a participant again. If the
employee becomes a participant within that five-year period, the service
period resumes for vesting of the participant’s account. If the
five-year period expires, the forfeitures become available to reduce
future Company contributions to the Plan. In addition,
terminated participant non-vested account balances of the IPP are
transferred to the forfeiture account. During the year ended
December 31, 2008, $53,256 in forfeitures were used to pay expenses of the
Plan. Forfeitures were $156,339 for the year ended December 31,
2008. Interest and dividends attributable to the forfeitures were $12,546
for the year ended December 31, 2008. As of December 31, 2008 and 2007,
the balance in the forfeiture account was $318,683 and $203,054,
respectively.
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2. Summary
of
Significant
Accounting
Policies
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Basis
of Presentation
The financial
statements of the Plan have been prepared on the accrual basis of
accounting in accordance with U.S. generally accepted accounting
principles.
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2. Summary
of
Significant
Accounting
Policies
Continued
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Use
of Estimates
The
preparation of the Plan’s financial statements in conformity with U.S.
generally accepted accounting principles requires the Plan’s management to
make estimates and assumptions that affect the reported amounts of assets
available for benefits at the date of the financial statements, the
changes in assets available for benefits during the reporting period and,
when applicable, the disclosures of contingent assets and liabilities at
the date of the financial statements. Actual results could
differ from those estimates.
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Risks
and Uncertainties
The Plan
provides for investments in securities that are exposed to various risks,
such as interest rate, currency exchange rate, credit and overall market
fluctuation. Due to the level of risk associated with certain
investment securities, it is 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 assets available for
benefits.
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During 2008
and as of the date of the accompanying independent auditors’ report, the
world’s economic and financial markets have experienced significant
instability and illiquidity. These developments have impacted
the fair values of many of the Plan’s investments.
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Financial
Accounting Standards Board Staff Position
As described
in Financial Accounting Standards Board (FASB) Staff Position, AAG INV-1
and SOP 94-4-1, Reporting of Fully
Benefit-Responsive Investment Contracts Held by Certain Investment
Companies Subject to the AICPA Investment Company Guide and
Defined-Contribution Health and Welfare and Pension Plans (the
FSP), 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 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. As required by the
FSP, the statement of assets available for benefits presents the fair
value of the investment contracts as well as the adjustment of the fully
benefit-responsive investment contracts from fair value to contract
value. The statement of changes in assets available for
benefits is prepared on a contract value
basis.
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2. Summary
of
Significant
Accounting
Policies
Continued
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Investment
Valuation and Income Recognition
The Plan’s
investments in mutual funds are valued at quoted market prices, which
represent the net asset values of units held by the Plan at year
end. Plan investments in common stock are stated at fair value
based on quoted market prices. Common collective trusts are
valued at the asset value per unit as determined by each common collective
trust as of the valuation date. The fair value of the Plan’s
interest in the Dwight Stable Value Fund (see detail of investments
included in this fund in Note 3) is based upon the market value of the
underlying securities at quoted market value or quoted share
prices.
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.
The net
appreciation (depreciation) in the fair value of investments, which
includes realized gains (losses) and unrealized appreciation
(depreciation) on those investments, is presented in the statement of
changes in assets available for benefits of the Plan, and totaled
($175,937,449) for the year ended December 31, 2008 (see Note
6).
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Payments
of Benefits
Benefits
payments are recorded when paid by the Plan.
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Administrative
Expenses
The Company
pays the majority of costs and expenses incurred in administering the
Plan. The Company provides accounting and other services for
the Plan at no cost to the Plan.
The Plan has
several fund managers that manage the investments held by the
Plan. Fees for investment fund management services are included
as a reduction of the return earned on each fund. In addition,
during the year ended December 31, 2008, the Company paid all investment
consulting fees related to these investment funds.
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Transaction
costs associated with the purchase or sale of Rio Tinto plc ADRs are paid
by the participants.
