UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 11-K
(Mark
One)
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☒
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ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the fiscal
year ended December 31, 2016
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or
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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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For the
transition period from
to
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Commission
file number
001-10533
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A.
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Full
title of the plan and the address of the plan, if different from that of the
issuer named below:
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KENNECOTT UTAH COPPER SAVINGS PLAN
FOR REPRESENTED EMPLOYEES
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B.
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Name
of the issuer of the securities held pursuant to the plan and the address of
its principal executive office:
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Rio Tinto plc
6 St. James's
Square
London SW1Y 4AD
United Kingdom
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the trustees (or
other persons who administer the employee benefit plan) have duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
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KENNECOTT
UTAH COPPER SAVINGS PLAN
FOR REPRESENTED EMPLOYEES
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By:
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/s/ Kathy K. Pike
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Name:
Kathy K. Pike
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Secretary-Rio
Tinto America Inc. Benefit Governance Committee
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Date:
June 28, 2017
Kennecott
Utah Copper
Savings Plan for Represented
Employees
Financial Report
December 31, 2016
Report of Independent Registered Public Accounting Firm
To the Rio Tinto America Inc.
Benefit Governance Committee
Kennecott Utah
Copper Savings Plan for Represented Employees
We have audited the accompanying statements of net assets
available for benefits of the Kennecott Utah Copper Savings Plan for
Represented Employees (the “Plan”) as of December 31, 2016 and 2015, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2016. 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 the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
The Plan is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Plan’s internal control over financial reporting. Accordingly, we express no
such opinion.
An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, 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, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan as of December 31, 2016 and 2015, and the changes in net assets available
for benefits for the year ended December 31, 2016, in conformity with
accounting principles generally accepted in the United States of America.
The supplemental information in the accompanying supplemental
schedule of
delinquent
participant
contributions
for the
year ended
December
31,
2016,
have been subjected to audit procedures performed in
conjunction with the audit of the Plan’s financial statements. The
supplemental information is presented for the purpose of additional analysis
and is not a required part of the financial statements but include supplemental
information required by the Department of Labor’s Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental information is the responsibility of the Plan’s
management. Our audit procedures included determining whether the supplemental
schedule reconciles to the financial statements or the underlying accounting
and other records, as applicable, and performing procedures to test the
completeness and accuracy of the information presented in the supplemental
information. In forming our opinion on the supplemental information in the
accompanying schedule, we evaluated whether the supplemental information,
including its form and content, is presented in conformity with the Department
of Labor’s Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. In our opinion, the
supplemental information in the accompanying schedule is fairly stated, in all
material respects, in relation to the financial statements as a whole.
/s/ Anton Collins Mitchell LLP
Denver, Colorado
June
28, 201
7
Kennecott
Utah Copper Savings Plan for Represented Employees
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Statements of Net Assets
Available for Benefits
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December 31, 2016 and 2015
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2016
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2015
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Investments at fair value (Notes
3 and 4):
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Plan
interest in Rio Tinto America Inc. Savings Plan Trust
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$ 63,358,975
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$ 58,371,937
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Receivables:
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Participant
contributions
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128,228
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-
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Employer
contributions
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47,287
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-
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Total
receivables
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175,515
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-
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Payables:
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Fees payable
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(12,256)
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-
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Total
payables
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(12,256)
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-
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Net
assets available for benefits
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$ 63,522,234
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$ 58,371,937
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See Report of Independent
Registered Public Accounting Firm and Notes to Financial Statements.
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Kennecott
Utah Copper Savings Plan for Represented Employees
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Statement of Changes in Net
Assets Available for Benefits
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For the Year Ended December
31, 2016
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Investment results (Note 3):
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Plan
interest in Rio Tinto America Inc. Savings Plan Trust’s investment income
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$ 5,050,142
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Contributions:
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Participants
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3,342,530
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Participant
rollovers
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66,495
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Employer
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1,233,600
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Total
contributions
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4,642,625
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Benefits paid to participants
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(4,502,862)
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Administrative expenses
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(31,699)
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Net
increase before transfers
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5,158,206
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Transfers to the Rio Tinto
America Inc. 401(k) Savings Plan and
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Investment
Partnership Plan (Note 1)
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(7,909)
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Net
increase after transfers
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5,150,297
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Net assets available for
benefits:
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Beginning
of the year
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58,371,937
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End
of the year
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$ 63,522,234
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See Report of Independent
Registered Public Accounting Firm and Notes to Financial Statements.
