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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
     
þ   ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2006
OR
     
o   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 29, 2007
 
  Gary L. Marsh    

 

 

ROWAN COMPANIES, INC. SAVINGS AND INVESTMENT PLAN
TABLE OF CONTENTS
         
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FINANCIAL STATEMENTS
        
 
        
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EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     9  
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, 2006 and 2005, 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, 2006 and 2005 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 & Jones llp
Houston, Texas
June 20, 2007

 

 

ROWAN COMPANIES, INC. SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2006 AND 2005
                 
    2006     2005  
ASSETS:
                
Investment, at fair value:
                
Plan interest in Master Trust 1
   $ 72,442,465     $ 67,047,416  
 
                
Receivables:
                
Employee contributions receivable
     481,368       374,100  
Employer contributions receivable
     180,310       137,886  
 
            
 
                
Total receivables
     661,678       511,986  
 
            
 
                
NET ASSETS AVAILABLE FOR BENEFITS AT FAIR VALUE
     73,104,143       67,559,402  
 
                
Adjustment from fair value to contract value for fully benefit-responsive investment contracts
     41,550       54,447  
 
            
 
                
NET ASSETS AVAILABLE FOR BENEFITS
   $ 73,145,693     $ 67,613,849  
 
            
 
1   Represents 5% or more of net assets available for benefits.
See Notes to Financial Statements.

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ROWAN COMPANIES, INC. SAVINGS AND INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2006 AND 2005
                 
    2006     2005  
ADDITIONS:
                
Additions to net assets attributed to:
                
Contributions:
                
Employee
   $ 6,018,866     $ 4,784,476  
Employer
     2,188,539       1,705,581  
 
            
 
                
Total contributions
     8,207,405       6,490,057  
 
                
Plan interest in net income of Master Trust
     4,256,246       6,913,260  
 
            
 
                
TOTAL ADDITIONS
     12,463,651       13,403,317  
 
            
 
                
DEDUCTIONS:
                
Deductions from net assets attributed to:
                
Employee withdrawals
     6,931,807       20,031,468  
 
            
 
                
TOTAL DEDUCTIONS
     6,931,807       20,031,468  
 
            
 
                
NET INCREASE (DECREASE)
     5,531,844       (6,628,151 )
 
                
NET ASSETS AVAILABLE FOR BENEFITS:
                
Beginning of year
     67,613,849       74,242,000  
 
            
 
                
End of year
   $ 73,145,693     $ 67,613,849  
 
            
See Notes to Financial Statements.

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ROWAN COMPANIES, INC. SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005
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 2006 and $4,000 for 2005).
 
    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 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 1/2 or hardship in accordance with the terms of the Plan.

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    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 2006 and 2005, Rowan utilized approximately $11,700 and $8,700, respectively, of employee forfeitures for employer contributions and Plan administrative expenses. At December 31, 2006 and 2005, Plan assets included approximately $14,800 and $12,600, 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 – 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.
 
    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. 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. The Plan has adopted the FSP for the year ended December 31, 2006 and has retroactively restated the presentation of investments in the accompanying Statement of Net Assets Available for Plan Benefits at December 31, 2005 as required by the FSP.
 
    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.

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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. 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, 2006 and 2005, the Master Trust held the following investments:
                                 
    2006     2005  
    Amount     %     Amount     %  
Investments — at fair value:
                                
Rowan Companies Unitized Stock Fund
   $ 19,213,104       16 %   $ 16,577,861       15 %
Registered investment companies
     101,936,261       84 %     94,314,152       85 %
 
                            
 
                                
Total investments at fair value
     121,149,365       100 %     110,892,013       100 %
 
                                
Adjustment from fair value to contract value for fully benefit-responsive investment contracts
     100,247               114,881          
 
                            
 
                                
Total Investments
   $ 121,249,612             $ 111,006,894          
 
                            
Investment income for the Master Trust for the years ended December 31, 2006 and 2005 was as follows:
                 
    2006     2005  
Investment income:
                
Increase (decrease) in fair value of investments:
                
Rowan Companies Unitized Stock Fund
   $ (1,223,247 )   $ 5,497,980  
Registered investment companies
     (953,673 )     3,964,303  
Interest and dividends
     9,615,379       590,628  
 
            
Net investment income
     7,438,459       10,052,911  
 
                
Expenses
     (22,403 )     (17,685 )
 
            
 
                
Net income
   $ 7,416,056     $ 10,035,226  
 
            
    The Plan’s interest in the Master Trust’s total investment units was approximately 60% at December 31, 2006 and 2005, with the balance attributed to the other Rowan-sponsored plan.

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5.   BENEFIT- RESPONSIVE INVESTMENT CONTRACTS
 
    The Plan has 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 above, 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 Company common stock totalling $15,075,725 and $13,055,404 at December 31, 2006 and 2005, 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.

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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  
    2006  
Net Assets Available for Benefits per the financial statements
   $ 73,145,693  
Adjustment from contract value to fair value for fully benefit responsive contracts
     (41,550 )
 
      
 
        
Net Assets Available for Benefits per Form 5500
   $ 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, 2006:
         
Increase in Net Assets Available for Benefits per the financial statements
   $ 5,531,844  
Adjustment from contract value to fair value for fully benefit responsive contracts
     (41,550 )
 
      
Increase in Net Assets Available for Benefits per Form 5500
   $ 5,490,294  
 
      

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Exhibit Index
         
EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM