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, 2005
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 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
TABLE OF CONTENTS
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PAGE
----
Report of Independent Registered Public Accounting Firm 3
Financial Statements:
Statements of Assets Available for Benefits as of
December 31, 2005 and 2004 4
Statement of Changes in Assets Available for Benefits
for the year ended December 31, 2005 5
Notes to Financial Statements 6 - 13
Supplemental Schedule - Schedule H, Part IV, line 4i -
Schedule of Assets (Held at End of Year) as of December 31, 2005 14 - 15
All other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 have been omitted because they are not applicable to
the Kennecott Corporation Savings Plan for Hourly Employees.
Signature 16
Exhibits 17-18
Page 2 of 18
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Plan Administrator (Vice President Human Resources of
Kennecott Utah Copper Corporation)
Kennecott Corporation Savings Plan for Hourly Employees
We have audited the accompanying statements of assets available for benefits of
the Kennecott Corporation Savings Plan for Hourly Employees (the Plan) as of
December 31, 2005 and 2004 and the related statement of changes in assets
available for benefits for the year ended December 31, 2005. 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. 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, the financial statements referred to above present fairly, in
all material respects, the assets available for benefits of the Kennecott
Corporation Savings Plan for Hourly Employees as of December 31, 2005 and 2004,
and the changes in assets available for benefits for the year ended December 31,
2005 in conformity with U.S. generally accepted accounting principles.
Our audits of the financial statements were performed for the purpose of forming
an opinion on the basic financial statements taken as a whole. The supplemental
Schedule of Assets (Held at End of Year) as of December 31, 2005 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 United
States Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The supplemental
schedule is the responsibility of the Plan's management and has been subjected
to the auditing procedures applied in the audits of the 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/ Tanner LC
Salt Lake City, Utah
June 28, 2006
Page 3 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
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2005 2004
-------------------------------
ASSETS
------
Investments $ 47,530,173 $ 44,832,506
-------------------------------
Receivables:
Employee contributions -- 83,242
Employer contributions -- 25,203
-------------------------------
Total receivables -- 108,445
-------------------------------
Assets available for benefits $ 47,530,173 $ 44,940,951
===============================
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See accompanying notes to financial statements.
Page 4 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2005
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ADDITIONS TO ASSETS ATTRIBUTED TO:
Contributions:
Employee $ 2,359,260
Employer 672,822
------------
Total contributions 3,032,082
------------
Investment income:
Net appreciation in fair value of investments 3,101,527
Interest and dividends 1,554,575
------------
Total investment income 4,656,102
------------
Total additions 7,688,184
------------
DEDUCTIONS FROM ASSETS ATTRIBUTED TO:
Transfers to the Rio Tinto America Inc. Savings Plan 1,620,480
Benefits paid to participants 3,478,357
Administrative expenses 125
------------
Total deductions 5,098,962
------------
Increase in assets available for benefits 2,589,222
ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 44,940,951
------------
End of year $ 47,530,173
============
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See accompanying notes to financial statements.
Page 5 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF The following brief description of the Kennecott
THE PLAN Corporation Savings Plan for Hourly Employees (the
Plan) is provided for general information purposes
only. Participants should refer to the Plan document
and the summary plan description for more complete
information.
GENERAL
The Plan is a defined contribution plan covering all
full-time hourly employees who are represented by or
included in a collective bargaining unit of Kennecott
Utah Copper Corporation and its affiliates
(collectively, the Company), as defined in the Plan
document. Eligible employees can participate in the
Plan immediately after completing three months of
continuous service. 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 (the Parent). 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.
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 19% of
their eligible compensation on a before-tax basis
through payroll deductions. Contributions are limited
by the IRC, which established a maximum contribution
of $14,000 ($18,000 for participants over age 50) for
the year ended December 31, 2005. 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.
The Company matches the participant's contributions
to the Plan at 50%, up to the first 6% of their
eligible compensation. Matching contributions are
recorded on the date the related participant
contributions are withheld.