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Kennecott Utah Copper
Savings Plan for Represented Employees
Note 1. Description of
the Plan
The following description of the Kennecott Utah Copper Savings
Plan for Represented Employees (the “Plan” or the “KUC Plan”) provides only
general information. Participants should refer to the plan document, summary
plan description and union agreement for a more complete description of the
Plan’s provisions.
General:
The Plan is a defined contribution plan
covering all hourly employees who are represented by or included in a
collective bargaining unit of Kennecott Utah Copper LLC and its affiliates
(collectively, the “Company” or the “Employer”), as defined in the plan
document. Eligible employees can participate in the Plan the first day of the
calendar month after completing three months of continuous service. New hires
will be enrolled automatically in the Plan at a before-tax contribution rate of
four percent of eligible compensation. New hires have the option of
electing out of the automatic enrollment at any time after they are eligible
for the Plan. Any election to opt out of the automatic enrollment after the
effective date will not affect any previously made contributions. The automatic
enrollment provisions do not apply to eligible employees of Kennecott Barneys
Canyon Mining Company.
Kennecott Utah Copper LLC 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 has appointed State Street
Bank & Trust Company (“State Street” or “Plan Trustee”) to be the trustee
of the Plan. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (“ERISA”), as amended.
The Plan is part of the Rio Tinto America Inc. Savings Plan
Trust (the “Master Trust”), whose assets are held with State Street. The Master
Trust was established August 1, 2010, to hold the qualified defined
contribution investment assets of the Plan and certain other benefit plans
sponsored by Rio Tinto America Holdings Inc. (and its subsidiaries). See Note 9
for subsequent changes in trustee and dissolution of the Master Trust.
Contributions:
Participants may elect, under a salary
reduction agreement, to contribute to the Plan an amount not less than one
percent and not more than 19 percent of their eligible compensation on a
before-tax basis through payroll deductions. Before-tax contributions are
limited by the Internal Revenue Code (“IRC”), which established a maximum
contribution of $18,000 ($24,000 for participants age 50 or over) for the year
ended December 31, 2016.
The Company matches participants’ contributions to the Plan at
50 percent, up to the first six percent of their eligible compensation.
Rollovers:
An employee can make rollover contributions
from another qualified plan or an individual retirement account (“IRA”) if
certain criteria are met as set forth in the plan document.
The Plan does not permit Participants to invest rollover
contributions into the common stock of the parent in the form of a unitized
fund with American Depository Receipts (“ADRs”) (the “Company Stock Fund” or “Employer
Stock Fund” or “Rio Tinto ADR Stock Fund”).
Participant accounts:
Each participant’s account is
credited with the participant’s contributions, the Company’s matching
contributions, an allocation of the Plan earnings (losses), and administrative
expenses. Allocations are based on participant earnings (losses), or account
balances, as defined. The benefit to which a participant is entitled is the
benefit which can be provided from the participant’s vested account. Effective
November 2015, terminated participants are charged a monthly fee to offset
recordkeeping expenses.
Kennecott Utah Copper
Savings Plan for Represented Employees
Notes to Financial Statements
Note 1. Description of the
Plan (Continued)
Participant-directed options for investments:
Participants have the option to allocate plan contributions among various investment
options, including the Rio Tinto ADR Stock Fund. All choices vary in types of
investments, rates of return and investment risk. Participants may elect to
have all or part of their account balances and future contributions invested in
one fund, transferred to another fund, or in any combination (except as noted
below). Participants also have the option to invest in managed funds that are
weighted by asset class, based on the participant’s retirement date. The funds
assume participants will retire upon reaching age 65 and invest in various
collective trust and mutual funds.
The Plan limits the total amount of participant contributions
and the Company matching contributions to the Rio Tinto ADR Stock Fund to a
maximum of 20 percent of such contributions. The Plan does not permit participants
to transfer funds into the Rio Tinto ADR Stock Fund, including rollover
contributions; however, participants are permitted to transfer funds out of the
Rio Tinto ADR Stock Fund or to re-allocate their portfolio among all other
funds with the exception of the Rio Tinto ADR Stock Fund.
