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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RIO TINTO AMERICA INC.
401(K) SAVINGS PLAN AND INVESTMENT PARTNERSHIP PLAN
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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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RIO
TINTO AMERICA INC. 401(K) SAVINGS PLAN
AND INVESTMENT PARTNERSHIP PLAN
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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
Rio
Tinto America Inc. 401(k)
Savings Plan and Investment
Partnership Plan
Financial Report
December 31, 2016
Report of Independent
Registered Public Accounting Firm
To the Rio Tinto America Inc.
Benefit Governance Committee
Rio Tinto America
Inc. 401(k) Savings Plan and Investment Partnership Plan
We have audited the accompanying statements of net assets
available for benefits of the Rio Tinto America Inc. 401(k) Savings Plan and
Investment Partnership Plan (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
schedules of assets (held at end of year) as of December 31, 2016 and
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
schedules reconcile 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 schedules, 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 schedules 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
Rio Tinto America Inc. 401(k)
Savings Plan and Investment Partnership Plan
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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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$ 469,845,790
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$ 471,869,320
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Receivables:
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Participant
contributions
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377,631
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355,600
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Employer
contributions
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505,979
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487,306
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Notes
from participants
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3,511,353
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4,618,759
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Total
receivables
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4,394,963
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5,461,665
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Payables:
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Fees
payable
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(101,633)
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-
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Total payables
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(101,633)
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-
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Net
assets available for benefits
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$ 474,139,120
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$ 477,330,985
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See Report of Independent
Registered Public Accounting Firm and Notes to Financial Statements.
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Rio
Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan
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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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$ 37,528,181
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Interest income on notes from
participants
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176,787
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Contributions:
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Participants
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11,206,453
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Participant
rollovers
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861,459
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Employer,
net of forfeitures
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14,366,093
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Total
contributions
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26,434,005
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Benefits paid to participants
and loans deemed distributed
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(67,183,483)
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Administrative expenses
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(287,339)
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Net
decrease before transfers
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(3,331,849)
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Transfers to the Plan (Note 1)
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139,984
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Net
decrease after transfers
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(3,191,865)
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Net assets available for
benefits:
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Beginning
of the year
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477,330,985
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End
of the year
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$ 474,139,120
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See Report of Independent
Registered Public Accounting Firm and Notes to Financial Statements.
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Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Note 1.
Description of the Plan
The following description of the Rio Tinto America Inc.
401(k) Savings Plan and Investment Partnership Plan (the “Plan” or the “RTAI
Plan”) provides only general information. Participants should refer to the plan
document and summary plan description for a more complete description of the
Plan’s provisions.
General:
The Plan is a defined contribution plan
covering all nonrepresented employees of Rio Tinto America Inc. and its participating
companies (collectively, the “Company” or the “Employer”), as defined in the
plan document. All eligible full-time employees of the Company can participate
in the Plan immediately upon employment. Part-time employees are eligible after
completing 1,000 hours of service during a 12-month period.
Rio Tinto America Inc. 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 50 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. Participants may also elect to make after-tax
contributions not less than one percent and not more than 50 percent of
their eligible compensation. Total before-tax and after-tax contributions
cannot exceed 50 percent of each participant’s eligible compensation.
The
Company matches participants’ before-tax and/or after-tax contributions to the
Plan at 100 percent, up to the first six percent of their eligible compensation.
The Company makes Investment Partnership
Plan (“IPP”) contributions. To be eligible for IPP contributions, active employees
as of March 31, 2007, were given the choice to discontinue credited future
benefit service under the Company-sponsored defined benefit pension plan, the
Rio Tinto America Inc. Retirement Plan. Effective April 1, 2007, new
participants in the Plan were eligible to receive IPP contributions. The
Company contributes six percent of eligible compensation up to the Social
Security wage base ($118,500 for 2016) and 11.7 percent of eligible compensation
over the Social Security wage base.
