EX-99 2 release2q08.htm PRESS RELEASE release2q08.htm
 
EXHIBIT 99

News Release
 
Rowan Companies, Inc.
2800 Post Oak Boulevard, Suite 5450
   Houston, Texas 77056 (713) 621-7800
ROWAN REPORTS SECOND QUARTER 2008 OPERATING RESULTS
 
 
FOR IMMEDIATE RELEASE                                                                                                                                            August 5, 2008
 
HOUSTON, TEXAS – For the three months ended June 30, 2008, Rowan Companies, Inc. (RDC – NYSE) generated net income of $120.6 million or $1.06 per share, compared to $128.1 million or $1.14 per share in the second quarter of 2007 and $98.6 million or 88¢ per share in the first quarter of 2008.  Revenues were $587.1 million in the second quarter of 2008, compared to $507.0 million in the second quarter of 2007 and $485.5 million in the first quarter of 2008.
 
The second quarter 2008 results included $1.5 million, or 1¢ per share, of gains on asset sales, compared to $14.6 million, or 8¢ per share, in the second quarter of 2007 and $5.4 million, or 4¢ per share, in the first quarter of 2008.
 
Rowan’s offshore rig utilization was 96% during the second quarter of 2008, up from 91% in the first quarter of 2008 but down from 97% in the prior year quarter, with much of the downtime in each period associated with rig relocations.  The Company’s average offshore day rate was $161,600 during the second quarter of 2008, up by $1,900 or 1% over the first quarter of 2008 and by $4,500 or 3% over the second quarter of 2007.  Rowan’s land rig utilization was 97% during the second quarter of 2008, up from 89% in the first quarter of 2008 and unchanged from the prior-year quarter.  The Company’s average land rig day rate was $22,600 during the second quarter of 2008, down by $600 or 3% from the first quarter of 2008, but up by $200 or 1% over the second quarter of 2007.
 
Rowan’s drilling operations generated revenues of $367.4 million during the second quarter of 2008, up by 8% over the first quarter of 2008 and by 4% over the prior-year quarter.  The Company’s income from drilling operations was $158.0 million or 43% of revenues during the second quarter of 2008, up by 10% over the first quarter of 2008, but down by 13% from the second quarter of 2007.
 
Rowan’s manufacturing operations generated external revenues of $219.7 million during the second quarter of 2008, up by 51% over the first quarter of 2008 and by 43% over the prior- year quarter.  The Company’s income from manufacturing operations was $23.7 million during the second quarter of 2008, up by 478% over the first quarter of 2008 and by 82% over the second quarter of 2007.
 
 
 
 

Danny McNease, Chairman and Chief Executive Officer, commented, “We are pleased with the contributions from our drilling and manufacturing businesses, each of which achieved a sequential improvement in revenues and operating income during the second quarter.  Our drilling results benefitted from our continued excellent operating performance, including the timely redeployment of assets, which yielded improvements in fleet utilization and average day rates during the quarter.
 
“Onshore, several of our land rigs secured term commitments during the quarter, including two rigs that were each contracted for three years.  We view this as a strong signal of operator confidence in the economics of the U. S. land drilling market, and Rowan is poised to benefit further should this trend continue.  Offshore, we expect to see the rebound in Gulf of Mexico day rates continue.  The global jack-up market remains strong and we are continuing to pursue international opportunities that are demanding premium equipment for deep gas or extended-reach drilling.  Rowan remains a unique player in the offshore rig market, specializing in high specification jack-up rigs ideally suited for the increasingly demanding drilling conditions of deep, high-temperature, high-pressure wells, and we believe we are well-positioned to meet the growing needs of the oil and gas industry.
 
“Our newbuild program for nine ultra-premium high-specification jack-up rigs is proceeding as planned.  Our first 240-C class jack-up, the Rowan Mississippi, and our fourth Tarzan Class jack-up, the J.P. Bussell, are currently scheduled for delivery in the fourth quarter of 2008.  We are aggressively pursuing long-term contracts for these rigs worldwide.  Our second 240-C class jack-up, the Ralph Coffman, is scheduled for delivery during the third quarter of 2009, followed by three additional jack-up rigs in each of 2010 and 2011.
 
“We are continuing to move forward with our stated plan to monetize the investment in our manufacturing businesses.  This process has generated interest from multiple parties, and we are actively working with a number of groups and considering several alternatives in order to maximize the return for our stockholders.  We remain committed to completing a transaction by year-end 2008.”
 
