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
For the fiscal year ended December 31, 2002
ROCKWELL AUTOMATION SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
ROCKWELL AUTOMATION, INC.
777 East Wisconsin Avenue, Suite 1400
Milwaukee, Wisconsin 53202
ROCKWELL AUTOMATION SAVINGS AND INVESTMENT
PLAN FOR REPRESENTED HOURLY EMPLOYEES
TABLE OF CONTENTS
PAGE NO.
--------
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001 2
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2002 and 2001 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE:
Form 5500, Schedule H, Part IV, Line 4i -
Schedule of Assets Held for Investment Purposes, 10
December 31, 2002
SIGNATURE 11
EXHIBITS:
Independent Auditors' Consent 12
Certifications 13
INDEPENDENT AUDITORS' REPORT
To the Rockwell Automation Savings and Investment Plan for
Represented Hourly Employees and to Participants therein:
We have audited the accompanying statements of net assets available for benefits
of the Rockwell Automation Savings and Investment Plan for Represented Hourly
Employees (the "Plan") as of December 31, 2002 and 2001, and the related
statements of changes in net assets available for benefits for the years then
ended. 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 in accordance with auditing standards generally accepted
in the United States of America. 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2002 and 2001, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents 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 schedule is the responsibility of the Plan's management. Such
schedule has been subjected to the auditing procedures applied in our audit of
the basic 2002 financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
Deloitte & Touche LLP
Milwaukee, Wisconsin
June 13, 2003
ROCKWELL AUTOMATION SAVINGS AND INVESTMENT
PLAN FOR REPRESENTED HOURLY EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
2002 2001
----------- -----------
ASSETS
INVESTMENTS:
Master Defined Contribution Trust $33,419,128 $33,686,995
Loan Fund 740,467 612,144
----------- -----------
Total investments 34,159,595 34,299,139
----------- -----------
TOTAL NET ASSETS AVAILABLE
FOR BENEFITS $34,159,595 $34,299,139
=========== ===========
See notes to financial statements.
- 2 -
ROCKWELL AUTOMATION SAVINGS AND INVESTMENT
PLAN FOR REPRESENTED HOURLY EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
------------- ------------
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR $ 34,299,139 $ 32,447,042
------------ ------------
INCOME:
(Loss) earnings from investments:
Net (loss) earnings in Master Defined Contribution Trust (500,277) 355,149
Interest 49,094 55,787
------------ ------------
Total (loss) earnings from investments (451,183) 410,936
------------ ------------
Contributions:
Employer 625,413 696,007
Employee 2,285,871 2,377,678
------------ ------------
Total contributions 2,911,284 3,073,685
------------ ------------
Total income 2,460,101 3,484,621
------------ ------------
EXPENSES:
Payments to participants or beneficiaries 2,599,645 1,643,189
------------ ------------
NET (LOSS) INCOME (139,544) 1,841,432
------------ ------------
NET TRANSFERS TO THE PLAN - 10,665
------------ ------------
NET (DECREASE) INCREASE (139,544) 1,852,097
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $ 34,159,595 $ 34,299,139
============ ============
See notes to financial statements.
- 3 -
ROCKWELL AUTOMATION SAVINGS AND INVESTMENT
PLAN FOR REPRESENTED HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
1. DESCRIPTION OF PLAN
The following brief description of the Rockwell Automation Savings and
Investment Plan for Represented Hourly Employees (the "Plan"), formerly
named Rockwell International Corporation Savings and Investment Plan
for Represented Hourly Employees, 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
covering all represented hourly employees of Rockwell
Automation, Inc. (formerly Rockwell International Corporation)
and its subsidiaries ("Rockwell") who elect to participate in
the Plan and who are employees at a Rockwell location to which
participation has been extended. The Employee Benefit Plan
Committee and the Plan Administrator control and manage the
operation and administration of the Plan. Wells Fargo, N.A.
(the "Trustee") is the Trustee of the Plan. 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").
On June 29, 2001, Rockwell completed the spinoff of its
Rockwell Collins avionics and communications business into an
independent, separately traded, publicly held company by
distributing all of the outstanding shares of Rockwell
Collins, Inc. ("Rockwell Collins") to Rockwell's shareowners
on the basis of one Rockwell Collins share for each
outstanding Rockwell share. See Note 5 which describes
additional changes to the Plan.
Participants in the Plan may invest in three investment funds
and the following stock funds which are specific to the Plan:
Stock Fund B (employee contributions) - Invests
principally in the common stock of Rockwell but may
also hold cash and cash equivalents.
ArvinMeritor Stock Fund - Invests principally in the
common stock of ArvinMeritor, Inc. but may also hold
cash and cash equivalents.
Conexant Stock Fund - Invests principally in the
common stock of Conexant Systems, Inc. but may also
hold cash and cash equivalents.