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2. Summary
of
Significant
Accounting
Policies
Continued
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Participant
Loans
Participants
may borrow from the Plan up to a maximum of $50,000 or 50% of their
account balances, whichever is less. Each loan is secured by
the balance in the participant’s account and bears interest at a rate
commensurate with prevailing rates at the time funds are borrowed, as
determined by the Plan Administrator. Loans originated during
the year ended December 31, 2008 have interest rates set at prime plus one
percent. A general-purpose loan must be repaid within 5
years. A loan for a primary residence must be repaid within 20
years. Principal and interest are paid ratably through payroll
deductions.
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3. Fully
Benefit-
Responsive
Investment
Contracts
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The Plan’s
investments include the Dwight Stable Value Fund. The Dwight
Stable Value Fund is invested in the following:
·
A money market fund (TBC Pooled Daily Liquidity Fund);
·
A fully benefit-responsive common collective trust (the SEI Stable
Asset Fund); and
·
Fully benefit-responsive synthetic GICs as follows:
a.
Dwight Intermediate Core Plus Fund, no specified maturity date,
4.36%;
b.
Dwight Managed Target 2, no specified maturity date, 4.36%;
c.
Dwight Managed Target 5, no specified maturity date, 4.36%;
d.
Dwight Intermediate Core Plus Fund, no specified maturity date,
3.79%;
e.
Dwight Managed Target 2, no specified maturity date, 3.79%;
and
f.
Dwight Managed Target 5, no specified maturity date,
3.79%
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3. Fully
Benefit-
Responsive
Investment
Contracts
Continued
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Synthetic
GICs provide for a guaranteed return on principal over a specified period
of time through fully benefit-responsive wrap contracts, issued by a third
party, which are secured by underlying assets. The Plan’s wrap
contracts have credit ratings ranging from AA+ to AAA. The
assets underlying the wrap contracts include diversified bond
portfolios. These bond portfolios include investments in
securities with contractual cash flows, such as asset backed securities,
collateralized mortgage obligations and commercial mortgage backed
securities, including securities backed by subprime mortgage
loans. The value, liquidity and related income of these
securities are sensitive to changes in economic conditions, including real
estate value, delinquencies or defaults, or both, and may be adversely
affected by shifts in the market’s perception of the issuers and changes
in interest rates.
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The crediting
interest rates of the contracts are based on agreed-upon formulas with the
issuing third-party, as defined in the contract agreement, but cannot be
less than zero. The
contract or crediting interest rates for the synthetic GICs are typically
reset quarterly and are based on capital market developments, the
performance of the assets backing the contract, and the expected and
actual contributions and withdrawals of all of the plans participating in
the contract. These
contracts typically provide that realized and unrealized gains and losses
on the underlying assets are not reflected immediately in the assets of
the fund. Realized and unrealized gains and losses are
amortized, usually over the time to maturity or the duration of the
underlying investments, through adjustments to the future interest
crediting rate. Additional inputs used to determine the
crediting interest rates include each contract’s portfolio market value,
current yield-to-date maturity, duration, and fair value relative to
contract value.
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The fair
value of the investment contracts relative to the contract value are
reflected in the statements of assets available for benefits as
“adjustment from fair value to contract value for fully benefit-responsive
investment contracts” (adjustment). If the adjustment is positive, this
indicates that the contract value is greater than the fair value. The
embedded losses will be amortized in the future through a lower interest crediting rate than would otherwise be the case. If the adjustment
is negative, this indicates that the contract value is less than the fair
value. The embedded gains will cause the future interest crediting rate to be higher than it otherwise would have been. A
positive adjustment is reflected in the Plan’s statements of assets
available for benefits as of December 31, 2008 and 2007 in the amount of
$11,996,107 and $690,931,
respectively.
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3. Fully
Benefit-
Responsive
Investment
Contracts
Continued
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These wrap
contracts provide benefit withdrawals and investment exchanges at the full
contract value of the synthetic contracts (principal plus accrued
interest) notwithstanding the actual market value of the underlying
investments (fair value plus accrued interest). There are
no reserves against contract value for credit risk of the contract issuer
or otherwise.
