SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
ALLEN-BRADLEY SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
ROCKWELL INTERNATIONAL CORPORATION
777 East Wisconsin Avenue, Suite 1400
Milwaukee, Wisconsin 53202
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ALLEN-BRADLEY COMPANY, INC.
ALLEN-BRADLEY SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-9
SUPPLEMENTAL SCHEDULES FOR THE YEAR ENDED DECEMBER 31, 1997:
Item 27a - Schedule of Assets Held for Investment Purposes 10
SIGNATURE S-1
EXHIBIT:
Independent Auditors' Consent S-2
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INDEPENDENT AUDITORS' REPORT
To the Allen-Bradley Savings and Investment Plan for
Represented Hourly Employees and Participants therein:
We have audited the accompanying financial statements of the Allen-Bradley
Savings and Investment Plan for Represented Hourly Employees as of December 31,
1997 and 1996 and for the years then ended, listed in the Table of Contents.
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 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,
1997 and 1996, and the changes in net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The schedule is the responsibility of the Plan's management. This schedule
has been subjected to the auditing procedures applied in our audit of the basic
1997 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.
/s/ DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
July 16, 1998
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ALLEN-BRADLEY COMPANY, INC.
ALLEN-BRADLEY SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 AND 1996
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1997 1996
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INVESTMENTS:
Master Defined Contribution Trust $ 26,127,019 $ -
Pooled insurance contract fund - 21,801,430
Money market funds - 194
Loan fund 312,791 -
---------- ----------
Total investments 26,439,810 21,801,624
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RECEIVABLES:
Contributions receivable - employer 24,864 23,886
Contributions receivable - employee 86,186 74,295
Income receivable 3 55
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Total receivables 111,053 98,236
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TOTAL ASSETS AND NET ASSETS AVAILABLE
FOR BENEFITS $ 26,550,863 $ 21,899,860
========== ==========
See notes to financial statements.
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ALLEN-BRADLEY COMPANY, INC.
ALLEN-BRADLEY SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
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1997 1996
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NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR $ 21,899,860 $ 17,261,102
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INCOME:
Earnings from Investments:
Net earnings in Master
Defined Contribution Trust 1,477,284 -
Dividends 645 -
Interest 5,242 798
Net (depreciation) appreciation
in fair value of Investments (3,911) 1,272,638
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Total earnings from investments 1,479,260 1,273,436
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Contributions received or receivable from:
Employer 1,060,463 1,016,873
Participants 3,469,535 3,302,618
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Total contributions 4,529,998 4,319,491
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Total income 6,009,258 5,592,927
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EXPENSES
Payments to participants or beneficiaries 1,382,282 954,169
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NET INCOME 4,626,976 4,638,758
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TRANSFERS TO THE PLAN 24,027 -
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NET INCREASE 4,651,003 4,638,758
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NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR $ 26,550,863 $ 21,899,860
========== ==========
See notes to financial statements.
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<PAGE>
ALLEN-BRADLEY COMPANY, INC.
ALLEN-BRADLEY SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
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1. DESCRIPTION OF PLAN
The following brief description of the 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 permanent represented hourly employees of Allen-Bradley Company,
Inc. (the "Company") who elect to participate in the Plan. The
Company is a wholly-owned subsidiary of Rockwell International
Corporation ("Rockwell"). The Savings Plan Benefits 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's assets. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974.
The Plan's investments have been transferred into a Master Defined
Contribution Trust (the "Master Trust"). With the exception of the
Participant Loan Fund which was held outside the Master Trust at
December 31, 1997, the Rockwell Stock Fund, which was transferred
into the Master Trust on September 19, 1997, and the Meritor Stock
Fund which was received in the Master Trust in October 1997, all
other funds in the Plan were included in the Master Trust on January
1, 1997. At December 31, 1997 the Plan was composed of six funds:
(i) the Fixed Income Fund, which invests primarily in debt
securities with maturities of three years or less; (ii) the
Diversified Fund, which invests primarily in stocks, bonds and other
corporate securities, except those issued by Rockwell; (iii) the
Guaranteed Return Fund, which invests in insurance company contracts
providing a guarantee of principal and stated rate of interest for a
specified period; (iv) the Intermediate Term Bond Fund, which
invests in U. S. Treasury and government agency bonds and
investment-grade corporate debt with intermediate maturities
averaging five years or less; in addition, the Loan fund,
representing outstanding participant loan balances, was held outside
the Master Trust, (v) Stock Fund B, which invests in or holds the
common stock of Rockwell International; and (vi) Stock Fund F, which
invests in or holds the common stock of the Meritor Automotive
Company ("Meritor").
Previously, for the Plan years prior to 1997, the Plan provided for
one investment fund in which participant contributions to the Plan
could be invested. This was the Guaranteed Return Fund (the "Fund"),
which invests in insurance company contracts providing a guarantee
of principal and stated rate of interest for a specified period.
Company contributions were invested in the same Fund.
