================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 11-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2001
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---------
Commission file number
------------
TRANSOCEAN U.S. SAVINGS PLAN
(Name changed May 9, 2002,
formerly "Transocean Sedco Forex Savings Plan")
(Full Title of the Plan and the Address of
the Plan, if Different from that of the
Issuer named below)
TRANSOCEAN INC.
(Name changed May 9, 2002,
formerly "Transocean Sedco Forex Inc.")
4 Greenway Plaza
Houston, Texas 77046
(Name of Issuer of the Securities Held Pursuant
to the Plan and Address of its
Principal Executive Office)
================================================================================
TRANSOCEAN U.S. SAVINGS PLAN
(FORMERLY "TRANSOCEAN SEDCO FOREX SAVINGS PLAN")
Financial Statements
and Supplemental Schedule
For the years ended December 31, 2001 and 2000
with Report of Independent Auditors
TRANSOCEAN U.S. SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
Page
----
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . 1
Audited Financial Statements
Statements of Net Assets Available for Benefits . . . . . . . . . . . . . . 2
Statements of Changes in Net Assets Available for Benefits. . . . . . . . . 3
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 4
Supplemental Schedule
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year) . . . . . 9
REPORT OF INDEPENDENT AUDITORS
The Administrative Committee
Transocean U.S. Savings Plan
We have audited the accompanying statements of net assets available for
benefits of the Transocean U.S. Savings Plan (formerly "Transocean Sedco Forex
Savings Plan") as of December 31, 2001 and 2000, 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 auditing standards generally
accepted in the 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 includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes 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, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan at
December 31, 2001 and 2000, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedule of
assets (held at end of year) as of December 31, 2001, is presented for purposes
of additional analysis and is not a required part of the 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. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
Houston, Texas
May 7, 2002
1
TRANSOCEAN U.S. SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31,
------------------------
2001 2000
------------------------
Investments, at Fair Value $63,139,717 $59,589,137
Contributions Receivable:
Employee 756,787 344,790
Employer 974,254 169,878
- -----------------------------------------------------------
Net assets available for benefits $64,870,758 $60,103,805
===========================================================
See accompanying notes
2
TRANSOCEAN U.S. SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31,
------------------------------
2001 2000
--------------- -------------
Additions:
Contributions:
Employee $ 10,421,638 $ 6,108,082
Employer 5,768,085 2,926,651
- ---------------------------------------------------------------------------------------------
Total contributions 16,189,723 9,034,733
- ---------------------------------------------------------------------------------------------
Investment income (loss):
Net appreciation (depreciation) in fair value of investments (9,465,120) 3,754,016
Investment income 1,103,311 1,698,759
- ---------------------------------------------------------------------------------------------
Total investment income (loss) (8,361,809) 5,452,775
- ---------------------------------------------------------------------------------------------
Total additions 7,827,914 14,487,508
- ---------------------------------------------------------------------------------------------
Deductions:
Participant loan processing fees (15,472) (14,818)
Benefits paid to participants (3,045,489) (3,325,818)
- ---------------------------------------------------------------------------------------------
Total deductions (3,060,961) (3,340,636)
- ---------------------------------------------------------------------------------------------
Net increase 4,766,953 11,146,872
- ---------------------------------------------------------------------------------------------
Net assets available for benefits:
Beginning of year 60,103,805 48,956,933
- ---------------------------------------------------------------------------------------------
End of year $ 64,870,758 $ 60,103,805
=============================================================================================
See accompanying notes
3
TRANSOCEAN U.S. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
-----------------
The Transocean U.S. Savings Plan (name changed May 9, 2002, formerly
"Transocean Sedco Forex U.S. Savings Plan", the "Plan") is a defined
contribution plan that was established on June 25, 1993. Effective July 1, 2001,
the name of the Plan changed from Transocean Sedco Forex Savings Plan to
Transocean Sedco Forex U.S. Savings Plan. Transocean Inc. (name changed May 9,
2002, formerly known as "Transocean Sedco Forex Inc.", the "Company") is the
Plan sponsor. The following description of the Plan provides only general
information of Plan provisions. Participants should refer to the Plan document
for a more complete description of the Plan's provisions.
