þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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FINANCIAL STATEMENTS: |
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3 | ||||||||
4 | ||||||||
SUPPLEMENTAL SCHEDULE: |
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11 | ||||||||
12 | ||||||||
EXHIBITS: |
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Consent of Independent Registered Public Accounting Firm |
13 | |||||||
EX-99.A: CONSENT |
2005 | 2004 | |||||||
ASSETS |
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INVESTMENTS: |
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Defined Contribution Master Trust (Note 3) |
$ | 87,800,560 | $ | 85,662,207 | ||||
Loan Fund |
4,828,230 | 4,521,295 | ||||||
Total investments |
92,628,790 | 90,183,502 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS |
$ | 92,628,790 | $ | 90,183,502 | ||||
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2005 | 2004 | |||||||
NET ASSETS
AVAILABLE FOR BENEFITS, BEGINNING OF YEAR |
$ | 90,183,502 | $ | 81,122,522 | ||||
ADDITIONS: |
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Income from investments: |
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Interest in income of Defined Contribution Master Trust |
8,018,251 | 10,860,543 | ||||||
Interest |
254,286 | 243,320 | ||||||
Total income from investments |
8,272,537 | 11,103,863 | ||||||
Contributions: |
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Employer |
1,215,194 | 1,163,163 | ||||||
Employee |
3,396,027 | 3,108,650 | ||||||
Total contributions |
4,611,221 | 4,271,813 | ||||||
Total additions |
12,883,758 | 15,375,676 | ||||||
DEDUCTIONS: |
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Payments to participants or beneficiaries |
8,775,270 | 5,701,146 | ||||||
Administrative expenses |
98,576 | 106,871 | ||||||
Total deductions |
8,873,846 | 5,808,017 | ||||||
NET INCREASE BEFORE TRANSFERS |
4,009,912 | 9,567,659 | ||||||
NET TRANSFERS
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(1,564,624 | ) | (506,679 | ) | ||||
NET INCREASE |
2,445,288 | 9,060,980 | ||||||
NET ASSETS
AVAILABLE FOR BENEFITS, END OF YEAR |
$ | 92,628,790 | $ | 90,183,502 | ||||
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1. | DESCRIPTION OF THE PLAN |
The following brief description of the Rockwell Automation Retirement Savings Plan for Hourly
Employees (the Plan) is provided for general information purposes only. Participants should
refer to the Plan document for more complete information. |
a. | General - The Plan is a defined contribution savings plan sponsored by Rockwell
Automation, Inc. (Rockwell Automation). The Rockwell Automation Employee Benefit Plan
Committee and the Plan Administrator control and manage the operation and administration
of the Plan. Wells Fargo, N.A. (Wells Fargo) was the trustee of the Master Trust
through June 30, 2005. Effective July 1, 2005, all assets and trustee responsibilities of
the Master Trust were transferred to Fidelity Management Trust Company. The assets of the
Plan are managed by the Trustee and several other investment managers. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). |
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Effective July 1, 2005, Rockwell Automation added new investment options, eliminated
certain investment options, and consolidated the Rockwell Automation Stock Funds. The new
investment options include common stock and debt investment options in addition to a mutual
fund brokerage account window. |
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Participants in the Plan could have invested in seventeen investment funds through June 30,
2005. Effective July 1, 2005, the investment options expanded to include a suite of ten
Lifestyle mutual funds, eleven core investment options and a mutual fund brokerage window.
In addition, the following stock funds were available in 2004 and 2005 and are specific to
the Plan: |
Rockwell Automation Stock Fund A (employer contributions) - Invests principally in the
common stock of Rockwell Automation but may also hold cash and cash equivalents.
Effective July 1, 2005, this fund was combined with Rockwell Automation Stock Fund B
and renamed Rockwell Automation Stock Fund. |
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Rockwell Automation Stock Fund B (employee contributions) - Invests principally in the
common stock of Rockwell Automation but may also hold cash and cash equivalents.
