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Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Statements of Net Assets Available for Benefits

December 31, 2012 and 2011 (Unaudited)

 

		2012			2011
		(Unaudited)			(Unaudited)
Investments at fair value (Notes 4 and 5):
Plan interest in Rio Tinto America Inc. Savings Plan Trust		$	454,470,926		$	428,009,706
Receivables:
Participant contributions		—			32,161
Employer contributions		—			61,631
Dividends receivable		—			315,364
Notes from participants (Note 2)		4,790,211			4,950,759
Total receivables		4,790,211			5,359,915
Net assets available for benefits, at fair value		459,261,137			433,369,621
Adjustment from fair value to contract value for fully benefit-responsive investment contracts (Note 3)		(3,832,061		)	(3,820,041		)
Net assets available for benefits		$	455,429,076		$	429,549,580

 

See Notes to Financial Statements.

 

1

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Statement of Changes in Net Assets Available for Benefits

For the Year Ended December 31, 2012 (Unaudited)

 

		(Unaudited)
Investment results (Note 4):
Plan interest in Rio Tinto America Inc. Savings Plan Trust’s investment income		$	53,012,165
Interest income on notes from participants		181,870
Contributions:
Participants		15,527,389
Participant rollovers		2,456,844
Employer		18,284,847
Total contributions		36,269,080
Benefits paid to participants		(63,940,326		)
Administrative expenses		(116,293		)
Net increase before transfers		25,406,496
Transfers (Note 1):
From the U.S. Borax Inc. 401(k) Savings and Retirement Contribution Plan for Represented Hourly Employees		64,805
From the Kennecott Utah Copper 401(k) Savings Plan for Represented Hourly Employees		408,195
Total transfers		473,000
Net increase after transfers		25,879,496
Net assets available for benefits:
Beginning of the year		429,549,580
End of the year		$	455,429,076

 

See Notes to Financial Statements.

 

2

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 1.                                 Description of the Plan

 

The following description of the Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan (the Plan) provides only general information. Participants should refer to the plan document and summary plan description for a more complete description of the Plan’s provisions.

 

General: The Plan is a defined contribution plan covering (1) all nonrepresented employees of Rio Tinto America Inc. and its affiliates (collectively, the Company or the Employer), as defined in the plan document, and (2) employees covered by a collective bargaining agreement that provides for plan participation. All eligible full-time employees of the Company can participate in the Plan immediately upon employment. Temporary and part-time employees are eligible after completing 1,000 hours of service during a 12-month period.

 

Rio Tinto America Inc. is an indirect wholly owned subsidiary of Rio Tinto plc (the Parent). The Plan has appointed State Street Bank & Trust Company (State Street) to be the trustee of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.

 

The Plan is part of Rio Tinto America Inc. Savings Plan Trust (the Master Trust), whose assets are held with State Street. The Master Trust was established to hold the qualified defined contribution investment assets of the Plan and certain other benefit plans sponsored by Rio Tinto America Inc. (and its subsidiaries).

 

Contributions: Participants may elect, under a salary reduction agreement, to contribute to the Plan an amount not less than 1 percent and not more than 50 percent of their eligible compensation on a before-tax basis through payroll deductions. Total before-tax and after-tax contributions cannot exceed 50 percent of each participant’s eligible compensation. Contributions are limited by the Internal Revenue Code (IRC), which established a maximum contribution of $17,000 ($22,500 for participants over age 50) for the year ended December 31, 2012. Participants may also elect to make after-tax contributions not less than 1 percent and not more than 50 percent of their eligible compensation. Participants may also contribute amounts representing distributions from other qualified defined contribution or defined benefit plans.

 

The Company makes Investment Partnership Plan (IPP) contributions. To be eligible for IPP contributions, current employees as of March 31, 2007, were required to discontinue credited future benefit service under the Company-sponsored defined benefit pension plan, the Rio Tinto America Inc. Retirement Plan. Effective April 1, 2007, new participants in the Plan were eligible to receive IPP contributions. The Company contributes 6.0 percent of eligible compensation up to the Social Security wage base ($110,100 for 2012) and 11.7 percent of eligible compensation over the Social Security wage base.

 

Participants are not required to contribute to the Plan to receive IPP contributions.

