þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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FINANCIAL STATEMENTS: |
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3 | ||||||||
4 | ||||||||
5 | ||||||||
SUPPLEMENTAL SCHEDULE: |
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13 | ||||||||
14 | ||||||||
EXHIBITS: |
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Consents of Independent Registered Public Accounting Firms |
15 | |||||||
EX-99.A: CONSENT OF VIRCHOW, KRAUSE & CO., LLP | ||||||||
EX-99.B: CONSENT OF DELOITTE & TOUCHE LLP |
2006 | 2005 | |||||||
ASSETS |
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INVESTMENTS: |
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Defined Contribution Master Trust (Note 3) |
$ | 9,419,665 | $ | 9,649,080 | ||||
Participant
Loans |
243,900 | 239,711 | ||||||
Total investments at fair value |
9,663,565 | 9,888,791 | ||||||
Adjustment from fair value to contract value
for interest in Defined Contribution Master Trust
relating to fully benefit-responsive investment contracts |
37,309 | 38,715 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS |
$ | 9,700,874 | $ | 9,927,506 | ||||
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2006 | 2005 | |||||||
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR |
$ | 9,927,506 | $ | 9,396,128 | ||||
ADDITIONS: |
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Income from investments: |
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Interest in income of Defined Contribution Master Trust |
816,526 | 785,036 | ||||||
Interest |
15,280 | 12,300 | ||||||
Total income from investments |
831,806 | 797,336 | ||||||
Contributions: |
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Employer |
130,048 | 136,642 | ||||||
Employee |
445,827 | 448,634 | ||||||
Total contributions |
575,875 | 585,276 | ||||||
Total additions |
1,407,681 | 1,382,612 | ||||||
DEDUCTIONS: |
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Payments to participants or beneficiaries |
1,535,938 | 823,210 | ||||||
Administrative expenses |
22,554 | 28,024 | ||||||
Total deductions |
1,558,492 | 851,234 | ||||||
NET (DECREASE) INCREASE BEFORE TRANSFERS |
(150,811 | ) | 531,378 | |||||
NET TRANSFERS |
(75,821 | ) | | |||||
NET (DECREASE) INCREASE |
(226,632 | ) | 531,378 | |||||
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR |
$ | 9,700,874 | $ | 9,927,506 | ||||
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1. | DESCRIPTION OF THE PLAN | |
The following brief description of the Rockwell Automation Retirement Savings Plan for Represented Hourly Employees (the Plan) is provided for general information purposes only. Participants should refer to the Plan document for more complete information. |
a. | General - The Plan is a defined contribution savings plan sponsored by Rockwell Automation, Inc. (Rockwell Automation). The Rockwell Automation Employee Benefit Plan Committee and the Plan Administrator control and manage the operation and administration of the Plan. Wells Fargo, N.A. (Wells Fargo) was the trustee of the Rockwell Automation, Inc. Defined Contribution Master Trust (the Defined Contribution Master Trust) through June 30, 2005. Effective July 1, 2005, all assets and trustee responsibilities of the Defined Contribution Master Trust were transferred to Fidelity Management Trust Company (the Trustee). The assets of the Plan are managed by the Trustee and several other investment managers. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). | ||
Effective July 1, 2005, Rockwell Automation added new investment options, eliminated certain investment options, and consolidated the Rockwell Automation Stock Funds. The new investment options include common stock and debt investment options in addition to a mutual fund brokerage account window. | |||
Participants in the Plan could have invested in seventeen investment funds through June 30, 2005. Effective July 1, 2005, the investment options expanded to include a suite of ten lifestyle mutual funds, ten core investment options and a mutual fund brokerage window. In addition, the following stock funds were available in 2005 and 2006 and are specific to the Plan: |
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The ArvinMeritor, Conexant, Rockwell Collins, Skyworks Solutions and Mindspeed Technology Stock Funds are closed to any additional employer and employee contributions. Any dividends received on behalf of the ArvinMeritor, Conexant, Skyworks Solutions and Mindspeed Technology Stock Funds and any dividends related to employee contributions received on behalf of the Rockwell Collins Stock Fund were paid to the Stable Value Fund. Any dividends on common stock related to employer contributions received on behalf of the Rockwell Collins Stock Fund were paid to the Rockwell Automation Stock Fund. Any dividends received on behalf of Rockwell Automation Stock Fund are paid to Rockwell Automation Stock Fund. | |||
