UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 11-K
------------------
ANNUAL REPORT PURSUANT TO SECTION 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark one)
[X] ANNUAL report pursuant to section 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 31, 2003
or
[_] Transition report pursuant to Section 15(d) of the Securities Exchange Act
For the transition period from _________ to ___________
Commission file number 001-10533
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
B. Name of issuer of the securities held pursuant to the Plan and the address of
its principal executive office:
Rio Tinto plc, 6 St. James's Square, London, SW1Y 4LD, England
Page 1 of 17
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
CONTENTS
Report of Independent Registered Public Accounting Firm .......................3
Financial Statements:
Statements of Assets Available
for Benefits...........................................................4
Statements of Changes in Assets
Available for Benefits.................................................5
Notes to Financial Statements........................................6 - 12
Supplemental Schedule:
Schedule H, line 4i - Schedule of Assets Held for Investment
Purposes at December 31, 2003.........................................14
Supplemental schedules required by the Employee Retirement Income Security Act
of 1974 that are omitted are not applicable to the Kennecott Corporation Savings
Plan for Hourly Employees.
Page 2 of 17
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of
the Kennecott Corporation Savings Plan for Hourly Employees
In our opinion, the accompanying statements of assets available for benefits and
the related statements of changes in assets available for benefits present
fairly, in all material respects, the assets available for benefits of the
Kennecott Corporation Savings Plan for Hourly Employees (the "Plan") at December
31, 2003 and 2002, and the changes in assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements 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. 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, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets Held
for Investment Purposes at December 31, 2003 is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audit of the 2003 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/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Salt Lake City, Utah
September 23, 2005
Page 3 of 17
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
Statements of Assets Available for Benefits
As of December 31, 2003 and 2002
2003 2002
----------- -----------
Assets
-----------
Investments $44,184,371 $40,405,282
Receivables:
Employee contributions 85,056 112,685
Employer contributions 25,771 34,090
----------- -----------
Assets available for benefits $44,295,198 $40,552,057
=========== ===========
The accompanying notes are an integral part of the financial statements
Page 4 of 17
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
Statements of Changes in Assets Available for Benefits
for the years ended December 31, 2003 and 2002
2003 2002
------------ ------------
Investment income (loss):
Interest and dividends $ 1,149,776 $ 1,296,280
Net appreciation (depreciation) in fair value of investments 5,682,975 (6,314,441)
------------ ------------
Total investment income (loss): 6,832,751 (5,018,161)
------------ ------------
Contributions:
Employee contributions 2,514,160 2,831,999
Employer contributions 697,566 842,303
------------ ------------
Total contributions 3,211,726 3,674,302
------------ ------------
Deductions:
Administrative fees (15,986) (13,986)
Benefits paid to participants (6,285,350) (8,392,521)
------------ ------------
Total deductions (6,301,336) (8,406,507)
------------ ------------
Net increase (decrease) 3,743,141 (9,750,366)
Assets available for benefits:
Beginning of year 40,552,057 50,302,423
------------ ------------
End of year $ 44,295,198 $ 40,552,057
============ ============
The accompanying notes are an integral part of the financial statements
Page 5 of 17
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Kennecott Corporation Savings Plan for
Hourly Employees (the Plan) have been prepared on the accrual basis of
accounting.
The Plan presents in the statements of changes in assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains (losses) and the
unrealized appreciation (depreciation) on those investments.
Use of Estimates - The preparation of the Plan's financial statements in
conformity 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 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.
Risks and Uncertainties - The Plan provides for various investment options,
in any combination of stocks, bonds, mutual funds and other investment
securities as designated by the employee. Investment securities are exposed
to various risks, such as interest rate and market fluctuations and credit
risk. Due to the level of risk associated with certain investment
securities, changes in the values of investment securities may occur in the
near term. Such changes could materially affect participants' account
balances and the amounts reported in the statements of assets available for
benefits.
Payments of Benefits - Benefits are recorded when paid.