Page 6 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
CONTINUED
--------------------------------------------------------------------------------
1. DESCRIPTION OF PARTICIPANT ACCOUNTS
THE PLAN Individual accounts are maintained for each Plan
CONTINUED participant. Each participant's account is credited
with the participant's contributions, the Company's
matching contribution, 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.
PARTICIPANT-DIRECTED OPTIONS FOR INVESTMENTS
Participants direct the investment of their
contributions and the Company matching contributions
into various investment options offered by the Plan.
Investment options include a money market fund,
common collective trusts, mutual funds, synthetic
guaranteed investment contracts and common stock of
the Parent in the form of American Depository
Receipts (ADRs).
VESTING
Participants are immediately vested in their
contributions plus actual earnings thereon. Vesting
in the Company's contribution portion of their
accounts is based on years of continuous service. A
participant is 100% cliff vested after three years of
credited service.
PAYMENT OF BENEFITS
On termination of service due to death, disability,
or retirement, participants or their beneficiaries
may elect to receive a lump-sum distribution in an
amount 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.
TRANSFERS
Along with the Plan, the Company also sponsors other
401(k) plans that cover non-represented employees. If
employees change from union to non-union status
during the year, their account balances are
transferred from the Plan to the non-union plan. For
the year ended December 31, 2005, transfers out of
the Plan totaled $1,620,480.
Page 7 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
CONTINUED
--------------------------------------------------------------------------------
1. DESCRIPTION OF FORFEITED ACCOUNTS
THE PLAN Forfeited non-vested participant account balances may
CONTINUED be used to reduce future Company contributions to the
Plan. There were no forfeitures utilized for these
purposes during the year ended December 31, 2005.
Forfeitures were $8,197 for the year ended December
31, 2005. As of December 31, 2005 and 2004, the
balance of the forfeiture account was $22,025 and
$13,828, respectively.
2. SUMMARY OF BASIS OF PRESENTATION
SIGNIFICANT The financial statements of the Plan have been
ACCOUNTING prepared on the accrual basis of accounting in
POLICIES accordance with U.S. generally accepted accounting
principles.
USE OF ESTIMATES
The preparation of the Plan's financial statements in
conformity with U.S. generally accepted accounting
principles requires Plan 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.
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.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value
(generally quoted market price) except for its
benefit-responsive guaranteed investment contracts,
which are stated at contract value (see Note 6).
Shares of mutual funds are stated at quoted market
prices, which represent the net asset value of shares
held by the Plan at year end.
Page 8 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
CONTINUED
--------------------------------------------------------------------------------
2. SUMMARY OF Purchases and sales of securities are recorded on a
SIGNIFICANT trade-date basis. Interest income is recorded on the
ACCOUNTING accrual basis. Dividends are recorded on the
POLICIES ex-dividend date.
CONTINUED
PAYMENTS OF BENEFITS
Benefits payments are recorded when paid by the Plan.
ADMINISTRATIVE EXPENSES
The Company pays the majority of costs and expenses
incurred in administering the Plan.
The Plan has several fund managers that manage the
investments held by the Plan. During the year ended
December 31, 2005, the Company paid all investment
management fees related to these investment funds.
The investment management fees related to transaction
costs associated with the purchase or sale of Rio
Tinto plc ADRs are paid by the participants.
PARTICIPANT LOANS
Loans are not permitted to be made to participants in
the Plan.
NEW ACCOUNTING PRONOUNCEMENT
In December 2005, the Financial Accounting Standards
Board (FASB) issued 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 (FSP). This FSP makes the
definition of benefit-responsive more restrictive so
that certain investment contracts currently reported
at contract value may be reported at fair value.
Management has not yet determined the impact this
standard, which is effective for the Plan year ending
December 31, 2006, will have on the Plan's financial
statements.
Page 9 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
CONTINUED
--------------------------------------------------------------------------------
3. PARTIES-IN- Certain Plan investments are managed by Putnam
INTEREST Investments, the Plan trustee, therefore, these
TRANSACTIONS 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, 2005 and 2004, the Plan held
33,950.034 and 30,627.477 shares, respectively, of
common stock of Rio Tinto plc, with a cost basis of
$3,053,212 and $2,144,056, respectively. During the
year ended December 31, 2005, the Plan recorded
dividend income of $107,456 related to these shares.