Vesting:
Participants are immediately vested in their
contributions plus actual earnings (losses) thereon. Vesting in the Company’s
matching contribution is based on completed years of service. A participant is
100 percent vested after three completed years of credited service, or at
time of death or attainment of age 65.
Payment of benefits:
Upon termination, retirement,
death or becoming permanently disabled, participants, or their beneficiaries
may elect to receive lump-sum or rollover distributions in an amount equal to
the value of the participants’ vested interests in their accounts. If a
participant terminates employment and the participant’s account balance is less
than $1,000, the Plan Administrator will authorize the benefit payment in a
single lump sum without the participant’s consent. During employment,
participants may withdraw account balances for financial hardship and other
in-service withdrawals, as defined.
Transfers:
Company employees not represented by a
collective bargaining unit (non-represented employees) participate in the Rio
Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan (the “RTAI
Plan”). If employees change from represented to non-represented status during
the year, their account balances are transferred within the Master Trust from
the KUC Plan to the RTAI Plan.
Forfeitures:
Forfeitures are used to reduce future
Company contributions or pay administrative expenses of the Plan. At December
31, 2016 and 2015, forfeited non-vested accounts were approximately $29,000 and
$9,000, respectively. Approximately $20,000 in forfeitures were used to pay
administrative expenses for the year ended December 31, 2016. No forfeitures
were used to pay Company contributions for the year ended December 31, 2016.
If the distribution of a participant’s account is outstanding
for five years or more, and reasonable efforts were made to locate the
participant, such participant’s benefit may be forfeited. Any forfeitures from
the Plan can be utilized to reinstate benefits should a participant or
beneficiary make a claim for the forfeited benefit.
Note 2. Summary of
Significant Accounting Policies
Basis of presentation:
The financial statements of the
Plan reflect transactions on the accrual basis of accounting.
Kennecott Utah Copper
Savings Plan for Represented Employees
Notes to Financial Statements
Note
2. Summary of Significant Accounting Policies (Continued)
Use of estimates:
The preparation of the financial statements in
conformity with accounting principles generally accepted in the United States
of America requires plan management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosures of
contingent assets and liabilities and changes therein, at the date of the
financial statements, and additions and deductions during the reporting period.
Actual results could differ from those estimates.
Concentrations, risks and uncertainties:
The Master
Trust invests in various investment securities. Investment securities are
exposed to various risks, such as interest rate, market, currency exchange
rate, and credit risks. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the values of
investment securities will occur in the near term and that such changes could
materially affect participants’ account balances and the amounts reported in
the statements of net assets available for benefits. The Plan’s investment in
the Invesco Stable Value Fund and the SSgA S&P 500 Index Fund represents 21.3
percent and 10.2 percent of the Plan’s total interest in the Master Trust,
respectively, at December 31, 2016. The Plan’s investment in the Invesco Stable
Value Fund represents 23.6 percent of the Plan’s total interest in the Master
Trust at December 31, 2015. The Rio Tinto America Inc. Savings Plan Investment
Committee (“Investment Committee”) monitors investment performance on a
quarterly basis.
Investment valuation and income recognition:
Investments are reported at fair value. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The Plan’s
Investment Committee determines the Plan’s valuation policies utilizing
information provided by the investment advisors and Plan Trustee. See Note 4
for a discussion of fair value measurements.
Interest income is recorded on the accrual basis, and
dividends are recorded on the ex-dividend date. Net appreciation (depreciation)
includes gains and losses on investments bought and sold as well as held during
the year. Realized gains and losses related to sales of investments are
recorded on a trade-date basis. Investment income (loss) is allocated to the
Plan based upon its pro rata share in the net assets of the Master Trust.
Expenses are allocated to the Plan based on actual costs incurred and its pro
rata share in the net assets of the Master Trust.
Payment of benefits:
Benefits are recorded when paid by
the Plan.
Contributions:
Employee
contributions and related matching contributions are recorded when withheld
from the participants’ compensation.
Administrative expenses:
Certain investment advisor and
other administrative fees were paid from the Plan for the year ended December
31, 2016. The Company provides accounting and other services for the Plan at no
cost to the Plan. All other expenses related to administering the Plan were
paid by the Company, and were excluded from these financial statements.
