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 year ended December 31, 1998
RELIANCE ELECTRIC COMPANY
SAVINGS AND INVESTMENT PLAN
ROCKWELL INTERNATIONAL CORPORATION
600 Anton Boulevard, Suite 700
Costa Mesa, California 92626-7147
<PAGE>
RELIANCE ELECTRIC COMPANY
SAVINGS AND INVESTMENT PLAN
INDEX
PAGE NUMBER
-----------
FINANCIAL STATEMENTS:
INDEPENDENT AUDITORS' REPORT 1
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1998 AND 1997 2 - 3
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS, FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997 4 - 5
NOTES TO FINANCIAL STATEMENTS 6 - 12
SUPPLEMENTAL SCHEDULES:
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES,
DECEMBER 31, 1998 13
SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS,
DECEMBER 31, 1998 14
SCHEDULE OF REPORTABLE TRANSACTIONS, FOR THE
YEAR ENDED DECEMBER 31, 1998 15
SIGNATURES S-1
EXHIBIT:
INDEPENDENT AUDITORS' CONSENT S-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
- - ----------------------------
To the Reliance Electric Company
Savings and Investment Plan
and Participants:
We have audited the accompanying financial statements of net assets available
for benefits of the Reliance Electric Company Savings and Investment Plan as of
December 31, 1998 and 1997, and the 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits as of December 31,
1998 and 1997, and the changes in net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes as of December 31, 1998, (2) loans or fixed income
obligations as of December 31, 1998, and (3) schedule of reportable transactions
for the year ended December 31, 1998 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
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. The supplemental information by fund in the statements of
net assets available for benefits and the statements of changes in net assets
available for benefits is presented for the purpose of additional analysis
rather than to present the net assets available for benefits and changes in net
assets available for benefits of the individual funds. The supplemental
schedules and supplemental information by fund are the responsibility of the
Plan's management. Such supplemental schedules and supplemental information by
fund have been subjected to the auditing procedures applied in the audit of the
basic 1998 financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole, except that the supplemental Schedule of Loans or Fixed Income
Obligations does not include certain information regarding participant loans.
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
June 18, 1999
<PAGE>
<TABLE>
<CAPTION>
RELIANCE ELECTRIC COMPANY SAVINGS AND INVESTMENT PLAN
- - -----------------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 (IN THOUSANDS)
- - -----------------------------------------------------------------------------------------------------------------------
Supplemental Information by Fund
-----------------------------------------------------------------------------
Master Defined
Interest Contribution Growth & Equity Basic Exxon U.S. Loan
ASSETS: Total Accumulation Trust Income Index Value Stock Gov't Fund
- - ------ ----- ------------ -------------- ------ ------ ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENTS:
Master Defined
Contribution Trust $ 43,111 $43,111
Aetna Growth & Income
Equity Account 49,899 $49,899
Equity Index Fund 63,499 $63,499
Merrill Lynch Basic Value Fund 68,670 $68,670
Exxon Corporation Common Stock 85,734 $85,734
Bankers Trust Pyramid
Government Fund 2,423 $2,423
Guaranteed Investment
Contracts 85,256 $85,256
Merrill Lynch Retirement
Preservation Trust 44,023 44,023
Loans to Participants 8,019 $8,019
Short-Term Investments 17,294 16,700 231 223 140
-------- -------- ------- ------- ------- ------- ------- ------ -------
Total Investments 467,928 145,979 43,111 50,130 63,499 68,670 85,957 2,423 8,159
