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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 25, 2007 | /s/ DAVID A. ARMOUR
By: David A. Armour Controller | |
ENSCO SAVINGS PLAN
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2006 | 2005 | ||||
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ASSETS: | |||||
Cash | $ -- | $ 530,039 | |||
Receivables: | |||||
Employer contributions | 11,736,462 | 9,841,066 | |||
Participant contributions | 381,769 | -- | |||
Investments, at fair value | 175,446,000 | 158,963,170 | |||
Net assets reflecting investments at fair value | 187,564,231 | 169,334,275 | |||
Adjustment from fair value to contract value for fully benefit- responsive investment contracts | 413,053 | 393,398 | |||
NET ASSETS AVAILABLE FOR PLAN BENEFITS | $187,977,284 | $169,727,673 | |||
The accompanying notes are an integral part of these financial statements. |
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ENSCO SAVINGS PLAN
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2006 | 2005 | ||||
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ADDITIONS TO NET ASSETS ATTRIBUTED TO: | |||||
Interest and dividends | $ 5,513,604 | $ 4,376,058 | |||
Participant contributions | 8,458,896 | 7,726,857 | |||
Employer contributions | 16,068,048 | 13,899,415 | |||
Net appreciation in the fair value of investments | 12,410,683 | 16,618,778 | |||
Total additions | 42,451,231 | 42,621,108 | |||
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: | |||||
Distributions to participants | 24,165,690 | 13,989,498 | |||
Fees | 35,930 | 38,470 | |||
Total deductions | 24,201,620 | 14,027,968 | |||
NET ADDITIONS | 18,249,611 | 28,593,140 | |||
NET ASSETS AVAILABLE FOR PLAN BENEFITS: | |||||
Beginning of year | 169,727,673 | 141,134,533 | |||
End of year | $187,977,284 | $169,727,673 | |||
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% (10% for a certain class of participants) of the Savings Participants compensation, or the annual dollar limitation set forth in Section 402(g) of the Code ($15,000 and $14,000 for the years ended December 31, 2006 and 2005, respectively). Participants who have attained age 50 before the close of the plan year are eligible to make additional pre-tax catch-up contributions. An individual's total catch-up contributions during 2006 could not exceed $5,000. 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 | 2006 | 2005 | |||||
First 5% of eligible compensation | 100% | 100% |
Total Matching Contributions for the years ended December 31, 2006 and 2005, were approximately $4.6 million and $4.1 million, respectively. Matching Contributions are disclosed net of approximately $800,000 and $900,000 of forfeitures for the years ended December 31, 2006 and 2005, respectively. 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 2006 and 2005 Profit Sharing Contributions awarded in cash were approximately $11.5 million and $9.8 million, respectively. At December 31, 2006 and 2005, the Plan's contribution receivable from the Company included approximately $11.5 million and $9.8 million, respectively, related to the 2006 and 2005 Profit Sharing Contributions, which were paid in March 2007 and 2006. |
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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 for those who have completed a period of service of at least three years prior to September 1, 2005 and age 65 for all other participants, 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. Upon completion of each Plan year, the nonvested portion of Matching Contribution account balances and Profit Sharing Contribution account balances of terminated Plan participants are forfeited (forfeitures) to the Plan and may be used to pay certain administrative expenses of the Plan and then applied to reduce the amount of employer contributions. The Plan used forfeitures of approximately $800,000 and $900,000 to reduce a portion of the Company's Matching Contributions in the years ended December 31, 2006 and 2005, respectively. |
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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, 2006 and 2005, 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. The daily value of each investment unit is determined by dividing the total fair market value of all assets in each fund by the total number of units in that fund. Investment income, including certain administrative fees and net appreciation (depreciation) of the fair value of investments, are allocated to each Participant's account based on the change in unit value for each investment fund in which the Participant has an account balance. |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Method of Accounting The Plan's financial statements are prepared on the accrual basis of accounting. The Plan's investments are stated at fair value. Quoted market prices are used to value investments. Shares of mutual funds are valued at the net asset value of shares held by the Plan at year end. Participant loans are valued at their outstanding balances, which approximate fair value. The Plan's interest in the T. Rowe Price Stable Value Common Trust Fund is valued based on information reported by the fund's investment advisor using the audited financial statements of the collective trust at year-end. 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 attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. The Plan's T. Rowe Price Stable Value Common Trust Fund invests in investment contracts. As required by the FSP, the statements of net assets available for plan benefits presents the fair value of the investment in the collective trust as well as the adjustment of the investment in the collective trust from fair value to contract value relating to the investment contracts. The statements of changes in net assets available for plan benefits are prepared on a contract value basis. |
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The Plan presents in the statements of changes in net assets available for plan benefits the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Net appreciation (depreciation) is calculated based on beginning of the year market values of investments to the date of sale and the purchase price, if purchased during the year, to the end of the year market value. 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 the Plan sponsor 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. |
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The fair value of investments that represent 5% or more of the Plans net assets are identified as follows: |
December 31, | |||||
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2006 | 2005 | ||||
Mutual Funds | |||||
T. Rowe Price: | |||||
Mid-Cap Growth Fund | $ 11,471,579 | $ 10,418,255 | |||