The Master Trust has several
fund managers that manage the investments held by the Plan. Fees for certain
investment fund management services are included as a reduction of the return
earned on each fund. These fees, net of expected revenue sharing, range from
0.04 percent to 0.99 percent of investment fund balances. The fees related to
transaction costs associated with the purchase or sale of Rio Tinto plc common
stock ADRs are paid by the participants.
Kennecott Utah Copper
Savings Plan for Represented Employees
Notes to Financial Statements
Note
2. Summary of Significant Accounting Policies (Continued)
Certain fees have been withdrawn from participant accounts,
and are held in a clearing account until they can be paid out to the service
providers. These balances are recorded as a Plan payable.
Subsequent events:
The Plan Administrator has evaluated
subsequent events through
June 28, 2017
,
which is the date the financial statements were available to be issued. See
Note 9.
New accounting pronouncements:
In February 2017, the
Financial Accounting Standards Board (“FASB”) issued Accounting Standards
Update (“ASU”) 2017-06
Plan Accounting: Defined Benefit Pension Plans (Topic
960), Defined Contribution Pension Plans (Topic 962), Health and Welfare
Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting
. For
each master trust in which a plan holds an interest, the amendments in this
update require a plan’s interest in that master trust and any change in that
interest to be presented in separate line items. The amendments in this update
remove the requirement to disclose the percentage interest in the master trust
for plans with divided interests and require that all plans disclose the dollar
amount of their interest in each of those general types of investments, which
supplements the existing requirement to disclose the master trust’s balances in
each general type of investments. The amendments in this update require all
plans to disclose their master trust’s other asset and liability balances and
the dollar amount of the plan’s interest in each of those balances. Lastly, the
amendments in this update remove the redundancy in investment disclosures
related to 401(h) account assets. The amendments in this update are effective
for fiscal years beginning after December 15, 2018 and are to be applied
retroactively. Early adoption is permitted. Management has elected to adopt ASU
2017-06 for the 2016 plan year. The adoption of this ASU did not have a
material impact on the financial statements.
Note 3. Plan Interest in the Rio Tinto America Inc.
Savings Plan Trust
The Plan’s investments are included in the investments of the
Master Trust. Each participating retirement plan has a divided interest in the
Master Trust (based on the investment direction by plan participants in the
various investment options offered through the Master Trust). The value of the
Plan’s interest in the Master Trust is based on the beginning of year value of
the Plan’s interest in the Master Trust plus actual contributions and allocated
investment income (loss) less actual distributions, and allocated
administrative expenses. Investment income (loss), investment management fees
and other direct expenses relating to the Master Trust are allocated to the
individual plans based on the average daily balances. Accrued income, pending
trades, and accrued expenses were de minimus at December 31, 2016 and 2015, and
are included in the investment balances below. The Plan’s interest in the
Master Trust was 9.1 percent and 8.4 percent at December 31, 2016 and 2015,
respectively. The Master Trust also includes the investment assets of the
following retirement plans:
·
RTAI Plan,
·
U.S. Borax Inc. 401(k) Savings and Retirement Contribution Plan
for Represented Employees, and
·
Rio Tinto Alcan 401(k) Savings Plan for Former Employees.