-------- -------- ------- ------- ------- ------- ------- ------ -------
RECEIVABLES:
- - -----------
Interest and Dividends
Receivable 412 397 1 1 12 1
-------- -------- ------- ------- ------- ------- ------- ------ -------
Total Receivables 412 397 1 1 12 1
-------- -------- ------- ------- ------- ------- ------- ------ -------
TOTAL ASSETS AND NET ASSETS
AVAILABLE FOR BENEFITS $468,340 $146,376 $43,111 $50,131 $63,499 $68,671 $85,969 $2,423 $8,160
======== ======== ======= ======= ======= ======= ======= ====== ======
</TABLE>
See notes to financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
RELIANCE ELECTRIC COMPANY SAVINGS AND INVESTMENT PLAN
- - -----------------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 (IN THOUSANDS)
- - ----------------------------------------------------------------------------------------------------------------------
Supplemental Information by Fund
----------------------------------------------------------------------------
Master Defined
Interest Contribution Growth & Equity Basic Exxon U.S. Loan
ASSETS: Total Accumulation Trust Income Index Value Stock Gov't Fund
- - ------ ----- ------------ -------------- ------ ------ ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENTS:
Master Defined
Contribution Trust $ 39,005 $39,005
Aetna Growth & Income
Equity Account 46,372 $46,372
Equity Index Fund 48,084 $48,084
Merrill Lynch Basic Value Fund 67,414 $67,414
Exxon Corporation Common Stock 81,616 $81,616
Bankers Trust Pyramid
Government Fund 2,020 $2,020
Guaranteed Investment
Contracts 103,441 $103,441
Merrill Lynch Retirement
Preservation Trust 47,349 47,349
Loans to Participants 7,941 $7,941
Short-Term Investments 4,155 1,682 218 7 438 1,733 77
-------- -------- ------- ------- ------- ------- ------- ------ ------
Total Investments 447,397 152,472 39,005 46,590 48,091 67,852 83,349 2,020 8,018
-------- -------- ------- ------- ------- ------- ------- ------ ------
RECEIVABLES:
- - -----------
Contributions Receivable 2,056 500 836 223 222 261 14
Interest and Dividends
Receivable 262 240 1 2 8 11
-------- -------- ------- ------- ------- ------- ------- ------ ------
Total Receivables 2,318 740 836 224 222 263 8 25
-------- -------- ------- ------- ------- ------- ------- ------ ------
TOTAL ASSETS AND NET ASSETS
AVAILABLE FOR BENEFITS $449,715 $153,212 $39,841 $46,814 $48,313 $68,115 $83,357 $2,045 $8,018
======== ======== ======= ======= ======= ======= ======= ====== ======
</TABLE>
See notes to financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
RELIANCE ELECTRIC COMPANY SAVINGS AND INVESTMENT PLAN
- - -----------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1998 (IN THOUSANDS)
- - ------------------------------------------------------------------------------------------------------------------------------
Supplemental Information by Fund
-------------------------------------------------------------------------------------
Master Defined
Interest Contribution Growth & Equity Basic Exxon U.S. Loan
INCOME: Total Accumulation Trust Income Index Value Stock Gov't Fund
------- ------------ ----------------- -------- ------ ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employer $ 5,484 $ 132 $ 5,193 $ 54 $ 42 $ 60 $ $ 3 $
Employee 15,085 4,929 1,483 2,654 2,807 3,041 171
-------- -------- -------- -------- ------- ------- ------- ------- ------
Total contributions 20,569 5,061 6,676 2,708 2,849 3,101 174
-------- -------- -------- -------- ------- ------- ------- ------- ------
Earnings from Investments:
Net loss from Master
Defined Contribution Trust (1,671) (1,671)
Interest 198 5 13 2 25 2 142 9
Dividends 1,406 1,406
Net appreciation
in fair value of
investments 52,908 8,810 6,334 14,152 6,210 17,402
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total earnings (loss)