Effective July 1, 2005, this fund was combined with Rockwell Automation Stock Fund A
and renamed Rockwell Automation Stock Fund. |
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Boeing Stock Fund Invests principally in the common stock of The Boeing Company but
may also hold cash and cash equivalents. |
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ArvinMeritor Stock Fund Invests principally in the common stock of ArvinMeritor,
Inc. but may also hold cash and cash equivalents. |
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Conexant Stock Fund Invests principally in the common stock of Conexant Systems,
Inc. but may also hold cash and cash equivalents. |
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Exxon Mobil Stock Fund Invests principally in the common stock of Exxon Mobil
Corporation but may also hold cash and cash equivalents. |
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Rockwell Collins Stock Fund Invests principally in the common stock of Rockwell
Collins, Inc. but may also hold cash and cash equivalents. |
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Skyworks Stock Fund Invests principally in the common stock of Skyworks Solutions,
Inc. but may also hold cash and cash equivalents. |
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Mindspeed Stock Fund Invests principally in the common stock of Mindspeed
Technologies, Inc. but may also hold cash and cash equivalents. |
The Boeing, ArvinMeritor, Conexant, Exxon Mobil, Rockwell Collins, Skyworks, and Mindspeed
Stock Funds are closed to any additional employer and employee contributions. Any
dividends on common stock related to employer contributions received on behalf of these
funds are paid to the Rockwell Automation Stock Fund. Any dividends on common stock
related to employee contributions received on behalf of these funds are paid to the
Rockwell Automation Stable Value Managed Fund (the Stable Value Fund). See note 6 for
additional information applicable to these stock funds. |
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b. | Participation - The Plan provides that eligible employees electing to become
participants may contribute up to a maximum of 25% of base compensation, as defined in the
Plan document. Participant contributions can be made either before or after United States
federal taxation of a participants base compensation. However, pre-tax contributions by
highly compensated participants are limited to 12% of the participants base compensation. |
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Rockwell Automation contributes an amount equal to 50% of the first 6% of base
compensation. Rockwell Automation contributions are made to the Rockwell Automation Stock
Fund. Participants who are vested may elect to transfer a portion or all of their
holdings in the Rockwell Automation Stock Fund to one or more of the investment funds. |
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Effective June 2002, the Plan was amended due to the Economic Growth and Tax Relief
Reconciliation Act of 2001, which made provisions for catch-up contributions to 401(k)
plans to give employees who are at least age 50 and older the opportunity to save more for
retirement. Employees must have been at least age 50 at December 31, 2005 to be eligible
to make catch-up contributions in the current year. The 2005 employee catch-up
contribution amount allowed was an additional $4,000 in pre-tax contributions and this
amount will increase by $1,000 each year until 2006 when it will be $5,000. |
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c. | Investment Elections Participants may contribute to any or all of the funds that
are available for contributions in 1% increments. Participants may change such investment
elections on a daily basis. If a participant does not have an investment election on
file, contributions were made to the Stable Value Fund through June 30, 2005. Effective
July 1, 2005, contributions are made to one of the Fidelity Freedom Funds, based on the
participants date of birth. |
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Participants may invest in the Stable Value Fund which invests primarily in guaranteed
investment contracts (GICs) and money market investments. The GICs are
benefit-responsive and are stated at contract value, which approximates fair value. The
crediting interest rate for the Stable Value Fund was 4.14% and 4.36% at December 31, 2005
and 2004, respectively. The crediting interest rates on the underlying investments are
reviewed on a quarterly basis for resetting. The average yield for the years ended
December 31, 2005 and 2004 was 4.33% and 4.70%, respectively. |
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d. | Unit Values - Participants do not own specific securities or other assets in the
various funds, but have an interest therein represented by units valued as of the end of
each business day. However, voting rights are extended to participants in proportion to
their interest in each stock fund and each mutual fund, as represented by common units.
