UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
| | | |
| þ | | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended December 31, 2004
OR
| | | |
| o | | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] |
Commission File Number: 001-12227
The Shaw Group Inc. 401(k) Plan
(Full Title of the Plan)
The Shaw Group Inc.
(Name of Issuer)
4171 Essen Lane
Baton Rouge, Louisiana 70809
(Address of Principal Executive Office)
THE SHAW GROUP INC. 401(K) PLAN
DECEMBER 31, 2004 AND 2003
BATON ROUGE, LOUISIANA
Report of Independent Registered Public Accounting Firm
The Plan Administrator
The Shaw Group Inc. 401(k) Plan
Baton Rouge, Louisiana
We have audited the accompanying statements of net assets available for benefits of The Shaw Group Inc. 401(k) Plan as of December 31, 2004 and 2003, 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 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 Shaw Group Inc. 401(k) Plan as of December 31, 2004 and 2003, and the changes in its net assets available for benefits for the years then ended, in conformity with United States generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2004 and schedule of non-exempt transactions for the year ended December 31, 2004, are presented for purposes of additional analysis and are not a required part of the basic financial statements but are 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. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Respectfully submitted,
Baton Rouge, Louisiana
June 23, 2005
1
THE SHAW GROUP INC. 401(K) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2004 AND 2003
ASSETS
| | | | | | | | | |
| | | 2004 | | | 2003 | |
Investments, at Fair Value: | | | | | | | | |
| Common Collective Trust Funds | | $ | 83,323,963 | | | $ | 45,252,235 | |
| Mutual Funds | | | 170,846,613 | | | | 95,828,387 | |
| Common Stock of the Plan Sponsor | | | 19,808,781 | | | | 12,501,646 | |
| Loans to Participants | | | 5,414,473 | | | | 1,311,670 | |
| | | | | | | |
| | | | | | | | | |
| Total Investments | | | 279,393,830 | | | | 154,893,938 | |
| | | | | | | | | |
Receivables: | | | | | | | | |
| Participants’ Contributions | | | 1,676,999 | | | | 309,532 | |
| Employer Contributions | | | 572,691 | | | | 111,427 | |
| | | | | | | |
| | | | | | | | | |
| Total Receivables | | | 2,249,690 | | | | 420,959 | |
| | | | | | | |
| | | | | | | | | |
Net Assets Available for Benefits | | $ | 281,643,520 | | | $ | 155,314,897 | |
| | | | | | | |
The accompanying notes are an integral part of these statements.
2
THE SHAW GROUP INC. 401(K) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
| | | | | | | | | |
| | | 2004 | | | 2003 | |
Additions to Net Assets Attributed to: | | | | | | | | |
| Investment Income: | | | | | | | | |
| Interest and Dividends | | $ | 6,070,982 | | | $ | 2,041,691 | |
| | | | | | | | | |
| Contributions: | | | | | | | | |
| Participants | | | 45,165,895 | | | | 36,332,448 | |
| Employer | | | 13,402,195 | | | | 11,453,043 | |
| Rollovers | | | 65,548,883 | | | | 5,338,840 | |
| | | | | | | |
| | | | 124,116,973 | �� | | | 53,124,331 | |
| | | | | | | | | |
| Net Appreciation in Fair Value: | | | | | | | | |
| Common Collective Trust Funds | | | 2,967,649 | | | | 2,508,904 | |
| Mutual Funds | | | 10,735,886 | | | | 16,836,409 | |
| Common Stock of the Plan Sponsor | | | 4,996,049 | | | | — | |
| | | | | | | |
| | | | 18,699,584 | | | | 19,345,313 | |
| | | | | | | | | |
| Transfers to the Plan | | | 1,768,335 | | | | — | |
| | | | | | | |
| Total Additions | | | 150,655,874 | | | | 74,511,335 | |
| | | | | | | | | |
Deductions from Net Assets Attributed to: | | | | | | | | |
| Benefit Payments | | | 20,265,628 | | | | 12,780,783 | |
| Administrative Expenses | | | 415,441 | | | | 217,202 | |
| | | | | | | |
| | | | 20,681,069 | | | | 12,997,985 | |
| | | | | | | | | |
| Net Depreciation in Fair Value: | | | | | | | | |
| Common Stock of the Plan Sponsor | | | — | | | | 807,316 | |
| | | | | | | |
| | | | — | | | | 807,316 | |
| | | | | | | | | |
| Transfers from the Plan | | | 3,646,182 | | | | — | |
| | | | | | | |
| Total Deductions | | | 24,327,251 | | | | 13,805,301 | |
| | | | | | | |
| Net Increase | | | 126,328,623 | | | | 60,706,034 | |
| | | | | | | | | |
Net Assets Available for Benefits at Beginning of Year | | | 155,314,897 | | | | 94,608,863 | |
| | | | | | | |
| | | | | | | | | |
Net Assets Available for Benefits at End of Year | | $ | 281,643,520 | | | $ | 155,314,897 | |
| | | | | | | |
The accompanying notes are an integral part of these statements.