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Certain
events may limit the ability of the Plan to transact at contract value
with the issuer of fully benefit-responsive investment
contracts. Such events include the following: (1) amendments to
the Plan documents (including complete or partial Plan termination or
merger with another plan), (2) bankruptcy of the Company or other Company
events (for example, divestiture or spin-off of a subsidiary) that cause a
significant withdrawal from the Plan, or (3) the failure of the trust to
qualify for exemption from federal income taxes or any required prohibited
transaction exemption under ERISA, as amended. With the
exception of announced efforts on the part of the Company to market the
sale of certain subsidiaries, the Plan Administrator does not believe that
the occurrence of any such event, which would limit the Plan’s ability to
transact at contract value with participants, is probable. The
contracts provide that withdrawals associated with certain events which
are not in the ordinary course of fund operations, and are determined by
the issuer to have a material adverse effect on the issuer’s financial
interest, may be paid at other than contract value.
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Absent the
events described in the preceding paragraph, the guaranteed investment
contracts do not permit the issuers to terminate the agreements prior to
the scheduled maturity dates.
Average
duration for all investment contracts was 2.80 and 3.02 years as of
December 31, 2008 and 2007, respectively. Average yield
data for all fully benefit-responsive investment contracts for the years
ended December 31, 2008 and 2007 was as
follows:
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2008
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2007
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Average
Yields:
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Based on
actual earnings
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5.71 | % | 5.59 | % | ||||
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Based on
interest rate credited to participants
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4.09 | % | 4.87 | % | ||||
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4. Party-in-
Interest
Transactions
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Certain Plan
investments are managed by Putnam Investments, the Plan trustee,
therefore, these transactions are exempt party-in-interest
transactions. Fees paid by the Plan for investment management
services were included as a reduction of the return earned on each
fund.
Transactions
associated with Rio Tinto plc ADRs are considered exempt party-in-interest
transactions because Rio Tinto plc is the Parent of the
Company. As of December 31, 2008 and 2007, the Plan held
209,588.054 and 146,778.41 shares, respectively, of common stock of Rio
Tinto plc. During the year ended December 31, 2008, the Plan
recorded dividend income of $879,940 related to the Rio Tinto plc
ADRs.
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5. Global
Securities
Lending
Program
|
The Plan
participates in the State Street Bank and Trust Company S&P 500
Flagship Securities Lending Series C Fund (the Fund), a common collective
trust. The Fund invests in certain collective investment funds that
participate in the State Street Global Securities Lending Program (Lending
Funds). Under the State Street Global Securities Lending
Program, securities held by Lending Funds are loaned by State Street Bank,
as agent, to certain brokers and other financial institutions (the
Borrowers). The Borrowers provide cash, securities, or letters
of credit as collateral against loans in an amount at least equal to 100%
of the fair value of the loaned securities. The Borrowers are
required to maintain the collateral at not less than 100% of the fair
value of the loaned securities. Cash collateral provided by the
Borrowers may be invested in State Street Bank and Trust Company
Collateral Funds (Cash Collateral Funds). The Lending Funds
invested cash provided by the Borrowers into the State Street Bank and
Trust Company Quality Trust for SSgA Funds.
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Risks
and Indemnification
State Street
Bank, as lending agent, indemnifies Lending Funds for replacement of any
loaned securities (or, in certain circumstances, return of equivalent cash
value) due to Borrower default on a security loan. Lending Fund
participants, however, bear the risk of loss with respect to the
investment of collateral.
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5. Global
Securities
Lending
Program
Continued
|
Withdrawal
Safeguards
From time to
time, the Trustee of the Lending Funds may exercise its rights in order to
protect all participants in the State Street Bank securities lending
funds. In an effort to better ensure safety of principal and
better maintain adequate liquidity, as well as achieve favorable returns
for all securities lending program participants, State Street Bank has
temporarily implemented withdrawal safeguards on full or partial
redemptions from certain securities lending funds.