From investments 52,841 8,815 (1,671) 6,347 14,154 7,641 17,404 142 9
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total income 73,410 13,876 5,005 9,055 17,003 10,742 17,404 316 9
-------- -------- -------- ------- ------- ------- ------- ------- -------
EXPENSES:
Distributions for withdrawals
and terminations 54,740 23,865 3,583 3,746 4,494 6,543 11,991 264 254
Administrative Expenses 45 39 6
--------- --------- -------- ------- ------- ------- ------- ------- -------
Total expenses 54,785 23,865 3,583 3,746 4,533 6,543 11,991 270 254
--------- --------- -------- ------- ------- ------- ------- ------- -------
NET INCOME (LOSS) 18,625 (9,989) 1,422 5,309 12,470 4,199 5,413 46 (245)
TRANSFERS:
Interfund transfers 3,153 1,848 (1,992) 2,716 (3,643) (2,801) 332 387
NET (DECREASE) INCREASE 18,625 (6,836) 3,270 3,317 15,186 556 2,612 378 142
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 449,715 153,212 39,841 46,814 48,313 68,115 83,357 2,045 8,018
--------- --------- -------- ------- ------- ------- ------- ------- -------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 468,340 $ 146,376 $ 43,111 $50,131 $63,499 $68,671 $85,969 $ 2,423 $ 8,160
========= ========= ======== ======= ======= ======= ======= ======= =======
</TABLE>
See notes to financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
RELIANCE ELECTRIC COMPANY SAVINGS AND INVESTMENT PLAN
- - -----------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
- - ------------------------------------------------------------------------------------------------------------------------------
Supplemental Information by Fund
-------------------------------------------------------------------------------------
Master Defined
Interest Contribution Growth & Equity Basic Exxon U.S. Loan
INCOME: Total Accumulation Trust Income Index Value Stock Gov't Fund
------- ------------ ----------------- -------- ------ ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employer $ 9,002 $ 9,002
Employee 18,077 $ 7,181 1,959 $ 2,691 $ 2,620 $ 3,429 $ 197
------- ------- ------- -------- ------- ------- ------- ------- ------
Total contributions 27,079 7,181 10,961 2,691 2,620 3,429 197
------- ------- ------- -------- ------- ------- ------- ------- ------
Earnings from Investments:
Net loss in Master
Defined Contribution Trust (685) (685)
Interest 7,159 6,965 9 5 15 $ 9 150 $ 6
Dividends 3,057 1,326 1,731
Net appreciation
in fair value of
investments 56,620 3,973 9,756 10,920 13,778 18,193
------- ------- ------- ------- ------- ------- ------- ------- ------
Total earnings (loss)
from investments 66,151 10,938 (685) 9,765 10,925 15,119 19,933 150 6
------- ------- ------- ------- ------- ------- ------- ------- ------
Total income 93,230 18,119 10,276 12,456 13,545 18,548 19,933 347 6
------- ------- ------- ------- ------- ------- ------- ------- ------
EXPENSES:
Distributions for withdrawals
and terminations 42,607 19,325 1,822 3,576 2,225 6,584 8,647 428 -
Administrative Expenses 93 51 36 6 -
-------- -------- ------- ------- -------- ------- ------- ------ ------
Total expenses 42,700 19,376 1,822 3,576 2,261 6,584 8,647 434 -
-------- -------- ------- ------- -------- ------- ------- ------ ------
NET INCOME (LOSS) 50,530 (1,257) 8,454 8,880 11,284 11,964 11,286 (87) 6
TRANSFERS:
Interfund transfers (18,419) 3,661 6,642 6,091 3,090 (1,786) (242) 963
NET INCREASE (DECREASE) 50,530 (19,676) 12,115 15,522 17,375 15,054 9,500 (329) 969
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR 399,185 172,888 27,726 31,292 30,938 53,061 73,857 2,374 7,049
-------- -------- ------- ------- ------- ------- ------- ------ -------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $449,715 $153,212 $39,841 $46,814 $48,313 $68,115 $83,357 $2,045 $ 8,018
======== ======== ======= ======= ======= ======= ======= ====== =======
</TABLE>
See notes to financial statements.