Rowan Companies, Inc. is a major provider of international and domestic contract drilling services.  The Company also owns and operates a manufacturing division that produces equipment for the drilling, mining and timber industries.  The Company’s stock is traded on the New York Stock Exchange.  Common Stock trading symbol: RDC.  Contact: William C. Provine, Vice-President – Investor Relations, 713-960-7575.  Website: www.rowancompanies.com
 

This report contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs and future expected financial performance of the Company that are based on current expectations and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected by the Company.  Among the factors that could cause actual results to differ materially include oil and natural gas prices, the level of offshore expenditures by energy companies, energy demand, the general economy, including inflation, weather conditions in the Company’s principal operating areas and environmental and other laws and regulations.  Other relevant factors have been disclosed in the Company’s filings with the U.S. Securities and Exchange Commission.
 

 
-2-

 
 


ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED BALANCE SHEETS
  
Unaudited (In Millions)
  
             
             
   
JUNE 30
  
   
2008
    
2007
  
             
ASSETS
            
             
Cash  and  cash  equivalents
   $ 179.1     $ 389.8  
Accounts  receivable
     491.8       338.2  
Inventories
     521.9       407.1  
Other  current  assets
     107.5       107.5  
     Total  current  assets
     1,300.3       1,242.6  
Restricted  cash
     -       50.0  
Property,  plant  and  equipment  -  net
     2,755.9       2,303.6  
Other  assets
     35.8       49.9  
     TOTAL
   $ 4,092.0     $ 3,646.1  
                 
                 
LIABILITIES  AND  STOCKHOLDERS'  EQUITY
                
                 
Current  maturities  of  long-term  debt
   $ 64.9     $ 64.9  
Accounts  payable
     150.4       104.0  
Other  current  liabilities
     264.1       331.9  
     Total  current  liabilities
     479.4       500.8  
Long-term  debt
     388.0       452.9  
Other  liabilities
     638.6       616.9  
Stockholders'  equity
     2,586.0       2,075.5  
     TOTAL
   $ 4,092.0     $ 3,646.1  
                 



 
 
 
 
 
-3-
 

 
 


ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  
Unaudited (In Millions Except Per Share Amounts)
  
                         
                         
   
THREE MONTHS
    
SIX MONTHS
  
   
ENDED JUNE 30
    
ENDED JUNE 30
  
   
2008
    
2007
    
2008
    
2007
  
                         
REVENUES
   $ 587.1     $ 507.0     $ 1,072.6     $ 969.3  
                                 
COSTS  AND  EXPENSES:
                                
  Operations
     342.7       274.9       625.4       579.3  
Depreciation  and  amortization
     33.5       28.9       66.6       56.5  
Selling,  general  and  administrative
     30.7       22.9       58.1       45.3  
Gain  on  sale  of  property  and  equipment
     (1.5 )     (14.6 )     (6.9 )     (38.7 )
Total
     405.4       312.1       743.2       642.4  
INCOME  FROM  OPERATIONS
     181.7       194.9       329.4       326.9  
Net  interest  and  other  income
     2.1       1.2       4.9       1.8  
INCOME  BEFORE  INCOME  TAXES
     183.8       196.1       334.3       328.7  
Provision  for  income  taxes
     63.2       68.0       115.1       114.2  
NET  INCOME
   $ 120.6     $ 128.1     $ 219.2     $ 214.5  
                                 
NET  INCOME  PER  DILUTED  SHARE
   $ 1.06     $ 1.14     $ 1.94     $ 1.92  
                                 
AVERAGE  DILUTED  SHARES
     113.8       112.2       113.3       111.9  
                                 
                                 
NOTE: See pages 6 and 7 for supplemental operating information.
                          