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b. Participation - The Plan provides that eligible employees
electing to become participants may contribute up to a maximum of
14% of compensation, as defined in the Plan. Participant
contributions can be made either before or after U.S. federal
taxation of a participant's compensation. The maximum before-tax
contribution (Salary Reduction Contribution) is 9% for non-highly
compensated participants and 8% for highly compensated participants.
In addition, the Company contributes out of its current or
accumulated earnings and profits, but not otherwise, an amount equal
to 50% of the total amount of participant contributions provided
that such amount shall not exceed an amount equal to 5% and 2.5% of
compensation in 1997 and 1996, respectively, less the amount of any
forfeitures as provided by the Plan (see Note 6).
c. Vesting - Each participant is fully vested at all times in the
portion of a participant's account which relates to the
participant's contributions and earnings thereon. Upon termination
of employment, participants may receive their account balance, to
the extent vested, in the form of a lump sum payment, installment
payments or an annuity contract from a legal reserve life insurance
company. Vesting in the Company contribution portion of a
participant's account plus actual earnings thereon is based on years
of credited service. A participant is 100% vested after five years
of credited service. Partial vesting occurs at a rate of 20% per
year of credited service. Participant before-tax contributions can
be withdrawn provided the participant has either attained the age of
59 1/2or is able to demonstrate financial hardship.
d. Unit Values - Participants do not own specific securities or other
assets in the Plan, but have an interest therein represented by
units valued each business day. Between valuation dates,
contributions to and withdrawal payments from each fund are
converted to units by dividing the amount of such transactions by
the unit value as last determined. The participants' accounts are
charged or credited, as the case may be, with the number of units
properly attributable to each participant.
e. Forfeitures - When certain terminations of participation in the Plan
occur, the nonvested portion of the participants' account represents
a forfeiture. Forfeitures revert to the Company and reduce the
Company's contributions to the Plan. However, if the participant is
reemployed and fulfills certain requirements, as defined in the
Plan, the participant's account will be restored by the Company.
f. Benefit Claims Payable - Distributions and withdrawals from
participants' accounts may be made as of the end of any quarter of
the Plan fiscal year. As of December 31, 1996 net assets available
for benefits included benefits of approximately $9,000 due to
participants who have withdrawn from participation in the Plan or
participants who have requested partial distributions. Effective
October 1, 1997, the Plan changed to daily processing of all
transactions. As a result, at December 31, 1997, there were no
amounts due to participants who had withdrawn from the Plan.
g. Priorities Upon Termination of the Plan - The Company has the
authority to suspend contributions to the Plan or to terminate or
modify the Plan from time to time. In the event that the Plan is
terminated or contributions by the Company are discontinued, each
participant's employer contributions account will be fully vested.
Benefits under the Plan will be provided solely from the Plan
assets.
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h. Loans - Effective January 1, 1997, 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 60 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 loan outstanding at a time.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Investments - The investments held in the Master Trust (1997) and
the investment in the Guaranteed Return Fund held by the Plan (1996)
were valued as follows:
(i) Valuation of Guaranteed Return Fund (Pooled Insurance Contract
Fund) - The Guaranteed Return Fund is valued at fair value at
December 31, 1997 and 1996. According to the provisions of AICPA
Statement of Position 94-4, the guaranteed investment contracts
held in the Guaranteed Return Fund were nonfully benefit
responsive in 1997 and were fully benefit responsive in 1996. As
such, the contracts are valued at fair value in 1997 and contract
value in 1996. The crediting interest rate for the contracts held
in the Guaranteed Return Fund at December 31, 1997 ranged from
5.84% to 6.84% with an average yield of 6.11% during 1997. The
fair market values of the guaranteed investment contracts
approximated cost at December 31, 1997 and 1996. The crediting
interest rate at December 31, 1996 was 6.27% with an average yield
of 6.74% during 1996. The crediting interest rate for each
contract within the fund is reset annually.
(ii) Valuation of Fixed Income Fund, the Intermediate Term Bond fund
and the Diversified Fund (Pooled Investment Funds) - Investments
in the Fixed Income Fund, the Intermediate Term Bond Fund and the
Diversified Fund are stated at fair value based on quoted market
prices reporting on the last business day of the Plan's year.
(iii) Valuation of Money Market fund - Investments in a money market
fund are stated at fair value, which is equivalent to cost.
(iv) Valuation of Rockwell Common Stock and Meritor Common Stock -
Investments in Rockwell and Meritor common stock are stated at
fair value based upon closing sales prices reported on recognized
securities exchanges on the last business day of the fiscal year.
c. Expenses - The Plan's expenses are paid by the Plan or the
Company, as provided by the Plan document.
d. Use of Estimates - The preparation of financial statement 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, 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.
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3. MASTER DEFINED CONTRIBUTION TRUST
At December 31, 1997, the majority of the Plan's investment assets are
held in a Master Trust account at Wells Fargo, N.A. Use of the Master
Trust permits the commingling of the trust assets of a number of benefit
plans of Rockwell and its subsidiaries for investment and administrative
purposes. Although assets are commingled in the Master Trust, 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 of the accounts for each day is
allocated by the trustee to each participating trust based on the
relationship of the interest of each trust to the total of the interests
of all participating trusts. 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 are the same as those discussed in note 1.