The following is a summary of the Master Trust assets, the
Plan’s divided interest in the assets of the Master Trust, and the Plan’s
divided interest percentage ownership of the Master Trust assets at December
31, 2016 and 2015:
Kennecott Utah Copper
Savings Plan for Represented Employees
Notes to Financial Statements
Note 3. Plan Interest in the
Rio Tinto America Inc. Savings Plan Trust (Continued)
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December 31, 2016
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Plan’s Percent
Interest in
Master Trust
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Master Trust
Assets
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Plan’s Interest
in Master Trust
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Investments at
fair value:
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Mutual
funds
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$ 383,615,539
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$ 31,329,708
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8.2
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Stable
value fund: collective investment trust
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149,603,512
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13,511,238
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9.0
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Collective
trust funds
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135,641,433
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14,100,819
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10.4
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Rio Tinto
plc common stock ADRs
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24,212,261
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3,956,299
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16.3
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Government
Short-Term Investment Fund
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5,270,515
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460,911
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8.7
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Net assets
available for benefits
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$ 698,343,260
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$ 63,358,975
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9.1
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December 31, 2015
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Plan’s Percent
Interest in
Master Trust
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Master Trust
Assets
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Plan’s Interest
in Master Trust
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Investments at
fair value:
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Mutual
funds
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$ 379,642,576
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$ 27,665,234
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7.3
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Stable
value fund: collective investment trust
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152,154,360
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13,793,938
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9.1
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Collective
trust funds
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140,743,623
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13,348,035
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9.5
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Rio Tinto
plc common stock ADRs
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19,922,030
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3,136,334
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15.7
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Government
Short-Term Investment Fund
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4,627,489
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419,517
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9.1
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Interest-bearing cash
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684,263
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8,879
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1.3
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Net assets
available for benefits
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$ 697,774,341
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$ 58,371,937
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8.4
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The following are changes in net assets for the Master
Trust for the year ended December 31, 2016:
Investment results:
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Appreciation
in fair value of investments, net of investment management fees
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$
41,303,995
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Interest
and dividends
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13,191,867
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Net investment results
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54,495,862
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Net transfers
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(53,926,943)
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Increase in net assets
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568,919
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Net assets:
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Beginning
of year
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697,774,341
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End
of year
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$
698,343,260
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Kennecott Utah Copper
Savings Plan for Represented Employees
Notes to Financial Statements
Note
4. Fair Value Measurements
Accounting guidance provides the framework for measuring fair
value. The framework provides a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority
to unobservable inputs (Level 3 measurements). The three levels of the fair
value hierarchy are described as follows:
Level 1: Inputs
to the valuation methodology are unadjusted quoted prices for identical assets
or liabilities in active markets that the Plan has the ability to access.
Level 2: Inputs to the valuation
methodology include quoted market prices for similar assets or liabilities in
active markets; quoted prices for identical or similar assets or liabilities in
inactive markets; inputs other than quoted prices that are observable for the
asset or liability; and inputs that are derived principally from or
corroborated by observable market data by correlation or other means. If the
asset or liability has a specified (contractual) term, the Level 2 input must
be observable for substantially the full term of the asset or liability.
Level 3: Inputs to the valuation
methodology are unobservable and significant to the fair value measurement.
The asset’s or liability’s fair value measurement level within
the fair value hierarchy is based on the lowest level of any input that is
significant to the fair value measurement. Valuation techniques used need to
maximize the use of observable inputs and minimize the use of unobservable
inputs.
Following is a description of the valuation methodologies used
for assets measured at fair value. There have been no significant changes in
the methodologies used at December 31, 2016 and 2015.
Mutual funds:
Mutual funds are valued at the daily
closing price as reported by the fund. Mutual funds held by the Master Trust
are open-end mutual funds that are registered with the U.S. Securities and
Exchange Commission. These funds are required to publish their daily net asset
value (“NAV”) and to transact at that price. The mutual funds held by the
Master Trust are deemed to be actively traded.
Stable value fund: collective investment trust:
The
stable value fund is valued at NAV per unit as a practical expedient, which is
calculated based on the fair values of the underlying funds. This practical
expedient would not be used if it is determined to be probable that the fund
will sell the investment for an amount different from the reported NAV. The
underlying funds include synthetic guaranteed investment
contracts (“GICs”) and traditional GICs, for which contract value is
used as the fair value, since contract value is the amount participants would
receive if they were to initiate permitted transactions under the terms of the
Plan. Participant transactions (purchases and sales) may occur daily. If the
Plan initiates a full redemption of the fund, the issuer reserves the right to
require 12 months’ notification in order to ensure that security liquidations
will be carried out in an orderly manner.
Kennecott Utah Copper
Savings Plan for Represented Employees
Notes to Financial Statements
Note
4. Fair Value Measurements (Continued)
Collective trust funds:
The
collective trust funds are valued at the NAV per unit as a practical expedient,
which is based on the fair values of the underlying funds using a market
approach. This practical expedient would not be used if it is determined to be
probable that the fund will sell the investment for an amount different from
the reported NAV. Underlying equity investments for which market quotations are
readily available are reported at the last reported sale price on their
principal exchange, market or system on valuation date, or official close price
of certain markets. If no sales are reported for that day, investments are
valued at the last published sales price, the mean between the last reported
bid and asked prices, or at fair value as determined in good faith by the
trustee of the fund. Underlying short-term investments are stated at amortized
costs, which approximates fair value. Underlying registered investment
companies or collective investment funds are valued at their respective NAV.