 

Participant accounts: Each participant’s account is credited with the participant’s contributions; the Company’s matching contributions, IPP contributions, an allocation of the plan earnings, 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 have the option to allocate plan contributions among several investment options, including common stock of the Parent in the form of a unitized fund with American Depositary Receipts (ADRs). All choices vary in types of investments, rates of return, and investment risk. Participants may elect to have all or part of their account balances and future contributions invested in one fund, transferred to another fund, or in any combination.

 

3

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 1.                                 Description of the Plan (Continued)

 

Participants also have the option to invest in managed funds that are weighted based on the participant’s retirement date. The funds assume participants will retire upon reaching age 65 and invest in collective trust funds

 

Vesting: Participants are immediately vested in their contributions and Company matching contributions plus actual earnings thereon. A participant is 100 percent cliff vested in the Company’s IPP contributions after three years of credited service or at time of death or attainment of age 65.

 

Effective in 2011, as a result of the sale of Luzenac America, Inc. and Colowyo, the affected participants who terminated employment with the Company were 100 percent vested in the Company IPP contributions.

 

Payment of benefits: Upon termination, retirement, death or becoming permanently disabled, participants with an account balance of $1,000 or more, or their beneficiaries, may elect to receive lump-sum distributions, annuity payments or rollover distributions in an amount equal to the value of the participants’ vested interests in their accounts. If a participant terminates employment and the participant’s account balance is less than $1,000, the Plan Administrator will authorize the benefit payment in a single lump sum without the participant’s consent. During employment, participants may withdraw account balances for financial hardship, as defined.

 

Notes from participants: Participants may borrow from their total account balance a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50 percent of the participant’s total vested account balance. Note terms range from one to five years or up to 20 years for the purchase of a primary residence. Notes from participants are treated as a separate investment of the participant, and all principal and interest payments on note balances are credited to the participant account from which the note from the participant was made. Notes from participants bear interest at rates ranging from 4.25 percent to 9.75 percent at December 31, 2012.

 

Transfers: Company employees represented by a collective bargaining unit (union employees) participate in the Kennecott Utah Copper 401(k) Savings Plan for Represented Hourly Employees and the U.S. Borax Inc. 401(k) Savings and Retirement Contribution Plan for Represented Hourly Employees. Employees of Alcancorp are enrolled in either the Alcancorp Employees’ Savings Plan or the Alcancorp Hourly Employees’ Savings Plan. If the employees change from union to nonunion status during the year, or moves from an Alcancorp plan, their account balances are transferred within the Master Trust between the plans.

 

Forfeitures: Forfeitures are used to reduce future Company contributions or to pay administrative expenses of the Plan. At December 31, 2012 and 2011, forfeited nonvested accounts were approximately $357,000 and $1,626,000, respectively. In 2012, employer contributions were reduced by approximately $1,499,000 from forfeited nonvested accounts and administrative expenses of approximately $5,000 were paid from forfeited nonvested accounts.

 

4

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 2.                                 Summary of Significant Accounting Policies

 

Basis of presentation: The financial statements of the Plan reflect transactions on the accrual basis of accounting.

 

Use of estimates: The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires plan management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities and changes therein, at the date of the financial statements, and additions and deductions during the reporting period. Actual results could differ from those estimates.

 

Risks and uncertainties: The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market, currency exchange rate, and credit risks. 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 net assets available for benefits.

 

Investment valuation and income recognition: Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Rio Tinto America Inc. Savings Plan Investment Committee determines the Plan’s valuation policies utilizing information provided by the investment advisers and Plan Trustee. See Note 5 for a discussion of fair value measurements.

 

Interest income is recorded on the accrual basis, and dividends are recorded on the ex-dividend date. Net appreciation (depreciation) includes gains and losses on investments bought and sold as well as held during the year. Realized gains and losses related to sales of investments are recorded on a trade-date basis. Investment income and expenses are allocated to the Plan based upon its pro rata share in the net assets of the Master Trust.

 

Payment of benefits: Benefits are recorded when paid by the Plan.

 

Administrative expenses: The Company pays the majority of costs and expenses incurred in administering the Plan. The Company provides accounting and other services for the Plan at no cost to the Plan.

 

The Master Trust has several fund managers that manage the investments held by the Plan. Fees for investment fund management services are included as a reduction of the return earned on each fund. In addition, during the year ended December 31, 2012, the Company paid all investment consulting fees related to these investment funds.

