SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 2002
ROCKWELL AUTOMATION RETIREMENT SAVINGS PLAN
FOR CERTAIN EMPLOYEES
ROCKWELL AUTOMATION, INC.
777 East Wisconsin Avenue, Suite 1400
Milwaukee, Wisconsin 53202
ROCKWELL AUTOMATION RETIREMENT SAVINGS PLAN
FOR CERTAIN EMPLOYEES
TABLE OF CONTENTS
PAGE NO.
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INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
December 31, 2002 and 2001 2
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2002 and 2001 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE:
Form 5500, Schedule H, Part IV, Line 4i -
Schedule of Assets Held for Investment Purposes,
December 31, 2002 9
SIGNATURE 10
EXHIBITS:
Independent Auditors' Consent 11
Certifications 12
INDEPENDENT AUDITORS' REPORT
To the Rockwell Automation Retirement Savings Plan
for Certain Employees and to Participants therein:
We have audited the accompanying statements of net assets available for benefits
of the Rockwell Automation Retirement Savings Plan for Certain Employees (the
"Plan") as of December 31, 2002 and 2001, and the related statements of changes
in net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2002 and 2001, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This schedule is the responsibility of the Plan's management. Such
schedule has been subjected to the auditing procedures applied in our audit of
the basic 2002 financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
Deloitte & Touche LLP
Milwaukee, Wisconsin
June 13, 2003
ROCKWELL AUTOMATION RETIREMENT SAVINGS PLAN
FOR CERTAIN EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
2002 2001
---------- ----------
ASSETS
INVESTMENTS:
Master Defined Contribution Trust $2,338,095 $3,199,215
Loan Fund 34,415 33,364
---------- ----------
Total investments 2,372,510 3,232,579
---------- ----------
TOTAL NET ASSETS AVAILABLE
FOR BENEFITS $2,372,510 $3,232,579
========== ==========
See notes to financial statements.
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ROCKWELL AUTOMATION RETIREMENT SAVINGS PLAN
FOR CERTAIN EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
------------- ------------
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR $ 3,232,579 $ 13,475,700
------------ ------------
INCOME:
(Loss) earnings from investments:
Net loss in Master Defined
Contribution Trust (207,831) (1,705,716)
Interest 2,284 16,954
------------ ------------
Total loss from investments (205,547) (1,688,762)
------------ ------------
Contributions:
Employer - 552,066
Employee - 1,850,201
------------ ------------
Total contributions - 2,402,267
------------ ------------
Total (loss) income (205,547) 713,505
------------ ------------
EXPENSES:
Payments to participants or beneficiaries 654,522 4,013,984
Administrative expenses - 4,591
------------ ------------
Total expenses 654,522 4,018,575
------------ ------------
NET LOSS (860,069) (3,305,070)
------------ ------------
NET TRANSFERS FROM THE PLAN - (6,938,051)
------------ ------------
NET DECREASE (860,069) (10,243,121)
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $ 2,372,510 $ 3,232,579
============ ============
See notes to financial statements.
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ROCKWELL AUTOMATION RETIREMENT SAVINGS PLAN
FOR CERTAIN EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
1. DESCRIPTION OF PLAN
The following brief description of the Rockwell Automation Retirement
Savings Plan for Certain Employees (the "Plan"), formerly named
Rockwell Retirement Savings Plan for Certain Employees, is provided for
general information purposes only. Participants should refer to the
Plan document for more complete information.
a. General - The Plan is a defined contribution savings plan
sponsored by Rockwell Automation, Inc. ("Rockwell"), formerly
named Rockwell International Corporation. The Employee Benefit
Plan Committee and the Plan Administrator control and manage
the operation and administration of the Plan. Wells Fargo,
N.A. (the "Trustee") is the Trustee of the Plan. The assets of
the Plan are managed by the Trustee and several other
investment managers. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA").