The net assets of the Master Trust at December 31, 1997 are summarized as
follows:
1997
-----------
ASSETS:
Cash and equivalents $ 151,789
U.S. Government securities 52,855,764
Corporate bonds and debentures 16,296,122
Corporate stocks 3,225,666,216
Guaranteed investment contracts 446,246,073
Accrued income 2,117,905
----------------
Total assets and net assets available for benefits $ 3,894,971,567
================
The net investment gain of the Master Trust for the year ended December
31, 1997 is summarized as follows:
Interest $ 36,452,298
Dividends 22,897,520
Net appreciation (depreciation):
U.S. Government Securities (412,594)
Corporate bonds and debentures 301,248
Common stocks (54,950,172)
-----------------
Total investment gain $ 4,288,300
=================
The Plan's interest in the total Master Trust as a percentage of net
assets of the Master Trust was approximately .67% at December 31, 1997.
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<PAGE>
Prior to the transfer of assets to the Master Trust in 1997, income of
$5,887 and net depreciation of $3,911 was earned on plan investments.
4. UNIT VALUES
Participation units outstanding and participants' equity per unit at
December 31, 1996 is as follows:
Units Participants'
1996 Outstanding Equity Per Unit
Guaranteed Return Fund 20,072,765 $ 1.091
5. 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 was not timely amended to bring it into compliance with the
requirements of the Tax Reform Act of 1986 and the Technical and
Miscellaneous Revenue Act of 1988. The Company voluntarily requested to
correct the defect under the Closing Agreement Program with the Internal
Revenue Service. Under this program, the Company amended the Plan on
September 28, 1995, to bring the Plan into compliance. On June 11, 1996,
the Company and the Internal Revenue Service entered into a signed closing
agreement in which the Internal Revenue Service concluded that it will
treat the Plan as having been timely amended for purposes of the Tax
Reform Act of 1986 and the Technical and Miscellaneous Revenue Act of 1988
with respect to Plan years beginning after December 31, 1986. As part of
the agreement, the Company paid $22,500 in penalties.
The Company believes the Plan currently is designed and being operated in
compliance with the applicable requirements of the Internal Revenue Code
and that the Plan continues to qualify under Section 401(a) and the
related trust continues to be tax-exempt as of December 31, 1997.
Therefore, no provision for income taxes is included in the Plan's
financial statements.
6. CHANGES IN THE PLAN
Effective January 1, 1997:
* Participants have the opportunity to change their investment options
for ongoing employee contributions, once every calendar quarter.
* Participants have the ability to invest employee contributions in 5%
increments among five investment funds.
* Participants have the ability to transfer current account balances,
once every calendar quarter on a limited basis.
* There is a new installment payment (distribution) option for retirees.
* There is an optional deferral of distribution to age 70 1/2 for
terminated employees if the account balance is greater than $3,500.
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Effective October 1, 1997:
* The Plan moved from monthly valuations to daily valuations. This
means that the value of participants account balances is
recalculated every business day instead of once per month. Most
transactions are processed on the date received, provided they are
received prior to the close of the New York Stock Exchange.
* On October 1, 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 Fund F, consisting of Meritor
Common Stock, has been added to the Plan and is included as part of
the Master Trust. Participants may not elect to invest in the Stock
Fund F.
* Participants may elect to transfer all or a portion of their
account balances in Meritor Stock Fund F to other investment funds
within this Plan. Special rules apply on which funds are available
for transfer.
Participants should refer to the Plan document for more complete
information regarding changes in the Plan.
* * * * * *
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<TABLE>
<CAPTION>
ALLEN-BRADLEY COMPANY, INC.
ALLEN-BRADLEY SAVINGS AND INVESTMENT PLAN
FOR REPRESENTED HOURLY EMPLOYEES
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
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Column B Column C Column D Column E
<S> <C> <C> <C>
Description of Investment
Identity of Issuer, Including Collateral, Rate
Borrower, Lessor of Interest, Maturity Date, Current
or Similar Party Par or Maturity Value Cost Value
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* Wells Fargo, N.A. Master Defined Contribution
Trust $23,793,792 $26,127,019
* Wells Fargo, N.A. Participant Loans; prime plus 1%
due 12 to 120 months from
date of loan 312,791 312,791
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Total Investments $24,106,583 $26,439,810
========== ==========
</TABLE>
*Party-in-interest
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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.
ALLEN-BRADLEY SAVINGS AND INVESTMENT
PLAN FOR REPRESENTED HOURLY EMPLOYEES
By /s/ Alfred J. Spigarelli
--------------------------------
Alfred J. Spigarelli
Plan Administrator
Date: April 3, 2000
S-1
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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
dated March 10, 1999, with respect to the Securities covered thereby, of our
report dated July 16, 1998, appearing in this Annual Report on Form 11-K of the
Allen-Bradley Savings and Investment Plan for Represented Hourly Employees for
the year ended December 31, 1997.
/s/ DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
April 3, 2000
S-2