Rockwell Collins Stock Fund - Invests principally in
the common stock of Rockwell Collins but may also
hold cash and cash equivalents.
Skyworks Stock Fund - Invests principally in the
common stock of Skyworks Solutions, Inc. but may also
hold cash and cash equivalents.
- 4 -
The ArvinMeritor, Conexant, Rockwell Collins, and Skyworks
Stock Funds are closed to any additional employee
contributions. Any dividends received on behalf of these funds
are paid to the Rockwell Stable Value Managed Fund ("stable
value fund").
b. Participation - The Plan provides that eligible employees
electing to become participants may contribute on a pre-tax
basis up to a maximum of 16% of base compensation for
non-highly compensated participants and up to 12% of base
compensation for highly-compensated participants, as defined
in the Plan document. In addition, highly-compensated
participants may contribute up to an additional 4% on an
after-tax basis. Prior to September 1, 2002, participants
could contribute on a pre-tax basis up to a maximum of 9% of
base compensation for non-highly compensated participants and
up to 8% of base compensation for highly compensated
participants. In addition, participants could contribute up to
an additional 5% on a post-tax basis. Rockwell contributes out
of its current or accumulated earnings and profits, but not
otherwise, an amount equal to 50% of the first 5% of the
participant contribution. Rockwell contributions are made to
the stable value fund. Effective November 2002, participants
may transfer employer contributions from the stable value fund
at any time. Prior to November 2002, participants were not
allowed to transfer employer contributions from the stable
value fund.
Effective June 1, 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 age 50 and older the
opportunity to save more for retirement. Employees must have
been age 50 or have turned age 50 by December 31, 2002 to be
eligible to contribute in 2002. The 2002 employee catch-up
contribution amount allowed was an additional $1,000 in
pre-tax contributions and this amount will increase by $1,000
each year until 2006 when it will be $5,000.
c. Investment Elections - Participants may elect to have
participant contributions made to any of the funds that are
available to participant contributions in 1% (5% prior to
November 2002) increments among any or all of these funds.
Participants may change such investment elections on a daily
basis. If a participant does not have an investment election
on file, contributions will be made to the stable value fund.
The Plan invests in the stable value fund which invests
primarily in guaranteed investment contracts (GICs) and money
market investments. The GICs are benefit-responsive and stated
at contract value. The weighted average crediting interest
rate for the stable value fund was 5.81% and 6.10% at December
31, 2002 and 2001, respectively.
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 Rockwell
common stock held in Stock Fund B. The 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.
e. Vesting - Each participant is fully vested at all times in the
portion of a participant's account that relates to the
participant's contributions and earnings thereon. Vesting in
the Rockwell contribution portion of a participant's account
plus actual earnings thereon is based on the vesting schedule
described in the Plan document. A participant is 100% vested
after 60 months of vesting service.
- 5 -
f. Loans - A participant may obtain a loan in an amount as
defined in the Plan (not less than $1,000 and not greater than
$50,000 reduced by the participant's highest outstanding loan
balance during the 12 month period before the date of the loan
or 50% of the participant's vested account balance) from the
remaining balance of the participant's account. Loans are
secured by the balance in the participant's 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 after a
minimum of 12 months. Payments of principal and interest are
credited to the participant's account. Participants may have
up to two outstanding loans at a time (one loan prior to
November 2002).
g. Forfeitures - When certain terminations of participation in
the Plan occur, the nonvested portion of the participant's
account represents a forfeiture as defined in the Plan
document. Forfeitures remain in the Plan and subsequently are
used to reduce Rockwell's contributions to the Plan. However,
if the participant is reemployed with Rockwell and fulfills
certain requirements, as defined in the Plan document, the
participant's account will be restored.
h. Plan Termination - Although Rockwell has not expressed any
current intent to terminate the Plan, Rockwell has the
authority to terminate or modify the Plan or suspend
contributions to the Plan in accordance with ERISA. In the
event that the Plan is terminated or contributions by Rockwell
are discontinued, each participant's employer contributions
account will be fully vested. Benefits under the Plan will be
provided solely from the Plan assets.
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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Valuation of Investments - Investment in the Master Defined
Contribution Trust is stated at fair value except for the
benefit-responsive GICs, which are stated at contract value
(Note 1c). 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
loan fund is stated at cost which approximates fair value.
b. Expenses - Plan fees and expenses, including fees and expenses
in connection with the provision of administrative services by
external service providers, are paid by Rockwell.
c. Use of Estimates - Estimates and assumptions made by the
Plan's 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 the Plan during
the reporting period. Actual results could differ from those
estimates.
d. Payment of Benefits - Benefits are recorded when paid.
- 6 -
e. 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. MASTER DEFINED CONTRIBUTION TRUST
At December 31, 2002 and 2001, with the exception of the participant
loan fund, all of the Plan's investment assets were held in a Master
Defined Contribution Trust ("Master Trust") account at Wells Fargo,
N.A. Use of the Master Trust permits the commingling of the trust
assets of a number of benefit plans of Rockwell 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.