Spectrum Growth Fund | 14,866,827 | 12,884,376 | |||
Balanced Fund | 10,697,144 | * | |||
Blue Chip Growth Fund | 8,898,380 | * | |||
Other Funds | 20,980,419 | 32,071,611 | |||
Common Collective Trust Fund: | |||||
T. Rowe Price Stable Value Common Trust Fund | 48,182,251 | 46,750,814 | |||
Common Stock: | |||||
ENSCO International Incorporated | 49,811,830 | 45,995,134 | |||
164,908,430 | 148,120,190 | ||||
Loan Fund | 10,537,570 | 10,842,980 | |||
Total Investments | $175,446,000 | $158,963,170 | |||
* Did not exceed 5% in 2005. | |||||
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2006 | 2005 | ||||||
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Company stock | $8,705,563 | $14,640,264 | |||||
Mutual funds | 3,705,120 | 1,978,514 | |||||
$12,410,683 | $16,618,778 | ||||||
At December 31, 2006 and 2005, the Plans investment in the Companys common stock was based on the closing price on such dates of $50.06 per share and $44.35 per share, respectively. Like any investment in publicly traded securities, the Companys common stock is subject to price changes. During 2006 and 2005, the high and low prices for the Companys common stock were $58.75 and $37.36 and $50.34 and $29.25, respectively. |
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The Plan has no employees. All administrative expenses of the Plan have been paid for by the Company. Fees paid by the participants and the plan for investment management and loan origination services amounted to approximately $36,000 and $38,000 for the years ended December 31, 2006 and 2005, respectively. 5. 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. 6. 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 July 28, 2005 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 allowed certain participants to contribute to the Plan prematurely and subsequently failed to follow their investment direction upon meeting the eligibility requirements to participate in the Plan. During 2006, the Plan self-corrected the error. The correction did not have a material effect on the Plan's financial statements and the Plan's administrator and counsel do not expect this correction will affect the Plan's tax-exempt status. 7. 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. Shares of the Company's common stock held by the Plan as an investment qualify as party-in-interest transactions. 8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 The following is a reconciliation of net assets
available for plan benefits between the financial statements and Form 5500: |
December 31, | |||||
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2006 | |||||
Net assets available for plan benefits per the financial statements | $187,977,284 | ||||
Adjustment from fair value to contract value for fully | |||||
benefit-responsive investment contracts | (413,053) | ||||
Net assets available for plan benefits per the Form 5500 | $187,564,231 | ||||
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December 31, | |||||
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2006 | |||||
Additions to net assets per the financial statements | $42,451,231 | ||||
Adjustment from fair value to contract value for fully | |||||
benefit-responsive investment contracts | (413,053) | ||||
Additions to net assets per the Form 5500 | $42,038,178 | ||||
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 Plan benefits. 10. NEW ACCOUNTING PRONOUNCEMENTS In September 2006, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value Measurement, which establishes a framework for measuring fair value under other accounting pronouncements that require fair value measurements and expands disclosures about such measurements. SFAS No. 157 does not require any new fair value measurements, but rather it creates a consistent method for calculating fair value measurements to address non-comparability of financial statements containing fair value measurements utilizing different definitions of fair value. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Plan will adopt SFAS No. 157 in 2008 and is evaluating the potential impact on its financial statements. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This standard is effective for fiscal years beginning after November 15, 2007. The Plan will adopt SFAS No. 159 in 2008 and is evaluating the potential impact on its financial statements. 11. SUBSEQUENT EVENT Effective January 1 2007, the Plan was amended by the Company to allow for Savings Participants to participate in the Profit Sharing Contribution of the Plan after completing 90 days of full-time employment. |
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Supplemental Information
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Identity of issue or | Description of | Rate of | Fair | ||||
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party involved | investment | interest | value | ||||
T. Rowe Price: | |||||||
*T. Rowe Price Stable | |||||||
Value Common Trust Fund | Common Trust Fund | 3.45% - 5.93% | $ 48,182,251 | ||||
*Balanced Fund | Mutual Fund | - | 10,697,144 | ||||
*Spectrum Income Fund | Mutual Fund | - | 6,658,738 | ||||
*Spectrum Growth Fund | Mutual Fund | - | 14,866,827 | ||||
*Blue Chip Growth Fund | Mutual Fund | - | 8,898,380 | ||||
*Equity Income Fund | Mutual Fund | - | 4,254,414 | ||||
*Equity Index 500 Fund | Mutual Fund | - | 4,466,711 | ||||
*Mid-Cap Growth Fund | Mutual Fund | - | 11,471,579 | ||||
*Small-Cap Stock Fund | Mutual Fund | - | 5,600,556 | ||||
115,096,600 | |||||||
Employer securities: | |||||||
*ENSCO International Incorporated | ENSCO International Incorporated Common Stock |
- | 49,811,830 | ||||
*Participant Loans | Participant Loans, maturity dates ranging from January 2007 to December 2016 |
4.89% - 10.50% | 10,537,570 | ||||
$175,446,000 | |||||||
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 have issued our report dated June 25, 2007, accompanying the financial statements and supplemental information of the ENSCO Savings Plan on Form 11-K for the year ended December 31, 2006. We hereby consent to the incorporation by reference of said report in the Registration Statement of ENSCO International Incorporated on Form S-8 (File No. 33-40282). |
/s/ Grant Thornton LLP Dallas, Texas |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Plan Administrator 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 with respect to the statement of net assets available for plan benefits of the ENSCO Savings Plan as of December 31, 2005, and the related statement of changes in net assets available for plan benefits for the year then ended, which report appears in the December 31, 2006 annual report on Form 11-K of the ENSCO Savings Plan. |
/s/ KPMG LLP Dallas, Texas |
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