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The objective
of these withdrawal safeguards is to protect the interest of all
participants, while providing the maximum level of liquidity that can be
prudently made available to all participants. These withdrawal
safeguards permit redemptions resulting from ordinary course activity,
subject to certain thresholds. Ordinary course activity also
may include periodic participant rebalancing of their investment portfolio
between Lending Funds and other State Street Bank collective investment
funds. Requests for redemptions above these withdrawal
safeguards may result in proceeds consisting of cash, units of other State
Street Bank collective investment funds, units of Cash Collateral Funds
that will be converted into units of a liquidating trust, or a combination
thereof. The Trustee continues to monitor market conditions and
evaluates the need for withdrawal safeguards, as appropriate.
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Investment
in Cash Collateral Fund Valuation
Management of
the Lending Funds regularly reviews the performance of the Cash Collateral
Funds and the variation between their per unit fair values and
$1.00. The Cash Collateral Funds primarily utilize quotations
from independent pricing services, quotations from bond dealers and
information with respect to bond and note transactions (“pricing service
information”) to determine the fair value of its
investments. Such pricing service information may also consist
of quotations derived from valuation models or matrix
pricing. As of December 31, 2008, the per unit fair value was
$0.93 for the State Street Bank and Trust Company Quality Trust for SSgA
Funds.
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5. Global
Securities
Lending
Program
Continued
|
Investment
in Cash Collateral Fund Valuation - Continued
For the
purposes of determining transaction price for issuances and redemptions of
Lending Fund units, management of the Lending Funds also evaluates
additional inputs to the fair value of the Lending Funds’ investments in
the Cash Collateral Funds, including among other things current market
conditions, credit quality, liquidity of the Cash Collateral Funds and the
assessed probability of incurring a realized loss on Cash Collateral Fund
Assets. Additionally, management of the Lending Funds evaluates
the qualitative aspects of the State Street Global Securities Lending
Program, including the historical performance of State Street Bank as
lending agent, the Cash Collateral Funds’ investment strategy and past
performance, and the expected continuing transactions price of the Cash
Collateral Funds at $1.00 per unit.
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Accordingly,
for purposes of calculating the transaction price of the Lending Funds,
management of the Lending Funds has valued its investments in Cash
Collateral Funds at their per unit transaction price of
$1.00. Management of the Lending Funds will continue to review
the Lending Funds participation in the State Street Global Securities
Lending Program, including the appropriateness of the fair value of the
Lending Funds’ investments in the Cash Collateral Funds at $1.00 per unit
for transaction purposes or, alternatively, at a lower per unit fair
value.
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6. Investments
|
The Plan’s
investments (stated at fair value) that represented five percent or more
of the Plan’s assets available for benefits as of December 31, 2008 and
2007 are as follows:
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2008
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2007
|
|||||||
|
Assets of the
Dwight Stable Value Fund:
|
||||||||
|
TBC
Pooled Employee Daily Liquidity Fund
|
$ | 3,509,287 | $ | 3,423,813 | ||||
|
Monumental
Life Insurance Company Synthetic GICs
|
58,924,901 | 61,306,152 | ||||||
|
State
Street Bank & Trust Synthetic GICs
|
45,522,709 | 47,120,265 | ||||||
|
SEI
Stable Asset Fund
|
27,700,168 | 34,900,140 | ||||||
| $ | 135,657,065 | $ | 146,750,370 | |||||
|