Effective January 1, 2000 and subsequent to the merger with Sedco Forex
Holdings Limited ("Sedco Forex"), former employees of Sedco Forex became
eligible to participate in the Plan if they: (i) had satisfied the Plan's one
month service requirement; (ii) were U.S. citizens, U.S. permanent residents or
non-U.S. citizens working in the U.S. and subject to U.S. taxes and (iii) were
employed in an eligible job category.
On January 31, 2001, the Company completed a merger transaction with R&B
Falcon Corporation ("R&B Falcon"). As a result of the merger, certain R&B
Falcon employees were allowed to participate in the Plan beginning June 1, 2001,
July 1, 2001, or August 1, 2001 based on their assignment and geographic
location.
GENERAL
The Plan is administered by an Administrative Committee, which is composed
of at least three members appointed by the Finance/Benefits Committee of the
Company's Board of Directors. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") and employee
participation in the Plan is voluntary. Plan assets are held by the Plan
trustee, Fidelity Management Trust Company ("Fidelity").
ELIGIBILITY
All employees of participating Employers, as defined in the Plan, who are
employed in an eligible job category, who are citizens or permanent residents of
the United States and who are not under a collective bargaining agreement are
eligible to participate in the Plan after completion of one full calendar month
of service. Effective June 1, 2000, non-U.S. citizens (other than U.S. permanent
residents) working in the United States and subject to U.S. taxes who are not
participating in the Plan have the option to commence participation if they are
employed in an eligible job category.
CONTRIBUTIONS
Participants may elect to make contributions to the Plan with pre-tax
dollars ("Pre-Tax Contributions"), pursuant to Section 401(k) of the Internal
Revenue Code (the "Code"), and/or contributions with after-tax dollars
("After-Tax Contributions") up to a maximum of 20 percent of earnings per pay
period.
The Plan allows rollovers from other qualified plans. Participants may
invest their rollovers into the Transocean Ordinary Shares Fund (a unitized fund
investing in the Company's ordinary shares) or any of the mutual funds available
under the Plan. Amounts rolled over can be withdrawn at any time.
4
TRANSOCEAN U.S. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
As a result of the merger with R&B Falcon and effective August 1, 2001,
certain R&B Falcon Management Services employees who are not eligible to
participate in the Transocean U.S. Retirement Plan (formerly "Transocean Sedco
Forex Retirement Plan") may, at the sole discretion of the Company, receive an
additional contribution into the Plan ("Annual Company Contribution"). The
Annual Company Contribution may be continued annually for eligible employees who
are actively employed on the last business day of the year and, if made, will be
a minimum of 1.5 percent of base pay, as defined by the Plan. The Annual
Company Contribution has a two-year vesting period with the employees receiving
credit for their previous periods of employment with R&B Falcon Management
Services.
PARTICIPATING EMPLOYER MATCHING CONTRIBUTIONS
The participating Employer matching contributions for each participant are
equal to the sum of 100 percent of the first three percent of eligible earnings
contributed by the participant to the Plan, plus 50 percent of the next three
percent of eligible earnings contributed by the participant to the Plan. Such
percentages are applied on a pay period by pay period basis. Diversification of
participating Employer matching contributions is permitted and participants may
direct participating Employer matching contributions into any investment fund
offered by the Plan on a daily basis. Participants may also transfer
participating Employer matching account balances between all investment funds on
a daily basis. The participating Employers may, at their sole discretion, make
an additional discretionary matching contribution of a percentage to be
determined by the Administrative Committee of the first four percent of
compensation contributed to the Plan.
INVESTMENT OF EARNINGS
All dividends paid on the Company ordinary shares held in the Transocean
Ordinary Shares Fund are used to purchase additional units of that stock fund.
Earnings on mutual funds are reinvested in that fund.
VESTING
Except for the Annual Company Contribution discussed above, participants
are immediately vested in their After-Tax Contributions, Pre-Tax Contributions
and participating Employer matching contributions plus actual earnings thereon.