Underlying fixed income investments are valued based on the basis of valuations
furnished by independent pricing services. In the event current market prices
or quotations are not readily available or deemed unreliable by the fund
trustee, the fair value of the underlying fund will be determined in good faith
by the fund trustee using alternative fair valuation methods. Participant
transactions (purchases and sales) may occur daily. There are no restrictions
on redemption.
Rio Tinto plc common stock ADRs:
Rio Tinto plc common
stock ADRs are valued at the closing price reported on the active market on
which individual securities are traded. The fund includes a cash component,
which is valued at $1 per unit.
Government short-term investment fund (“STIF”):
Consists of the State Street Global Advisors (“SSgA”) Government STIF which
seeks to maximize current income, to the extent consistent with the
preservation of capital and liquidity and the maintenance of a stable $1.00 per
share NAV, by investing in U.S. dollar-denominated money market securities.
Interest-bearing cash:
Interest-bearing
cash is valued at cost plus accrued income, which approximates fair value
measured by similar assets in active markets.
The following tables set forth, by
level, within the fair value hierarchy, the Master Trust’s fair value measurements
at December 31, 2016 and 2015:
|
Assets at Fair Value as of December 31,
2016
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
|
|
|
|
Mutual funds
|
$ 383,615,539
|
$ -
|
$ -
|
$ 383,615,539
|
Rio Tinto plc
common stock ADRs (Note 5)
|
24,212,261
|
-
|
-
|
24,212,261
|
Government
Short-Term Investment Fund
|
-
|
5,270,515
|
-
|
5,270,515
|
Total assets in
the fair value hierarchy
|
$ 407,827,800
|
$ 5,270,515
|
$
-
|
$ 413,098,315
|
|
|
|
|
|
Investments measured
at net asset value (a):
|
|
|
|
|
Stable value
fund: collective investment trust
|
|
|
|
149,603,512
|
Collective
trust funds
|
|
|
|
135,641,433
|
Total
investments measured at net asset value
|
|
|
|
285,244,945
|
|
|
|
|
|
Investments at
fair value
|
|
|
|
$ 698,343,260
|
Kennecott Utah Copper
Savings Plan for Represented Employees
Notes to Financial Statements
Note
4. Fair Value Measurements (Continued)
|
Assets at Fair Value as of December 31,
2015
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
|
|
|
|
Mutual funds
|
$ 379,642,576
|
$ -
|
$ -
|
$ 379,642,576
|
Rio Tinto plc common
stock ADRs (Note 5)
|
19,922,030
|
-
|
-
|
19,922,030
|
Government
Short-Term Investment Fund
|
-
|
4,627,489
|
-
|
4,627,489
|
Interest-bearing
cash
|
684,263
|
-
|
-
|
684,263
|
Total assets in
the fair value hierarchy
|
$ 400,248,869
|
$ 4,627,489
|
$ -
|
$ 404,876,358
|
|
|
|
|
|
Investments
measured at net asset value (a):
|
|
|
|
|
Stable value
fund: collective investment trust
|
|
|
|
152,154,360
|
Collective
trust funds
|
|
|
|
140,743,623
|
Total
investments measured at net asset value
|
|
|
|
292,897,983
|
|
|
|
|
|
Investments at
fair value
|
|
|
|
$ 697,774,341
|
(a) In
accordance with Subtopic 820-10, certain investments that are measured at fair
value using the net asset value per share (or its equivalent) practical
expedient have not been classified in the fair value hierarchy. The fair value
amounts presented in this table are intended to permit reconciliation of the
fair value hierarchy to the amounts presented in the statements of net assets
available for benefits.
The methods described above may produce a fair value
calculation that may not be indicative of net realizable value or reflective of
future fair values. Furthermore, while the Plan believes its valuation methods
are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain
financial instruments could result in a different fair value measurement at the
reporting date.