4. INVESTMENTS The Plan's investments that represented five percent
or more of the Plan's assets available for benefits
as of December 31, 2005 and 2004 are as follows:
2005 2004
-------------------------
Dodge & Cox Stock Fund $ 6,434,011 $ *
Rio Tinto plc ADRs 6,205,727 3,651,102
State Street Bank
Synthetic GIC 4,485,340 4,920,475
SEI Stable Asset Fund 4,459,585 3,726,143
Putnam S&P 500 Index Fund 4,173,396 3,606,189
Putnam Voyager Fund 3,767,535 2,568,125
Artisan Mid Cap Fund 2,383,356 *
Putnam International
Equity Fund 2,769,805 2,623,143
Monumental Life Insurance
Company GIC 2,096,601 2,819,519
Putnam Fund for Growth
and Income * 5,379,788
Putnam New Opportunities
Fund * 4,661,883
* These investments did not exceed five percent or
more of total assets available for benefits in the
respective year and, therefore, are not shown
separately.
Page 10 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
CONTINUED
--------------------------------------------------------------------------------
4. INVESTMENTS During the year ended December 31, 2005, the Plan's
CONTINUED investments (including gains and losses on
investments bought and sold, as well as held during
the year) appreciated in value as follows:
Investments at fair value:
Common stock $2,106,119
Mutual funds 811,138
Common collective trusts 184,270
----------
Net appreciation in investments $3,101,527
==========
5. PLAN The terms of the Plan may be amended, modified or
TERMINATION 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
for purposes other than for the exclusive benefit of
participants and/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 Plan Administrator.
6. GUARANTEED The Plan's guaranteed investment contracts are in a
INVESTMENT stable value fund. The guaranteed investment
CONTRACTS contracts are fully benefit responsive and are stated
at contract value (which represents contributions
made under the contract, plus interest earned, less
withdrawals and administrative expenses). The stable
value fund is invested in a money market fund, a
common/collective trust (the SEI Stable Asset Fund),
and synthetic guaranteed investment contracts (GICs).
The synthetic GICs are secured by underlying fixed
income assets. The average crediting interest rates
on the investment contracts was 4.76% and 4.54% for
the years ended December 31, 2005 and 2004,
Page 11 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
CONTINUED
--------------------------------------------------------------------------------
6. GUARANTEED respectively. Average duration for all investment
INVESTMENT contracts was 2.99 years and 2.96 years at December
CONTRACTS 31, 2005 and 2004, respectively. The average yield
CONTINUED was 4.89% and 4.70% for the years ended December 31,
2005 and 2004, respectively. There are no reserves
against the contract value for credit risk of the
contracted issuer or otherwise.
The contract or crediting interest rates for certain
stable value investment contracts are reset quarterly
and are based on the market value of the portfolio of
assets underlying these contracts. Inputs used to
determine the crediting interest rates include each
contract's portfolio market value, current
yield-to-date maturity, duration and market value
relative to contract value. With respect to interest
rate resets, all contracts are guaranteed that the
rates will not be negative.
A synthetic GIC provides 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 backed by underlying assets.
The portfolio of assets underlying the synthetic GICs
has an overall AAA credit quality and includes
mortgages, fixed income securities and United States
treasury notes and bonds. 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).
Wrap contracts are designed to smooth out the impact
of normal market fluctuations associated with the
performance of the underlying investments. The fair
value of the synthetic GICs was $11,800,714 and
$11,519,614 as of December 31, 2005 and 2004,
respectively. The contract value of the synthetic
GICs included $24,836 and $287,377 as of December 31,
2005 and 2004, respectively, attributable to the wrap
contract providers representing the amounts by which
the net value of the contracts is less than the net
value of the underlying assets.
Page 12 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
CONTINUED
--------------------------------------------------------------------------------
7. INCOME TAX The Internal Revenue Service has determined and
informed the Company by a letter dated December 9,
2002, that the Plan and related trust were designed
in accordance 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 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.