Participants accounts are charged or credited for Plan earnings or loss from investments,
as the case may be, with the number of units properly attributable to each participant. |
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e. | Vesting - Each participant is fully vested at all times in the portion of the
participants account that relates to the participants contributions and earnings
thereon. Vesting in the Rockwell Automation contribution portion of participant accounts
plus actual earnings thereon is based on years of vesting service. A participant is 100%
vested after three years of vesting service. Until a participant reaches three years of
vesting service, the participant is not vested in amounts related to Rockwell Automation
contributions. |
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f. | Loans A participant may obtain a loan in an amount as defined in the Plan document
(not less than $1,000 and not greater than the lower of $50,000, reduced by the
participants highest outstanding loan balance during the 12 month period before the date
of the loans or 50% of the participants vested account balance less any outstanding
loans) from the balance of the participants account. Loans are secured by the remaining
balance in the participants account. Interest is charged at a rate equal to the prime
rate plus 1%. The loans can be repaid through payroll deductions over terms of 12, 24,
36, 48 or 60 months or up to 120 months for the purchase of a primary residence, or repaid
in full at any time after a minimum of one month. Payments of principal and interest are
credited to the participants account. Participants may have up to two outstanding loans
at any time from the Plan. |
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g. | Forfeitures - When certain terminations of participation in the Plan occur, the
nonvested portion of the participants account represents a forfeiture, as defined in the
Plan document. Forfeitures remain in the Plan and subsequently are used to reduce
Rockwell Automations contributions to the Plan in accordance with ERISA. However, if the
participant is re-employed with Rockwell Automation and fulfills certain requirements, as
defined in the Plan document, the participants account will be restored. |
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h. | Plan Termination - Although Rockwell Automation has not expressed any current intent
to terminate the Plan, Rockwell Automation has the authority to terminate or modify the
Plan or to suspend contributions to the Plan in accordance with ERISA. In the event that
the Plan is terminated or contributions by Rockwell Automation are discontinued, each
participants employer contribution account will be fully vested. Benefits under the Plan
will be provided solely from Plan assets. |
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i. | Withdrawals and Distributions - Active participants may withdraw certain amounts up
to their entire vested interest when the participant attains the age of 59-1/2 or is able
to demonstrate financial hardship. Participant vested amounts are payable upon
retirement, death or other termination of employment. |
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j. | Expenses - Plan fees and expenses, including fees and expenses associated with the
provision of administrative services by external service providers, are paid from Plan
assets. |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
a. | Valuation of Investments - Investment in the Defined Contribution Master Trust is
stated at fair value except for the benefit-responsive GICs, which are stated at contract
value, which approximates fair value (Note 1c). Purchases and sales of securities are
recorded on a trade date |
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basis. Interest income is recorded on an accrual basis. Dividends are recorded on the
ex-dividend date. The loan fund is stated at cost which approximates fair value. |
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b. | Use of Estimates - Estimates and assumptions made by the Plans management affect the
reported amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of increases
and decreases to Plan assets during the reporting period. Actual results could differ
from those estimates. |
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c. | Payment of Benefits - Benefits are recorded when paid. |
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d. | Risks and Uncertainties - The Plan invests in various investments. Investments, in
general, are exposed to various risks, such as interest rate, credit, and overall market
volatility. Due to the level of risk associated with certain investments, it is
reasonably possible that changes in the values of certain investments will occur in the
near term and that such changes could materially affect the amounts reported in the
financial statements. |
3. | DEFINED CONTRIBUTION MASTER TRUST | |
At December 31, 2004, with the exception of the participant loan fund, all of the Plans
investment assets were held in a Defined Contribution Master Trust account at Wells Fargo, N.A.