Investment Valuation and Income Recognition - The Plan's investments are
stated at fair value except for its insurance contracts, which are valued
at contract value (Note 3). Quoted market prices are used to value
investments. Shares of mutual funds are valued at the net asset value of
shares held by the Plan at year end. Participant loans are valued at their
outstanding balances, which approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
2. DESCRIPTION OF THE PLAN
The following brief description of the Plan is provided for general
information purposes only. Participants should refer to the summary Plan
description, "Savings Plan for Hourly Employees," which provides a detailed
discussion of the Plan, benefits and vesting of participants.
Page 6 of 17
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
2. DESCRIPTION OF THE PLAN, (continued)
General - The Plan is a defined contribution plan covering eligible, union
represented hourly employees of Kennecott Utah Copper Corporation and
Participating Companies (collectively the Company), as defined in the Plan.
Kennecott Utah Copper Corporation is an indirect wholly-owned subsidiary of
Rio Tinto America Inc., which is an indirect wholly-owned subsidiary of Rio
Tinto plc.
Rio Tinto plc and Rio Tinto Limited entered into a dual listed companies
merger in 1995 with the effect that the two companies operate as one
business organization. All eligible union represented hourly full-time
employees of the Company can participate in the Plan immediately after
completing three months of continuous service.
Contributions - An eligible participant may make a contribution of 1% to
19% of his/her salary on a before-tax basis via payroll deduction up to a
maximum of $12,000 for 2003 and $11,000 for 2002. Contributions are
allocated among 17 investments, as designated by the participant. The
Company matches employee contributions $0.50 for every dollar contributed
by the participant, up to 6% of base wages. The Company match is invested
in the same manner as the employee's contributions.
Participant Accounts - Each participant's investment account is credited
with the participant's contributions and an allocation of the Company's
contributions and Plan earnings and is charged with an allocation of
investment management fees. Allocations are based on participant earnings
or account balances. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested account.
Each participant may cause some or all of his or her current or cumulative
contributions, including any amounts contributed by the Company as match
contributions, to be invested in one or more of the investments made
available through the Plan.
Vesting - Participants are immediately vested in their voluntary
contributions plus actual earnings thereon. Vesting in the Company
contribution portion of their account plus earnings thereon is based on
years of service. As of January 1, 2002, a participant is 100% cliff vested
after three years of credited service. In the event of death or permanent
disability, a participant becomes fully vested in the Company contributions
and earnings thereon.
Payment of Benefits - On termination of service, a participant may elect to
receive an amount equal to the value of the participant's vested interest
in his or her account in a lump-sum amount.
Page 7 of 17
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
2. DESCRIPTION OF THE PLAN, (continued)
Account Forfeitures - Forfeited non-vested amounts are used to reduce
Company contributions. Forfeitures from the Plan were $20,631 and $9,018
for the years ending December 31, 2003 and 2002, respectively. On a
periodic basis, the Plan Administrator directs that accumulated, multi-year
forfeitures be used to offset employer contributions. The last time this
occurred was for the year ended December 31, 2003 in the amount of $52,266.
There was no such offset directed for the year ended December 31, 2002. As
of December 31, 2003, the Plan had $41,944 of unused, forfeited non-vested
amounts.
Administrative - The Administrative Committee, consisting of three or more
persons appointed by the Board of Directors of Kennecott Utah Copper
Corporation, administers the Plan. The Administrative Committee has the
sole power and responsibility to interpret and construe the provisions of
the Plan and decide on any disputes, and in general, to direct the
administration of the Plan.
Expenses - Putnam manages all investments except for the Plan's Dwight
Stable Value Fund. The Company pays all other costs and expenses incurred
in administering the Plan. A third party investment manager manages the
Plan's Dwight Stable Value Fund. The investment manager receives an
investment management fee at an annual rate of 0.9% of the Dwight Stable
Value Fund's fair value calculated based on the Fund's average month-end
balance for each calendar quarter and paid quarterly. The investment
management fees totaling $15,967 and $13,986 for the years ended December
31, 2003 and 2002, respectively, were paid by participants of the Dwight
Stable Value Fund. Transaction costs associated with the purchase or sale
of Rio Tinto plc ADRs are paid by the participant.
