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The financial statements listed in the accompanying table of contents on the following page are filed as part of this Form 11-K. Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrative Committee of the Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. |
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ENSCO Savings Plan |
Date: June 22, 2006 | /s/ DAVID A. ARMOUR
By: David A. Armour Controller | |
ENSCO SAVINGS PLAN
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2005 | 2004 | ||||
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ASSETS: | |||||
Cash | $ 530,039 | $ 84,110 | |||
Receivables: | |||||
Employer contributions | 9,841,066 | 3,426,401 | |||
Investments, at fair value | 159,356,568 | 137,624,022 | |||
Total assets | 169,727,673 | 141,134,533 | |||
NET ASSETS AVAILABLE FOR PLAN BENEFITS | $169,727,673 | $141,134,533 | |||
The accompanying notes are an integral part of these financial statements. |
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ENSCO SAVINGS PLAN
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2005 | 2004 | ||||
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ADDITIONS TO NET ASSETS ATTRIBUTED TO: | |||||
Interest and dividends | $ 4,376,058 | $ 3,225,530 | |||
Participant contributions | 7,726,857 | 7,754,865 | |||
Employer contributions | 13,899,415 | 7,527,925 | |||
Net appreciation in the fair value of investments | 16,618,778 | 10,764,115 | |||
Total additions | 42,621,108 | 29,272,435 | |||
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: | |||||
Distributions to participants | 13,989,498 | 9,845,652 | |||
Loan fees | 38,470 | 48,155 | |||
Total deductions | 14,027,968 | 9,893,807 | |||
NET ADDITIONS | 28,593,140 | 19,378,628 | |||
NET ASSETS AVAILABLE FOR PLAN BENEFITS: | |||||
Beginning of year | 141,134,533 | 121,755,905 | |||
End of year | $169,727,673 | $141,134,533 | |||
The accompanying notes are an integral part of these financial statements. |
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Savings Participants may elect to make contributions to the Plan by salary deferrals (Savings Contributions), which qualify for tax deferral under Section 401(k) of the Internal Revenue Code (the Code). Savings Contributions are generally limited to the lesser of 50% of the Savings Participants compensation, or the annual dollar limitation set forth in Section 402(g) of the Code ($14,000 and $13,000 for the years ended December 31, 2005 and 2004, respectively). Within certain limits, as defined in the Plan, Savings Participants may elect to increase, decrease or suspend their Savings Contributions and corresponding salary deductions. At the discretion of its Board of Directors, the Company may make contributions to the Plan for the benefit of Savings Participants (Matching Contributions). Matching Contributions may be made by the Company in the form of a stated dollar amount or in the form of a matching percentage of Savings Contributions. Matching Contributions are allocated to individual Savings Participants pro rata based on their respective Savings Contributions for the Plan year. The Company made Matching Contributions to active participant employee accounts as follows: |
Matching Percentage | |||||||
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Contribution Level | 2005 | 2004 | |||||
First 5% of base pay | 100% | 100% |
Total Matching Contributions for each of the years ended December 31, 2005 and 2004, were approximately $4.1 million. Matching Contributions are disclosed net of approximately $900,000 of forfeitures for the years ended December 31, 2005 and 2004. At the discretion of its Board of Directors, the Company may also make annual contributions to the Plan for the benefit of all eligible employees (Profit Sharing Contributions). The Company may make Profit Sharing Contributions either in cash or in the Companys common stock. Annual Profit Sharing Contributions are allocated to eligible employees based on their proportionate compensation. The 2005 and 2004 Profit Sharing Contributions awarded in cash were approximately $9.8 million and $3.4 million, respectively. At December 31, 2005 and 2004, the Plan recorded receivables from the Company in the amount of approximately $9.8 million and $3.4 million, respectively, related to the 2005 and 2004 Profit Sharing Contributions, which were paid in March 2006 and 2005. |
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Plan Administration T. Rowe Price Trust Company ("T. Rowe Price") serves as the asset custodian and investment manager for the Plan's trust fund and executes all investment actions at the discretion of Plan participants. Recordkeeping responsibilities are maintained by T. Rowe Price. Vesting A Plan participants Matching Contribution account balance and Profit Sharing Contribution account balance shall become vested and nonforfeitable upon the completion of certain years of service with the Company, as follows: |