6. Investments
Continued
|
|
2008
|
2007
|
|||||||
|
Dodge and Cox
Stock Fund
|
$ | 39,897,135 | $ | 74,079,771 | ||||
|
PIMCO Total
Return Fund
|
39,213,406 | 33,516,108 | ||||||
|
State Street
Bank and Trust Company S&P 500 Flagship Securities Lending Series
C Fund
|
26,939,530 | 44,303,629 | ||||||
|
Harbor
Capital Appreciation Fund
|
26,312,796 | 40,496,345 | ||||||
|
American
Funds Europacific Growth
|
20,012,629 | - | ||||||
|
Rio Tinto plc
ADRs
|
18,634,474 | 61,632,256 | ||||||
|
Artisan Mid
Cap Fund
|
- | 30,935,150 | ||||||
|
Putnam
International Equity Fund
|
- | 39,544,736 | ||||||
|
During the
year ended December 31, 2008, the Plan’s investments (including gains and
losses on investments bought and sold, as well as held during the year)
depreciated in fair value as
follows:
|
|
Mutual
Funds
|
$ | (109,942,393 | ) | |
|
Common
Stock
|
(50,203,374 | ) | ||
|
Common
collective trusts
|
(15,791,682 | ) | ||
|
Net
depreciation
|
$ | (175,937,449 | ) |
|
Effective
January 1, 2008, the Plan adopted Statement of Financial Accounting
Standards (SFAS) No. 157, Fair Value
Measurements. SFAS No. 157 defines fair value as the price that
would be received to sell an asset or paid to transfer a liability in the
principal market for the asset or liability or, in the absence of a
principal market, the most advantageous market for the asset or liability,
in an orderly transaction between market participants at the measurement
date.
|
||
|
SFAS
No. 157 also establishes a fair value hierarchy for those instruments
measured at fair value that distinguishes between assumptions based on
market data (observable inputs) and the Plan’s assumptions (unobservable
inputs). The hierarchy consists of three levels:
Level
1: Quoted prices (unadjusted) in active markets for identical
assets that are accessible at the measurement date for assets and
liabilities.
|
|
6. Investments
Continued
|
Level
2: Quoted prices in inactive markets for identical assets or
liabilities, quoted prices for similar assets or liabilities in active
markets, or other observable inputs either directly related to the asset
or liability or derived principally from corroborated observable market
data.
Level
3: Unobservable inputs for the asset that are supported by little
or no market activity and that are significant to the fair value of the
underlying asset.
|
|
|
The following
table summarizes the Plan’s assets measured at fair value on a recurring
basis in accordance with SFAS No. 157 as of December 31,
2008:
|
|
Description
|
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||||
|
Money
market fund
|
$ | 3,509,631 | $ | - | $ | - | $ | 3,509,631 | ||||||||
|
Common
collective trusts
|
25,030,092 | 29,182,281 | 427,325 | 54,639,698 | ||||||||||||
|
Mutual
funds
|
180,973,803 | - | - | 180,973,803 | ||||||||||||
|
Synthetic
guaranteed investment
contracts
|
8,167,325 | 89,651,756 | 6,628,529 | 104,447,610 | ||||||||||||
|
Common
stock
|
18,634,474 | - | - | 18,634,474 | ||||||||||||
|
Participant
loans
|
- | - | 10,483,752 | 10,483,752 | ||||||||||||
| $ | 236,315,325 | $ | 118,834,037 | $ | 17,539,606 | $ | 372,688,968 | |||||||||
|
The following
is a reconciliation of the investments in which significant unobservable
inputs (Level 3) were used in determining fair
value:
|
|
Common
Collective Trusts and Synthetic Guaranteed Investment
Contracts
|
||||||||||||||||||
|
Beginning
|
Net
realized
|
Net
|
Net
transfers
|
Ending
|
||||||||||||||
|
balance
as of
|
gain/(loss)
|
purchases/
|
in
and/or out
|
balance
as of
|
||||||||||||||
|
January
1, 2008
|
and
depreciation
|
sales
|
of
Level 3
|
December
31, 2008
|
||||||||||||||
| $ |
11,775,127
|
$ | (1,582,990) | $ |
(2,372,969)
|
$ |
(763,314)
|
$ |
7,055,854
|
|||||||||
|
Participant
Loans
|
||||
|
Amount
|
||||
|
Beginning
balance January 1, 2008
|
$ | 11,268,531 | ||
|
Issuances
|
6,322,555 | |||
|
Repayments
and settlements
|
(7,107,334 | ) | ||
|
Ending
Balance, December 31, 2008
|
$ | 10,483,752 | ||
|
No
adjustments were required to be made to the financial statements as a
result of adopting SFAS No.