Effective March 31, 2006, Rockwell Automation removed the following closed stock fund options from the Plan: ArvinMeritor Stock Fund, Conexant Stock Fund, Rockwell Collins Stock Fund, Skyworks Solutions Stock Fund and Mindspeed Technology Stock Fund. Participants had the option to redirect their investments in these closed stock funds to any of the available investment options or elect to take a distribution. If a participant did not take action by March 31, 2006, the participants investments in the closed stock funds were automatically transferred to a Fidelity Freedom Fund based on the participants date of birth. | |||
b. | Participation - The Plan provides that eligible employees electing to become participants may contribute up to a maximum of 16% of base compensation, as defined in the Plan document. Participant contributions can be made either before or after United States federal taxation of a participants base compensation. However, pre-tax contributions by highly compensated participants are limited to 12% of the participants base compensation. | ||
The Rockwell Automation matching contribution is 50% of participant contributions up to the first 5% of the participants base compensation for the Allen-Bradley IAM Union participant group and up to the first 6% of the participants base compensation for the Madison, Indiana participant group. No Rockwell Automation contributions are made to the participant accounts of the Chicago Service Center, Hamilton and Euclid participant groups. The Rockwell Automation matching contributions are made to the Rockwell Automation Stock Fund. Participants who are vested may elect to transfer a portion or all of their holdings in Rockwell Automation Stock Fund to one or more of the other investment funds. See also Note 6 related to plan changes. | |||
Effective June 2002, the Plan was amended due to the Economic Growth and Tax Relief Reconciliation Act of 2001, which made provisions for catch-up contributions to 401(k) plans to give employees who are at least age 50 and older the opportunity to save more for retirement. Employees must have been at least age 50 at December 31, 2005 to be eligible to make catch-up contributions in the current year. The 2006 and 2005 employee catch-up contribution amount allowed was an additional $5,000 and $4,000 in pre-tax contributions, respectively. | |||
c. | Investment Elections - Participants may contribute to any or all of the funds that are available for contributions in 1% increments. Participants may change such investment elections on a daily basis. If a participant does not have an investment election on file, contributions were |
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made to the Stable Value Fund through June 30, 2005. Effective July 1, 2005, contributions are made to one of the Fidelity Freedom Funds, based on the participants date of birth. | |||
Participants may invest in the Stable Value Fund, a common collective trust fund, which invests primarily in benefit-responsive guaranteed investment contracts (GICs) and money market investments. | |||
d. | Unit Values - Participants do not own specific securities or other assets in the various funds, but have an interest therein represented by units valued as of the end of each business day. However, voting rights are extended to participants in proportion to their interest in each stock fund and each mutual fund, as represented by common units. Participants accounts are charged or credited for Plan earnings or loss from investments, as the case may be, with the number of units properly attributable to each participant. | ||
e. | Vesting - Each participant is fully vested at all times in the portion of the participants account that relates to the participants contributions and earnings thereon. Employer contributions and earnings are vested after the participant has completed three years of vesting service. | ||
f. | Loans - A participant may obtain a loan in an amount as defined in the Plan document (not less than $1,000 and not greater than the lower of $50,000, reduced by the participants highest outstanding loan balance during the 12 month period before the date of the loans, or 50% of the participants vested account balance less any outstanding loans) from the balance of the participants account. Loans are secured by the remaining balance in the participants account. Interest is charged at a rate equal to the prime rate plus 1%. The loans can be repaid through payroll deductions over terms of 12, 24, 36, 48 or 60 months, or up to 120 months for the purchase of a primary residence, or repaid in full after a minimum of one month. Payments of principal and interest are credited to the participants account. Participants may have up to two outstanding loans at a time. | ||
g. | Forfeitures - When certain terminations of participation in the Plan occur, the nonvested portion of the participants account represents a forfeiture, as defined in the Plan document. Forfeitures remain in the Plan and subsequently are used to reduce Rockwell Automations contributions to the Plan in accordance with ERISA. However, if the participant is re-employed with Rockwell Automation and fulfills certain requirements, as defined in the Plan document, the participants account will be restored. | ||