 
 
 
 
 
-4-
 
 


 
ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  
Unaudited (In Millions)
  
             
   
SIX MONTHS
  
   
ENDED JUNE 30
  
   
2008
    
2007
  
CASH  PROVIDED  BY  (USED  IN):
            
   Operations:
            
      Net income
   $ 219.2     $ 214.5  
      Adjustments  to  reconcile  net  income  to  net cash  provided  by  operations:
                
         Depreciation  and  amortization
     66.6       56.5  
         Deferred  income  taxes
     28.1       16.6  
         Gain  on  sale  of  assets
     (6.9 )     (38.7 )
         Other -  net
     6.9       17.8  
      Net  changes  in  current  assets  and  liabilities
     (135.0 )     (34.8 )
      Net  changes  in  other  noncurrent  assets  and  liabilities
     (14.3 )     19.2  
   Net  cash  provided  by  operations
     164.6       251.1  
                 
   Investing  activities:
                
      Property,  plant  and  equipment  additions
     (319.1 )     (221.3 )
      Decrease  in  Restricted  cash  balance
     50.0       106.1  
      Proceeds  from  disposals  of  property,  plant  and  equipment
     19.2       43.4  
   Net  cash  provided  by  (used  in)  investing  activities
     (249.9 )     (71.8 )
                 
   Financing  activities:
                
      Repayments  of  borrowings
     (32.5 )     (32.5 )
      Payment  of  cash  dividends
     (22.3 )     (22.1 )
      Proceeds  from  equity  compensation  plans  and  other
     34.7       7.1  
   Net  cash  used  in  financing  activities
     (20.1 )     (47.5 )
                 
INCREASE  (DECREASE)  IN  CASH  AND  CASH  EQUIVALENTS
     (105.4 )     131.8  
CASH  AND  CASH  EQUIVALENTS,  BEGINNING  OF  PERIOD
     284.5       258.0  
CASH  AND  CASH  EQUIVALENTS,  END  OF  PERIOD
   $ 179.1     $ 389.8  


 

 
 
 
 
-5-
 


ROWAN  COMPANIES,  INC.
SUPPLEMENTAL  DRILLING  INFORMATION
Unaudited  (dollars  in  millions,  except  where  otherwise  indicated )
                                             
             
THREE  MONTHS  ENDED
             
June 30, 2008
  
March 31, 2008
  
June 30, 2007
             
$ (a)
  
Elims.
  
$ (b)
% Revs.
  
$ (a)
  
Elims.
  
$ (b)
% Revs.
  
$
% Revs.
                                             
DRILLING  OPERATIONS:
                                      
 
Revenues
        
 $    367.4
      
 $    367.4
     100
  
 $    340.4
      
 $    340.4
     100
  
 $    353.1
     100
 
Operating  costs  (excluding  items  shown  below)
  
     (164.6)
  
 $  1.3
  
     (163.3)
      (44)
  
     (157.1)
  
 $  0.6
  
     (156.5)
      (46)
  
     (144.6)
      (41)
 
Depreciation  and  amortization  expense
    
       (29.7)
      
       (29.7)
        (8)
  
       (29.2)
      
       (29.2)
        (9)
  
       (25.3)
        (7)
 
Selling,  general  and  administrative  expenses (c)
  
       (17.9)
      
       (17.9)
        (5)
  
       (16.5)
      
       (16.5)
        (5)
  
       (16.0)
        (5)
 
Gain  on  sale  of  property  and  equipment
  
           1.5
      
           1.5
         0
  
           5.4
      
           5.4
         2
  
         14.7
         4
   
Income  from  operations
      
 $    156.7
  
 $  1.3
  
 $    158.0
       43
  
 $    143.0
  
 $  0.6
  
 $    143.6
       42
  
 $    181.9
       52
   
EBITDA
        
 $    184.9
  
 $  1.3
  
 $    186.2
       51
  
 $    166.8
  
 $  0.6
  
 $    167.4
       49
  
 $    192.5
       55
                                             
OFFSHORE  RIG  DAYS:
                                      
 
Operating
                
       1,840
            
       1,745
    
       1,848
  
 
Available
                
       1,911
            
       1,911
    
       1,911
  
   
Utilization
                
96%
            
91%
    
97%
  
                                             
LAND  RIG  DAYS:
                                      
 
Operating
                
       2,604
            
       2,358
    
       2,377
  
 
Available
                
       2,672
            
       2,639
    
       2,457
  
   
Utilization
                
97%
            
89%
    
97%
  
                                             
AVERAGE  DAY  RATES  (in  thousands):
                                    
 
Gulf  of  Mexico  rigs
              
 $    126.6
            
 $    114.1
    
 $    123.8
  
 
Middle  East  rigs
              
       153.5
            
       151.7
    
       153.0
  
 
North  Sea  rigs
                
       225.1
            
       243.8
    
       249.5
  
 
All  offshore  rigs
              
       161.6
            
       159.7
    
       157.1
  
 
Land  rigs
                
         22.6
            
         23.2
    
         22.4
  
                                             
   
(a)  Amounts include effects of intercompany transactions between drilling and manufacturing operations.
   