WITHDRAWALS
Participants may not withdraw Pre-Tax Contributions and earnings thereon
until the earliest of termination of employment, attainment of age 59 or in the
event of financial hardship. There is no limit on the number of withdrawals made
by participants from their accounts after they reach age 70 . Participants can
withdraw After-Tax Contributions and earnings thereon once in any six-month
period after six months of Plan participation. Except as noted below,
participating Employer matching contributions and earnings thereon cannot be
withdrawn from the Plan prior to termination of employment. Participating
Employer matching contributions and earnings thereon resulting from
contributions made prior to June 4, 1993 can be withdrawn once in any six-month
period. All distributions from mutual funds are made in cash. All amounts
invested in the Transocean Ordinary Shares Fund, whether purchased with
participant or participating Employer matching contributions, are distributed in
the form of stock certificates or cash at the participant's election.
5
TRANSOCEAN U.S. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Dividends paid to Fidelity on units purchased for or credited to the
participant's account prior to the distribution of such units to the participant
are applied to the purchase of additional units for the participant's account.
Upon termination of service for any reason, if a participant's account is
less than or equal to $5,000, the account balance will automatically be
distributed to the participant within 12 months following termination. For
accounts greater than $5,000, participants may request distribution upon
termination but are not required to do so.
PARTICIPANT LOANS
Participants may borrow from their account balance the lessor of 50 percent
of their vested account balance or $50,000, with a minimum loan amount of
$1,000. Participants may have two loans outstanding at any one time - a "general
loan", which can be used for any purpose and is to be repaid over five years or
less, and a "home loan", which can only be used to purchase a primary residence
and is required to be repaid in equal amounts over 15 years or less. The
interest rate is fixed for the term of the loan based on the prime rate in
effect during the quarter in which the loan is made plus one percent. Principal
and interest is paid ratably to the participant's account through payroll
deductions. There is a one-time loan origination fee of $35 per loan and an
annual maintenance fee of $15 for each calendar year the loan is outstanding.
These fees are deducted from the participant's account. Outstanding loan amounts
are due if employment is terminated.
PLAN TERMINATION
Although the Company has not expressed an intent to do so, the Plan may be
amended or discontinued at any time subject to the provisions of ERISA. In the
event the Plan is terminated, the full amount credited to each participant's
account will be payable as soon as practicable following such termination.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------
BASIS OF ACCOUNTING
The financial statements of the Plan have been prepared under the accrual
method of accounting in accordance with accounting principles generally accepted
in the United States. The following is a summary of significant accounting
policies followed by the Plan.
USE OF ESTIMATES
The preparation of these financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates that affect the amounts reported in the financial statements,
accompanying notes and schedule. Actual results may differ from those
estimates.
INVESTMENT VALUATION
Amounts invested in the investment funds are carried at fair value based on
the last quoted sales price of the year. Participant loans are valued at
amortized cost, which approximates fair value. Purchases and sales of securities
are recorded on a trade-date basis. Interest income is recorded as earned and
dividends are recorded on the ex-dividend date.
6
TRANSOCEAN U.S. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
BENEFIT PAYMENTS
Benefit payments are recorded when paid.
UNIT ACCOUNTING
The Plan utilizes the unit method of accounting that allows the Transocean
Ordinary Shares Fund to hold a small amount of cash for liquidity purposes. The
value of each unit does not vary significantly from the price of the ordinary
shares held in the fund. The ordinary share price is readily available to the
participants and is printed in many publications. Participants may hold units of
the Transocean Ordinary Shares Fund representing their proportionate interest in
both the ordinary shares and cash held in the fund.
RISK AND UNCERTAINTIES
The Plan provides for various investments in ordinary shares, mutual funds
and short-term investments. 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 and that such changes could materially affect the amounts
reported in the statements of net assets available for benefits and participant
account balances.