3
THE SHAW GROUP INC. 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
Note 1 - Description of Plan -
The following description of The Shaw Group Inc. 401(k) Plan (the Plan) provides only general information. Participants should refer to the plan agreement for a more complete description, which is available from The Shaw Group Inc. (the Company).
General
The Plan is a defined contribution plan covering all employees not covered by a collective bargaining agreement of The Shaw Group Inc. who are age 21 or older. The entry date of the Plan is the employee’s date of hire, and the employee is eligible to participate once he has completed one hour of service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Effective January 1, 2004, certain hourly employees of the Company became participants in a separate plan and are no longer participants in The Shaw Group Inc. 401(k) Plan. Plan assets of approximately $3.3 million were transferred to this new plan, The Shaw Group Inc. 401(k) Plan for Certain Hourly Employees.
During 2002, the Company acquired substantially all of the assets of the IT Group, Inc. and its subsidiaries. During the year ended December 31, 2004, the Plan received rollover contributions for employees in the IT Corporation Retirement Savings Plan that was terminated, which accounts for substantially all of the Rollovers included in the accompanying Statement of Changes in Net Assets Available for Benefits.
Contributions
Participants may elect to contribute up to 50% of their pretax annual compensation, as defined by the Plan. Participants who have attained age 50 before the end of the plan year are eligible to make catch-up contributions. Participants may also roll over amounts representing distributions from other qualified defined benefit or defined contribution plans, subject to approval by the Company.
The Company provides a matching contribution on behalf of each participant, who has completed one year of service, equal to 50% of the participant’s compensation deferral not to exceed 6% of the participant’s compensation. In addition, the Company may elect to make discretionary contributions. No discretionary contributions were made during the years ended December 31, 2004 and 2003.
Contributions are required to meet certain limitations, as prescribed by the Internal Revenue Code (the Code). Excess contributions will be refunded so that the Plan complies with the regulations of the Code.
4
Forfeitures
Forfeitures of terminated participants’ nonvested account balances are used to reduce employer contributions. Forfeited nonvested balances at December 31, 2004 totaled $255,314. In 2004 and 2003, employer contributions were reduced by forfeitures of $538,134 and $428,323, respectively.
Vesting
Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company’s contribution portion of their accounts, plus actual earnings thereon, is based on years of active service. After one year of service as defined by the Plan, the participant becomes 20% vested in the Company’s contributions and vesting increases 20% for each year of active service thereafter. A participant is 100% vested after five years of service.
Loans to Participants
Loans to participants are permitted under the plan, subject to the provisions of ERISA. Loans are limited to 50% of a participant’s vested account balance in the Plan, not to exceed $50,000. Participant loans for less than $1,000 are not permitted. Loans are secured by the participant’s account balance and bear interest at varying rates.
Payments of Benefits
Upon termination of service, a participant with a vested balance greater than $5,000 may elect to receive either a lump-sum amount or an annuity equal to the value of the participant’s account. Those participants with balances less than $5,000 receive lump-sum amounts. A participant may withdraw all or a portion of their account in the event of financial hardship, as defined by the Plan.
Transfers to/from the Plan
In conjunction with the Company’s business acquisition and divestiture activities, plan assets have been transferred into and out of the Plan, respectively. When an acquired company’s plan is terminated, those participants are given the option to roll over their accounts into the Plan. Such rollovers are included in Rollover Contributions in the accompanying Statement of Changes in Net Assets Available for Benefits. Mergers of acquired company plans, plan assets transferred out of the Plan due to divestitures, and plan assets transferred into and out of the Plan from and to other Company sponsored qualified plans as a result of employee status changes are included in Transfers in the accompanying Statement of Changes in Net Assets Available for Benefits.
Note 2 - Summary of Significant Accounting Policies -
The financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. 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 that affect the amounts reported in the financial statements and accompanying notes and schedules. Actual results could differ from those estimates.
5
Administrative Expenses
The Company, at its sole discretion, may pay the administrative expenses (i.e., trustee fees, fund fees, loan fees, and recordkeeping fees) of the Plan. If such expenses are not paid by the plan sponsor, they are paid out of plan assets. Certain administrative expenses of the Plan were paid by the Company for the years ended December 31, 2004 and 2003.
Investments
Participants can direct all employee and employer contributions to be invested in the various common collective trust funds, mutual funds, or in the common stock of The Shaw Group Inc.