(b)  Amounts exclude effects of intercompany transactions.
                  
   
(c)  Amounts include corporate SG&A costs that are allocated between operating segments.
      
   
(d)  EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-GAAP financial measure that we believe is relevant to our stockholders.
   
      We measure EBITDA as operating income plus depreciation less gain on sale.
              




 
 
 
-6-
 
 
 


ROWAN  COMPANIES,  INC.
SUPPLEMENTAL  MANUFACTURING  INFORMATION
Unaudited  (dollars  in  millions)
                                                 
                                                 
             
THREE  MONTHS  ENDED
             
June 30, 2008
  
March 31, 2008
  
June 30, 2007
             
$ (a)
% Revs.
  
Elims.
  
$ (b)
% Revs.
  
$ (a)
% Revs.
  
Elims.
  
$ (b)
% Revs.
  
$
% Revs.
                                                 
MANUFACTURING  OPERATIONS:
                                        
 
Revenues
        
 $   320.4
   100
  
 $(100.7)
  
 $  219.7
   100
  
 $  224.1
   100
  
 $ (79.0)
  
 $  145.1
   100
  
 $  153.9
   100
 
Operating  costs (excluding  items  shown  below)
     (258.4)
    (81)
  
       79.0
  
   (179.4)
    (82)
  
   (192.2)
    (86)
  
      66.0
  
   (126.2)
    (87)
  
   (130.3)
    (85)
 
Depreciation  and  amortization  expense
  
         (3.8)
      (1)
      
       (3.8)
      (2)
  
       (3.9)
      (2)
      
       (3.9)
      (3)
  
       (3.6)
      (2)
 
Selling,  general  and  administrative  expenses (c)
       (12.8)
      (4)
      
     (12.8)
      (6)
  
     (10.9)
      (5)
      
     (10.9)
      (8)
  
       (6.9)
      (4)
 
Gain  (loss)  on  sale  of  property  and  equipment
             -
        -
      
           -
        -
  
           -
        -
      
           -
        -
  
       (0.1)
      (0)
   
Income  from  operations
      
 $     45.4
     14
  
 $  (21.7)
  
 $    23.7
     11
  
 $    17.1
       8
  
 $ (13.0)
  
 $      4.1
       3
  
 $    13.0
       8
   
EBITDA
        
 $     49.2
     15
  
 $  (21.7)
  
 $    27.5
     13
  
 $    21.0
       9
  
 $ (13.0)
  
 $      8.0
       6
  
 $    16.7
     11
                                                 
                                                 
REVENUES:
                                            
 
Drilling  Products  and  Systems
    
 $   258.9
     81
  
 $(100.7)
  
 $  158.2
     72
  
 $  170.1
     76
  
 $ (79.0)
  
 $    91.1
     63
  
 $  112.6
     73
 
Mining,  Forestry  and  Steel  Products
    
        61.5
     19
  
           -
  
       61.5
     28
  
       54.0
     24
  
          -
  
       54.0
     37
  
       41.3
     27
   
Total
        
 $   320.4
   100
  
 $(100.7)
  
 $  219.7
   100
  
 $  224.1
   100
  
 $ (79.0)
  
 $  145.1
   100
  
 $  153.9
   100
                                                 
                                                 
MANUFACTURING  BACKLOG:
                                        
 
Drilling  Products  and  Systems
    
 $1,159.8
    
 $(877.8)
  
 $  282.0
              
 $  366.7
    
 $  328.8
  
 
Mining,  Forestry  and  Steel  Products
    
        75.4
    
           -
  
       75.4
              
       70.7
    
       36.6
  
   
Total
        
 $1,235.2
    
 $(877.8)
  
 $  357.4
              
 $  437.4
    
 $  365.4
  
                                                 
                                                 
                                                 
   
(a)  Amounts include effects of intercompany transactions between manufacturing and drilling operations.
            
   
(b)  Amounts exclude effects of intercompany transactions.
                            
   
(c)  Amounts include corporate SG&A costs that are allocated between operating segments.
                    
   
(d)  EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-GAAP financial measure that we believe is relevant to our stockholders.
  
   
      We measure EBITDA as operating income plus depreciation less gain on sale.
                    


 
 
-7-