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x
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ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
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KENNECOTT
CORPORATION SAVINGS PLAN
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FOR
HOURLY EMPLOYEES
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Financial
Statements and Supplemental Schedules
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As
of December 31, 2008 and 2007 and for the
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Year
Ended December 31, 2008
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Together
with Report of Independent Registered Public
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Accounting
Firm
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Page
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Report of
Independent Registered Public Accounting Firm
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1
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Financial
Statements:
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Statements
of Assets Available for Benefits as of
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December
31, 2008 and 2007
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2
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Statement
of Changes in Assets Available for Benefits
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for
the Year Ended December 31, 2008
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3
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Notes to
Financial Statements
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4 -
17
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Supplemental
Schedules:
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Schedule
H, Part IV, Line 4i -
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Schedule
of Assets (Held at End of Year) as of December 31, 2008
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18 -
19
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Schedule
H, Part IV, Line 4a –
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Schedule
of Delinquent Contributions
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20
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2008
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2007
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Assets
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Investments, at fair
value
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$ | 37,320,406 | $ | 58,673,209 | ||||
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Receivables:
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Employee
contributions
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- | 31,592 | ||||||
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Employer
contributions
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882 | 9,580 | ||||||
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Total
receivables
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882 | 41,172 | ||||||
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Assets available for benefits, at
fair value
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37,321,288 | 58,714,381 | ||||||
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Adjustment from fair value to
contract value for fully benefit-responsive investment
contracts
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1,527,210 | 65,110 | ||||||
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Assets available for
benefits
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$ | 38,848,498 | $ | 58,779,491 | ||||
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See
accompanying notes to financial statements.
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2
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Contributions:
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Employee
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$ | 2,817,484 | ||
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Employer
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835,194 | |||
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Total
contributions
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3,652,678 | |||
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Investment income
(loss):
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Net depreciation in fair value of
investments
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(19,891,774 | ) | ||
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Interest and
dividends
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1,964,893 | |||
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Total investment loss,
net
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(17,926,881 | ) | ||
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Deductions from assets attributed
to:
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Transfers to the Rio Tinto America
Inc. Savings Plan
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125,147 | |||
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Benefits paid to
participants
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5,531,018 | |||
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Administrative
expenses
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625 | |||
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Total
deductions
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5,656,790 | |||
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Net decrease in assets available
for benefits
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(19,930,993 | ) | ||
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Assets available for
benefits:
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Beginning of
year
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58,779,491 | |||
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End of year
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$ | 38,848,498 | ||
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See
accompanying notes to financial statements.
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3
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1. Description
of
the Plan
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The following
brief description of the Kennecott 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.
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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 or
the Employer), 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.
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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 $15,500 ($20,500 for participants
over age 50) for the year ended December 31, 2008. 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.
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The Company
matches the participants’ 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.
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1. Description
of
the Plan
Continued
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Participant
Accounts
Individual
accounts are maintained for each Plan 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.
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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 mutual funds, a common collective
trust, common stock of the Parent in the form of American Depositary
Receipts (ADRs), and a stable value fund consisting of a money market
fund, a common collective trust and synthetic guaranteed investment
contracts.
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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. Upon death and retirement a participant becomes 100%
vested.
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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.
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Transfers
Along with
the Plan, the Company employees also participate in another 401(k) plan
that covers employees not represented by a collective bargaining unit
(union). 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; namely, the Rio Tinto America Inc. Savings
Plan. For the year ended December 31, 2008, transfers out of
the Plan totaled $125,147.
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1. Description
Of
the Plan
Continued
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Forfeited
Accounts
Forfeited
non-vested participant account balances may be used to reduce future
Company contributions to the Plan. Forfeitures were $6,068 for
the year ended December 31, 2008. Interest and dividends
attributable to the forfeitures were $822 for the year ended December 31,
2008. Losses attributable to the forfeitures were $4,641 for
the year ended December 31, 2008. As of December 31, 2008 and
2007, the balance of the forfeiture account was $16,229 and $13,980,
respectively.
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2. Summary
of
Significant
Accounting
Policies
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Basis
of Presentation
The financial
statements of the Plan have been prepared on the accrual basis of
accounting in accordance with U.S. generally accepted accounting
principles.
As described
in Financial Accounting Standards Board (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 (the
FSP), 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 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. As required by the
FSP, the statement of assets available for benefits presents the fair
value of the investment contract as well as the adjustment of the fully
benefit-responsive investment contract from fair value to contract
value. The statement of changes in assets available for
benefits is prepared on a contract value basis.