On June 29, 2001, Rockwell completed the spinoff of its
Rockwell Collins avionics and communications business into an
independent, separately traded, publicly held company by
distributing all of the outstanding shares of Rockwell
Collins, Inc. ("Rockwell Collins") to Rockwell's shareowners
on the basis of one Rockwell Collins share for each
outstanding Rockwell share. After the spinoff, participants
that were employees of Rockwell Collins were allowed to elect
to transfer their balances to plans established by their
employer. Participant balances in the amount of $6,705,976
were transferred to a Rockwell Collins plan. As a result of
the spinoff, the Plan was frozen with contributions no longer
made by or on behalf of participants. See Note 5 which
describes additional changes to the Plan.
Participants were allowed to invest in seven investment funds
and the following stock funds which were specific to the Plan:
Stock Fund A (employer contributions) - Invests
principally in the common stock of Rockwell but may
also hold cash and cash equivalents.
Stock Fund B (employee contributions) - Invests
principally in the common stock of Rockwell but may
also hold cash and cash equivalents.
Boeing Stock Fund - Invests principally in the common
stock of The Boeing Company but may also hold cash
and cash equivalents.
ArvinMeritor Stock Fund - Invests principally in the
common stock of ArvinMeritor, Inc. but may also hold
cash and cash equivalents.
Conexant Stock Fund - Invests principally in the
common stock of Conexant Systems, Inc. but may also
hold cash and cash equivalents.
Rockwell Collins Stock Fund - Invests principally in
the common stock of Rockwell Collins but may also
hold cash and cash equivalents.
Skyworks Stock Fund - Invests principally in the
common stock of Skyworks Solutions, Inc. but may also
hold cash and cash equivalents.
- 4 -
The Boeing, ArvinMeritor, Conexant, Rockwell Collins, and
Skyworks Stock Funds are closed to any additional employer and
employee contributions. Any dividends on common stock related
to employer contributions received on behalf of these funds
are paid to Stock Fund A. Any dividends on common stock
related to employee contributions received on behalf of these
funds are paid to the Rockwell Stable Value Managed Fund
("stable value fund").
b. Participation - Participation in the Plan was extended to
certain employees of certain collective bargaining units
within Rockwell Collins who were eligible to participate, as
defined in the Plan document. As a result of the spinoff, the
plan was frozen with contributions no longer made by or on
behalf of participants. Prior to the spinoff, participants
were allowed to contribute up to a maximum of 16% of base
compensation, as defined in the Plan document. Participant
contributions were made either before or after United States
federal taxation of a participant's compensation. However,
pre-tax contributions by highly compensated participants were
limited to 12% of the participant's base compensation.
Participants who have attained age 65 and retired and elected
to defer distribution until a later date, may elect on a daily
basis to transfer in 1% increments or specified dollar amounts
of the participant's interest in Stock Fund A to one or more
of the investment funds.
c. Investment Elections - Participants could elect to have
participant contributions made to any of the funds that were
available to participant contributions in 1% increments among
any or all of these funds. Participants could change such
investment elections on a daily basis. If a participant did
not have an investment election on file, contributions were
made to the stable value fund.
The Plan invests in the stable value fund which invests
primarily in guaranteed investment contracts (GICs) and money
market investments. The GICs are benefit-responsive and stated
at contract value. The weighted average crediting interest
rate for the stable value fund was 5.81% and 6.10% at December
31, 2002 and 2001, respectively.
Participants could elect to contribute to a guaranteed return
fund which was invested in an insurance contract with the
Prudential Insurance Company of America until its expiration
on April 2, 2001. The guaranteed return fund contract provided
a variable guaranteed annual return to participants for the
contract period. The crediting interest rate for the contract
was 5.82% at December 31, 2000. The funds invested in the
guaranteed return fund contract were automatically transferred
into the stable value fund upon its expiration.
d. Unit Values - Participants do not own specific securities or
other assets in the various funds, but have an interest
therein represented by units valued as of the end of each
business day. However, voting rights are extended to
participants in proportion to their interest in Rockwell
common stock held in Stock Fund A and Stock Fund B, 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. Employer Contributions - During 2001, Rockwell contributed to
the Plan an amount equal to 55% of the participant's
contribution up to a maximum of $550. Rockwell contributions
were made to Stock Fund A.
f. Vesting - Plan participants became fully vested in all account
balances as a result of the Rockwell Collins spinoff.