-5-
<PAGE>
RELIANCE ELECTRIC COMPANY SAVINGS AND INVESTMENT PLAN
- - -----------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- - -------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following general description of the Reliance Electric Company
Savings and Investment Plan (the "Plan") is provided for general
information purposes only. Participants should refer to the Plan
document for complete information.
a. The Plan is a defined contribution plan administered by
Reliance Electric Company (the "Company"). The Company is a
wholly-owned subsidiary of Allen-Bradley Company, LLC, which
is a wholly-owned subsidiary of Rockwell International
Corporation ("Rockwell"). The trustee of the Plan is Wells
Fargo, N.A. In 1997, the following investments of the plan
(described below) were transferred into the Rockwell
International Corporation Master Defined Contribution Trust:
Rockwell Stock Funds A and B and Boeing Stock Funds C and D.
b. Eligibility - All employees of the Company and its eligible
subsidiaries in the United States who have completed 30 days
of service and are not covered by a collective bargaining
agreement (unless that collective bargaining agreement
expressly provides for the employees' eligibility) are
eligible to participate in the Plan. Eligible employees can
elect to participate in the Plan at the beginning of any month
following their eligibility date.
c. Vesting - Employee contributions are fully vested. Employer
matching contributions are vested after the participant has
completed three years of service. Any employer matching
contributions which are forfeited are applied to reduce future
Company contributions. During 1998 and 1997, employer matching
contributions were reduced by approximately $129,902 and
$95,000, respectively, from forfeited non-vested accounts.
d. Contributions - Eligible employees may elect to contribute
from 1% to 16% of their pre-tax compensation including wages,
bonuses and commissions into the Plan up to $10,000 in 1998
and $9,500 in 1997. Participants who have completed one year
of service are eligible to receive matching company
contributions. Prior to January 1, 1998, the Company matching
contribution ranged from 50% to 100% of participant
contributions, provided that such amounts did not exceed an
amount equal to 6% of a participant's compensation, based on a
formula measuring the growth of Rockwell Automation sales.
Effective January 1, 1998, Rockwell contributed an amount
equal to 50% of the first 6% of eligible compensation
contributed by participants. The Company matching contribution
is in the form of Rockwell Common Stock. Plan participants can
elect to have their contributions invested in 5% increments in
the different investment funds available.
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<PAGE>
e. Investments - Excluding the Exxon, Meritor, Conexant and
Boeing stock funds (which are closed to new contributions) and
the Rockwell Stock Fund B, a participant may direct
contributions to any of the following investment options:
i) Interest Accumulation Fund - Investments in contracts
with insurance or other financial institutions that
provide for return of principal plus a rate of return
on the investment.
ii) Rockwell Stock Funds A and B - These funds consist
exclusively of shares of Common Stock of Rockwell
International Corporation.
iii) Aetna Growth and Income Equity Account - A pooled
fund investing primarily in the Aetna Variable fund,
a registered mutual fund. This fund is invested in a
wide variety of preferred and common stocks and
interest-producing securities.
iv) Equity Index Fund - A mutual fund managed by the
Bankers Trust Company of New York investing in stocks
intended to approximate the overall performance of
the Standard and Poor's 500 Composite Stock Index
("S&P 500 Index").
v) Merrill Lynch Basic Value Fund - A mutual fund whose
investments are primarily in common stock of
established companies that are selected with an
objective of long-term growth through capital
appreciation and income.
vi) Exxon Stock Fund - This fund consists exclusively of
shares of common stock of the Exxon Corporation.
Exxon's Stock is traded on the New York Stock
Exchange. The Exxon Stock Fund has been closed to new
contributions and transfers (into the fund) since
1986. Quarterly dividends paid by Exxon are
reinvested in additional shares of Exxon stock by the
Plan Trustee.
vii) U.S. Government Fund - This fund consists of
securities backed by the United States Government
and its agencies.
viii) Boeing Stock Funds C and D - These funds consist
exclusively of shares of common stock of The
Boeing Company.
ix) Meritor Stock Funds E and F - These funds consist
exclusively of shares of common stock of Meritor
Automotive, Inc. See Note 7 for additional
information.
x) Conexant Stock Funds G and H - These funds consist
exclusively of shares of common stock of Conexant
Systems, Inc. See Note 7 for additional information.
f. Short-term Investments - The Trustee makes short-term
investments of available cash until amounts are invested or
disbursed in accordance with Plan participant elections.