 

The fees related to transaction costs associated with the purchase or sale of Rio Tinto plc ADRs are paid by the participants.

 

Notes from participants: Notes from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Default notes from participants are recorded as a distribution based on the terms of the plan document.

 

Accounting guidance requires that participant loans be classified as notes from participants, which are segregated from plan investments and measured at their unpaid principal balance plus any accrued interest. Notes from participants have been classified as an investment asset for Form 5500 reporting purposes.

 

5

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 2.                                 Summary of Significant Accounting Policies (Continued)

 

Subsequent events: The Plan Administrator has evaluated subsequent events through the date the financial statements were issued.

 

Recent pronouncement: In 2011, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. ASU 2011-04 converges the fair value measurement guidance in U.S. GAAP and International Financial Reporting Standards. Some amendments clarify the application of existing fair value measurement requirements and others change a particular principle for measuring fair value for disclosing fair value measurement information. In addition, ASU 2011-04 requires additional fair value disclosures. The adoption of ASU 2011-04 as of January 1, 2012, did not have a material effect on the Plan or Master Trust’s net assets available for benefits or changes in net assets available for benefits.

 

Pending pronouncement: In 2012, the Financial Accounting Standards Board issued ASU 2012-04, Technical Corrections and Improvements, which includes technical corrections and improvements related to fair value measurements and has been issued, but which the Plan or Master Trust have not yet fully adopted, as the effective date is for fiscal periods beginning after December 15, 2012.

 

Note 3.                                 Fully Benefit-Responsive Investment Contracts

 

Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts, because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. The statements of net assets available for benefits presents the fair value of the investment contracts as well as the adjustment of the Plan’s interest in the fully benefit-responsive investment contracts from fair value to contract value. The statement of changes in net assets available for benefits is prepared on a contract value basis for fully benefit-responsive investment contracts.

 

Note 4.                                 Plan Interest in the Rio Tinto America Inc. Savings Plan Trust

 

The Plan’s investments are included in the investments of the Master Trust. Each participating retirement plan has a divided interest in the Master Trust. The value of the Plan’s interest in the Master Trust is based on the beginning of year value of the Plan’s interest in the Master Trust plus actual contributions and allocated investment income (loss) less actual distributions, and allocated administrative expenses. Investment income (loss), investment management fees and other direct expenses relating to the Master Trust are allocated to individual plans based on the average daily balances. The Plan’s interest in the Master Trust was 65.0 percent and 77.9 percent as of December 31, 2012 and 2011, respectively. The Master Trust also includes the investment assets of the following retirement plans:

• Kennecott Utah Copper 401(k) Savings Plan for Represented Hourly Employees

• U.S. Borax Inc. 401(k) Savings and Retirement Contribution Plan for Represented Hourly Employees

• Rio Tinto Alcan 401(k) Savings Plan for Former Employees

• Alcancorp Employees’ Savings Plan

• Alcancorp Hourly Employees’ Savings Plan

 

6

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 4.                                 Plan Interest in the Rio Tinto America Inc. Savings Plan Trust (Continued)

 

The following is a summary of the Master Trust assets, the Plan’s divided interest in the assets of the Master Trust, and the Plan’s divided interest percentage ownership of the Master Trust assets as of December 31, 2012 and 2011:

 

		December 31, 2012
								Plan’s Percent
		Master Trust			Plan’s Interest			Interest in
		Assets			in Master Trust			Master Trust
		(Unaudited)			(Unaudited)			(Unaudited)
Investments at fair value:
Mutual funds		$	321,715,507		$	213,741,629		66.4
Stable value fund		194,572,398			104,277,214			53.6
Collective trust funds		125,736,983			93,562,360			74.4
Rio Tinto plc common stock ADRs		52,737,988			39,998,892			75.8
Interest-bearing cash		5,474,520			2,890,831			52.8
Net assets available for benefits, at fair value		700,237,396			454,470,926			64.9
Adjustment from fair value to contract value for fully benefit-responsive		(7,150,299		)	(3,832,061		)	53.6
Net assets available for benefits		$	693,087,097		$	450,638,865		65.0

 

