1
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, 1999
ROCKWELL EMPLOYEE SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
ROCKWELL INTERNATIONAL CORPORATION
777 East Wisconsin Avenue, Suite 1400
Milwaukee, Wisconsin 53202
2
ROCKWELL EMPLOYEE SAVINGS AND INVESTMENT
PLAN FOR REPRESENTED HOURLY EMPLOYEES
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE NO.
--------
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for Benefits for the Years
Ended December 31, 1999 and 1998 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE:
Schedule of Assets Held for Investment Purposes at End of Year 9
December 31, 1999
SIGNATURE S-1
EXHIBIT:
Independent Auditors' Consent S-2
3
INDEPENDENT AUDITORS' REPORT
To the Rockwell Employee Savings and Investment Plan for
Represented Hourly Employees and to Participants therein:
We have audited the accompanying statements of net assets available for benefits
of the Rockwell Employee Savings and Investment Plan for Represented Hourly
Employees (formerly Allen-Bradley Savings and Investment Plan for Represented
Hourly Employees) (the "Plan") as of December 31, 1999 and 1998, 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,
1999 and 1998, 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 as of December
31, 1999 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 1999 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 23, 2000
4
ROCKWELL EMPLOYEE SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
----------- -----------
INVESTMENTS:
Master Defined Contribution Trust $30,595,044 $30,514,887
Loan fund 573,269 564,219
----------- -----------
Total investments 31,168,313 31,079,106
----------- -----------
RECEIVABLES:
Interest and Dividends 105,160 43
----------- -----------
Total receivables 105,160 43
----------- -----------
TOTAL NET ASSETS AVAILABLE
FOR BENEFITS $31,273,473 $31,079,149
=========== ===========
See notes to financial statements.
-2-
5
ROCKWELL EMPLOYEE SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR $ 31,079,149 $ 26,550,863
------------ ------------
INCOME:
Earnings from investments:
Net earnings in Master Defined Contribution Trust 3,055,485 1,985,638
Interest 47,654 37,670
------------ ------------
Total earnings from investments 3,103,139 2,023,308
Contributions:
Employer 1,033,529 1,004,399
Employee 3,499,904 3,364,866
------------ ------------
Total contributions 4,533,433 4,369,265
------------ ------------
Total income 7,636,572 6,392,573
------------ ------------
EXPENSES:
Payments to participants or beneficiaries 4,780,380 1,850,389
------------ ------------
NET INCOME 2,856,192 4,542,184
------------ ------------
NET TRANSFERS FROM THE PLAN (2,661,868) (13,898)
------------ ------------
NET INCREASE 194,324 4,528,286
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $ 31,273,473 $ 31,079,149
============ ============
See notes to financial statements.
-3-
6
ROCKWELL EMPLOYEE SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following brief description of the Rockwell Employee Savings and
Investment Plan for Represented Hourly Employees (formerly Allen-Bradley
Savings and Investment 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 covering all
represented hourly employees of Rockwell International Corporation and
its subsidiaries ("Rockwell") who elect to participate in the Plan and
who are employees at a Rockwell location to which participation has
been extended. The Central Retirement Committee and the Plan
Administrator control and manage the operation and administration of
the Plan. Wells Fargo, N.A. 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"). See Note 5 which
describes changes to the Plan.
Participants in the Plan may invest in any of the following investment
funds:
Diversified Fund - Invests principally in common stocks and
convertible securities.
Aggregate Bond Index Fund - Invests in fixed income securities
included in the Lehman Brothers Aggregate Bond Index.
Stable Value Fund - Invests in insurance contracts and fixed
income securities.
Stock Fund B (employee contributions) - Invests principally in
the common stock of Rockwell but may hold Rockwell common stock
and cash.
Other funds of the Plan include:
Stock Fund F - Holds the common stock of Meritor Automotive, Inc.
("Meritor").
Stock Fund H - Holds the common stock of Conexant Systems, Inc.
("Conexant"). See Note 5.
Loan Fund - Represents outstanding participant loan balances.
Stock Funds F and H are closed to any additional employee
contributions. Additionally, there are special rules regarding
distribution from such funds. Any dividends received on behalf of
these funds are paid to the Stable Value Fund.