Plan Termination - The terms of the Plan may be amended, modified or
discontinued after the effective date of the Savings Plan Agreement. Such
amendment, modification or discontinuance may occur pursuant to
negotiations for employees at Kennecott Utah Copper Corporation who are
represented by the labor organizations that are jointly referred to as the
Union, or as required by law or to gain Internal Revenue Service approval.
No change, however, shall make it possible for any part of the funds of the
Plan to be used for or diverted to purposes other than for the exclusive
benefit of participants or their beneficiaries. In addition, no change
shall adversely affect the rights of any participant with respect to
contributions made prior to the date of the change.
If the Plan is terminated in accordance with the terms described in the
preceding paragraph, each participant's account shall become fully vested
and nonforfeitable and distribution of Plan assets shall be made as
directed by the Administrative Committee.
Page 8 of 17
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
3. INCOME TAX STATUS
The Plan obtained its latest determination letter on December 9, 2002, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since receiving the determination letter.
However, the Plan Administrator and the Plan's tax 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.
4. PARTIES-IN-INTEREST TRANSACTIONS
Certain Plan investments are managed by Putnam Investments. Putnam
Investments is the trustee as defined by the Plan, therefore, these
transactions qualify as party-in-interest transactions.
Transactions associated with Rio Tinto plc ADRs are considered
party-in-interest transactions since Rio Tinto plc is the parent of the
Company.
5. INVESTMENTS
Investments in common collective trust funds are stated at fair value based
upon the market value of the underlying securities, as determined or
provided by the Trustee. Collective trust funds represent investments in
pooled funds. Investments are purchased and sold at the fair value of the
underlying securities and receive the interest and dividend earnings of the
underlying securities.
Shares of mutual funds are valued at the net asset value of shares held by
the Plan at year end.
Investments in common stock are stated at fair value based on quoted market
prices.
The Plan invests in both group annuity contracts and synthetic investment
contracts. The Plan has entered into investment contracts with various
insurance companies. The Plan maintains the contributions in a pooled
account. The account is credited with earnings on the underlying
investments and charged for Plan withdrawals and administrative expenses
charged. The contracts are included in the financial statements at contract
value, (which represents contributions made under the contract, plus
earnings, less withdrawals and administrative expenses) because it is fully
benefit responsive. For example, participants may ordinarily direct the
withdrawal or transfer of all or a portion of their investment at contract
value. There are no reserves against contract value for credit risk of the
contract issuer or otherwise.
Page 9 of 17
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
5. INVESTMENTS, (continued)
The guaranteed insurance contracts held by the Plan are accounted for at
their contract value (representing invested principal plus accrued
interest) as reported by the contract issuers. Synthetic investment
contracts have crediting rates that reset quarterly based on a
pre-determined crediting rate formula. This formula factors in the contract
value, the market value, the yield to maturity and the underlying fixed
income investments. In all cases, the contract value is determined by
increasing the principal balance by accrued interest that is based on the
contract value crediting rate of each contract.
Synthetic investment contracts are comprised of both investment and
contractual components. The investment component consists of securities or
units of a commingled pooled fund of fixed-income securities, referred to
as the underlying investments. Underlying investments may include, but are
not limited to:
o Units of collective investment trusts ("CITs"), shares of mutual
funds, or actively managed accounts, which may include CITs and
mutual funds which provide for contract value accounting as part
of the CIT or mutual fund structure. Any CIT or mutual fund
investment has a stated target minimum average credit rating of
"AA".
o U.S. Treasuries and other securities backed by the full faith and
credit of the U.S. Government.
o Securities rated "AAA" at time of purchase and issued by U.S.
Government Sponsored Entities.
o Other fixed income investments such as mortgage-backed
securities, asset-backed securities, collateralized mortgage
obligations, corporate debt obligations and structured notes, in
each case rated "AAA" at the time of purchase.
The underlying investments are "wrapped" by contracts issued by third-party
financial institutions. These wrap contracts provide benefit withdrawals
and investment exchanges at the full contract values of the synthetic
contracts (i.e. principal plus accrued interest) notwithstanding the actual
market value of the underlying investments (i.e. fair value of security
plus accrued interest). In this manner, wrap contracts are designed to
smooth out the impact of normal market fluctuations associated with the
performance of the underlying investments.