Completed years of service | Vested percentage | ||
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Less than two years | 0% | ||
Two years | 20% | ||
Three years | 40% | ||
Four years | 60% | ||
Five years | 80% | ||
Six or more years | 100% |
A Plan participant shall become fully vested in his or her Matching Contribution account balance and Profit Sharing Contribution account balance upon certain events, including death or disability, attaining the age of 60, or a full termination of the Plan. Upon partial termination of the Plan, affected participants become fully vested in their Matching Contribution and Profit Sharing Contribution account balances. A Plan participants Savings Contribution account balance and Rollover Contribution account balance are fully vested at all times. |
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Distributions Distributions of a Plan participants Savings Contribution account and Rollover Contribution account and the vested portion of a participants Matching Contribution account and Profit Sharing Contribution account are generally made within 60 days of an employee request due to termination of employment or certain Internal Revenue Service ("IRS") regulations. At December 31, 2005 and 2004, all persons had been paid who elected to withdraw from the Plan. Investments The Plan allows participants to direct all contributions among a number of different investment choices managed by T. Rowe Price and Company stock. Earnings and losses incurred by investments are allocated pro rata to participant's accounts. |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Method of Accounting The Plans financial statements are prepared on the accrual basis of accounting. The Plans investments are stated at fair value except for the Stable Value Common Trust Fund, which is stated at contract value (Note 3). The Plans investments are principally comprised of the Companys common stock and mutual funds. The fair value of the Plans investments is based on quoted market prices. Participant loans are stated at their outstanding balance. Purchases and sales of mutual funds and the Companys common stock are recorded on a trade-date basis. Interest is recorded on the accrual basis and dividends are recorded on the ex-dividend date. |
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Distributions Distributions of benefits to participants are recorded when paid. Loans Approved loans to eligible participants shall be granted from the participants vested accounts. The interest rate is a fixed rate determined monthly. All loans must be secured with an irrevocable pledge assignment. Loan payments are generally made through a participant payroll deduction. Loans shall not exceed the limitations listed in the Plan document, which are the lesser of 50% of the participant's vested balance or $50,000 less the highest outstanding loan balance in the previous 12 months. The Plan allows no more than two outstanding loans at a time to any one participant. Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and related changes in net assets available for plan benefits, and disclosure of gain and loss contingencies at the date of the financial statements. Actual results could differ from those estimates. 3. INVESTMENT CONTRACTS The Plan's investment in the T. Rowe Price Stable Value Common Trust Fund holds substantial investments in guaranteed investment contracts, bank investment contracts and synthetic investment contracts. The fund is carried at contract value. The value of the underlying contracts consist of changes in principal value, reinvested dividends and capital gains distributions, and approximates fair market value. The fund is fully benefit responsive and contains no limitations on liquidity guarantees. The stated interest rates of the contracts vary and the average yields for the years ended December 31, 2005 and 2004, were 3.95% and 3.93%, respectively, after expenses. |
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Plan investments that represent 5% or more of the Plans net assets are identified as follows: |
December 31, | |||||
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2005 | 2004 | ||||
Investment at Fair Value as Determined by | |||||
Quoted Market Price | |||||
Mutual Funds: | |||||
Mid-Cap Growth Fund | $ 10,418,255 | $ 7,321,946 | |||
Spectrum Growth Fund | 12,884,376 | 11,011,641 | |||
Other Funds | 32,071,611 | 29,191,474 | |||
Common Stock: | |||||
ENSCO International Incorporated | 45,995,134 | 35,183,861 | |||
101,369,376 | 82,708,922 | ||||
Investment at Contract Value: | |||||
T. Rowe Price Stable Value Common Trust Fund | 47,144,212 | 45,008,778 | |||
Loan Fund | 10,842,980 | 9,906,322 | |||
Total Investments | $159,356,568 | $137,624,022 | |||