h. | Plan Termination - Although Rockwell Automation has not expressed any current intent to terminate the Plan, Rockwell Automation has the authority to terminate or modify the Plan or suspend contributions to the Plan in accordance with ERISA. In the event the Plan is terminated or contributions by Rockwell Automation are discontinued, each participants employer contribution account will be fully vested. Benefits under the Plan will be provided solely from Plan assets. | ||
i. | Withdrawals and Distributions - Active participants may withdraw certain amounts up to their entire vested interest when the participant attains the age of 59-1/2 or is able to demonstrate financial hardship. Participant vested amounts are payable upon retirement, death, or other termination of employment. | ||
j. | Expenses - Plan fees and expenses, including fees and expenses associated with the provision of administrative services by external service providers, are paid from Plan assets. |
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2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
a. | New Accounting Pronouncement - As described in Financial Accounting Standards Board Staff Position, FSP 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 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 Plan invests in investment contracts through a common collective trust held by the Defined Contribution Master Trust. As required by the FSP, the Statement of Net Assets Available for Benefits presents the fair value of the investment in the common collective trust as well as the adjustment of the investment in the common collective trust from fair value to contract value relating to the investment contracts. Prior year balances have been reclassified accordingly. The Statement of Changes in Net Assets Available for Benefits is presented on a contract value basis. | ||
b. | Valuation of Investments - The Plan has an interest in the assets of the Defined Contribution Master Trust. The assets of the Defined Contribution Master Trust are stated at fair value, except for the investment in the Stable Value Fund, which is stated at contract value. Purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on an accrual basis. Dividends are recorded on the ex-dividend date. The loan fund is stated at cost which approximates fair value. | ||
c. | Use of Estimates - Estimates and assumptions made by the Plans management affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases to Plan assets during the reporting period. Actual results could differ from those estimates. | ||
d. | Payment of Benefits - Benefits are recorded when paid. | ||
e. | Risks and Uncertainties - The Plan invests in various investments. In general, investments are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investments, it is reasonably possible that changes in the values of certain investments will occur in the near term and that such changes could materially affect the amounts reported in the financial statements. |
3. | DEFINED CONTRIBUTION MASTER TRUST | |
At December 31, 2006 and 2005, with the exception of the participant loan fund, all of the Plans investment assets were held in the Defined Contribution Master Trust account at the Trustee. Use of the Defined Contribution Master Trust permits the commingling of the trust assets of a number of benefit plans of Rockwell Automation and its subsidiaries for investment and administrative purposes. Although assets are commingled in the Defined Contribution Master Trust, the Trustee maintains supporting records for the purpose of allocating the net earnings or loss of the investment accounts to the various participating plans. | ||
The Defined Contribution Master Trust investments are valued at fair value at the end of each day. If available, quoted market prices are used to value investments. If quoted market prices are not available, the fair value of investments is estimated primarily by independent investment brokerage firms and insurance companies. |
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2006 | 2005 | |||||||
Money market funds |
$ | 23,560,512 | $ | 42,987,654 | ||||
Cash |
1,763,797 | 878,749 | ||||||
Common stocks |
1,290,692,208 | 1,947,764,881 | ||||||
Mutual funds |
822,411,845 | 322,044,256 | ||||||
Brokeragelink accounts |
10,016,400 | 4,338,439 | ||||||
Corporate debt investments |
15,072,367 | 48,488,390 | ||||||
U.S. government securities |
30,444,387 | 9,058,239 | ||||||
Other fixed income investments |
3,610,587 | 3,844,480 | ||||||
Investments
in common collective trusts: |
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Fidelity U.S. Equity Index Commingled Pool |
138,482,454 | 130,213,723 | ||||||
Stable Value Fund |
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guaranteed investment contracts |