The difference between the market value of the underlying investments and
the reported value of the synthetic contract is generally the implicit
value of the wrap contract. A positive value implies that the wrap contract
issuer is obligated to the Fund for the indicated amount in the event of
benefit withdrawals and or investment exchanges from the contract. A
negative value for the wrap contract indicates that the market value of the
underlying investment exceeds the contract value.
Page 10 of 17
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
5. INVESTMENTS, (continued)
The crediting rate of a particular synthetic contract is reset on a fixed
schedule basis and is thus tied to the performance of the underlying
investments.
TOTAL FAIR WRAPPER CONTRACT
DESCRIPTION AND UNDERLYING INVESTMENTS VALUE VALUE VALUE
SYNTHETIC GUARANTEED CONTRACTS
Monumental Life Insurance Company
MDA00039TR, no set maturity date, 5.15% $ 2,817,154 $ (130,176) $ 2,686,978
Transamerica Life Insurance Company
TDA76580TR-0, no set maturity date, 5.54% 1,786,400 (115,643) 1,670,757
State Street Bank
99037, no set maturity date, 3.98% 4,822,884 (90,970) 4,731,914
State Street Bank
101138, no set maturity date, 6.07% 1,721,356 (91,125) 1,630,231
----------- ----------- -----------
TOTAL SYNTHETIC GUARANTEED CONTRACTS $11,147,794 $ (427,914) $10,719,880
=========== =========== ===========
At December 31, 2003 and 2002, all investments were held by Putnam
Investments.
During 2003 and 2002, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in value by $5,682,975 and $(6,314,441), respectively.
2003 2002
----------- -----------
Common Collective Trust $ 187,123 $ (840,583)
Mutual Funds 4,366,189 (5,542,298)
Common Stock 1,129,663 68,440
----------- -----------
$ 5,682,975 $(6,314,441)
=========== ===========
Page 11 of 17
KENNECOTT CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
5. INVESTMENTS, (continued)
The following information presents the fair value of all investments by
type of investment as of December 31, 2003 and 2002:
2003 2002
----------- -----------
Money Market
Mellon Bank - STIF Account $ 93,674 $ --
The Boston Company - STIF Account -- 92,603
----------- -----------
$ 93,674 $ 92,603
----------- -----------
Common Collective Trust
SEI Stable Asset Fund 4,697,103 * 2,171,233 *
Putnam S&P 500 Index Fund 3,558,411 * 3,099,055 *
----------- -----------
8,255,514 5,270,288
----------- -----------
Mutual Fund
Managers Special Equity Fund 835,088 453,967
Dreyfus Mid-Cap Value Fund 843,817 300,572
PIMCO Total Return Fund 1,548,236 1,849,645
MSIF Institutional International Equity Fund 181,079 76,813
Dodge & Cox Stock Fund 531,886 319,449
UAM/ICM Small Company Fund 461,908 357,538
Putnam Asset Allocation: Growth Fund 298,293 238,683
Putnam Asset Allocation: Balanced Fund 232,345 190,555
Putnam Asset Allocation: Conservative Fund 222,702 135,580
Putnam International Equity Fund 2,429,618 * 2,156,020 *
Putnam Investors Fund 494,379 388,478
Putnam Fund for Growth and Income 5,228,096 * 4,739,944 *
Putnam New Opportunities Fund 5,022,937 * 4,086,046 *
Putnam Voyager Fund 2,664,377 * 2,342,597 *
----------- -----------
20,994,761 17,635,887
----------- -----------
Guaranteed Insurance Contracts
Monumental Life Insurance Company 385,603 741,592
Transamerica Life Insurance Company -- 1,012,177
Monumental Life Insurance Company -- 1,193,281
Pacific Mutual Insurance Company -- 745,816
----------- -----------
385,603 3,692,866
----------- -----------
Synthetic Guaranteed Contracts
Monumental Life Insurance Company 2,686,978 * 2,708,328 *
Transamerica Life Insurance Company 1,670,757 1,717,719
