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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 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM ______ TO ______.
COMMISSION FILE NUMBER __________
TRANSOCEAN U.S. SAVINGS PLAN
(Full Title of the Plan and the Address of
the Plan, if Different from that of the
Issuer named below)
TRANSOCEAN 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)
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TRANSOCEAN U.S. SAVINGS PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
WITH REPORT OF INDEPENDENT AUDITORS
TRANSOCEAN U.S. SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
Page
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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). . . . 8
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 as of December 31, 2002 and 2001,
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, 2002 and 2001, 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, 2002, 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
June 17, 2003
1
TRANSOCEAN U.S. SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
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2002 2001
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Investments, at Fair Value $77,890,557 $63,139,717
Contributions Receivable
Employee 472,209 756,787
Employer 254,977 974,254
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Net Assets Available for Benefits $78,617,743 $64,870,758
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See accompanying notes
2
TRANSOCEAN U.S. SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended December 31,
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2002 2001
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Additions
Transfers from another qualified plan $ 15,137,495 $ -
Contributions
Employee 12,452,244 10,421,638
Employer 6,276,498 5,768,085
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Total contributions 18,728,742 16,189,723
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Investment income (loss)
Net depreciation in fair value of investments (14,547,753) (9,465,120)
Investment income 809,895 1,103,311
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Total investment loss (13,737,858) (8,361,809)
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Total Additions 20,128,379 7,827,914
Deductions
Benefits paid to participants (5,842,538) (3,045,489)
Transfers to another qualified plan (514,160) -
Participant loan processing fees (24,696) (15,472)
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Total Deductions (6,381,394) (3,060,961)
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Net Increase 13,746,985 4,766,953
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Net Assets Available for Benefits
Beginning of Year 64,870,758 60,103,805
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End of Year $ 78,617,743 $ 64,870,758
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See accompanying notes
3
TRANSOCEAN U.S. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - PLAN DESCRIPTION
The Transocean U.S. Savings Plan (the "Plan") is a defined contribution
plan that was established on June 25, 1993. Effective May 9, 2002, the name of
the Plan changed from Transocean Sedco Forex U.S. Savings Plan to Transocean
U.S. Savings Plan. Transocean Inc. (the "Company") is the Plan sponsor. The
following description of the Plan provides only general information of the Plan
provisions. Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
In July 2002, the Company announced plans to pursue a divestiture of its
Gulf of Mexico Shallow and Inland Water business, and in December 2002, a
registration statement was filed with the Securities and Exchange Commission
relating to an initial public offering of that business. On December 31, 2002
and as a result of the planned divestiture, certain employees in the Gulf of
Mexico Shallow and Inland Water business ceased to be participants in the Plan
and the account balances of these employees were transferred to the TODCO
Savings Plan (formerly known as "R&B Falcon U.S. Savings Plan"). Also on
December 31, 2002 and as a result of the planned divestiture, the account
balances of certain employees in the Company's International and U.S. Floater
Contract Drilling Services business were transferred from the TODCO Savings Plan
into the Plan.
On January 31, 2001, the Company completed a merger transaction with R&B
Falcon Corporation ("R&B Falcon", now known as "TODCO"). 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
appointed by the Finance and 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"). The Administrative Committee periodically reviews the
Plan's investment options and may from time to time make changes to those
options based on performance.
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. Beginning July 1, 2002, eligible employees were allowed to make
additional contributions into the Plan ("Catch-Up Contributions") if they were
50 years old or older at any time during the year.
The Plan allows rollovers from other qualified plans. Participants may
invest their rollovers into the Transocean Inc. 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 employees of R&B Falcon Management Services, Inc. (now known as "TODCO
Management Services, Inc., LLC.") who were not eligible to participate in the
Transocean U.S. Retirement Plan received an additional contribution into the
Plan ("Annual Company Contribution"). The Annual Company Contribution, a minimum
of 1.5 percent of base pay, as defined in the Plan, was paid in February 2002 to
all eligible employees who were actively employed on the last business day of
the year and was the minimum of 1.5 percent of base pay., The Annual Company
Contribution has a two-year vesting period with the employees receiving credit
for their previous periods of employment with TODCO Management Services, Inc.
LLC. Effective November 1, 2002 and in connection with planned divestiture of
the Company's Gulf of Mexico Shallow and Inland Water business, the Plan was
amended to eliminate the Annual Company Contribution.