-4-
7
b. Participation - The Plan provides that eligible employees electing to
become participants may contribute pre-tax up to a maximum of 9% of
base compensation for non-highly compensated participants and 8% of
base compensation for highly-compensated participants, as defined in
the Plan document. In addition, participants may contribute up to an
additional 5% post tax. Rockwell contributes out of its current or
accumulated earnings and profits, but not otherwise, an amount equal
to 50% of the total amount of a participant contribution provided that
such amount shall not exceed an amount equal to 5% of compensation.
Rockwell contributions are made to the Stable Value Fund.
c. Investment Elections - Participants may elect to have participant
contributions made to any of the funds indicated in Note 1.a. that are
available to participant contributions in 5% increments among any or
all of these funds. Participants may change such investment elections
once every calendar quarter.
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 B. The participants' accounts
are charged or credited, 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 a participant's account that relates to the participant's
contributions and earnings thereon. Vesting in the Rockwell
contribution portion of a participant's account plus actual earnings
thereon is based on the vesting schedule as described in the Plan
document. A participant is 100% vested after 60 months of vested
service.
f. Loans - A participant may obtain a loan in an amount as defined in the
Plan (not less than $1,000 and not greater than $50,000 or 50% of the
participant's account balance) from the balance of the participant's
account. Loans are secured by the 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 repaid in full after a minimum of 12 months.
Payments of principal and interest are credited to the participant's
account. Participants may have only one outstanding loan at a time.
g. Forfeitures - When certain terminations of participation in the Plan
occur, the nonvested portion of the participant's account represents a
forfeiture as defined in the Plan document. Forfeitures remain in the
Plan and subsequently are used to reduce Rockwell's contributions to
the Plan. However, if the participant is reemployed and fulfills
certain requirements, as defined in the Plan document, the
participant's account will be restored.
h. Plan Terminations - Although Rockwell has not expressed any current
intent to terminate the Plan, Rockwell has the authority to terminate
or modify the Plan or suspend contributions to the Plan in accordance
with ERISA. In the event that the Plan is terminated or contributions
by Rockwell are discontinued, each participant's employer
contributions account will be fully vested. Benefits under the Plan
will be provided solely from the Plan assets.
-5-
8
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.
Upon termination of employment, participants may elect to receive the
vested portion of their account balance (employee and employer
contributions), in the form of a lump sum.
Upon retirement, participants may elect to receive the vested portion
of their account balance (employee and employer contributions) in the
form of a lump sum or in annual installment payments up to 10 years.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Valuation of Investments - Investment in the Master Defined
Contribution Trust is stated at fair value. See Note 3. The loan fund
is stated at cost which approximates fair value.
b. Expenses - Plan fees and expenses are paid by the trustee from plan
assets. 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.
3. MASTER DEFINED CONTRIBUTION TRUST
At December 31, 1999 and 1998, with the exception of the participant loan
fund, all of the Plan's investment assets were held in a Master Defined
Contribution Trust ("Master Trust"), 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, Wells Fargo,
N.A. maintains supporting records for the purpose of allocating the net
gain of the investment accounts to the various participating plans.
The investment accounts of the Master Trust 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. The investment funds held by the Master
Trust are discussed in Note 1.
The net gain or loss of the accounts for each day is 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.