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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.
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2. Summary
of
Significant
Accounting
Policies
Continued
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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.
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During 2008
and as of the date of the accompanying independent auditors’ report, the
world’s economic and financial markets have experienced significant
instability and illiquidity. These developments have impacted
the fair values of many of the Plan’s investments.
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Investment
Valuation and Income Recognition
The Plan’s
investments in mutual funds are valued at quoted market prices, which
represent the net asset values of units held by the Plan at year
end. Plan investments in common stock are stated at fair value
based on quoted market prices. Common collective trusts are
valued at the asset value per unit as determined by each common collective
trust as of the valuation date. The fair value of the Plan’s
interest in the Dwight Stable Value Fund (see detail of investments
included in this fund in Note 3) is based upon the market value of the
underlying securities at quoted market value or quoted share
prices.
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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.
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The net
appreciation (depreciation) in the fair value of investments, which
includes realized gains (losses) and unrealized appreciation
(depreciation) on those investments, is presented in the statement of
changes in assets available for benefits of the Plan, and totaled
($19,891,774) for the year ended December 31, 2008 (see Note
6).
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Payments
of Benefits
Benefits
payments are recorded when paid by the
Plan.
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2. Summary
of
Significant
Accounting
Policies
Continued
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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.
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The Plan 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, 2008, the
Company paid all investment consulting fees related to these investment
funds.
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The fees
related to transaction costs associated with the purchase or sale of Rio
Tinto plc ADRs are paid by the participants.
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Participant
Loans
Loans are not
permitted to be made to participants in the Plan.
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3. Fully
Benefit-
Responsive
Investment
Contracts
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The Plan’s
investments include the Dwight Stable Value
Fund. The Dwight Stable Value Fund is invested in
the following:
·A
money market fund (TBC Pooled Employee Daily Liquidity Fund);
·A
fully benefit-responsive common collective trust (the SEI Stable Asset
Fund); and
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·Fully
benefit-responsive synthetic guaranteed investment contracts (GICs) as
follows:
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a. Synthetic GIC, Dwight
Managed Target 2, no specified maturity date, 4.16%;
b. Synthetic GIC, Dwight
Managed Target 5, no specified maturity date, 4.16%;
c. Synthetic GIC, Dwight
Managed Target 5, no specified maturity date, 5.26%;
d. Synthetic GIC, Dwight
Intermediate Core Plus Fund, no specified maturity date,
3.84%;
e. Synthetic GIC, Dwight
Managed Target 2, no specified maturity date, 3.77%; and
f. Synthetic GIC,
Dwight Managed Target 5, no specified maturity date,
3.77%
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3. Fully
Benefit-
Responsive
Investment
Contracts
Continued
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Synthetic
GICs provide 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 secured by underlying assets. The Plan’s wrap
contracts have credit ratings ranging from AA+ to AAA. The
assets underlying the wrap contracts include diversified bond
portfolios. These bond portfolios include investments in
securities with contractual cash flows, such as asset backed securities,
collateralized mortgage obligations and commercial mortgage backed
securities, including securities backed by subprime mortgage
loans. The value, liquidity and related income of these
securities are sensitive to changes in economic conditions, including real
estate value, delinquencies or defaults, or both, and may be adversely
affected by shifts in the market’s perception of the issuers and changes
in interest rates.
The crediting
interest rates of the contracts are based on agreed-upon formulas with the
issuing third-party, as defined in the contract agreement, but cannot be
less than zero. The contract or
crediting interest rates for the GICs are typically reset quarterly and
are based on capital market developments, the performance of the assets
backing the contract, and the expected and actual contributions and
withdrawals of all of the plans participating in the
contract. These contracts typically provide that realized and
unrealized gains and losses on the underlying assets are not reflected
immediately in the assets of the fund. Realized and unrealized
gains and losses are amortized, usually over the time to maturity or the
duration of the underlying investments, through adjustments to the future
interest crediting rate. Additional 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.
The fair
value of the investment contracts relative to the contract value are
reflected in the statements of assets available for benefits as
“adjustment from fair value to contract value for fully benefit-responsive
investment contracts” (adjustment).
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3. Fully
Benefit-
Responsive
Investment
Contracts
Continued
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If the
adjustment is positive, this indicates that the contract value is greater
than the fair value. The embedded losses will be amortized in the future
through a lower interest crediting rate than would otherwise
be the case. If the adjustment is negative, this indicates that the
contract value is less than the fair value. The embedded gains will cause
the future interest crediting rate to be higher than it
otherwise would have been. A positive adjustment is reflected in the
Plan’s statements of assets available for benefits as of December 31, 2008
and 2007 in the amount of $1,527,210 and $65,110,
respectively.
