rowan.htm
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
FORM
11-K
[X] ANNUAL
REPORT PURSUANT TO SECTION 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2007
OR
[
] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ____ to ____
Commission
File
Number
1-5491
|
A.
|
Full
title of the plan and the address of the plan, if different from that of
the issuer named below:
|
ROWAN
COMPANIES, INC. SAVINGS AND INVESTMENT PLAN
|
B.
|
Name
of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
|
Rowan Companies, Inc.
2800 Post Oak Boulevard, Suite 5450
Houston, Texas 77056-6189
REQUIRED
INFORMATION
The Rowan Companies, Inc.
Savings and Investment Plan (the “Plan”) is subject to the Employee Retirement
Income Security Act of 1974 (“ERISA”). Therefore, in lieu of the
requirements of Items 1-3 of Form 11-K, the financial statements of the Plan for
and as of the fiscal year and fiscal year-ends reflected therein, which have
been prepared in accordance with the financial reporting requirements of ERISA,
are attached hereto as Appendix 1 and incorporated herein by this
reference.
SIGNATURES
The Plan, Pursuant to the
requirements of the Securities and 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.
ROWAN
COMPANIES, INC. SAVINGS AND INVESTMENT PLAN
By: Rowan Companies, Inc. Savings
And Investment Plan
Administrative Committee:
| /s/GARY L.
MARSH |
June 27,
2008 |
|
Gary L.
Marsh |
|
ROWAN COMPANIES, INC. SAVINGS AND
INVESTMENT PLAN
TABLE
OF CONTENTS
| |
Page
|
| |
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
1
|
| |
|
|
FINANCIAL
STATEMENTS
|
|
| |
|
|
Statements
of Net Assets Available for Benefits - December 31, 2007 and
2006
|
2
|
| |
|
|
Statements
of Changes in Net Assets Available for Benefits - Years Ended December 31,
2007 and 2006
|
3
|
| |
|
|
Notes
to Financial Statements - December 31, 2007 and
2006
|
4
|
| |
|
|
EXHIBIT 23.1 CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
|
|
Note:
Schedules required by 29 CFR 2520.103-10 of the Department of Labor’s Rules and
Regulations for reporting and disclosure under ERISA have been omitted because
they are not applicable.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Rowan
Companies, Inc. Savings and Investment Plan:
We have
audited the accompanying statements of net assets available for benefits of the
Rowan Companies, Inc. Savings and Investment Plan (the “Plan”) as of
December 31, 2007 and 2006, and the related statements of changes in net
assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan’s
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We
conducted our audits in accordance with 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. 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, such financial statements present fairly, in all material respects, the
net assets available for benefits of the Plan as of December 31, 2007 and 2006
and the changes in net assets available for benefits for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
/s/ McConnell and Jones LLP
McConnell and Jones LLP
Houston,
Texas
June 27,
2008
Rowan
Companies, Inc. Savings and Investment Plan
Statements
of Net Assets Available for Benefits
December
31, 2007 and 2006
|
|
|
2007
|
|
|
2006
|
|
|
Assets
|
|
|
|
|
|
|
|
Investment,
at fair value:
|
|
|
|
|
|
|
|
Plan interest in
Master Trust
1
|
|
$ |
80,044,636 |
|
|
$ |
72,442,465 |
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
|
|
|
|
Employer
contributions
|
|
|
191,435 |
|
|
|
180,310 |
|
|
Participant
contributions
|
|
|
487,303 |
|
|
|
481,368 |
|
|
|
|
|
678,738 |
|
|
|
661,678 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Assets Available for Benefits at Fair Value
|
|
|
80,723,374 |
|
|
|
73,104,143 |
|
|
|
|
|
|
|
|
|
|
|
Adjustment from fair value to contract value for fully
benefit-responsive investment contracts
|
|
|
52,079 |
|
|
|
41,550 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Assets Available for Benefits
|
|
$ |
80,775,453 |
|
|
$ |
73,145,693 |
|
|
|
|
|
|
|
|
|
|
|
1 Represents 5% or more of net
assets available for benefits.
The
accompanying notes are an integral part of these financial
statements.