The common collective trust funds are valued based on the daily net asset value for each fund, as determined by the issuer of the fund. The mutual funds are valued at quoted market prices. The common stock of The Shaw Group Inc. is valued at its market price as quoted on the New York Stock Exchange. Loans to participants are valued at cost, which approximates fair value.
Purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
The Plan provides for various investment options in any combination of common collective trust funds, mutual funds and common stock of the Company. These investments are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with these investments, it is at least reasonably possible that changes in the values of the funds/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.
Reclassifications
Certain reclassifications have been made to the 2003 amounts to conform to the 2004 financial statement presentation.
Note 3 - Plan Termination -
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue their 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% vested in their accounts.
Note 4 - Investments -
The following table presents participant-directed investments that represent 5% or more of the Plan’s net assets:
6
| | | | | | | | | |
| | | 2004 | | | 2003 | |
| AMVESCAP National Trust Company (AMVESCAP) | | | | | | | | |
| Common Collective Trust Funds: | | | | | | | | |
| Stable Value Trust | | $ | 58,742,058 | | | $ | 32,557,249 | |
| 500 Index Trust | | | 15,228,446 | | | | 7,422,549 | |
| International Equity Trust | | | 9,353,459 | | | | 5,272,437 | |
| | | | | | | | | |
| Mutual Funds: | | | | | | | | |
| AIM Dynamics Fund | | | 17,822,997 | | | | 15,818,293 | |
| Putnam Voyager | | | — | | | | 16,342,702 | |
| American Funds Growth Fund of America | | | 18,887,969 | | | | — | |
| AIM Basic Value | | | 18,549,719 | | | | 12,269,090 | |
| MFS Total Return | | | 15,016,859 | | | | 8,921,916 | |
| Brandywine | | | 14,483,943 | | | | 6,689,615 | |
| American Funds AMCAP | | | 17,803,615 | | | | — | |
| AIM Blue Chip | | | — | | | | 16,077,148 | |
| PIMCO Total Return | | | 11,033,122 | | | | 7,754,124 | |
| | | | | | | | | |
| Common Stock: | | | | | | | | |
| The Shaw Group Inc. | | | 19,808,781 | | | | 12,501,646 | |
Note 5 - Income Tax Status -
The Company has applied for a determination letter from the Internal Revenue Service stating that the Plan is qualified under section 401(a) of the Internal Revenue Code (IRC). Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable sections of the IRC. Therefore no provision for income taxes has been included in these financials statements.
Note 6 - Party-in-Interest Transactions -
Certain plan investments are held in a trust fund managed by AMVESCAP. Since AMVESCAP National Trust Company is the Plan trustee, these transactions qualify as party-in-interest transactions. The Plan permits participants to make loans from the Plan. The Plan also invests in the common stock of The Shaw Group Inc. These transactions also qualify as party-in-interest transactions.
Note 7 - Non-Exempt Transactions -
Due to an oversight, the Company did not properly withhold and remit certain employee contributions. During 2004, the Company remitted $21,927 of employee deferrals and company matching contributions to the Plan’s trustee as soon as the oversight was discovered.
Note 8 - Reconciliation of Financial Statements to Schedule H of Form 5500 -
The following is a reconciliation of net assets available for benefits per the financial statements to Schedule H of Form 5500 at December 31, 2004:
7
| | | | | |
| Net assets available for benefits per the financial statements | | $ | 281,643,520 | |
| | | | | |
| Amounts allocated to withdrawing participants | | | (65,359 | ) |
| | | | |
| | | | | |
| Net assets available for benefits per Schedule H to the Form 5500 | | $ | 281,578,161 | |
| | | | |
The following is a reconciliation of benefits paid to participants per the financial statements for the year ended December 31, 2004 to Schedule H of Form 5500:
| | | | | |
| Benefits paid to participants per financial statements | | $ | 20,265,628 | |
| | | | | |
| Add: Amounts allocated to withdrawing participants at December 31, 2004 | | | 65,359 | |
| | | | |
| | | | | |
| Benefits paid to participants per Schedule H of Form 5500 | | $ | 20,330,987 | |
| | | | |
Amounts allocated to withdrawing participants are recorded on the Schedule H of Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 2004 but not yet paid as of that date.