State Street Bank 4,731,914 * 4,474,288 *
State Street Bank 1,630,231 1,607,484
----------- -----------
10,719,880 10,507,819
----------- -----------
Common Stock
Rio Tinto plc ADRs 3,734,939 * 3,205,819 *
----------- -----------
Total Investments $44,184,371 $40,405,282
=========== ===========
* Represents 5% or more of assets available for benefits
Page 12 of 17
SUPPLEMENTAL SCHEDULE
Page 13 of 17
KENNECOTT COPRORATION SAVINGS PLAN FOR HOURLY EMPLOYEES
FORM 5500 DETAIL SCHEDULE
Schedule H, line 4i - Schedule of Assets Held for Investment Purposes at December 31, 2003
(a) (b) (c) (d) (e)
Identity of issue, borrower, Description of investment including maturity date,
lessor or similar party rate of interest, collateral, par or maturity value Cost(1) Current Value
Mellon Bank - STIF Account Money Market $ 93,674
------------
SEI Stable Asset Fund Common Collective Trust 4,697,103
(2) Putnam S&P 500 Index Fund Common Collective Trust 3,558,411
------------
Total Common Collective Trusts 8,255,514
------------
Managers Special Equity Fund Mutual Fund 835,088
Dreyfus Mid-Cap Value Fund Mutual Fund 843,817
PIMCO Total Return Fund Mutual Fund 1,548,236
MSIF Institutional International Equity Fund Mutual Fund 181,079
Dodge & Cox Stock Fund Mutual Fund 531,886
UAM/ICM Small Company Fund Mutual Fund 461,908
(2) Putnam Asset Allocation: Growth Fund Mutual Fund 298,293
(2) Putnam Asset Allocation: Balanced Fund Mutual Fund 232,345
(2) Putnam Asset Allocation: Conservative Fund Mutual Fund 222,702
(2) Putnam International Equity Fund Mutual Fund 2,429,618
(2) Putnam Investors Fund Mutual Fund 494,379
(2) Putnam Fund for Growth and Income Mutual Fund 5,228,096
(2) Putnam New Opportunities Fund Mutual Fund 5,022,937
(2) Putnam Voyager Fund Mutual Fund 2,664,377
------------
Total Mutual Funds 20,994,761
------------
Monumental Life Insurance Company GIC, final due 06/15/04, 6.60% 385,603
------------
Total GICs 385,603
------------
Monumental Life Insurance Company Synthetic GIC, Dwight Managed Target 2, no specified
maturity date, 5.15% 2,001,858
Monumental Life Insurance Company Synthetic GIC, Dwight Managed Target 5, no specified
maturity date, 5.15% 815,296
Monumental Life Insurance Company Wrap contract (130,176)
------------
2,686,978
------------
Transamerica Occidental Life Insurance Co. Synthetic GIC, Dwight Managed Target 5, no
specified maturity date, 5.54% 1,786,400
Transamerica Occidental Life Insurance Co. Wrap contract (115,643)
------------
1,670,757
State Street Bank Synthetic GIC, Dwight Core Int Fund, no
specified maturity date, 6.07% 1,721,356
State Street Bank Wrap contract (91,125)
------------
1,630,231
State Street Bank Synthetic GIC, Dwight Managed Target 2, no
specified maturity date, 3.98% 3,585,156
State Street Bank Synthetic GIC, Dwight Managed Target 5, no
specified maturity date, 3.98% 1,237,728
State Street Bank Wrap contract (90,970)
------------
4,731,914
------------
Total Synthetic Guaranteed Investment Contracts 10,719,880
------------
(2) Rio Tinto plc ADRs Common Stock 3,734,939
------------
Total Investments $ 44,184,371
============
(1) Cost information not required as pre Special Rule for certain participant-directed transactions
(2) Known party-in-interest
Page 14 of 17
SIGNATURE
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.
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
By: /s/ Robert L. Light
----------------------------------
Name: Robert L. Light
Title: Chief Financial Officer
Date: November 2, 2005
Page 15 of 17
Exhibit Description
------- -----------
23.1 Consent of PricewaterhouseCoopers LLP
Page 16 of 17