Participants are not required to contribute to the Plan to
receive IPP contributions. An employee who becomes disabled under the Company’s
long-term disability plan and who has attained five years of service, as
defined, will continue to receive IPP contributions from the Company until
their termination of employment from the Company, based on such participant’s
compensation at the date of disability.
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.
Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
Note 1. Description of the
Plan (Continued)
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, IPP contributions (if applicable), 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 that can be provided from the
participant’s vested account. Effective November 2015, terminated participants
are charged a monthly fee to offset recordkeeping expenses.
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 and Company matching contributions plus actual earnings or losses
thereon. Vesting in the Company’s IPP contributions is graded based on completed
years of service. A participant is 100 percent vested after three completed years
of credited service in IPP contributions, 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 distributions, installment payments 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.
Notes from participants:
Participants
may borrow from their total account balance a minimum of $1,000 up to a maximum
equal to the lesser of $50,000 or 50 percent of the participant’s total vested
account balance. Note terms range from one to five years or up to 20 years for
the purchase of a primary residence. Notes to participants are treated as a
separate investment of the participant, and all principal and interest payments
on note balances are credited to the participant account from which the note to
the participant was made. Notes from participants bear interest at rates
ranging from 4.25 percent to 7.75 percent at December 31, 2016.
Interest rates are two percent above the prime rate at the
beginning of the last month preceding the calendar quarter in which the loan is
approved, and are fixed for the term of the loan.
Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
Note 1.
Description of the Plan (Continued)
Transfers:
Company employees represented by a collective
bargaining unit (represented employees) participate in the Kennecott Utah
Copper Savings Plan for Represented Employees (the “KUC Plan”) and the U.S.
Borax Inc. 401(k) Savings and Retirement Contribution Plan for Represented Employees
(the “Borax Plan”). If the employees change from represented to non-represented
status during the year, their account balances are transferred within the Master
Trust from the respective represented plan to the Plan.
Forfeitures:
Forfeitures are used to first restore
re-employed participants’ IPP accounts and secondly to reduce future Company
contributions or to pay administrative expenses of the Plan. At December 31,
2016 and 2015, forfeited non-vested accounts were approximately $293,000 and $428,000.
Approximately $202,000 and $342,000 in forfeitures were used to pay
administrative expenses and reduce Company contributions, respectively, 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.
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
18.6 percent and 10.1 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 18.6 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.
Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
Note 2. Summary of
Significant Accounting Policies (Continued)
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,
legal 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.
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.
Notes from participants:
Notes from participants are
measured at their unpaid principal balance plus any accrued but unpaid
interest. No allowance for credit losses has been recorded at December 31, 2016
or 2015. Defaulted notes from participants are recorded as a distribution in
the year of default. Interest income from loans is recorded on the accrual
basis.
Accounting guidance requires that participant loans be
classified as notes from participants, which are segregated from plan
investments. Notes from participants have been classified as an investment
asset for Form 5500 reporting purposes.
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.
Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
Note 2. Summary of
Significant Accounting Policies (Continued)
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 67.3 percent and 67.6 percent at December 31, 2016 and 2015,
respectively. The Master Trust also includes the investment assets of the
following retirement plans:
·
KUC Plan,
·
Borax Plan, and
·
Rio Tinto Alcan 401(k) Savings Plan for Former Employees.
Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
Note 3. Plan Interest in the
Rio Tinto America Inc. Savings Plan Trust (Continued)
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:
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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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$ 256,295,677
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66.8
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Stable
value fund: collective investment trust
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149,603,512
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87,320,926
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58.4
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Collective
trust funds
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135,641,433
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105,177,505
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77.5
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Rio Tinto
plc common stock ADRs
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24,212,261
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17,945,836
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74.1
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Government
Short-Term Investment Fund
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5,270,515
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3,105,846
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58.9
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Net assets
available for benefits
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$ 698,343,260
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$ 469,845,790
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67.3
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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
|
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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$ 256,680,115
|
67.6
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Stable
value fund: collective investment trust
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152,154,360
|
87,650,415
|
57.6
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Collective
trust funds
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140,743,623
|
109,655,425
|
77.9
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Rio Tinto
plc common stock ADRs
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19,922,030
|
14,789,376
|
74.2
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Government
Short-Term Investment Fund
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4,627,489
|
2,665,723
|
57.6
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Interest-bearing cash
|
684,263
|
428,266
|
62.6
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Net assets
available for benefits
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$ 697,774,341
|
$ 471,869,320
|
67.6
|
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Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
Note 3.