157.
|
|
7. Plan
Termination
|
Although it
has not expressed any intention to do so, the Company has the right under
the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions set forth in ERISA.
|
|
|
8. Income
Tax
Status
|
The Plan does
not have a determination letter from the Internal Revenue Service
informing it that the Plan and related trust are designed in accordance
with the applicable requirements of the Internal Revenue
Code. However, the Plan Administrator and the Plan’s legal
counsel believe that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue
Code. Therefore, no provision for income taxes has been
included in the Plan’s financial statements.
|
|
|
9. Reconciliation
of
Financial
Statements
to
Form
5500
|
The following
is a reconciliation of assets available for benefits as presented in the
financial statements as of December 31, 2008 and 2007 to the Form
5500:
|
|
2008
|
2007
|
|||||||
|
Assets
available for benefits as presented in the financial
statements
|
$ | 384,686,371 | $ | 549,591,366 | ||||
|
Adjustment
from contract value to fair value
|
(11,996,107 | ) | (690,931 | ) | ||||
|
Assets
available for benefits as presented in Form
5500
|
$ | 372,690,264 | $ | 548,900,435 | ||||
|
10. Delinquent
Contributions
|
As of
December 31, 2008, a receivable has been recorded for delinquent Employer
contributions of $1,213 related to payroll periods in 2007. A
receivable for corrective earnings contributions of $83 has also been
recorded (see the accompanying supplemental schedule of delinquent
contributions).
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
||||||||||||
|
Party
in
|
Number
of
|
Current
|
||||||||||||||
|
Interest
|
Identity
of Issue
|
Description
of Investment
|
Units
|
Cost
|
Value
|
|||||||||||
|
Money
Market Fund:
|
||||||||||||||||
|
Mellon
Bank
|
TBC
Pooled Employee Daily Liquidity Fund
|
3,509,287 |
**
|
$ | 3,509,287 | |||||||||||
|
Common
Collective Trusts:
|
||||||||||||||||
|
SEI
Investments
|
SEI
Stable Asset Fund
|
27,700,168 |
**
|
27,700,168 | ||||||||||||
|
State
Street Bank & Trust Company
|
State
Street Bank and Trust Company S&P 500 Flagship
Securities
|
|||||||||||||||
|
Lending
Series C Fund
|
1,624,723 |
**
|
26,939,530 | |||||||||||||
|
Total
Common Collective Trusts
|
54,639,698 | |||||||||||||||
|
Mutual
Funds:
|
||||||||||||||||
|
Dodge
and Cox
|
Dodge
and Cox Stock Fund
|
536,468 |
**
|
39,897,135 | ||||||||||||
|
PIMCO
|
PIMCO
Total Return Fund
|
3,867,200 |
**
|
39,213,406 | ||||||||||||
|
Harbor
|
Harbor
Capital Appreciation Fund
|
1,129,305 |
**
|
26,312,796 | ||||||||||||
|
American
|
American
Funds Europacific Growth
|
716,015 |
**
|
20,012,629 | ||||||||||||
|
Artisan
|
Artisan
Mid Cap Fund
|
950,911 |
**
|
16,175,002 | ||||||||||||
|
Dodge
and Cox
|
Dodge
& Cox International Fund
|
580,424 |
**
|
12,711,289 | ||||||||||||
|
UAM
Trust Company
|
UAM/ICM
Small Company Fund
|
537,396 |
**
|
9,931,071 | ||||||||||||
|
Wells
Fargo
|
Wells
Fargo Advantage C&B Mid Cap Value Fund
|
751,821 |
**
|
7,909,160 | ||||||||||||
|
Blackrock
|
Blackrock
Small Cap Growth Equity
|
544,454 |
**
|
7,883,691 | ||||||||||||
|
JP
Morgan
|
JP
Morgan Investor Balanced Fund
|
98,058 |
**
|
927,624 | ||||||||||||
|
Total
Mutual Funds
|
180,973,803 | |||||||||||||||
|
*
denotes a party-in-interest as defined by
ERISA
|
||||||||||||||||
|
**
not required as investments are participant
directed
|
||||||||||||||||
|
See
accompanying report of independent registered public accounting
firm.