Rowan
Companies, Inc. Savings and Investment Plan
Statements
of Changes in Net Assets Available for Benefits
Years
Ended December 31, 2007 and 2006
|
|
|
2007
|
|
|
2006
|
|
|
Investment
Income
|
|
|
|
|
|
|
|
Plan
interest in net income of Master Trust
|
|
$ |
8,661,947 |
|
|
$ |
4,256,246 |
|
|
|
|
|
|
|
|
|
|
|
|
Contributions
|
|
|
|
|
|
|
|
|
|
Employer
|
|
|
2,457,452 |
|
|
|
2,188,539 |
|
|
Participant
|
|
|
6,489,081 |
|
|
|
6,018,866 |
|
|
|
|
|
8,946,533 |
|
|
|
8,207,405 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
additions
|
|
|
17,608,480 |
|
|
|
12,463,651 |
|
|
|
|
|
|
|
|
|
|
|
|
Deductions
|
|
|
|
|
|
|
|
|
|
Benefits
paid directly to participants
|
|
|
9,978,720 |
|
|
|
6,931,807 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
deductions
|
|
|
9,978,720 |
|
|
|
6,931,807 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Increase
|
|
|
7,629,760 |
|
|
|
5,531,844 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Assets Available for Benefits, Beginning of Year
|
|
|
73,145,693 |
|
|
|
67,613,849 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Assets Available for Benefits, End of Year
|
|
$ |
80,775,453 |
|
|
$ |
73,145,693 |
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these financial
statements.
Rowan
Companies, Inc. Savings and Investment Plan
Notes
to Financial Statements
December
31, 2007 and 2006
1. PLAN
DESCRIPTION
The
following brief description of the Rowan Companies, Inc. Savings and Investment
Plan (the “Plan”) is provided for general informational purposes
only. Participants should refer to the Plan agreement for more
complete information.
General
– The Plan is a defined contribution, individual account 401(k) plan covering
substantially all drilling division employees of Rowan Companies, Inc. and its
subsidiaries (“Rowan”).
Participation
– Employees are eligible to enter the Plan on the January 1 or July 1
immediately following the completion of 1,000 hours of service in the 12-month
period beginning on the employee’s date of hire and ending on the anniversary of
such date.
Funding
– Plan participants may make contributions to the Plan of up to 60% of their
regular compensation on a before-tax basis. Rowan makes a Matching
Contribution equal to 50% of the first 6% of the participant’s
contribution. Participants who attain the age of 50 before the end of
the Plan year may make additional before-tax contributions to the Plan ($5,000
for 2007 and 2006).
Investment
Options – The assets of the Plan are held in the Master Trust for Rowan
Companies and Affiliates Defined Contribution Plans (the “Master Trust”) and
managed by Fidelity Management Trust Company, the Trustee of the Plan (the
“Trustee”). Plan participants direct the investment of their accounts
among the Plan’s investment options and may, at their sole discretion, transfer
amounts between such options, including the Rowan Companies Unitized Stock Fund
(the “Fund”), at any time.
Expenses
– Participants’ accounts are charged with investment advisory and other fees by
the Trustee through charges by the underlying funds. Other expenses
of administering the Plan and Master Trust are borne by the Plan or by Rowan, at
its discretion.
Vesting
Provisions – Participants are 100% vested at all times in their own
contributions, plus any earnings accrued thereon, and achieve 100% vesting in
employer matching contributions, plus any earnings thereon, after either three
years of qualified service, attainment of age 60 or upon death or
disability.
Distributions
– Participants can obtain lump-sum or installment distributions of vested
balances upon termination of employment, retirement, disability or death.
Participants may be permitted to withdraw their before-tax account upon
attainment of age 59 ½ or hardship in accordance with the terms of the
Plan.
Forfeitures
– Upon termination of employment, participants’ nonvested balances are
forfeited. Such forfeitures can be applied to reduce employer
contributions or Plan administrative expenses otherwise payable by Rowan. During
2007 and 2006, Rowan utilized approximately $12,561 and $11,700, respectively,
of employee forfeitures for Plan administrative expenses. At December
31, 2007 and 2006, Plan assets included approximately $21,096 and $14,800,
respectively, of nonvested forfeited accounts.
Plan
Termination – Although it has not expressed any intention to do so, Rowan
may terminate the Plan at any time subject to the provisions of the Employee
Retirement Income Security Act of 1974. In the event the Plan is terminated,
each participant shall be entitled to 100% of all contributions, plus any
earnings accrued thereon, as of the date of termination.
Party-in-Interest
Transactions – The investment by the Trustee of Plan contributions into
mutual funds managed by an affiliate of the Trustee are party-in-interest
transactions, and the related management fees are deducted from investment
earnings. Rowan is also a party-in-interest.
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Accounting – The financial statements are prepared on the accrual
basis of accounting in accordance with accounting principles generally accepted
in the United States of America.