3. INVESTMENTS
-----------
Investments that represent five percent or more of the Plan's net assets
are as follows:
December 31,
------------------------
2001 2000
----------- -----------
Transocean ordinary shares $23,616,281 $24,872,200
Fidelity Magellan Fund 13,787,688 14,836,356
Spartan U.S. Equity Index Portfolio 7,234,130 6,617,067
Fidelity Retirement Government Money Market Portfolio 6,451,505 4,440,771
Fidelity Puritan Fund 5,297,403 4,775,843
During 2001 and 2000, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in fair value as follows:
Years Ended
December 31,
--------------------------
2001 2000
------------ ------------
Mutual funds $(3,157,482) $(2,833,008)
Ordinary shares (6,307,638) 6,587,024
------------ ------------
Net appreciation (depreciation) $(9,465,120) $ 3,754,016
============ ============
4. INCOME TAX STATUS
-----------------
The Plan received a determination letter from the Internal Revenue Service
("IRS") dated February 20, 1998 stating that the Plan is qualified under Section
401(a) of the Code and, therefore, the related trust is exempt from taxation.
Subsequent to receiving the determination letter, the Plan was amended and
restated. On February 22, 2002, the Company requested a determination from the
7
TRANSOCEAN U.S. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
IRS on the tax qualified status of the restated Plan. Once qualified, the Plan
is required to operate in conformity with the Code to maintain its
qualification. The Company has indicated that it will take the necessary steps,
if any, to maintain the Plan's qualified status.
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
---------------------------------------
Fidelity executed all mutual fund investment transactions for the years
ended December 31, 2001 and 2000. Fidelity also provided certain accounting
services to the Plan. Except for participant loan processing fees, the
participating Employers have paid all administrative expenses of the Plan,
including legal, accounting and trustee fees.
8
SUPPLEMENTAL SCHEDULE
TRANSOCEAN U.S. SAVINGS PLAN
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
EIN: 66-0582307
DECEMBER 31, 2001
Current
Identity of Issue Description Value
- ------------------------------- ----------------------------------------------- -----------
*Transocean Inc. Ordinary Shares; 696,248 Shares $23,616,281
*Fidelity Magellan Fund Mutual Fund; 132,294 Shares 13,787,688
*Spartan U.S. Equity;
Index Portfolio Mutual Fund; 178,005 Shares 7,234,130
*Fidelity Ret. Government
Money Market Portfolio Mutual Fund; 6,451,505 Shares 6,451,505
*Fidelity Puritan Fund Mutual Fund; 299,796 Shares 5,297,403
Neuberger & Berman
Partners Trust Mutual Fund; 90,316 Shares 1,446,866
MAS Fixed Income Portfolio Mutual Fund; 118,986 Shares 1,382,622
Templeton Foreign Fund A Mutual Fund; 89,289 Shares 825,926
*Spartan Extended Market
Index Mutual Fund; 23,455 Shares 555,889
*Fidelity U.S. Bond Index Mutual Fund; 17,630 Shares 190,399
*Spartan International Index Mutual Fund; 2,259 Shares 55,219
*Fidelity Interest-Bearing Cash Money Market Fund: 222,580 Shares 222,580
*Participant Loans Loans Receivable with various maturity dates
and interest rates ranging from 7.0 % to 10.5 % 2,073,209
-----------
Total Investments $63,139,717
===========
* Indicates a party-in-interest to the Plan.
9
TRANSOCEAN U.S. SAVINGS PLAN
Exhibit No. 1
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-66036) pertaining to the Transocean U. S. Savings Plan
(formerly "Transocean Sedco Forex Savings Plan") of our report dated May 7, 2002
with respect to the financial statements and the supplemental schedule of the
Transocean U.S. Savings Plan included in this Annual Report (Form 11-K) for the
year ended December 31, 2001.
/s/ Ernst & Young LLP
Houston, Texas
June 13, 2002
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Transocean U.S. Savings Plan (formerly "Transocean Sedco Forex Savings
Plan") has duly caused this Annual Report on Form 11-K to be signed on its
behalf by the undersigned hereunto duly authorized, on the 13 day of June, 2002.
by Transocean U.S. Savings Plan
BY
----------------------------------
Ann Clinton
Plan Administrator