- 5 -
g. Loans - A participant can obtain a loan in the amount as
defined in the Plan document (not less than $1,000 and not
greater than $50,000 reduced by the participant's highest
outstanding loan balance during the 12 month period before the
date of the loan or 50% of the participant's vested account
balance less outstanding loans) from the balance of the
participant's account. Loans are secured by the remaining
balance in the participant's account. Interest is charged at a
rate equal to the prime rate plus 1%. The loans can be repaid
through payroll deductions over terms of 12, 24, 36, 48 or 60
months or up to 120 months for the purchase of a primary
residence, or in full at any time after a minimum of one
month. Payments of principal and interest are credited to the
participant's account. Participants can have up to two
outstanding loans at a time.
h. Forfeitures - When certain terminations of participation in
the Plan occur, the nonvested portion of a participant's
account represents a forfeiture, as defined in the Plan
document. Forfeitures remain in the Plan and subsequently were
used to reduce Rockwell's contributions to the Plan. However,
if the participant is reemployed with Rockwell and fulfils
certain requirements, as defined in the Plan document, the
participant's account will be restored.
i. Plan Termination - Contributions to the Plan have been
suspended in accordance with ERISA. The Plan is frozen and
each participant's employer contribution account is fully
vested. Benefits under the Plan will be provided solely from
the Plan assets.
j. Withdrawals and Distributions - Active participants may
withdraw certain amounts up to their entire vested interest
when the participant attains the age of 59-1/2 or is able to
demonstrate financial hardship. Participant vested amounts are
payable upon retirement, death or other termination of
employment.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Valuation of Investments - Investment in the Master Defined
Contribution Trust is stated at fair value except for the
benefit-responsive GICs, which are stated at contract value
(Note 1c). Purchases and sales on securities are recorded on a
trade date basis. Interest income is recorded on the accrual
basis. Dividends are recorded on the ex-dividend date. The
loan fund is stated at cost which approximates fair value.
b. Expenses - Plan fees and expenses, including fees and expenses
in connection with the provision of administrative services by
external service providers, are paid by Rockwell.
c. Use of Estimates - Estimates and assumptions made by the
Plan's management affect the reported amount of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of increases and decreases to the Plan during
the reporting period. Actual results could differ from those
estimates.
d. Payment of Benefits - Benefits are recorded when paid.
e. Risks and Uncertainties - The Plan invests in various
investments. Investments, in general, are exposed to various
risks, such as interest rate, credit, and overall market
volatility. Due to the level of risk associated with certain
investments, it is reasonably possible that changes in the
values of certain investments will occur in the near term and
that such changes could materially affect the amounts reported
in the financial statements.
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3. MASTER DEFINED CONTRIBUTION TRUST
At December 31, 2002 and 2001, with the exception of the participant
loan fund, all of the Plan's investment assets were held in the Master
Defined Contribution Trust ("Master Trust") account at Wells Fargo,
N.A. Use of the Master Trust permits the commingling of the trust
assets of a number of benefit plans of Rockwell and its subsidiaries
for investment and administrative purposes. Although assets are
commingled in the Master Trust, the Trustee maintains supporting
records for the purpose of allocating the net earnings or loss of the
investment accounts to the various participating plans.
The Master Trust investments are valued at fair value at the end of
each day except for the benefit-responsive GICs, which are valued at
contract value (Note 1c). If available, quoted market prices are used
to value investments. If quoted market prices are not available, the
fair value of investments is estimated primarily by independent
investment brokerage firms and insurance companies.
The net earnings or loss of the accounts for each day are allocated by
the Trustee to each participating plan based on the relationship of the
interest of each plan to the total of the interests of all
participating plans.