		December 31, 2011
								Plan’s Percent
		Master Trust			Plan’s Interest			Interest in
		Assets			in Master Trust			Master Trust
		(Unaudited)			(Unaudited)			(Unaudited)
Investments at fair value:
Mutual funds		$	330,260,110		$	262,177,016		79.4
Stable value fund		168,540,617			126,695,654			75.2
Rio Tinto plc common stock ADRs		48,415,374			37,333,977			77.1
Interest-bearing cash		2,156,593			1,803,059			83.6
Net assets available for benefits, at fair value		549,372,694			428,009,706			77.9
Adjustment from fair value to contract value for fully benefit-responsive		(5,081,722		)	(3,820,041		)	75.2
Net assets available for benefits		$	544,290,972		$	424,189,665		77.9

 

During 2012, the Master Trust’s investments (including investments bought and sold, as well as held during the year) appreciated as follows:

 

		(Unaudited)
Net appreciation in fair value of investments:
Mutual funds		$	38,850,403
Collective trust funds		6,690,732
Rio Tinto plc common stock ADRs		9,187,061
Net appreciation in fair value of investments		$	54,728,196

 

7

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 4.                                 Plan Interest in the Rio Tinto America Inc. Savings Plan Trust (Continued)

 

The following are changes in net assets for the Master Trust for the year ended December 31, 2012:

 

		(Unaudited)
Investment results:
Net appreciation in fair value of investments		$	54,728,196
Interest and dividends		14,710,354
Net investment results		69,438,550
Net transfers		79,570,902
Administrative expenses		(213,327		)
Increase in net assets		148,796,125
Net assets:
Beginning of year		544,290,972
End of year		$	693,087,097

 

The following table presents the investments that represent 5 percent or more of the Master Trust’s net assets and the Plan’s share of investments in the Master Trust that represent 5 percent or more of the Plan’s net assets as of December 31, 2012 and 2011:

 

		December 31,
		2012						2011
		Master Trust			Plan			Master Trust			Plan
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Invesco Stable Value Trust		$	194,572,398		$	104,277,214		$	168,540,617		$	126,695,654
Vanguard Institutional Index;
Class I Shares		54,743,013			23,436,830			43,086,458			30,155,295
Rio Tinto plc common stock ADRs		52,737,988			39,998,892			48,415,374			37,333,977
PIMCO Total Return Fund;
Institutional Shares		48,447,090			33,962,527			59,421,393			50,190,711
SSgA S&P 500 Index Fund;
Class N Shares		45,056,176			34,498,122			*			*
Dodge & Cox Stock Fund		44,236,592			32,964,645			50,931,220			41,835,849
Harbor Capital Appreciation Fund		*			22,756,169			41,215,278			32,822,140
Artisan Mid Cap Fund;
Institutional Shares		*			*			29,711,719			24,837,747

 

*Investment did not exceed 5 percent of the Master Trust’s or Plan’s net assets in the year indicated.

 

8

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 5.                                 Fair Value Measurements

 

Accounting guidance provides the framework for measuring fair value. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:

 

Level 1:         Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.

 

Level 2:         Inputs to the valuation methodology include quoted market prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

 

Level 3:         Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

 

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no significant changes in the methodologies used at December 31, 2012 and 2011.

 

Mutual funds: Mutual funds are valued at the daily closing price as reported by the fund. Mutual funds held by the Master Trust are open-end mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily net asset value (NAV) and to transact at that price. The mutual funds held by the Master Trust are deemed to be actively traded.

 

Stable value fund: The stable value fund is valued based upon the per share NAV of the underlying securities. Underlying short-term securities are valued at amortized cost if maturity is 60 days or less at the time of purchase, or market value if maturity is greater than 60 days. Underlying investments in collective trusts are valued at the respective NAV as reported by such trusts. Underlying debt securities are valued on the basis of valuations provided by independent pricing services, or obtained from dealers making a market for such securities when independent pricing service valuations are not available.

 

Collective trust funds: The collective trust funds are valued at the underlying NAV per unit, which is based on the fair values of the underlying funds using a market approach. Underlying equity investments for which market quotations are readily available are reported at the last reported sale price on their principal exchange, market or system on valuation date, or official close price of certain markets. If no sales are reported for that day, investments are valued at the last published sales price, the mean between the last reported bid and asked prices, or at fair value as determined in good faith by the trustee of the fund. Underlying short-term investments are stated at amortized costs, which approximates fair value. Underlying registered investment companies or collective investment funds are valued at their respective NAV. Underlying fixed income investments are valued based on the basis of valuations furnished by independent pricing services. In the event current market prices or quotations are not readily available or deemed unreliable by the fund trustee, the fair value of the underlying fund will be determined in good faith by the fund trustee using alternative fair valuation methods.