The availability of observable
market data is monitored to assess the appropriate classification of financial
instruments within the fair value hierarchy. Changes in economic conditions or
model-based valuation techniques may require the transfer of financial
instruments from one fair value level to another. In such instances, the
transfer is reported at the beginning of the reporting period. The Master Trust
evaluates the significance of transfers between levels based upon the nature of
the financial instrument and size of the transfer relative to total net assets
available for benefits. For the year ended December 31, 2016, there was an immaterial
transfer between level 2 and level 1, related to the interest-bearing cash and Government
STIF balances.
The Master Trust follows guidance on how entities should
estimate fair value of certain alternative investments. The fair value of
investments within the scope of the guidance can be determined using NAV per
share as a practical expedient, when fair value is not readily determinable;
unless it is probable the investment will be sold at something other than NAV.
Kennecott Utah Copper
Savings Plan for Represented Employees
Notes to Financial Statements
Note
4. Fair Value Measurements (Continued)
The following table includes categories of investments within
the Master Trust where NAV is available as a practical expedient:
|
Fair Value as of December 31
|
Redemption
|
Redemption
|
|
2016
|
2015
|
Frequency
|
Notice Period
|
Stable value
fund:
|
|
|
|
|
Invesco stable value trust
|
$
149,603,512
|
$ 152,154,360
|
Daily
|
12 months for full liquidation
|
Collective trust
funds:
|
|
|
|
|
Bond investments
|
22,922,124
|
29,535,725
|
Daily*
|
None
|
Commodities futures market
|
4,284,085
|
3,592,835
|
Daily*
|
None
|
Foreign
|
23,921,864
|
26,598,863
|
Daily*
|
None
|
Large cap
|
60,225,709
|
55,238,243
|
Daily*
|
None
|
Real estate
|
3,205,616
|
3,451,200
|
Daily*
|
None
|
Small-mid cap
|
11,341,299
|
17,044,610
|
Daily*
|
None
|
U.S. fixed-income securities
|
9,740,736
|
3,393,516
|
Daily*
|
None
|
U.S. money market securities (b)
|
-
|
1,888,631
|
Daily*
|
None
|
*The fund trustee, in its sole
discretion, reserves the right to value any contributions or withdrawals as of
the next succeeding valuation date or another date as the fund trustee deems
appropriate.
(b)
The fund seeks to maximize current income, to the extent consistent with
the preservation of capital and liquidity and the maintenance of a stable
$1.00 per share NAV, by investing in U.S. dollar-denominated money market
securities
There are no unfunded commitments related to the categories of
investments where NAV is available as a practical expedient.
Note 5. Related Party and Parties-in-Interest
Transactions
The Master Trust is managed by State Street. Therefore,
certain transactions within the Master Trust qualify as party-in-interest
transactions. The Master Trust also holds collective trust funds that are
managed by SSgA, the investment management division of State Street. Fees paid
by the Master Trust or Plan for investment management services to State Street
or SSgA were included as a reduction of the return earned on each investment.
The Master Trust invests in Rio Tinto plc common stock ADRs.
The Master Trust held 628,783 and 678,951 shares of Rio Tinto plc common stock
ADRs at December 31, 2016 and 2015, respectively, valued at $38.46 and $29.12,
respectively. The cash component of this fund was approximately $68,000 and
$151,000 at December 31, 2016 and 2015, respectively. During the year ended December
31, 2016, purchases and sales of shares by the Master Trust totaled
approximately $4,719,000 and $1,204,000, respectively. These transactions
qualify as party-in-interest transactions, which are exempt from prohibited
transaction rules.
Kennecott Utah Copper
Savings Plan for Represented Employees
Notes to Financial Statements
Note
6. Plan Termination
Although it has not expressed any intent to do so, the Company
has the right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. In the event of
termination, all participants would become fully vested in their accounts.
Note 7. Tax Status
The Internal Revenue Service has
determined and informed the Company by a letter dated March 20, 2015, that the
Plan and related trust were designed in accordance with the applicable
requirements of the IRC. The Plan has been amended since receiving the
determination letter; however, the Plan Administrator and the Plan’s legal
counsel believe that the Plan is currently designed and being operated in
compliance with the applicable requirements of the IRC and therefore believe
the Plan and the related trust are tax-exempt.
The Plan Administrator has evaluated
the Plan’s tax positions and concluded the Plan had maintained its tax-exempt
status and had taken no uncertain tax positions which require adjustment to the
financial statements. Therefore, no provision or liability for income taxes has
been included in the financial
statements. The
Plan is subject to routine audits by taxing jurisdictions; however, there are
currently no audits for any tax years in progress.