-7-
<PAGE>
g. Participant Accounts - A separate account is maintained for
each participant in the Plan, reflecting contributions,
investments, investment gains and losses, distributions,
loans, withdrawals and transfers.
h. Plan Withdrawals and Distributions - Active participants may
withdraw certain amounts from their accounts up to their
entire vested interest when they attain the age of 59-1/2, or
if they qualify for financial hardship. Participant vested
amounts are payable upon retirement, death, or other
termination of employment. Benefit claims payable for
participants who have withdrawn from the Plan at December 31,
1998 and 1997 amounted to $3.6 million and $4.0 million,
respectively.
i. Plan Termination - Although the Company has not expressed any
intent to terminate the Plan, it reserves the right to do so
at any time. In the event of termination, the interests of
each participant with respect to Company contributions will
vest immediately and be nonforfeitable.
j. Participant 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.
Interest is charged at a rate equal to the prime rate plus 1%.
The loans can be repaid through payroll deductions over
periods ranging from 12 to 56 months or up to 120 months for
the purchase of a primary residence, or they can be 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.
2. SIGNIFICANT ACCOUNTING POLICIES
a. Investment Valuation - Investments in securities and
short-term investments are stated at fair value as measured by
readily available market prices; investments in contracts with
insurance companies, included in general accounts, are stated
at contract value. According to the provisions of AICPA
Statement of Position 94-4 ("SOP"), "Reporting of Investment
Contracts Held by Health and Welfare Benefit Plans and Defined
Contribution Plans", the guaranteed investment contracts are
deemed to be fully benefit responsive; as such the contracts
are presented at contract value on the face of the financial
statements. The fair value of the Guaranteed Investment
Contracts as of December 31, 1998 and 1997 is approximately
$85.3 million and $103.4 million, respectively. The crediting
interest rates for the contracts ranged from 6.19% to 6.33% at
December 31, 1998 and 5.71% to 6.33% at December 31, 1997.
Mutual fund investments are valued at net asset value at which
shares of the fund may be purchased or redeemed.
b. Security Transactions and Investment Income - Purchases and
sales of securities are reported on a trade date basis.
Dividend income
-8-
<PAGE>
is recorded on the ex-dividend date and interest income is
recorded on the accrual basis.
c. Plan Expenses - Asset management fees charged by the Growth
and Income Fund, Equity Index Fund, Interest Accumulation
Fund, and U.S. Government Fund are paid by the Plan. All other
administrative expenses of the Plan are paid by the Company.
d. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires Plan management to make estimates and assumptions
that affect the reported amounts of net assets available for
benefits and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported
amounts of additions and deductions to the Plan's net assets
available for benefits during the reporting period. Actual
results could differ from those estimates.
3. INVESTMENTS EXCEEDING 5% OF NET ASSETS
The Plan's investments which exceeded 5% of net assets available for
benefits as of December 31, 1998 and 1997 are as
follows (dollars in thousands):
Description of Investment 1998 1997
------------------------- ---- ----
Guaranteed Investment Contracts:
John Hancock (#9659) $ - $24,572
Bankers Trust Pyramid Guaranteed Investment
Fund 42,645 45,851
Merrill Lynch Retirement Preservation Trust 44,023 47,349
Exxon Common Stock 85,734 81,616
Bankers Trust Equity Index Fund 63,499 48,084
Aetna Growth & Income Equity Account 49,899 46,372
Merrill Lynch Basic Value Fund 68,670 67,414
4. TAX STATUS
The Plan obtained its latest determination letter in 1995, 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. The Company 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, 1998. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
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<PAGE>
5. UNITS OF PARTICIPATION
1998 1997
----------------- ------------------
Number Unit Number Unit
Investment Program of Units Value of Units Value
------------------ ----------------- ------------------
Interest Accumulation
Fund 13,453,020 $ 10.85 14,936,131 $ 10.22
Exxon Stock Fund 6,984,898 $ 12.31 8,279,064 10.07
6. MASTER DEFINED CONTRIBUTION TRUST
At December 31, 1998 and 1997, some 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. 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.