Effective July 1, 2005, Rockwell Automation transferred assets and trustee responsibility of
the Master Trust to Fidelity Management Trust Company. At December 31, 2005, with the
exception of the participant loan fund, all of the Plans investment assets, were held in a
Defined Contribution Master Trust (Master Trust) account at Fidelity Management Trust
Company. Use of the Master Trust permits the commingling of the trust assets of a number of
benefit plans of Rockwell Automation and its subsidiaries for investment and administrative
purposes. Although assets are commingled in the Master Trust, the Trustee maintains supporting
records for the purpose of allocating the net earnings or loss of the investment accounts to
the various participating plans. |
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The Master Trust investments are valued at fair value at the end of each day except for the
benefit-responsive GICs, which are valued at contract value, which approximates fair value
(Note 1c). If available, quoted market prices are used to value investments. If quoted market
prices are not available, the fair value of investments is estimated primarily by independent
investment brokerage firms and insurance companies. |
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The net earnings or loss of the accounts for each day are allocated by the Trustee to each
participating plan based on the relationship of the interest of each plan to the total of the
interests of all participating plans. |
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The net assets of the Master Trust at December 31, 2005 and 2004 are summarized as follows: |
2005 | 2004 | |||||||
Money market funds |
$ | 42,987,654 | $ | 37,421,244 | ||||
Cash |
878,749 | | ||||||
Common stocks |
1,947,764,881 | 1,902,170,600 | ||||||
Mutual funds |
322,044,256 | 455,508,743 | ||||||
Brokeragelink accounts |
4,338,439 | | ||||||
Corporate debt investments |
48,488,390 | | ||||||
U.S. government securities |
9,058,239 | | ||||||
Other fixed income investments |
3,844,480 | | ||||||
Investments
in common collective trusts |
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Fidelity U.S. equity index fund |
130,213,723 | 133,981,640 | ||||||
Rockwell
Stable Value Managed Fund |
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guaranteed investment contracts |
623,683,062 | 613,535,748 | ||||||
Accrued income |
1,786,974 | 612,285 | ||||||
Accrued fees |
(1,269,612 | ) | | |||||
Pending trades |
104,295 | (979,318 | ) | |||||
Net assets |
$ | 3,133,923,530 | $ | 3,142,250,942 | ||||
The net investment income of the Master Trust for the years ended December 31, 2005 and 2004 is summarized as follows: |
2005 | 2004 | |||||||
Interest |
$ | 28,518,879 | $ | 32,409,174 | ||||
Dividends |
29,517,117 | 31,991,722 | ||||||
Net appreciation in fair value of investments: |
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Common stocks |
248,851,908 | 371,203,744 | ||||||
Mutual funds |
27,810,954 | 26,429,103 | ||||||
Investments
in common collective trusts |
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Fidelity US Equity Index Fund |
6,148,810 | 13,104,341 | ||||||
Net investment income |
$ | 340,847,668 | $ | 475,138,084 | ||||
The Plans interest in the Master Trust, as a percentage of net assets held by the Master Trust
was approximately 3% at December 31, 2005 and 2004. While the Plan participates in the Master
Trust, the investment portfolio is not ratable among the various participating plans. As a
result, those plans with smaller participation in the common stock funds recognized a
disproportionately lesser amount of net appreciation in 2005 and 2004. |
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The Master Trusts investments that exceeded 5% of net assets as of December 31, 2005 and 2004 are as follows: |
Description of Investment | 2005 | 2004 | ||||||
Rockwell Automation, Inc. common stock |
$ | 784,609,618 | $ | 754,857,187 | ||||
Rockwell Collins, Inc. common stock |
429,878,867 | 466,972,321 |
Certain Master Trust investments are shares of mutual funds managed by Wells Fargo or Fidelity Management Trust Company. Wells Fargo was the trustee for a portion of the year and Fidelity is now the trustee and recordkeeper as defined by the Master Trust; therefore, these transactions qualify as party-in-interest transactions. Fees paid by the Master Trust for investment management services were included as a reduction of the return earned on each fund. | ||