--------------------------------------------------------------------------------
Page 13 of 18
KENNECOTT CORPORATION SAVINGS PLAN
FOR HOURLY EMPLOYEES
EMPLOYER IDENTIFICATION NUMBER: 13-3108078
PLAN NUMBER: 204
SCHEDULE H, PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2005
-----------------------------------------------------------------------------------------------------------------------------------
(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 Mellon Bank - STIF Account 94,931 ** $ 98,038
--------------
COMMON COLLECTIVE TRUSTS:
SEI Investments SEI Stable Asset Fund ** 4,459,585
* Putnam Putnam S&P 500 Index Fund 117,351 ** 4,173,396
--------------
Total Common Collective Trusts 8,632,981
--------------
MUTUAL FUNDS:
Dreyfus Dreyfus Mid-Cap Value Fund 39,345 ** 1,237,562
PIMCO PIMCO Total Return Fund 149,301 ** 1,979,612
Morgan Stanley MSDW Institutional International Equity Fund 17,803 ** 440,863
Dodge and Cox Dodge and Cox Stock Fund 6,932 ** 6,434,011
Artisan Artisan Mid Cap Fund 2,383,356 ** 2,383,356
UAM Trust Company UAM/ICM Small Company Fund 18,910 ** 665,517
* Putnam Putnam Small Cap Fund 51,074 ** 1,138,956
* Putnam Putnam International Equity Fund 110,170 ** 2,769,805
* Putnam Putnam Voyager Fund 149,832 ** 3,767,535
--------------
Total Mutual Funds 20,817,217
--------------
* denotes a party-in-interest as defined by ERISA
** not required as investments are participant directed
--------------------------------------------------------------------------------
See report of independent registered public accounting firm.
Page 14 of 18
KENNECOTT CORPORATION
SAVINGS PLAN FOR HOURLY EMPLOYEES
EMPLOYER IDENTIFICATION NUMBER: 13-3108078
PLAN NUMBER: 204
SCHEDULE H, PART IV, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
CONTINUED
DECEMBER 31, 2005
-----------------------------------------------------------------------------------------------------------------------------------
(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 Synthetic GIC, Dwight Managed Target 2,
Insurance Company no specified maturity date, 5.15% ** 2,096,601
Monumental Life Synthetic GIC, Dwight Managed Target 5,
Insurance Company no specified maturity date, 5.15% ** 874,147
Monumental Life
Insurance Company Wrap Contract ** (10,007)
--------------
2,960,741
--------------
Transamerica Occidental Synthetic GIC, Dwight Managed Target 5,
Life Insurance Co. no specified maturity date, 5.54% ** 1,915,346
Transamerica Occidental
Life Insurance Co. Wrap Contract ** (48,866)
--------------
1,866,480
--------------
State Street Bank Synthetic GIC, Dwight Core Int Fund, no
specified maturity date, 6.07% ** 1,853,051
State Street Bank Wrap Contract ** (28,561)
--------------
1,824,490
--------------
State Street Bank Synthetic GIC, Dwight Managed Target 2,
no specified maturity date, 3.98% ** 4,485,340
State Street Bank Synthetic GIC, Dwight Managed Target 5,
no specified maturity date, 3.98% ** 576,229
State Street Bank Wrap Contract ** 62,598
--------------
5,124,167
--------------
Total Synthetic Guaranteed Investment Contracts 11,775,878
--------------
* Rio Tinto plc ADRs COMMON STOCK 30,627 ** 6,205,727
--------------
* Putnam PENDING ACCOUNT 332 ** 332
--------------
Total Investments $ 47,530,173
==============
* denotes a party-in-interest as defined by ERISA
** not required as investments are participant directed
--------------------------------------------------------------------------------
See report of independent registered public accounting firm.
Page 15 of 18
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/ Christopher Crowl
-----------------------------------------
Name: Christopher Crowl
Title: Vice President Human Resources
Date: June 29, 2006
Page 16 of 18
Exhibit Description
------- -----------
23.1 Consent of Tanner LC
Page 17 of 18