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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). There are
no reserves against contract value for credit risk of the contract issuer
or otherwise.
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Certain
events may limit the ability of the Plan to transact at contract value
with the issuer of fully benefit-responsive investment
contracts. Such events include the following: (1) amendments to
the Plan documents (including complete or partial plan termination or
merger with another plan), (2) bankruptcy of the Company or other Company
events (for example, divestiture or spin-off of a subsidiary) that cause a
significant withdrawal from the Plan, or (3) the failure of the trust to
qualify for exemption from federal income taxes or any required prohibited
transaction exemption under ERISA, as amended. The Plan
Administrator does not believe that the occurrence of any such event,
which would limit the Plan’s ability to transact at contract value with
participants, is probable. The contracts provide that
withdrawals associated with certain events which are not in the ordinary
course of fund operations, and are determined by the issuer to have a
material adverse effect on the issuer’s financial interest, may be paid at
other than contract value.
Absent the
events described in the preceding paragraph, the synthetic guaranteed
investment contracts do not permit the issuers to terminate the agreements
prior to the scheduled maturity
dates.
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3. Fully
Benefit-
Responsive
Investment
Contracts
Continued
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Average
duration for all investment contracts was 2.71 and 2.98 years as of
December 31, 2008 and 2007, respectively. Average yield
data for all fully benefit-responsive investment contracts for the years
ended December 31, 2008 and 2007 was as
follows:
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Average
Yields
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2008
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2007
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Based on
actual earnings
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5.54%
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5.62%
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Based on
interest rate credited to
participants
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4.06%
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4.96%
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4. Parties-in-
Interest
Transactions
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Certain Plan
investments are managed by Putnam Investments, the Plan
trustee. Therefore, these 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.
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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, 2008 and 2007, the Plan held
33,728.384 and 27,449.129 shares, respectively, of common stock of Rio
Tinto plc. During the year ended December 31, 2008, the Plan
recorded dividend income of $167,227 related to these shares.
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5.
Global
Securities
Lending
Program
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The Plan
participates in the State Street Bank and Trust Company S&P 500
Flagship Securities Lending Series C Fund (the Fund), a common collective
trust. The Fund invests in certain collective investment funds that
participate in the State Street Global Securities Lending Program (Lending
Funds). Under the State Street Global Securities Lending
Program, securities held by Lending Funds are loaned by State Street Bank,
as agent, to certain brokers and other financial institutions (the
Borrowers). The Borrowers provide cash, securities, or letters
of credit as collateral against loans in an amount at
least equal to 100% of the fair value of the loaned
securities.
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5.
Global
Securities
Lending
Program
Continued
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The Borrowers
are required to maintain the collateral at not less than 100% of the fair
value of the loaned securities. Cash collateral provided by the
Borrowers may be invested in State Street Bank and Trust Company
Collateral Funds (Cash Collateral Funds). The Lending Funds
invested cash provided by the Borrowers into the State Street Bank and
Trust Company Quality Trust for SSgA Funds.
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Risks
and Indemnification
State Street
Bank, as lending agent, indemnifies Lending Funds for replacement of any
loaned securities (or, in certain circumstances, return of equivalent cash
value) due to Borrower default on a security loan. Lending Fund
participants, however, bear the risk of loss with respect to the
investment of collateral.
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Withdrawal
Safeguards
From time to
time, the Trustee of the Lending Funds may exercise its rights in order to
protect all participants in the State Street Bank securities lending
funds. In an effort to better ensure safety of principal and
better maintain adequate liquidity, as well as achieve favorable returns
for all securities lending program participants, State Street Bank has
temporarily implemented withdrawal safeguards on full or partial
redemptions from certain securities lending funds.
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The objective
of these withdrawal safeguards is to protect the interest of all
participants, while providing the maximum level of liquidity that can be
prudently made available to all participants. These withdrawal
safeguards permit redemptions resulting from ordinary course activity,
subject to certain thresholds. Ordinary course activity also
may include periodic participant rebalancing of their investment portfolio
between Lending Funds and other State Street Bank collective investment
funds. Requests for redemptions above these withdrawal
safeguards may result in proceeds consisting of cash, units of other State
Street Bank collective investment funds, units of Cash Collateral Funds
that will be converted into units of a liquidating trust, or a combination
thereof. The Trustee continues to monitor market conditions and
evaluates the need for withdrawal safeguards, as
appropriate.