At December 31, 2005 and 2004, the Master Trust held 13,262,502 and 15,234,252 shares,
respectively, of common stock of Rockwell Automation, the sponsoring employer, with a cost
basis of $92,966,323 and $99,094,064, respectively, and a market value of $784,609,618 and
$754,857,187, respectively. |
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During 2005 and 2004, dividends on Rockwell Automation common stock paid to eligible plan
participants were $10,614,199 and $10,599,454, respectively. |
4. | NON-PARTICIPANT DIRECTED INVESTMENTS | |
Information about the net assets and the significant components of the changes in net assets
relating to the non-participant directed investments in the Rockwell Automation Stock Fund for
the year ended December 31, 2005 and Rockwell Automation Stock Fund A for the year ended
December 31, 2004, respectively, is as follows: |
2005 | 2004 | |||||||
Net Assets, Beginning of Year |
$ | 12,922,130 | $ | 9,188,979 | ||||
Changes in net assets: |
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Contributions |
1,218,148 | 1,169,899 | ||||||
Dividends |
69,604 | 81,264 | ||||||
Net appreciation |
2,551,154 | 3,609,189 | ||||||
Benefits paid to participants |
(927,170 | ) | (590,983 | ) | ||||
Administrative expenses |
(16,142 | ) | (15,637 | ) | ||||
Transfers |
(764,197 | ) | (520,581 | ) | ||||
Total changes in net assets |
2,131,397 | 3,733,151 | ||||||
Net Assets, End of Year* |
$ | 15,053,527 | $ | 12,922,130 | ||||
* | These net assets are included in the Master Trust. |
5. | TAX STATUS | |
The Internal Revenue Service has determined and informed Rockwell Automation by letter dated
October 3, 2002, that the Plan and related trust are designed in accordance with applicable
sections of the Internal Revenue Code of 1986, as amended (the IRC). The Plan has been
amended since receiving the determination letter. The Plan Administrator and the Plans tax
counsel believe that the |
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Plan is currently designed and is being operated in compliance with the applicable provisions
of the IRC and the Plan continues to be tax-exempt. Therefore, no provision for income taxes
has been included in the Plans financial statements. |
6. | SUBSEQUENT EVENTS | |
Effective January 1, 2006, a participant is eligible for employer contributions immediately
upon participation in the plan. Prior to this change, there was a six month waiting period
before an employee was eligible for employer contributions. |
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Effective March 31, 2006, Rockwell Automation removed the following Closed Stock Fund options
from the Plan: ArvinMeritor Stock Fund, Boeing Stock Fund, Conexant Stock Fund, MindSpeed
Technology Stock Fund, Skyworks Solutions Stock Fund and Rockwell Collins Stock Fund.
Participants had the option to redirect their investments in the Closed Stock Funds to any of
the available investment options. If a participant did not take action by March 31, 2006, the
participants investments in the Closed Stock Funds were automatically transferred to the
appropriate Fidelity Freedom Fund based on the participants date of birth. The ExxonMobil
Stock Fund, also a Closed Stock Fund, will be removed as an investment option as of June 29,
2007. |
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Column A | Column B | Column C | Column D | Column E | ||||||||
Description of Investment | ||||||||||||
Identity of Issuer, | Including Collateral, Rate | |||||||||||
Borrower, Lessor | of Interest, Maturity Date, | Current | ||||||||||
or Similar Party | Par or Maturity Value | Cost | Value | |||||||||
* |
Fidelity Management Trust Company | Defined Contribution Master Trust | $ | 57,857,476 | $ | 87,800,560 | ||||||
* |
Various participants | Participant Loans; rates ranging between 5% and 10.5%, due 2006 to 2015 | 4,828,230 | 4,828,230 | ||||||||
Total assets (held at end of year) | $ | 62,685,706 | $ | 92,628,790 | ||||||||
* | Party-in-interest |
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By
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/s/ Roger Freitag
|
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Plan Administrator |
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