 

9

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 5.                                 Fair Value Measurements (Continued)

 

Rio Tinto plc common stock ADRs: Rio Tinto plc common stock ADRs are valued at the closing price reported on the active market on which individual securities are traded.

 

Interest-bearing cash: Interest-bearing cash is valued at cost plus accrued income, which approximates fair value measured by similar assets in active markets.

 

The following tables set forth, by level within the fair value hierarchy, the Master Trust’s fair value measurements at December 31, 2012 and 2011:

 

		Assets at Fair Value as of December 31, 2012
		Level 1			Level 2			Level 3			Total
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Mutual funds:
Large cap		$	133,659,931		$	—		$	—		$	133,659,931
Mid cap		34,764,146			—			—			34,764,146
Small cap		33,452,050			—			—			33,452,050
International		41,367,018			—			—			41,367,018
Bond investments		78,472,362			—			—			78,472,362
Stable value fund		—			194,572,398			—			194,572,398
Collective trust funds:
Bond investments		—			31,378,192			—			31,378,192
Commodities futures market		—			3,507,864			—			3,507,864
Foreign		—			23,288,813			—			23,288,813
Large Cap		—			45,056,176			—			45,056,176
Real estate		—			2,919,632			—			2,919,632
Small-mid cap		—			15,086,170			—			15,086,170
U.S. fixed-income securities		—			3,116,019			—			3,116,019
U.S. money market securities		—			1,384,117			—			1,384,117
Rio Tinto plc common stock ADRs		52,737,988			—			—			52,737,988
Interest-bearing cash		5,474,520			—			—			5,474,520
		$	379,928,015		$	320,309,381		$	—		$	700,237,396

 

		Assets at Fair Value as of December 31, 2011
		Level 1			Level 2			Level 3			Total
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Large cap		$	135,216,942		$	—		$	—		$	135,216,942
Mid cap		41,301,152			—			—			41,301,152
Small cap		34,936,542			—			—			34,936,542
International		43,614,747			—			—			43,614,747
Blended investment		14,039,481			—			—			14,039,481
Bond investments		61,151,246			—			—			61,151,246
Stable value fund		—			168,540,617			—			168,540,617
Rio Tinto plc common stock ADRs		48,415,374			—			—			48,415,374
Interest-bearing cash		2,156,593			—			—			2,156,593
		$	380,832,077		$	168,540,617		$	—		$	549,372,694

 

10

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 5.                                 Fair Value Measurements (Continued)

 

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. The Master Trust evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total net assets available for benefits. For the year ended December 31, 2012, there were no transfers between levels.

 

The Master Trust follows guidance on how entities should estimate fair value of certain alternative investments. The fair value of investments within the scope of the guidance can be determined using NAV per share as a practical expedient, when fair value is not readily determinable, unless it is probable the investment will be sold at something other than NAV.

 

The following table includes categories of investments where NAV is available as a practical expedient:

 

		Fair Value as of December 31						Redemption		Redemption
		2012			2011			Frequency		Notice Period
		(Unaudited)			(Unaudited)
Stable value fund:
Invesco stable value fund (a)		$	194,572,398		$	168,540,617		Daily		None
Collective trust funds:
Bond investments (b)		31,378,192			—			Daily*		None
Commodities futures market (c)		3,507,864			—			Daily*		None
Foreign (d)		23,288,813			—			Daily*		None
Large Cap (e)		45,056,176			—			Daily*		None
Real estate (f)		2,919,632			—			Daily*		None
Small-mid cap (g)		15,086,170			—			Daily*		None
U.S. fixed-income securities (h)		3,116,019			—			Daily*		None
U.S. money market securities (i)		1,384,117			—			Daily*		None

 

*The fund trustee, in its sole discretion, reserves the right to value any contributions or withdrawals as of the next succeeding valuation date or another date as the fund trustee deems appropriate.

 

There are no unfunded commitments related to the categories of investments where NAV is available as a practical expedient.

