LeTourneau 11-K 2005

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, 2005

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:

LETOURNEAU, 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 77056-6127

REQUIRED INFORMATION

The LeTourneau, 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 and schedules 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.

LETOURNEAU, INC. SAVINGS AND INVESTMENT PLAN

By: LeTourneau, Inc. Savings
And Investment Plan
Administrative Committee:
 
/s/
WILLIAM H. WELLS
June 29, 2006
 
William H. Wells
 

                


LETOURNEAU, 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, 2005 and 2004
2
   
    Statements of Changes in Net Assets Available for Benefits - Years Ended December 31, 2005 and 2004
3
   
    Notes to Financial Statements - December 31, 2005 and 2004
4
   
SUPPLEMENTAL SCHEDULE
  
   
    Schedule H, Line 4(i): – Schedule of Assets (Held at End of Year)
8
   
    Note: Other 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.
  
   
EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
9
 
 
 
 

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
LeTourneau, Inc. Savings and Investment Plan:
 
We have audited the accompanying statements of net assets available for benefits of the LeTourneau, Inc. Savings and Investment Plan (the “Plan”) as of December 31, 2005 and 2004, 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, 2005 and 2004 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.
 
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying 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 supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
 

 

McConnell & Jones LLP
 

 
Houston, Texas
June 9, 2006



 
 
LETOURNEAU, INC. SAVINGS AND INVESTMENT PLAN
 
    
 
    
 
  
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
 
DECEMBER 31, 2005 AND 2004
 
 
    
 
    
 
  
 
    
2005
 
 
2004
  
ASSETS:
    
 
    
 
  
  Investments:
 
 
  
 
  
    At fair value:              
      Plan interest in Master Trust (1)   $
43,905,031
   $
40,756,138
  
    Participant loans 
     -     1,592  
               
   Total investments 
     43,905,031     40,757,730  
               
  Receivables:
    
 
    
 
  
    Employee contributions receivable
    
286,597
    
235,349
  
    Employer contributions receivable
    
104,391
    
87,174
  
       
     Total receivables   390,988   322,523  
           
     TOTAL ASSETS   44,296,019   41,080,253  
           
NET ASSETS AVAILABLE FOR BENEFITS
  
$
44,296,019
  
$
41,080,253
  
       
 
    
 
    
 
  
(1) Represents 5% or more of net assets available for benefits 
              
               
               
               
               
See Notes to Financial Statements.
 
    
 
    
 
  
 
 
-2-
 
 
LETOURNEAU, INC. SAVINGS AND INVESTMENT PLAN
 
 
 
 
 
 
 
 
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
 
YEARS ENDED DECEMBER 31, 2005 AND 2004
 
 
    
2005
 
 
2004
  
 
    
 
    
 
  
ADDITIONS:
    
 
    
 
  
   Additions to net assets attributed to:              
      Contributions:
    
 
    
 
  
        Employee
  
$
 3,514,870  
$
2,836,314
  
        Employer
     1,126,638    
960,363
  
               
        Total contributions     4,641,508     3,796,677  
               
      Plan interest in Master Trust net investment gain
     3,121,966    
2,538,027
  
      Other     -     6,451   
       
              TOTAL ADDITIONS
     7,763,474    
6,341,155
  
       
 
    
 
    
 
  
DEDUCTIONS:
    
 
    
 
  
   Deductions from net assets attributed to:              
      Employee withdrawals
    
4,547,708
    
3,488,775
  
       
              TOTAL DEDUCTIONS
    
4,547,708
    
3,488,775
  
       
NET INCREASE
    
3,215,766
    
2,852,380
  
 
    
 
    
 
  
NET ASSETS AVAILABLE FOR BENEFITS:
    
 
    
 
  
   Beginning of year
    
41,080,253
    
38,227,873
  
       
   End of year
  
$
44,296,019
  
$
41,080,253
  
       
 
    
 
    
 
  
               
               
               
               
See Notes to Financial Statements.
 
 
-3-

LETOURNEAU, INC. SAVINGS AND INVESTMENT PLAN
 
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004

1.
PLAN DESCRIPTION
 
The following brief description of the LeTourneau, 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 employees of LeTourneau, Inc. and its wholly owned subsidiaries, collectively referred to herein as “LeTourneau”.
 