The Master Trust investments are valued at fair value. If available,
quoted market prices are used to value investments. In instances
wherein quoted market prices are not available, the fair value of
investments is estimated primarily by independent investment brokerage
firms and insurance companies. The funds held by the Master Trust for
the Plan include the Rockwell, Meritor, Boeing, and Conexant stock
funds. For purposes of presentation in the Statement of Changes in Net
Assets Available for Benefits for the year ended December 31, 1997, the
Master Defined Contribution Trust column includes at the beginning
balance, the aggregate balances of the Rockwell and Boeing stock funds
as of December 31, 1996. The Rockwell, Boeing and Meritor Stock funds
were transferred to the Master Trust during September 1997.
The net assets of the Master Trust at December 31, 1998 and 1997 are
summarized as follows:
1998 1997
---- ----
Assets:
Cash and equivalents $ 74,351,351 $ 151,789,487
U.S. Government securities 20,395,583 52,855,764
Corporate bonds and debentures 135,081,333 16,296,122
Corporate stocks 2,852,241,039 3,225,666,216
Guaranteed investment contracts 406,115,361 446,246,073
Accrued income 4,125,316 2,117,905
-------------- --------------
Total assets and net assets
available for benefits $3,492,309,983 $3,894,971,567
============== ==============
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<PAGE>
The net investment (loss) earnings of the Master Trust for the years
ended December 31, 1998 and 1997 is summarized as follows:
1998 1997
---- ----
Interest $ 38,579,864 $ 36,452,298
Dividends 58,366,753 22,897,520
Net appreciation (depreciation):
U.S. Government securities 407,560 (412,594)
Corporate bonds and debentures (625,459) 301,248
Common and preferred stocks (103,309,401) (54,950,172)
------------- -------------
Net investment (loss) earnings $ (6,580,683) $ 4,288,300
============= =============
The Plan's interest in the total Master Trust as a percentage of net
assets of the Master Trust was 1% at both December 31, 1998 and 1997,
respectively. 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 less net
depreciation in 1998 and 1997.
The amounts appearing in the Statement of Changes in Net Assets
Available for Benefits for the year ended December 31, 1997, for the
Master Defined Contribution Trust includes the following activity that
occurred prior to the transfer of the funds to the trust:
Rockwell Rockwell Boeing Boeing
Stock A Stock B Stock C Stock D
-------- -------- ------- -------
Interest and
dividends $ 266,121 $ 172,367 $ 8,282 $ 5,758
Net appreciation
(depreciation) in
fair value of
investments 90,911 60,327 (724,606) (502,549)
Contributions 5,905,625 1,229,480 - -
Distributions 708,709 564,301 26,444 15,225
7. CHANGES IN THE PLAN
On September 30, 1997, Rockwell spun-off its Automotive business into
an independent, publicly held company, Meritor Automotive, Inc.
("Meritor") and distributed all of the outstanding shares of common
stock of Meritor to holders of Rockwell Common Stock. As a result of
this transaction, participants of the Plan received one share of
Meritor Common Stock for every three shares of Rockwell Common Stock
which they held as of the transaction date. Also effective September
30, 1997, Meritor Stock Funds E and F, consisting of Meritor Common
Stock, have been added to the plan. Participants may elect to transfer
all or a portion of their account balances in Meritor Stock Fund E and
Stock Fund F to other investment funds within this Plan. Special rules
apply on which funds are available for transfer.