Investment
Valuation and Income Recognition – Investments held by the Master Trust
are stated at fair value as determined by quoted market prices. The
Rowan Companies Unitized Stock Fund is valued by the Master Trust at its unit
price (comprised of market price plus uninvested cash position) on the date of
allocation, and current unit price is used at the time of distribution to
participants.
Purchases
and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date. The net increase (decrease) in
fair value of investments consists of the net change in unrealized gains
(losses) in fair values and realized gains (losses) upon the sale of investment
securities. The net change in unrealized gains (losses) and realized
gains (losses) upon sale are determined using fair values as of the beginning of
the year or the purchase price if the investment securities are acquired during
the year.
As
described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1
and SOP 94-4-1, Reporting
of Fully Benefit-Responsive Investment Contracts Held by Certain Investment
Companies Subject to the AICPA Investment Company Guide and Defined-Contribution
Health and Welfare and Pension Plans (the FSP), investment contracts held
by a defined-contribution plan are required to be reported at fair value.
However, contract value is the relevant measurement basis for that portion
attributable to fully benefit-responsive investment contracts because it
represents the amount participants would receive if they were to initiate
permitted transactions under the terms of the Plan. The Plan has adopted the FSP
beginning with the year ended December 31, 2006. As required by the FSP, the
Statement of Net Assets Available for Benefits presents the fair value of the
investment contracts as well as the amount necessary to adjust the fully
benefit-responsive investment contracts from fair value to contract
value.
Payment
of Benefits – Benefits are recorded when paid.
Use
of Estimates – The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those
estimates.
3. RISKS
AND UNCERTAINTIES
The Plan
provides for various investments in common stock and registered investment
companies. Investment securities, in general, are exposed to various
risks, such as interest rate, credit and overall market volatility
risk. 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.
4. INVESTMENT
IN MASTER TRUST
The
Master Trust for Rowan Companies and Affiliates Defined Contribution Plans
commingles, for investment and administrative purposes, Plan assets with those
of another plan sponsored by a Rowan subsidiary. The Trustee
maintains supporting records for the purpose of allocating investment gains or
losses to the participating plans. Plan interest in the net assets of
the Master Trust is based on the assets held by each plan in the Master Trust on
an actual basis. Net investment gains or losses for each day are
allocated by the Trustee to each participating plan based on the plans’ relative
interest in the investment units of the Master Trust. At December 31,
2007 and 2006, the Master Trust held the following investments:
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Investments
- at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rowan
Companies Unitized Stock Fund
|
|
$ |
16,868,507 |
|
|
|
13 |
% |
|
$ |
19,213,104 |
|
|
|
16 |
% |
|
Registered
investment companies
|
|
|
117,659,622 |
|
|
|
87 |
% |
|
|
101,936,261 |
|
|
|
84 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
investments at fair value
|
|
|
134,528,129 |
|
|
|
100 |
% |
|
|
121,149,365 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment from fair value to contract value for fully
benefit-responsive investment contracts
|
|
|
115,397 |
|
|
|
|
|
|
|
100,247 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Investments
|
|
$ |
134,643,526 |
|
|
|
|
|
|
$ |
121,249,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
income for the Master Trust for the years ended December 31, 2007 and 2006 was
as follows:
|
|
|
2007
|
|
|
2006
|
|
|
Investment
income:
|
|
|
|
|
|
|
|
Increase
(decrease) in fair value of investments:
|
|
|
|
|
|
|
|
Rowan
Companies Unitized Stock Fund
|
|
$ |
4,181,087 |
|
|
$ |
(1,223,247 |
) |
|
Registered
investment companies
|
|
|
560,143 |
|
|
|
(953,673 |
) |
|
Interest
and dividends
|
|
|
8,574,996 |
|
|
|
9,615,379 |
|
|
Net
investment income
|
|
|
13,316,226 |
|
|
|
7,438,459 |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
(20,436 |
) |
|
|
(22,403 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
13,295,790 |
|
|
$ |
7,416,056 |
|
|
|
|
|
|
|
|
|
|
|
The
Plan’s interest in the Master Trust’s total investment units was approximately
60% at both December 31, 2007 and 2006, with the balance attributed to the other
Rowan-sponsored plan.
5. BENEFIT-
RESPONSIVE INVESTMENT CONTRACTS
The Plan
has an interest in a Stable Value Fund that has investments in fixed income
securities and bond funds and may include derivative instruments, such as
futures contracts and swap agreements. The stable value fund also enters into a
“wrapper” contract issued by a third-party.