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 - Any dividends paid on the Company's ordinary
shares held in the Transocean Inc. Ordinary Shares Fund are used to purchase
additional units of that share 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 1/2 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 1/2. 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. Dividends
paid 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. Catch-Up Contributions and
earnings thereon may not be withdrawn until the earlier of termination of
employment or attainment of age 59 1/2. Catch-Up Contributions and earnings
thereon are not eligible to be withdrawn for a financial hardship.
5
TRANSOCEAN U.S. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Upon termination of employment 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 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 may be used for any purpose and is to be repaid over
five years or less, and a "home loan", which may 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 are 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 per loan 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 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.
NOTE 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 mutual funds and the Company's
ordinary shares 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.
BENEFIT PAYMENTS - Benefit payments are recorded when paid.
UNIT ACCOUNTING - On January 1, 2003, the Plan began using the share method
of accounting. Prior to that date, the Plan utilized the unit method of
accounting, which allowed the Transocean Inc. Ordinary Shares Fund to hold a
small amount of cash for liquidity purposes. The value of each unit did 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. Under the unit accounting method, participants may have held
units of the Transocean Inc. Ordinary Shares Fund representing their
proportionate interest in both the ordinary shares and cash held in the fund.
RISKS 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
6
TRANSOCEAN U.S. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
NOTE 3 - INVESTMENTS
Individual investments that represent five percent or more of the Plan's
net assets are as follows:
December 31,
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2002 2001
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Transocean Inc. Ordinary Shares Fund $21,865,637 $23,616,281
Marsico Focus Fund 11,355,680 -
Fidelity Retirement Money Market Portfolio 10,563,699 -
Spartan U.S. Equity Index Portfolio 10,398,125 7,234,130
ICAP Equity Portfolio 6,629,032 -
Fidelity Puritan Fund 5,523,839 5,297,403
PIMCO Total Return Fund 4,391,301 -
Fidelity Magellan Fund - 13,787,688
Fidelity Retirement Government Money Market Portfolio - 6,451,505
During 2002 and 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated in
value as follows:
Years Ended December 31,
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2002 2001
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Mutual funds $ (7,101,903) $ (3,157,482)
Ordinary shares fund (7,445,850) (6,307,638)
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Net depreciation $(14,547,753) $ (9,465,120)
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NOTE 4 - INCOME TAX STATUS
The Plan received a determination letter from the Internal Revenue Service
dated July 31, 2002, stating that the Plan is qualified under Section 401(a) of
the Code and, therefore, the related trust is exempt from taxation. Subsequent
to the issuance of the determination letter, the Plan was amended. Once
qualified, the Plan is required to operate in conformity with the Code to
maintain its qualification. The Plan Administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code and,
therefore, believes that the Plan, as amended, is qualified and the related
trust is tax exempt.
NOTE 5 - TRANSACTIONS WITH PARTIES-IN-INTEREST
Fidelity executed all mutual fund investment transactions for the years
ended December 31, 2002 and 2001. Fidelity also provided certain accounting
services to the Plan. Except for participant loan and withdrawal processing
fees, the Company has paid all administrative expenses of the Plan, including
legal, accounting and trustee fees.
7
SUPPLEMENTAL SCHEDULE
TRANSOCEAN U.S. SAVINGS PLAN
Schedule H, Line 4 (i) - Schedule of Assets (Held at End of Year)
EIN: 66-0582307
PN: 002
December 31, 2002
Current
Identity of Issue Description Value
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* Transocean Inc. Ordinary Shares Fund; 942,484 Shares $21,865,637
Marsico Focus Fund Mutual Fund; 1,002,267 Shares 11,355,680
* Fidelity Retirement Money Market Portfolio Mutual Fund; 10,563,699 Shares 10,563,699
* Spartan U.S. Equity Index Portfolio Mutual Fund; 333,808 Shares 10,398,125
ICAP Equity Portfolio Mutual Fund; 206,705 Shares 6,629,032
* Fidelity Puritan Fund Mutual Fund; 349,832 Shares 5,523,839
PIMCO Total Return Fund Mutual Fund; 411,556 Shares 4,391,301
PIMCO PEA Opportunity Fund Mutual Fund; 182,583 Shares 1,946,340
Putnam International Growth Fund A Mutual Fund; 96,785 Shares 1,588,234
* Participant Loans Loans Receivable with various
maturity dates and interest rates
ranging from 4.75% to 10.5% 3,628,670
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Total Investments $77,890,557
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* Indicates a party-in-interest to the Plan.
8
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Transocean U.S. 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
27th day of June, 2003.
by Transocean U.S. Savings Plan
By __________________________________________
Ann Clinton
Plan Administrator