Plan Interest
in the Rio Tinto America Inc. Savings Plan Trust (Continued)
The following are changes in net assets for the Master Trust
for the year ended December 31, 2016:
Investment results:
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|
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Appreciation
in fair value of investments, net of investment management fees
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$ 41,303,995
|
Interest
and dividends
|
|
|
13,191,867
|
Net investment results
|
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54,495,862
|
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Net transfers
|
|
|
(53,926,943)
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Increase in net assets
|
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568,919
|
|
|
|
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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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.
Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
Note 4. Fair Value Measurements (Continued)
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.
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.
Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
Note 4. Fair Value
Measurements (Continued)
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
|
|
|
|
|
|
|
|
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.
Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
Note 4. Fair Value Measurements (Continued)
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.
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.
Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
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. As of December 31, 2016 and 2015, the Plan held
notes receivable from participants totaling approximately $3,511,000 and $4,619,000,
respectively. These transactions qualify as party-in-interest transactions,
which are exempt from prohibited transaction rules.
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 June 4, 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 and participant
loan repayments to the Plan on a timely basis totaling approximately
$4,986,000, $1,000 and $2,926,000 for the years ended December 31, 2013, 2014
and 2015, respectively. During the year ended December 31, 2016, the Company
remitted lost earnings on the 2013, 2014 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 $3,120,000 for the year ended December 31, 2015; however, during
the VFCP filing process, the Company determined that only approximately
$2,926,000 was considered to be late.
Rio Tinto America Inc. 401(k) Savings Plan and Investment
Partnership Plan
Notes to Financial Statements
Note 8.
Delinquent Participant Contributions (Continued)
The
Company also erroneously failed to remit participant contributions and
participant loan repayments totaling approximately $3,499,000 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
$2,622,000 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 $877,000, and has begun the
process of filing under the VFCP. See the accompanying supplemental Schedule of
Delinquent Participant Contributions.
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, obtain a loan 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 and March 31, 2017, the Plan was
amended for minor changes to various plan provisions, including elapsed time
for determining vesting and breaks in service, timing of distributions and a
formal loan policy.
Rio
Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan
|
|
|
|
Schedule H
, Part IV, Line
4i—Schedule of Assets (Held at End of Year)
|
|
December 31, 2016
|
|
|
|
|
|
EIN: 11-3359689
|
|
Plan Number: 002
|
|
|
|
Description of Asset
|
Fair Value
|
|
|
Notes from participants, due in
various amounts through June 2036, with interest rates ranging from 4.25% to
7.75%*
|
|
$ 3,511,353
|
|
|
*Party-in-interest transaction
considered exempt by the Department of Labor.
|
|
|
|
|
|
|
|
See Report of Independent
Registered Public Accounting Firm and Notes to Financial Statements.
|
Rio
Tinto America Inc. 401(k) Savings Plan and Investment Partnership Plan
|
|
Schedule H, Part IV
, Line
4a—Schedule of Delinquent Participant Contributions
|
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
EIN: 11-3359689
|
|
|
|
|
Plan Number: 002
|
|
|
|
|
|
|
|
|
|
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
|
$
-
|
$ -
|
$4,985,737*
|
$ -
|
2014
|
$
-
|
$ -
|
$876*
|
$ -
|
2015
|
$
-
|
$ -
|
$2,925,913*
|
$ -
|
2016
|
$876,556**
|
$ -
|
$2,622,178*
|
$ -
|
|
|
|
|
|
*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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