-6-
9
The net assets of the Master Trust at December 31, 1999 and 1998 are
summarized as follows:
1999 1998
-------------- --------------
Cash and equivalents $ 57,771,160 $ 74,351,351
U.S. Government securities -- 20,395,583
Corporate bonds and debentures 42,402,523 135,081,333
Common stocks 4,428,191,177 2,852,241,039
Mutual Funds 503,123,568 --
Stable Value Fund 547,797,792 --
Guaranteed investment contracts 147,012,701 406,115,361
Accrued income 4,091,896 4,125,316
-------------- --------------
Net assets available for benefits $5,730,390,817 $3,492,309,983
============== ==============
The net earnings (loss) of the Master Trust for the years ended December 31,
1999 and 1998 are summarized as follows:
1999 1998
--------------- ---------------
Interest $ 49,441,701 $ 38,579,864
Dividends 57,083,001 58,366,753
Net appreciation (depreciation) in fair
value of investments:
U.S. Government securities (375,707) 407,560
Corporate bonds and debentures (1,899,587) (625,459)
Common stocks 2,074,314,661 (103,309,401)
Mutual funds 151,108,840 --
Other (392,165) --
--------------- ---------------
Net earnings (loss) $ 2,329,280,744 $ (6,580,683)
=============== ===============
The Plan's interest in the total Master Trust, as a percentage of net
assets held of the Master Trust, was less than 1% at both December 31, 1999
and 1998. While the Plan participates in the Master Trust, the portfolio of
investments is not ratable between the various participating plans. As a
result, those plans with smaller participation in the common stock funds
recognized a disproportionately lesser amount of net appreciation and net
depreciation in 1999 and 1998, respectively.
4. TAX STATUS
The Plan obtained its latest determination letter in 1996, in which the
Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Internal Revenue Code.
The Plan has been amended since receiving the determination letter.
Rockwell believes that the Plan currently is designed and being operated in
compliance with the applicable requirements of the Internal Revenue Code
and that, therefore, the Plan continues to qualify under Section 401(a) and
the related trust continues to be tax-exempt as of December 31, 1999.
Therefore, no provision for income taxes is included in the Plan's
financial statements.
-7-
10
5. CHANGES IN THE PLAN
On December 31, 1998, Rockwell spun-off its Semiconductor Systems business
into an independent, publicly held company, Conexant Systems, Inc.
("Conexant"), and distributed all of the outstanding shares of common stock
of Conexant to holders of Rockwell common stock. As a result of this
distribution, the Plan received one share of Conexant common stock for
every two shares of Rockwell common stock held by Stock Fund B as of the
distribution date. The Conexant shares were received on January 4, 1999 by
Stock Fund H, which was established as of the December 31, 1998
distribution date. Upon distribution, the value of each Conexant share was
approximately $16.75, which was twice the amount of the approximate $8.37
decline in the value of each Rockwell share at that same time. As such,
based on the distributing allocation of the shares (one share for every two
Rockwell shares held), the distribution of Conexant shares had no impact on
Plan participant account balance. Participants may elect to transfer all or
a portion of their account balance in Stock Fund H to other investment
funds within the Plan. Special rules apply on which funds are available for
transfer.
Effective January 1, 1999, the plan name was changed from the Allen-Bradley
Savings and Investment Plan for Represented Hourly Employees to the
Rockwell Employee Savings and Investment Plan for Represented Hourly
Employees.
Participants should refer to the Plan document for more complete
information regarding changes in the Plan.
* * * * * *
-8-
11
ROCKWELL EMPLOYEE SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT END OF YEAR DECEMBER 31, 1999
- --------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
DESCRIPTION OF INVESTMENT,
IDENTITY OF ISSUER, INCLUDING COLLATERAL, RATE
BORROWER, LESSOR OR OF INTEREST, MATURITY DATE, CURRENT
SIMILAR PARTY COST VALUE
- -------- -------------------- --------------------------- ------------ ------------
* Wells Fargo, N.A. Master Defined
Contribution Trust $ 28,551,593 $ 30,595,044
* Various Participants Participant Loans; prime
plus 1%, due 2000
to 2009 573,269 573,269
------------ ------------
Total investments $ 29,124,862 $ 31,168,313
============ ============
* Party-in-interest.
-9-
12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed by the
undersigned, hereunto duly authorized.
ROCKWELL EMPLOYEE SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
By
--------------------------------------
Alfred J. Spigarelli
Plan Administrator
Date: June 23, 2000
S-1
13
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-17405 of Rockwell International Corporation on Form S-8 and the Prospectus
related thereto of our report dated June 23, 2000, appearing in this Annual
Report on Form 11-K of the Rockwell Employee Savings and Investment Plan for
Represented Hourly Employees for the year ended December 31, 1999.
Deloitte & Touche, LLP
Milwaukee, Wisconsin
June 23, 2000
S-2