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5.
Global
Securities
Lending
Program
Continued
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Investment
in Cash Collateral Fund Valuation
Management of
the Lending Funds regularly reviews the performance of the Cash Collateral
Funds and the variation between their per unit fair values and
$1.00. The Cash Collateral Funds primarily utilize quotations
from independent pricing services, quotations from bond dealers and
information with respect to bond and note transactions (“pricing service
information”) to determine the fair value of its
investments. Such pricing service information may also consist
of quotations derived from valuation models or matrix
pricing. As of December 31, 2008, the per unit fair value was
$0.93 for the State Street Bank and Trust Company Quality Trust for SSgA
Funds.
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For the
purposes of determining transaction price for issuances and redemptions of
Lending Fund units, management of the Lending Funds also evaluates
additional inputs to the fair value of the Lending Funds’ investments in
the Cash Collateral Funds, including among other things current market
conditions, credit quality, liquidity of the Cash Collateral Funds and the
assessed probability of incurring a realized loss on Cash Collateral Fund
Assets. Additionally, management of the Lending Funds evaluates
the qualitative aspects of the State Street Global Securities Lending
Program, including the historical performance of State Street Bank as
lending agent, the Cash Collateral Funds’ investment strategy and past
performance, and the expected continuing transactions price of the Cash
Collateral Funds at $1.00 per unit.
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Accordingly,
for purposes of calculating the transaction price of the Lending Funds,
management of the Lending Funds has valued its investments in Cash
Collateral Funds at their per unit transaction price of
$1.00. Management of the Lending Funds will continue to review
the Lending Funds participation in the State Street Global Securities
Lending Program, including the appropriateness of the fair value of the
Lending Funds’ investments in the Cash Collateral Funds at $1.00 per unit
for transaction purposes or, alternatively, at a lower per unit fair
value.
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6. Investments
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The Plan’s
investments stated at fair value that represented five percent or more of
the Plan’s assets available for benefits as of December 31, 2008 and 2007
are as follows:
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2008
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2007
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Assets of the Dwight Stable Value
Fund:
|
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TBC Pooled Employee Daily Liquidity
Fund
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$ | 285,827 | $ | 162,873 | ||||
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State Street Bank & Trust Synthetic
GICs
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7,459,595 | 7,677,878 | ||||||
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Monumental Life Insurance Company Synthetic
GICs
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5,324,778 | 5,571,169 | ||||||
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SEI Stable Asset
Fund
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4,543,520 | 4,800,390 | ||||||
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Total Dwight Stable Value Fund
Assets
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17,613,720 | 18,212,310 | ||||||
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Dodge and Cox Stock
Fund
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3,507,307 | 7,173,980 | ||||||
|
Rio Tinto plc
ADRs
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2,998,791 | 11,525,889 | ||||||
|
State Street Bank and Trust Company S&P 500 Flagship Securities Lending Series C
Fund
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2,456,173 | 4,237,044 | ||||||
|
PIMCO Total Return
Fund
|
2,406,318 | - | ||||||
|
Harbor Capital Appreciation
Fund
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2,315,901 | 3,710,213 | ||||||
|
American Funds Europacific Growth
Fund
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2,085,841 | - | ||||||
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Artisan Mid Cap
Fund
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1,543,159 | 3,079,845 | ||||||
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Putnam International Equity
Fund
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- | 3,877,927 | ||||||
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During the
year ended December 31, 2008, the Plan’s investments (including gains and
losses on investments bought and sold, as well as held during the year)
depreciated in value as follows:
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Investments
at fair value:
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Common
stock
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$ | (8,891,608 | ) | |
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Mutual
funds
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(9,501,585 | ) | ||
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Common
collective trusts
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(1,498,581 | ) | ||
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Net
depreciation
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$ | (19,891,774 | ) | |
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6. Investments
Continued
|
Effective
January 1, 2008, the Plan adopted Statement of Financial Accounting
Standards (SFAS) No. 157, Fair Value
Measurements. SFAS No. 157 defines fair value as the price that
would be received to sell an asset or paid to transfer a liability in the
principal market for the asset or liability or, in the absence of a
principal market, the most advantageous market for the asset or liability,
in an orderly transaction between market participants at the measurement
date.