8
THE SHAW GROUP INC. 401(K) PLAN
SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
EIN: 72-1106167 PN: 001
DECEMBER 31, 2004
| | | | | | | | | | | | | |
| | | Description of Investment Including | | | | | | | |
| Identity of Issue, Borrower, | | Maturity Date, Rate of Interest, | | | | | | Current | |
| or Similar Party | | Collateral, Par or Maturity Value | | Cost(1) | | | Value | |
| *AMVESCAP National Trust Company Common Collective Trust Funds: | | | | | | | | | | | | |
| International Equity Trust | | | 363,523.4570 Units | | | | | | | $ | 9,353,459 | |
| 500 Index Trust | | | 490,765.2683 Units | | | | | | | | 15,228,446 | |
| Stable Value Trust | | | 58,742,057.9081 Units | | | | | | | | 58,742,058 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | 83,323,963 | |
| | | | | | | | | | | | | |
| Mutual Funds: | | | | | | | | | | | | |
| AIM Dynamics Fund | | | 1,080,181.6127 Units | | | | | | | | 17,822,997 | |
| Janus Mid Cap Value | | | 590,718.4212 Units | | | | | | | | 13,048,970 | |
| Brandywine | | | 532,889.7224 Units | | | | | | | | 14,483,943 | |
| American Funds Growth Fund of America | | | 696,973.0278 Units | | | | | | | | 18,887,969 | |
| AIM Small Cap Growth | | | 76,390.1451 Units | | | | | | | | 2,097,673 | |
| AIM Basic Value | | | 572,169.0043 Units | | | | | | | | 18,549,719 | |
| PIMCO Total Return | | | 1,034,032.0638 Units | | | | | | | | 11,033,122 | |
| American Funds AMCAP | | | 979,835.7149 Units | | | | | | | | 17,803,615 | |
| MFS Total Return | | | 938,553.6984 Units | | | | | | | | 15,016,859 | |
| Royce Low Priced Stock | | | 631,841.9132 Units | | | | | | | | 9,686,137 | |
| Dodge & Cox Income | | | 143,417.9916 Units | | | | | | | | 1,841,487 | |
| Loomis Sayles High Income | | | 164,247.5095 Units | | | | | | | | 1,218,717 | |
| PIMCO High Yield Fund | | | 583,440.6621 Units | | | | | | | | 5,816,903 | |
| Dodge & Cox Common Stock | | | 50,730.0272 Units | | | | | | | | 6,606,064 | |
| MFS Value Fund | | | 104,188.4341 Units | | | | | | | | 2,410,920 | |
| Dreyfus Premier New Leaders | | | 16,551.8863 Units | | | | | | | | 735,235 | |
| Baron Growth | | | 127,171.1777 Units | | | | | | | | 5,706,171 | |
| Artisan International | | | 88,127.8570 Units | | | | | | | | 1,951,151 | |
| American Century Real Estate | | | 152,415.8641 Units | | | | | | | | 3,776,865 | |
| American Century Conservative | | | 52,757.6908 Units | | | | | | | | 294,915 | |
| American Century Moderate | | | 45,338.9422 Units | | | | | | | | 306,945 | |
| American Century Aggressive | | | 97,087.6867 Units | | | | | | | | 748,546 | |
| Long Leaf Partners Fund | | | 31,982.4459 Units | | | | | | | | 1,001,690 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | 170,846,613 | |
| | | | | | | | | | | | | |
| *Common Stock: | | | | | | | | | | | | |
| The Shaw Group Inc | | | 1,075,786 Shares | | | | | | | | 19,808,781 | |
| | | | | | | | | | | | | |
| *Loans to Participants | | Maturities to December 2014, at interest Rates Ranging from 5.0% to 11.5% | | | | | | | 5,414,473 | |
| | | | | | | | | | | | |
| | | | | | | | | | | $ | 279,393,830 | |
| | | | | | | | | | | | |
| * | | Indicates party-in-interest to the Plan. |
| |
| (1) | | Not required as investments are participant directed. |
See accompanying report of independent registered public accounting firm.
9
THE SHAW GROUP INC. 401(K) PLAN
SCHEDULE OF NON-EXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
| | | | | | | | | |
| Identity of | | | | | | Purchase |
| Party Involved | | Relationship to Plan | | Description of Transaction | | Price |
| The Shaw Group Inc | | Plan Sponsor | | Failure to withhold salary deferrals and match required by the Department of Labor | | $ | 21,927 | |
See accompanying report of independent registered public accounting firm.
10
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator of The Shaw Group Inc. 401(k) Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | |
| Date: June 28, 2005 | THE SHAW GROUP INC. 401(k) PLAN
THE SHAW GROUP INC., PLAN ADMINISTRATOR
| |
| | By: | /s/ Gary P. Graphia | |
| | | Name: | Gary P. Graphia | |
| | | Title: | Secretary and General Counsel | |
| |
INDEX TO EXHIBITS
| | | |
| Exhibit No. | | Description |
| 23.1 | | Consent of Independent Registered Public Accounting Firm |