The net assets of the Master Trust at December 31, 2002 and 2001 are
summarized as follows:
2002 2001
--------------- ---------------
Cash and equivalents $ 30,847,729 $ 26,896,546
Common stocks 1,231,983,302 1,517,780,621
Mutual funds 305,886,443 375,758,692
Preferred/convertible securities 3,834,375 3,045,546
Investments in common collective trusts:
Stable value fund 583,562,332 558,611,089
Fidelity U.S. equity index fund 95,486,091 130,249,787
Accrued income 586,782 621,155
Pending trades 1,175,677 (893,132)
--------------- ---------------
Net assets $ 2,253,362,731 $ 2,612,070,304
=============== ===============
The net loss of the Master Trust for the years ended December 31, 2002
and 2001 is summarized as follows:
2002 2001
-------------- --------------
Interest $ 34,034,580 $ 39,078,134
Dividends 33,132,739 44,001,783
Net depreciation in fair value of investments:
Common stocks (128,658,298) (398,976,496)
Mutual funds (58,591,682) (50,802,436)
Investments in common collective trusts (28,283,536) (21,417,146)
Other (1,528,742) (1,797,770)
------------- -------------
Net loss $(149,894,939) $(389,913,931)
============= =============
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The Plan's interest in the total Master Trust as a percentage of net
assets of the Master Trust was less than 1% at both December 31, 2002
and 2001. While the Plan participates in the Master Trust, the
investment portfolio is not ratable among the various participating
plans. As a result, those plans with smaller participation in the
common stock funds recognized a disproportionately lesser amount of net
depreciation in 2002 and 2001.
4. TAX STATUS
The Internal Revenue Service has determined and informed Rockwell by
letter dated October 3, 2002, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (IRC). The Plan Administrator and the Plan's tax counsel believe
that the Plan is designed and is currently being operated in compliance
with the applicable provisions of the IRC.
5. CHANGES IN THE PLAN
Effective June 1, 2001, the name of the plan changed to Rockwell
Automation Retirement Savings Plan for Certain Employees.
Effective June 29, 2001, the Plan was amended to allow for the
discontinuance of contributions to the Plan from and on behalf of
employees of Rockwell Collins and the creation of the Rockwell Collins
Stock Fund. In conjunction with the Rockwell Collins spinoff, all Plan
accounts of active Rockwell Collins' participants became fully vested.
On June 25, 2002, Conexant Systems, Inc. ("Conexant") spun off its
wireless communications business prior to the merger of that business
with Alpha Industries, Inc., which was subsequently renamed Skyworks
Solutions, Inc. ("Skyworks"). As a result of the spinoff and the
merger, Conexant shareholders received 0.351 of a share of Skyworks
common stock for each outstanding Conexant share. The Plan was amended
on June 5, 2002, to allow the creation of the Skyworks Stock Fund to
hold the distributed shares of Skyworks.
6. SUBSEQUENT EVENT
In March 2003, Conexant announced its plan to spinoff to shareholders
Mindspeed Technologies, Inc., its Internet infrastructure business
("Mindspeed"). At the time of spinoff, Conexant shareholders will
receive one share of Mindspeed for every three shares of Conexant
common stock held as of record on June 20, 2003.
* * * * *
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ROCKWELL AUTOMATION RETIREMENT SAVINGS PLAN
FOR CERTAIN EMPLOYEES
FORM 5500, SCHEDULE H, PART IV, LINE 4I -
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES,
DECEMBER 31, 2002
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
DESCRIPTION OF INVESTMENT
IDENTITY OF ISSUER, INCLUDING COLLATERAL, RATE
BORROWER, LESSOR OF INTEREST, MATURITY DATE, CURRENT
OR SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE
------- ---------------- --------------------------- ----------- -----------
* Wells Fargo, N.A. Master Defined
Contribution Trust $ 2,745,783 $ 2,338,095
* Various participants Participant Loans;
prime rate plus 1%,
due 2003 to 2007 34,415 34,415
----------- -----------
Total investments $ 2,780,198 $ 2,372,510
=========== ===========
*Party-in-interest
- 9 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned, hereunto duly authorized.
ROCKWELL AUTOMATION RETIREMENT SAVINGS PLAN
FOR CERTAIN EMPLOYEES
By /s/ Roger Freitag
---------------------------------
Roger Freitag
Plan Administrator
Date: June 26, 2003
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