574,433,048 | 617,812,976 | ||||||
Accrued income |
856,605 | 1,786,974 | ||||||
Accrued fees |
(991,334 | ) | (1,269,612 | ) | ||||
Pending trades |
(1,829,037 | ) | 104,295 | |||||
Net assets at fair value |
2,908,523,839 | 3,128,053,444 | ||||||
Adjustment from fair value to contract value
for fully benefit-responsive investment contracts |
6,074,950 | 5,870,086 | ||||||
Net assets |
$ | 2,914,598,789 | $ | 3,133,923,530 | ||||
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2006 | 2005 | |||||||
Interest |
$ | 27,023,045 | $ | 28,518,879 | ||||
Dividends |
49,160,767 | 29,517,117 | ||||||
Net appreciation in fair value of investments: |
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Common stocks |
165,836,538 | 248,851,908 | ||||||
Mutual funds |
58,593,922 | 27,810,954 | ||||||
Investment in common collective trust |
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Fidelity U.S. Equity Index Commingled Pool |
19,208,879 | 6,148,810 | ||||||
Brokeragelink accounts |
1,051,484 | | ||||||
Net investment income |
$ | 320,874,635 | $ | 340,847,668 | ||||
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Description of Investment | 2006 | 2005 | ||||||
Rockwell Automation, Inc. common stock |
$ | 622,339,111 | $ | 784,609,618 | ||||
Rockwell Collins, Inc. common stock |
| 429,878,867 | ||||||
Fidelity International Discovery Fund |
158,982,632 | |
4. | NON-PARTICIPANT DIRECTED INVESTMENTS | |
Information about the net assets and the significant components of the changes in net assets relating to the non-participant directed investments in the Rockwell Automation Stock Fund for the year ended December 31, 2006 and 2005 is as follows: |
2006 | 2005 | |||||||
Net Assets, Beginning of Year |
$ | 1,657,888 | $ | 1,389,034 | ||||
Changes in net assets: |
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Contributions |
129,871 | 136,642 | ||||||
Dividends |
25,182 | 5,980 | ||||||
Net appreciation |
61,861 | 262,647 | ||||||
Benefits paid to participants |
(206,515 | ) | (95,745 | ) | ||||
Administrative expenses |
(3,730 | ) | (4,603 | ) | ||||
Transfers |
(96,636 | ) | (36,067 | ) | ||||
Total changes in net assets |
(89,967 | ) | 268,854 | |||||
Net Assets, End of Year* |
$ | 1,567,921 | $ | 1,657,888 | ||||
* | These net assets are included in the Defined Contribution Master Trust. |
5. | TAX STATUS | |
The Internal Revenue Service has determined and informed Rockwell Automation by letter dated October 3, 2002, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code of 1986, as amended (the IRC). The Plan has been amended since receiving the determination letter. The Plan Administrator believes that the Plan is currently |
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designed and is being operated in compliance with the applicable provisions of the IRC and the Plan continues to be tax-exempt. Therefore, no provision for income taxes has been included in the Plans financial statements. | ||
6. | SUBSEQUENT EVENT | |
Effective January 31, 2007, Rockwell Automation sold the Dodge mechanical and Reliance Electric motors and motor repair services businesses. As a result of the sale, all employees of the divested business were terminated in the Plan and those not fully vested were 100% vested in the Plan. |
2006 | ||||
Net assets
available for benefits reported in the financial statements |
$ | 9,700,874 | ||
Adjustment
from fair value to contract value for interest in Defined
Contribution Master Trust relating to fully benefit-responsive
investment contracts |
(37,309 | ) | ||
Net assets
available for benefits reported on Form 5500 |
$ | 9,663,565 | ||
2006 | |||||
Total
additions reported in the financial statements |
1,407,681 | ||||
Adjustment
from fair value to contract value for interest in Defined
Contribution Master Trust relating to fully benefit-responsive
investment contracts |
(37,309 | ) | |||
Total income
plus transfers in as reported on Form 5500 |
$ | 1,370,372 | |||
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Column A | Column B | Column C | Column D | Column E | ||||||||
Description of Investment | ||||||||||||
Identity of Issuer, | Including Collateral, Rate | |||||||||||
Borrower, Lessor | of Interest, Maturity Date, | Fair | ||||||||||
or Similar Party | Par or Maturity Value | Cost | Value | |||||||||
* |
Fidelity Management. | Defined Contribution | ||||||||||
Trust Company | Master Trust | $ | 7,020,695 | $ | 9,419,665 | |||||||
* |
Various | Participant Loans; | ||||||||||
participants | rates ranging between | |||||||||||
5% and 9.25%, | ||||||||||||
due 2007 to 2011 | 0 | 243,900 | ||||||||||
Total assets (held at end of year) | $ | 7,020,695 | $ | 9,663,565 | ||||||||
* | Party-in-interest |
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By
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/s/ Teresa E Carpenter
|
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Plan Administrator |
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