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2005 | 2004 | ||||||
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Company stock | $14,640,264 | $ 6,381,677 | |||||
Mutual funds | 1,978,514 | 4,382,438 | |||||
$16,618,778 | $10,764,115 | ||||||
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At December 31, 2005 and 2004, the Plans investment in the Companys common stock was based on the closing price on such dates of $44.35 per share and $31.74 per share, respectively. Like any investment in publicly traded securities, the Companys common stock is subject to price changes. During 2005 and 2004, the high and low prices for the Companys common stock were $50.34 and $29.25 and $34.15 and $24.95, respectively. |
5. ADMINISTRATIVE FEES The Plan has no employees. All administrative expenses of the Plan have been paid for by the Company. 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 Plan termination, participants will become 100 percent vested in their accounts. 7. TAX STATUS Management believes that the Plan is qualified under Section 401(a) of the Code and therefore the trust is exempt from taxation under Section 501(a). A favorable IRS determination letter dated September 21, 1995 was received for the Plan. The Plan was amended subsequent to the 1995 determination letter and a favorable IRS determination letter dated April 4, 2003 has been received for the amended and restated Plan. Generally, contributions to a qualified plan are deductible by the Company when made, earnings of the trust are tax exempt and participants are not taxed on their benefits until withdrawn from the Plan. During 2005, the Plan failed to follow the investment direction submitted by certain participants. The Plan intends to correct the failure under the IRS's Employee Plans Compliance Resolution System. The Plan administrator and counsel for the Plan expect that the final outcome of the correction will not have a material effect on the Plan's financial statements or the tax-exempt status of the trust. 8. RELATED PARTY TRANSACTIONS Certain Plan investments are shares of mutual funds managed by T. Rowe Price. T. Rowe Price is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. Fees paid by the Plan for the investment management services amounted to approximately $38,000 and $48,000 for the years ended December 31, 2005 and 2004, respectively. Shares of the Company's common stock held by the Plan as an investment qualify as party-in-interest transactions. 9. RISKS AND UNCERTAINTIES The Plan invests in various investment options that are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the value of the investments will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the statement of net assets available for benefits. |
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Supplemental Information
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Identity of issue or | Description of | Rate of | Current | ||||
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party involved | investment | interest | value | ||||
T. Rowe Price: | |||||||
*T. Rowe Price Stable | |||||||
Value Common Trust Fund | Common Trust Fund | 3.34% - 6.33% | $ 47,144,212 | ||||
*Balanced Fund | Mutual Fund | - | 6,941,735 | ||||
*Spectrum Income Fund | Mutual Fund | - | 6,634,796 | ||||
*Spectrum Growth Fund | Mutual Fund | - | 12,884,376 | ||||
*Blue Chip Growth Fund | Mutual Fund | - | 6,963,253 | ||||
*Equity Income Fund | Mutual Fund | - | 2,688,830 | ||||
*Equity Index 500 Fund | Mutual Fund | - | 3,688,890 | ||||
*Mid-Cap Growth Fund | Mutual Fund | - | 10,418,255 | ||||
*Small-Cap Stock Fund | Mutual Fund | - | 5,154,107 | ||||
102,518,454 | |||||||
Employer securities: | |||||||
*ENSCO International Incorporated | ENSCO International Incorporated Common Stock |
- | 45,995,134 | ||||
*Participant Loans | Participant Loans, maturity dates ranging from February 2006 to December 2015 |
6.00% - 8.25% | 10,842,980 | ||||
$159,356,568 | |||||||
Historical cost information is not presented on this schedule, as all investments are participant directed. |
*Party-in-interest |
See accompanying independent registered public accounting firm's report. |
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We consent to the incorporation by reference in the registration statement No. 33-40282 on Form S-8 of ENSCO International Incorporated of our report dated June 22, 2006 relating to the statements of net assets available for plan benefits of the ENSCO Savings Plan as of December 31, 2005 and 2004, and the related statements of changes in net assets available for plan benefits for the years then ended and the related supplemental Schedule H, Line 4i - Schedule of Assets (Held at End of Year), which report appears in the December 31, 2005 annual report on Form 11-K of the ENSCO Savings Plan. |
/s/ KPMG LLP Dallas, Texas |
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