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 of up to 60% of their regular compensation on a before- or after-tax basis. LeTourneau makes a matching contribution equal to 50% of the first 6% of the participant’s before-tax contribution. Participants who attain the age of 50 before the end of the Plan year may make additional before-tax contributions to the Plan ($4,000 for 2005 and $3,000 for 2004).
 
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, at any time.
 
Expenses - Participants’ accounts are charged with investment advisory and other fees by the Trustee. Other expenses of administering the Plan and Master Trust are borne by the Plan or by LeTourneau, 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. At December 31, 2005 and 2004, Plan assets included approximately $2,000 and $3,000 of distributions payable to former Plan participants, respectively.
 
 
-4-
 
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 LeTourneau. During 2005 and 2004, LeTourneau utilized approximately $5,000 and $70,000, respectively, of employee forfeitures for employer contributions and Plan administrative expenses. At December 31, 2005 and 2004, Plan assets included approximately $20,600 and $85, respectively, of nonvested forfeited accounts.
 
Plan Termination - Although it has not expressed any intention to do so, LeTourneau 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. LeTourneau 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.
 
Investment Valuation and Income Recognition - The Plan’s investments are stated at fair value as determined by quoted market prices. 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.
 
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.
 
-5-
  
4.
INVESTMENT IN ROWAN 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 Rowan. The Trustee maintains supporting records for the purpose of allocating investment gains or losses to the participating plans. The investment accounts of the Master Trust are valued at fair value at the end of each trading day based upon quoted market prices. 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, 2005 and 2004, the Master Trust held the following investments:
 

 
  
2005
    
2004
  
 
  
 
  
 
    
 
  
 
  
 
  
Amount
   %     
Amount
   %   
Investments - at fair value:
  
 
  
 
    
 
  
 
  
Rowan Companies Unitized Stock Fund
$
16,577,861
  
15
%
$
11,602,694
  
10
%
Registered investment companies
  
94,429,033
  
85
%
  
102,612,923
  
90
%
     
Total investments
$
111,006,894
  
100
%
$
114,215,617
  
100
%
     
 
 
Investment income for the Master Trust for the years ended December 31, 2005 and 2004 was as follows:
 
 
 
    
2005
 
 
2004
  
 
    
 
    
 
  
Investment income:
    
 
    
 
  
Increase in fair value of investments:
    
 
    
 
  
Rowan Companies Unitized Stock Fund
  
$
5,497,980
  
$
1,771,033
  
Registered investment companies
    
3,964,303
    
3,857,504
 
Interest and dividends
    
590,628
    
2,664,054
  
       
Net investment income
  
$
10,052,911
  
$
8,292,591
 
       
 
 
The Plan’s interest in the Master Trust’s total investment units was approximately 40% at December 31, 2005 and 36% at December 31, 2004, with the balance attributed to the other Rowan-sponsored plan.
 
 
5.  TAX STATUS OF THE PLAN
 
The Internal Revenue Service has determined and informed LeTourneau by a letter dated March 24, 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 LeTourneau believe that the Plan continues to be operated in compliance with the applicable requirements of the IRC.
 
-6-

 


 




SUPPLEMENTAL SCHEDULE

 
 
 
 
 
 
 
 
 
 
 
-7-

 

LETOURNEAU, INC. SAVINGS AND INVESTMENT PLAN
 
EIN: 76-0420123 PN: 003

Schedule H, Line 4(i): - Schedule of Assets (Held at End of Year)

As of December 31, 2005

 

[a]
  
[b]
  
[c]
  
[d]
  
[e]
  
                   
       
Description of Investment including
          
Party-in-
  
Identity of Issue, Borrower, Lessor or
 
Maturity Date, Rate of Interest, Collateral,
          
interest
  
Similar Party
  
Par or Maturity Value
  
Cost
  
Current Value
  
                   
*
  
Plan interest in Master Trust
  
Master Trust
  
**
  
$ 43,905,031
  
                   
       
Total
      
$ 43,905,031
  
                   
    
 
    * A party-in-interest to the Plan
    ** Cost not required for participant directed investments
 

 
-8-