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|
SFAS
No. 157 also establishes a fair value hierarchy for those instruments
measured at fair value that distinguishes between assumptions based on
market data (observable inputs) and the Plan’s assumptions (unobservable
inputs). The hierarchy consists of three levels:
Level
1: Quoted prices (unadjusted) in active markets for identical
assets that are accessible at the measurement date for assets and
liabilities.
Level
2: Quoted prices in inactive markets for identical assets or
liabilities, quoted prices for similar assets or liabilities in active
markets, or other observable inputs either directly related to the asset
or liability or derived principally from corroborated observable market
data.
Level
3: Unobservable inputs for the asset that are supported by little
or no market activity and that are significant to the fair value of the
underlying asset.
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|
The following
table summarizes the Plan’s assets measured at fair value on a recurring
basis in accordance with SFAS No. 157 as of December 31,
2008:
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Description
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Level
1
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Level
2
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Level
3
|
Total
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|
Money
market fund
|
$ | 285,827 | $ | - | $ | - | $ | 285,827 | ||||||||
|
Common
collective trusts
|
4,105,561 | 2,824,040 | 70,092 | 6,999,693 | ||||||||||||
|
Mutual
funds
|
14,251,722 | - | - | 14,251,722 | ||||||||||||
|
Synthetic
guaranteed investment
contracts
|
1,021,586 | 10,985,689 | 777,098 | 12,784,373 | ||||||||||||
|
Common
stock
|
2,998,791 | - | - | 2,998,791 | ||||||||||||
| $ | 22,663,487 | $ | 13,809,729 | $ | 847,190 | $ | 37,320,406 | |||||||||
|
The following
is a reconciliation of the investments in which significant unobservable
inputs (Level 3) were used in determining fair
value:
|
|
Beginning
|
Net
realized
|
Net
|
Net
transfers
|
Ending
|
||||||||||||||
|
balance
as of
|
gain/(loss)
|
purchases/
|
in
and/or out
|
balance
as of
|
||||||||||||||
|
December
31, 2007
|
and
depreciation
|
sales
|
of
Level 3
|
December
31, 2008
|
||||||||||||||
| $ | 1,461,494 | $ | (194,762 | ) | $ | (319,918 | ) | $ | (99,624 | ) | $ | 847,190 | ||||||
|
6. Investments
Continued
|
No
adjustments were required to be made to the financial statements as a
result of adopting SFAS No. 157.
|
|
|
7. Plan
Termination
|
The terms of
the Plan may be amended, modified or discontinued after the effective date
of the Savings Plan Agreement. Such amendment, modification or
discontinuance may occur pursuant to negotiations for employees at
Kennecott Utah Copper Corporation who are represented by the labor
organizations that are jointly referred to as the Union, or as required by
law, or to gain Internal Revenue Service approval. No change,
however, shall make it possible for any part of the funds of the Plan to
be used for or diverted 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.
|
||
|
8. Income
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 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 is 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.
|
|
9. Reconciliation
of
Financial
Statements
to
Form
5500
|
The following
is a reconciliation of assets available for benefits as presented in the
financial statements as of December 31, 2008 and 2007 to the Form
5500:
|
|
2008
|
2007
|
|||||||
|
Assets
available for benefits as presented in
the financial statements
|
$ | 38,848,498 | $ | 58,779,491 | ||||
|
Adjustment
from contract value to fair value
for fully benefit-responsive investment contracts
|
(1,527,210 | ) | (65,110 | ) | ||||
|
Assets
available for benefits as presented in
Form 5500
|
$ | 37,321,288 | $ | 58,714,381 | ||||
|
10.
Delinquent
Contributions
|
During the
year ended December 31, 2008, Plan management determined that employee
contributions totaling $1,131,418 had not been deposited timely to the
Plan. As of December 31, 2008, corrective earnings
contributions due to the Plan were $882 (see the accompanying supplemental
Schedule of Delinquent Contributions).
|
|
|
11.Subsequent
Event
|
On May 1,
2009, Kennecott Utah Copper Corporation, the Plan sponsor, changed its
name to Kennecott Utah Copper,
LLC.