The Master Trust investments are valued at fair value at the end of
each day except for the benefit-responsive GICs, which are value at
contract 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.
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.
The net assets of the Master Trust at December 31, 2002 and 2001 are
summarized as follows:
2002 2001
--------------- ----------------
Cash and equivalents $ 30,847,729 $ 26,896,546
Common stocks 1,231,983,302 1,517,780,621
Mutual funds 305,886,443 375,758,692
Preferred/convertible securities 3,834,375 3,045,546
Investments in common collective trusts:
Stable value fund 583,562,332 558,611,089
Fidelity U.S. equity index fund 95,486,091 130,249,787
Accrued income 586,782 621,155
Pending trades 1,175,677 (893,132)
--------------- ---------------
Net assets $ 2,253,362,731 $ 2,612,070,304
=============== ===============
- 7 -
The net loss of the Master Trust for the years ended December 31, 2002
and 2001 is summarized as follows:
2002 2001
-------------- --------------
Interest $ 34,034,580 $ 39,078,134
Dividends 33,132,739 44,001,783
Net depreciation in fair value of investments:
Common stocks (128,658,298) (398,976,496)
Mutual funds (58,591,682) (50,802,436)
Investments in common collective trusts (28,283,536) (21,417,146)
Other (1,528,742) (1,797,770)
------------- -------------
Net loss $(149,894,939) $(389,913,931)
============= =============
The Plan's interest in the total Master Trust, as a percentage of net
assets held by the Master Trust, was approximately 1% at December 31,
2002 and 2001. 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
depreciation in 2002 and 2001.
4. TAX STATUS
The Internal Revenue Service has determined and informed Rockwell by
letter dated October 3, 2002, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (IRC). The Plan Administrator and the Plan's tax counsel believe
that the Plan is designed and is currently being operated in compliance
with the applicable provisions of the IRC.
5. CHANGES IN THE PLAN
Effective June 1, 2001, the name of the plan changed to Rockwell
Automation Savings and Investment Plan for Represented Hourly
Employees.
Effective June 29, 2001, the Rockwell Collins Stock Fund was
established to hold the Rockwell Collins common stock received as a
result of the Rockwell Collins spinoff.
On June 25, 2002, Conexant Systems, Inc. ("Conexant") spun off its
wireless communications business prior to the merger of that business
with Alpha Industries, Inc., which was subsequently renamed Skyworks
Solutions, Inc. ("Skyworks"). As a result of the spinoff and the
merger, Conexant shareholders received 0.351 of a share of Skyworks
common stock for each outstanding Conexant share. The Plan was amended
on June 5, 2002, to allow the creation of the Skyworks Stock Fund to
hold the distributed shares of Skyworks.
Effective September 2002, participants may contribute on a pre-tax
basis up to a maximum of 16% of base compensation for non-highly
compensated participants and up to 12% of base compensation for highly
compensated participants. Prior to September 1, 2002, participants
could contribute on a pre-tax basis up to a maximum of 9% of base
compensation for non-highly compensated participants and up to 8% of
base compensation for highly compensated participants. In addition,
participants could contribute up to an additional 5% on a post-tax
basis.
- 8 -
Effective November 2002, participants may elect investment options in
1% increments and have two loans outstanding at a time. Prior to
November 2002, participants elected investment options in 5% increments
and were only allowed one outstanding loan at a time.
Effective November 2002, participants may transfer employer
contributions from the stable value fund at anytime. Prior to November
2002, participants were not allowed to transfer employer contributions
from the stable value fund.
6. SUBSEQUENT EVENTS
In March 2003, Conexant announced its plan to spinoff to shareholders
Mindspeed Technologies, Inc., its Internet infrastructure business
("Mindspeed"). At the time of spinoff, Conexant shareholders will
receive one share of Mindspeed for every three shares of Conexant
common stock held as of record on June 20, 2003.
* * * * * *
- 9 -
ROCKWELL AUTOMATION SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
FORM 5500, SCHEDULE H, PART IV, LINE 4I -
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES,
DECEMBER 31, 2002
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
-------- ------------------- --------------------------- ------------ ------------
* Wells Fargo, N.A. Master Defined
Contribution Trust $ 34,808,616 $ 33,419,128
* Various Participant Loans, prime
participants rate plus 1%, due 2003 to
2009 740,467 740,467
------------ ------------
Total investments $ 35,549,083 $ 34,159,595
============ ============
*Party-in-interest.
- 10 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned, hereunto duly authorized.
ROCKWELL AUTOMATION SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
By /s/ Roger Freitag
----------------------------
Roger Freitag
Plan Administrator
Date: June 26, 2003
- 11 -