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<PAGE>
Effective January 1, 1998 participants may elect to transfer all or a
portion of their account balances in Boeing Stock Fund C and Stock Fund
D to other investment funds within this Plan. Special rules apply on
which funds are available for transfer.
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 Funds A and B as of the distribution date. The Conexant shares
were received on January 4, 1999 by Conexant Stock Funds G and H, which
were 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 distribution allocation of the shares (one Conexant share for every
two Rockwell shares held), the distribution of Conexant shares had no
impact on Plan participant account balances. Participants may elect to
transfer all or a portion of their account balances in Conexant Stock
Fund G and Stock Fund H to other investment funds within this Plan.
Special rules apply on which funds are available for transfer.
8. SUBSEQUENT EVENTS
In January 1999, Rockwell approved a series of changes to the Plan that
became effective on April 1, 1999. These changes include increasing the
investment opportunities available under the Plan and adding
flexibility to certain participant transactions such as investment of
future participant contributions, fund transfers, participant loans
etc., and providing an ongoing investment education program to Plan
participants. Participants should refer to the Summary Plan
Descriptions for more information on these changes.
Effective January 1, 1999, certain Plan participants transferred to the
Allen-Bradley Savings and Investment Plan for Hourly Employees. The
account balances related to these participants transferred during
April, 1999.
Also, effective January 1, 1999, the Plan was merged into the
Allen-Bradley Savings and Investment Plan for Salaried Employees, which
was renamed the Rockwell International Corporation Salaried Retirement
Savings Plan. The Plan's assets were transferred to the Rockwell
International Corporation Salaried Retirement Plan during April, 1999.
-12-
<PAGE>
<TABLE>
<CAPTION>
RELIANCE ELECTRIC COMPANY SAVINGS AND INVESTMENT PLAN
- - -----------------------------------------------------
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998 (IN THOUSANDS)
- - ------------------------------------------------------------------------------------------------------------------------
COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- --------
Identity of issuer Description of investment,
borrower, lessor including collateral, rate of interest, Current
or similar party maturity date, par or maturity value Cost Value
------------------ --------------------------------------- ---- -------
<S> <C> <C> <C>
* Wells Fargo, N.A. Master Defined Contribution Trust $ 41,624 $ 43,111
======== ========
* Wells Fargo, N.A. John Hancock GA #9659, 6.19% $ 22,825 $ 22,825
Metropolitan Life Insurance Company GAC #24725, 6.33% 19,786 19,786
Bankers Trust Pyramid Guaranteed Investment Fund 42,645 42,645
-------- --------
Total Investment Contracts $ 85,256 $ 85,256
======== ========
* Wells Fargo, N.A. Merrill Lynch Retirement Preservation Trust $ 44,023 $ 44,023
Bankers Trust Pyramid Government Fund 2,423 2,423
-------- --------
Total Investments in Fixed Income Trusts $ 46,446 $ 46,446
======== ========
* Wells Fargo, N.A. Exxon, 1,172,425 shares $ 21,834 $ 85,734
-------- --------
Total Common Stocks $ 21,834 $ 85,734
======== ========
* Wells Fargo, N.A. Bankers Trust Equity Index Fund $ 33,366 $ 63,499
Aetna Growth & Income Equity Account 34,958 49,899
Merrill Lynch Basic Value Fund 49,505 68,670
-------- --------
Total Mutual/Equity Funds $117,829 $182,068
======== ========
* Wells Fargo, N.A. Short-Term Income Fund $ 17,294 $ 17,294
======== ========
* Loans *Loans to participants 7% - 12%, maturities
ranging from 12 to 120 months $ 8,019 $ 8,019
======== ========
Total Investments - All Funds $338,302 $467,928
======== ========
</TABLE>
* Party-in-interest
-13-
<PAGE>
RELIANCE ELECTRIC COMPANY SAVINGS AND INVESTMENT PLAN
DECEMBER 31, 1998
Schedule 27b - Schedule of Loans or Fixed Income Obligations
<TABLE>
<CAPTION>
g) Detailed
Description
of Loan,
Including
Dates of
Making and
Maturity,
Interest
Rate, Type
and Value of
Collateral,
Amount Received During Reporting Year Description Amount Overdue
------------------------------------- and Terms of --------------
Renegotiation
b) Identity and c) Original f) Unpaid of Loan, if
Address of Amount of Balance at any, and Other
a) Obligor Loan d) Principal e) Interest End of Year Material Items h) Principal i) Interest
- - ----- --------------- ------------ ------------ ----------- -------------- ----------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
* Various Not Not Not Not Various $46,204 Not
Participants available* available* available* available* Participant available*
Loans
<FN>
Not available*: The Plan's recordkeeper has indicated that this information is not currently available.