As
described in Note 2, because these contracts are fully benefit-responsive,
contract value is the relevant measurement attribute for that portion of the net
assets available for benefits attributable to these contracts. Contract value
represents contributions made under the contract, plus earnings, less
participant withdrawals and administrative expenses. Participants may ordinarily
direct the withdrawal or transfer of all or a portion of their investment at
contract value.
There are
no reserves against contract value for credit risk of the contract issuer or
otherwise. The crediting interest rate is based on a formula agreed upon with
the issuer, but it may not be less than zero percent. Such interest rates are
reviewed on a quarterly basis for resetting.
6. TAX
STATUS OF THE PLAN
The
Internal Revenue Service has determined and informed Rowan by a letter dated
April 23, 2004, that the Plan and related trust are designed in accordance with
applicable sections of the Internal Revenue Code (“IRC”). The
determination is applicable for Plan amendments executed and/or dated through
June 19, 2003. The Plan has been amended since that date; however,
the Plan administrator and Rowan believe that the Plan continues to be operated
in compliance with the applicable requirements of the IRC.
7. TRANSACTIONS
WITH PARTIES-IN-INTEREST
Certain
Plan investments are funds managed by Fidelity Investments, Inc. (the
recordkeeper and trustee) and therefore qualify as party-in-interest
transactions. Other party-in-interest investments held by the Plan
include Rowan common stock, which totaled $12,847,752 and $15,075,725 at
December 31, 2007 and 2006, respectively.
Fees paid
during the year for legal, accounting, and other professional services rendered
by parties-in-interest were based on customary and reasonable rates for such
services.
8. RECONCILIATION
OF FINANCIAL STATEMENTS TO FORM 5500
The
following is a reconciliation of net assets available for benefits per the
financial statements to Form 5500:
|
|
|
December
31,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
Net
Assets Available for Benefits per the financial
statements
|
|
$ |
80,775,453 |
|
|
$ |
73,145,693 |
|
|
|
|
|
|
|
|
|
|
|
Adjustment
from contract value to fair value for fully benefit-responsive
contracts
|
|
|
(52,079 |
) |
|
|
(41,550 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
Assets Available for Benefits per Form 5500
|
|
$ |
80,723,374 |
|
|
$ |
73,104,143 |
|
|
|
|
|
|
|
|
|
|
|
The
following is a reconciliation of the changes in net assets available for
benefits per the financial statements to Form 5500 for the year ended December
31, 2007:
|
|
|
|
|
Increase
in Net Assets Available for Benefits per the financial
statements
|
|
$ |
7,629,760 |
|
|
|
|
|
|
|
Adjustment
from contract value to fair value for fully
benefit-responsive contracts
|
|
|
(52,079 |
) |
|
|
|
|
|
|
Reverse
prior year adjustment from contract value to fair value for fully
benefit-responsive contracts
|
|
|
41,550 |
|
|
|
|
|
|
|
Increase
in Net Assets Available for Benefits per Form 5500
|
|
$ |
7,619,231 |
|
|
|
|
|
|
|
9. RECENT
ACCOUNTING PRONOUNCEMENTS
In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value,
establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. SFAS 157 applies to Plan reporting periods
beginning in 2008. Based on the assets currently held by the Plan, the Plan’s
management does not expect the adoption of SFAS 157 to have a material impact on
the Plan’s financial statements.
10. SUBSEQUENT
EVENTS
The Plan
was amended as follows effective January 1, 2008:
Participation
– Employees hired before January 1, 2008 are eligible to enter the Plan on the
first day of each month upon completion of two months of
service. Employees hired on or after January 1, 2008 are not eligible
to enter the Plan, but are eligible to enter a separate defined contribution,
individual account 401(k) plan administered by Rowan.
Automatic
Enrollment Feature – Eligible employees hired before January 1, 2008, who
have never had a contribution election in place, are subject to automatic
enrollment. Rowan will automatically deduct 3% from their pay on a pre-tax basis
following a 30 day notice period. The deferral rate is increased by 1% each year
until it reaches a maximum of 6% of compensation. Employees can elect to stop or
change this automatic contribution.
Qualified
Automatic Safe Harbor Matching Contributions – Rowan makes matching
contributions to all participants in an amount equal to 100% of the first 1% of
the participant’s eligible compensation and 50% of the next 5% of the eligible
compensation.
Vesting
Provisions – Qualified Automatic Safe Harbor Matching Contributions and
earnings are fully vested after two years of service and Employer Matching
Contributions and earnings are fully vested after three years of
service.
-9-