|
|
(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
|
TBC
Pooled Employee Daily Liquidity
Fund
|
285,827 |
**
|
$ | 285,827 | |||||||||||
|
Common
Collective Trusts:
|
||||||||||||||||
|
SEI
Investments
|
SEI
Stable Asset Fund
|
4,543,520 |
|
**
|
4,543,520 | |||||||||||
|
State
Street Bank and Trust Company
|
State
Street Bank and Trust Company S&P 500 Flagship
Securities
|
|||||||||||||||
|
Lending
Series C Fund
|
148,132 |
**
|
2,456,173 | |||||||||||||
|
Total
Common Collective Trusts
|
6,999,693 | |||||||||||||||
|
Mutual
Funds:
|
||||||||||||||||
|
Dodge
and Cox
|
Dodge
and Cox Stock Fund
|
47,160 |
**
|
3,507,307 | ||||||||||||
|
PIMCO
|
PIMCO
Total Return Fund
|
237,309 |
**
|
2,406,318 | ||||||||||||
|
Harbor
|
Harbor
Capital Appreciation Fund
|
99,395 |
**
|
2,315,901 | ||||||||||||
|
American
Funds
|
American
Funds Europacific Growth Fund
|
74,628 |
**
|
2,085,841 | ||||||||||||
|
Artisan
|
Artisan
Mid Cap Fund
|
90,721 |
**
|
1,543,159 | ||||||||||||
|
Dodge
and Cox
|
Dodge
and Cox International Fund
|
28,535 |
**
|
624,927 | ||||||||||||
|
JP
Morgan
|
UAM/ICM
Small Company Fund
|
33,552 |
**
|
620,046 | ||||||||||||
|
Blackrock
|
Blackrock
Small Cap Growth Equity
|
41,090 |
**
|
594,983 | ||||||||||||
|
Wells
Fargo
|
Wells
Fargo Advantage C&B Mid Cap
Fund
|
49,623 |
**
|
522,032 | ||||||||||||
|
JP
Morgan
|
JP
Morgan Investor Balanced Fund
|
3,238 | 30,630 | |||||||||||||
|
Total
Mutual Funds
|
14,251,144 | |||||||||||||||
|
See report of
independent registered public accounting firm.
|
18
|
|
(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 Insurance Company
|
Synthetic
GIC, Dwight Managed Target 2, no specified maturity date,
4.16%
|
143,905 | ** | $ | 2,395,807 | |||||||||||
|
Monumental
Life Insurance Company
|
Synthetic
GIC, Dwight Managed Target 5, no specified maturity date,
4.16%
|
54,666 | ** | 949,944 | ||||||||||||
|
Monumental
Life Insurance Company
|
Synthetic
GIC, Dwight Managed Target 5, no specified maturity date,
5.26%
|
113,886 | ** | 1,979,027 | ||||||||||||
| 5,324,778 | ||||||||||||||||
|
State
Street Bank and Trust Company
|
Synthetic
GIC, Dwight Intermediate Core Plus Fund,
|
|||||||||||||||
|
no
specified maturity date, 3.84%
|
136,428 | ** | 1,950,177 | |||||||||||||
|
State
Street Bank and Trust Company
|
Synthetic
GIC, Dwight Managed Target 2, no specified maturity date,
3.77%
|
295,164 | ** | 4,914,031 | ||||||||||||
|
State
Street Bank and Trust Company
|
Synthetic
GIC, Dwight Managed Target 5, no specified maturity date,
3.77%
|
34,262 | ** | 595,387 | ||||||||||||
| 5,509,418 | ||||||||||||||||
|
Total
Synthetic Guaranteed Investment Contracts
|
12,784,373 | |||||||||||||||
| * |
Rio
Tinto plc ADRs
|
Common
Stock
|
33,728 | ** | 2,998,791 | |||||||||||
| * |
Putnam
|
Pending
Account
|
** | 578 | ||||||||||||
|
Total
Investments at fair value
|
$ | 37,320,406 | ||||||||||||||
|
*
denotes a party-in-interest as defined by
ERISA
|
||||||||||||||||
|
**
not required as investments are participant
directed
|
||||||||||||||||
|
See report of
independent registered public accounting firm.
|
19
|
|
Nonexempt
prohibited
|
||||
|
Employee
contributions
|
transactions that
are
|
Corrective
Employer
|
||
|
remitted late to the
Plan
|
corrected outside
VFCP
|
earnings
contribution
|
||
|
$ 1,131,418
|
$ 1,131,418
|
$ 882
|
|
See report of
independent registered public accounting firm.
|
20
|
|
KENNECOTT
CORPORATION SAVINGS PLAN
|
||
|
FOR
HOURLY EMPLOYEES
|
||
| By: | /s/ Kelly D. Sanders | |
|
Name: Kelly
D. Sanders
|
||
|
Title:
Chief Operating Officer, Kennecott Utah Copper
LLC
|
||
|
Exhibit
|
||
|
Number
|
Document
|
|
|
23.1
|
Consent
of Independent Registered Public Accounting
Firm
|