Note: The participant loans included in this schedule are over 90 days past due. Each identified participant has been notified
that this past due status, if not corrected by bringing the loan to a current status within 60 days, will result in the loan
being defaulted and the loan amount being found to be taxable as a deemed distribution.
</FN>
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
RELIANCE ELECTRIC COMPANY SAVINGS AND INVESTMENT PLAN
- - -----------------------------------------------------
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998 (IN THOUSANDS)
- - --------------------------------------------------------------------------------------------------------------------
REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1998 REPRESENT SERIES OF TRANSACTIONS INVOLVING ONE SERIES
WHICH EXCEEDS 5% OF ASSETS AVAILABLE FOR PLAN BENEFITS AT THE BEGINNING OF THE YEAR
Column A Column B Column C Column D Column G Column H Column I
-------- -------- -------- -------- -------- -------- --------
Current Value
Identity of Description Purchase Selling Cost of of Asset on Net
Party Involved of Asset Price Price Asset Transaction Date Gain/(Loss)
-------------- ----------- -------- ------- ------- ---------------- -----------
Sales
- - -----
<S> <C> <C> <C> <C> <C> <C>
Wells Fargo, N.A. Short-term
Short-Term Income Fund Investments $86,920 $86,920 $86,920 -
Wells Fargo, N.A. Interest
Accumulation
Fund 40,625 38,564 40,625 $2,061
Aetna Contract #5360 1% 12/31/99 19,908 14,799 19,908 5,109
Merrill Lynch Basic
Value Fund Inc-A#221 13,753 9,241 13,753 4,513
Bankers Trust Pyramid
Equity Index Fund Mutual Fund 13,147 7,097 13,147 6,051
Purchases
- - ---------
Wells Fargo, N.A. Short-term
Short-Term Income Fund Investments $86,231 86,231 86,231 -
Wells Fargo, N.A. Interest
Accumulation
Fund 25,117 25,117 25,117 -
Aetna Contract #5360 1% 12/31/99 17,101 17,101 17,101 -
Merrill Lynch Basic
Value Fund Inc-A#221 12,966 12,966 12,966 -
Bankers Trust Pyramid
Equity Index Fund Mutual Fund 14,410 14,410 14,410 -
</TABLE>
-15-
<PAGE>
SIGNATURES
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 INTERNATIONAL CORPORATION
SALARIED RETIREMENT SAVINGS PLAN,
AS SUCCESSOR TO THE
RELIANCE ELECTRIC COMPANY
SAVINGS AND INVESTMENT PLAN
By /s/ Alfred J. Spigarelli
-------------------------------
Alfred J. Spigarelli
Plan Administrator
Date: June 29, 1999
S-1
<PAGE>
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in Registration Statement No.
333-17031 of Rockwell International Corporation on Form S-8, and the Prospectus
dated March 10, 1999, with respect to the Securities covered thereby, of our
report dated June 18, 1999, appearing in this Annual Report on Form 11-K of the
Reliance Electric Company Savings and Investment Plan for the year ended
December 31, 1998.
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
June 29, 1999
S-2