|
22
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
||||||||||||
|
Party
in
|
Number
of
|
Current
|
||||||||||||||
|
Interest
|
Identity
of Issue
|
Description
of Investment
|
Units
|
Cost
|
Value
|
|||||||||||
|
Synthetic
Guaranteed Investment Contracts:
|
||||||||||||||||
|
Monumental
Life Insurance Company
|
Synthetic
GIC, Dwight Managed Target 2, no specified maturity date,
4.36%
|
1,902,805 |
**
|
$ | 31,678,851 | |||||||||||
|
Monumental
Life Insurance Company
|
Synthetic
GIC, Dwight Managed Target 5, no specified maturity date,
4.36%
|
1,459,500 |
**
|
25,362,219 | ||||||||||||
|
Monumental
Life Insurance Company
|
Synthetic
GIC, Dwight Intermediate Core Plus Fund,
|
|||||||||||||||
|
no
specified maturity date, 4.36%
|
131,787 |
**
|
1,883,831 | |||||||||||||
|
State
Street Bank & Trust Company
|
Synthetic
GIC, Dwight Managed Target 2, no specified maturity date,
3.79%
|
1,538,601 |
**
|
25,615,411 | ||||||||||||
|
State
Street Bank & Trust Company
|
Synthetic
GIC, Dwight Intermediate Core Plus Fund,
|
|||||||||||||||
|
no
specified maturity date, 3.79%
|
834,957 |
**
|
11,935,334 | |||||||||||||
|
State
Street Bank & Trust Company
|
Synthetic
GIC, Dwight Managed Target 5, no specified maturity date,
3.79%
|
458,756 |
**
|
7,971,964 | ||||||||||||
|
Total
Synthetic Guaranteed Investment Contracts
|
104,447,610 | |||||||||||||||
|
*
|
Rio
Tinto plc ADRs
|
Common
Stock
|
209,588 |
**
|
18,634,474 | |||||||||||
|
*
|
Putnam
|
Pending
Account
|
**
|
344 | ||||||||||||
|
*
|
Various
participants
|
Participant
loans (maturing 2009 to 2028 at interest
rates
|
||||||||||||||
|
ranging
from 5.0% to 10.5%)
|
1,149 |
**
|
10,483,752 | |||||||||||||
|
Total
Investments at Fair Value
|
$ | 372,688,968 | ||||||||||||||
|
*
denotes a party-in-interest as defined by
ERISA
|
||||||||||||||||
|
**
not required as investments are participant
directed
|
||||||||||||||||
|
See
accompanying report of independent registered public accounting
firm.
|
23
|
|
Employer
|
Nonexempt
prohibited
|
Corrective
|
|||||||||||
|
match
|
transactions that
are
|
additional
Employer
|
|||||||||||
|
due
|
corrected outside
VFCP
|
earnings
contribution
|
|||||||||||
| $ |
1,213
|
$ |
1,213
|
$ |
83
|
||||||||
|
See
accompanying report of independent registered public accounting
firm.
|
24
|
|
RIO
TINTO AMERICA INC. SAVINGS PLAN
|
||
|
By:
|
/s/ Chad
Anderson
|
|
|
Name: Chad
Anderson
|
||
|
Title:
Rio Tinto America Benefits Compliance
Committee
|
||
|
Exhibit
|
||
|
Number
|
Document
|
|
|
23.1
|
Consent
of Independent Registered Public Accounting
Firm
|