Note 8
.
Delinquent Participant Contributions
The
Company erroneously failed to remit participant contributions to the Plan on a
timely basis totaling approximately $639,000 and $251,000 for the years ended December
31, 2013 and 2015, respectively. During the year ended December 31, 2016, the
Company remitted lost earnings on the 2013 and 2015 delinquent contributions, and
filed the correction under the Voluntary Fiduciary Correction Program (“VFCP”).
The VFCP application has been received by the Department of Labor and is
currently under review. The Plan had previously reported late contributions of
approximately $1,000 for the year ended December 31, 2014; however, during the
VFCP filing process, the Company determined that these contributions were not
considered to be late. Additionally, the Plan had previously reported late
contributions of approximately $501,000 for the year ended December 31, 2015;
however, during the VFCP filing process the Company determined that only
approximately $251,000 was considered to be late.
The
Company also erroneously failed to remit participant contributions repayments
totaling approximately $780,000 to the Plan on a timely basis for the year
ended December 31, 2016. The Company remitted lost earnings and filed under
the VFCP for late contributions totaling approximately $651,000 during the year
ended December 31, 2016. The Company is in the process of calculating and
remitting lost earnings on the remaining 2016 delinquent contributions,
totaling approximately $129,000 and has begun the process of filing under the
VFCP. See the accompanying supplemental Schedule of Delinquent Participant
Contributions.
Kennecott Utah Copper
Savings Plan for Represented Employees
Notes to Financial Statements
Note 9. Subsequent Events
The Rio Tinto America Inc.
Benefit
Governance Committee and the Investment Committee decided to transition the
custodial and recordkeeping functions from State Street and Xerox HR Solutions,
respectively, to Prudential Retirement Insurance and Annuity Company. This
transition occurred on February 1, 2017. In order to facilitate this
transition, a blackout period was established and enforced. For the period from
4:00 PM on January 31, 2017 through February 13, 2017 (the blackout period),
participants were unable to direct or diversify investments in their individual
accounts, or receive a distribution from the Plan. During the transition, the
Master Trust was dissolved and the Plan reverted to stand alone trust and plan
accounting.
Effective February 1, 2017, the
Plan was amended for minor changes to various plan provisions, including timing
of distributions upon termination, death or disability and restrictions
regarding rollover account withdrawals. In addition, in March of 2017, the
Company and respective unions agreed to a new collective bargaining agreement.
The agreement provides for a Retirement Contribution Plan provision effective
January 1, 2018. The Plan will be amended in 2017 to reflect the agreed upon
terms.
Kennecott
Utah Copper Savings Plan for Represented Employees
|
|
Schedule H
, Part IV, Line
4a—Schedule of Delinquent Participant Contributions
|
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
EIN: 13-3108078
|
|
|
|
Plan Number: 204
|
|
|
|
|
|
|
|
|
Participant Contributions
Transferred Late to Plan
|
Total That Constitute Nonexempt Prohibited
Transactions
|
|
Check Here if
Late
Participant Loan
Repayments Are
Included:
¨
|
Contributions
Not Fully
Corrected**
|
Contributions
Corrected Outside
the Voluntary
Fiduciary
Correction Program
(VFCP)
|
Contributions
Pending
Correction in
VFCP
|
Total Fully
Corrected Under
VFCP and
Prohibited
Transaction
Exemption
2002-51
|
|
|
|
|
|
2013
|
$ -
|
$ -
|
$ 639,272*
|
$ -
|
2015
|
$ -
|
$ -
|
$ 251,149*
|
$ -
|
2016
|
$ 129,001*
|
$ -
|
$ 650,958*
|
$ -
|
|
|
|
|
|
*Party-in-interest transaction
|
|
|
|
|
|
|
|
|
**The Company is in the process
of calculating and remitting lost earnings on these delinquent contributions
and has begun the process of filing under the VFCP.
|
|
|
|
|
|
|
|
See Report of Independent
Registered Public Accounting Firm and Notes to Financial Statements.
|
|
EXHIBIT INDEX
Exhibit
|
|
|
Number
|
|
Document
|
|
|
|
23.1
|
|
Consent
of Independent Registered Public Accounting Firm
|
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