 

(a)         The fund seeks preservation of principal and to provide interest income reasonably obtained under prevailing market conditions and rates, consistent with seeking to maintain required liquidity.

 

(b)         The trust funds seek investment return that approximate as closely as practicable, before expenses, the performance of a U.S. bond index over the long term.

 

(c)          The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the Dow Jones-UBS Commodity Total Return IndexSM over the long term.

 

11

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 5.                                 Fair Value Measurements (Continued)

 

(d)         The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the MSCI ACWI ex-USA IMI Index over the long term.

 

(e)          The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the S&P 500 over the long term.

 

(f)           The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the FTSE EPRA/NAREIT Developed Liquid Index over the long term.

 

(g)          The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the Russell Small Cap Completeness Index over the long term.

 

(h)         The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the Barclays U.S. 1-3 Year Government/Credit Bond Index over the long term.

 

(i)             The fund seeks to maximize current income, to the extent consistent with the preservation of capital and liquidity and the maintenance of a stable $1.00 per share NAV, by investing in U.S. dollar-denominated money market securities.

 

Note 6.                                 Parties-in-Interest Transactions

 

The Master Trust is managed by State Street. Therefore, transactions within the Master Trust qualify as party-in-interest transactions. The Master Trust also holds collective trust funds that are managed by State Street Global Advisors (SSgA), the investment management division of State Street. Fees paid by the Master Trust or Plan for investment management services to State Street or SSgA were included as a reduction of the return earned on each investment.

 

The Master Trust invests in Rio Tinto plc common stock ADRs. The Master Trust held 912,975 and 990,443 shares of Rio Tinto plc common stock ADRs at December 31, 2012 and 2011, respectively, valued at $58.05 and $48.88, respectively. During the year ended December 31, 2012, purchases and sales of shares by the Master Trust totaled approximately $5,573,000 and $9,807,000, respectively.

 

During the year ended December 31, 2012, the Plan had transactions with Xerox Business Services, LLC, the Plan’s record keeper, which are allowed by the Plan. These transactions qualify as party-in-interest transactions, which are exempt from prohibited transaction rules.

 

Note 7.                                 Plan Termination

 

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of termination, all participants would become fully vested in their accounts.

 

Note 8.                                 Tax Status

 

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 IRC. 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 IRC and therefore believe that the Plan and the related trust are tax-exempt.

 

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Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Notes to Financial Statements (Unaudited)

 

Note 8.         Tax Status (Continued)

 

The Plan Administrator has evaluated the Plan’s tax positions and concluded that the Plan had maintained its tax-exempt status and had taken no uncertain tax positions that require adjustment to the financial statements. Therefore, no provision or liability for income taxes has been included in the financial statements. With few exceptions, the Plan is no longer subject to income tax examinations by the U.S. federal, state or local tax authorities for years prior to 2009.

 

Note 9.                                 Reconciliation of Financial Statements to Form 5500

 

The following is a reconciliation of the net assets available for benefits as presented in the financial statements to the Form 5500 as of December 31:

 

		2012			2011
			(Unaudited)			(Unaudited)
Net assets available for benefits as presented in these financial statements		$	455,429,076		$	429,549,580
Adjustment from fair value to contract value for fully benefit- responsive investment contracts		3,832,061			3,820,041
Net assets available for benefits as presented in the Form 5500		$	459,261,137		$	433,369,621

 

The following is a reconciliation of the net increase in net assets available for benefits before transfers as presented in these financial statements to the Form 5500:

 

		Year Ended
		December 31,
		2012
		(Unaudited)
Net increase in net assets available for benefits before transfers as presented in these financial statements		$	25,406,496
Subtract adjustment from fair value to contract value for fully benefit-responsive investment contracts for 2011		(3,820,041		)
Add adjustment from fair value to contract value for fully benefit-responsive investment contracts for 2012		3,832,061
Net increase in net assets available for benefits before transfers as presented in Form 5500		$	25,418,516

 

13

 

Rio Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan

 

Schedule H, Part IV, Line 4i—Schedule of Assets (Held at End of Year)

December 31, 2012 (Unaudited)

 

Description of Asset		Fair Value
			(Unaudited)
Notes from participants, due in various amounts through March 2033, with interest rates ranging from 4.25% to 9.75%*		$	4,790,211

 

*Party-in-interest transaction considered exempt by the Department of Labor.

 

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