EX-99 2 release3q08.htm PRESS RELEASE release3q08.htm
 
EXHIBIT 99

News Release
 
Rowan Companies, Inc.
2800 Post Oak Boulevard, Suite 5450
   Houston, Texas 77056 (713) 621-7800
ROWAN REPORTS THIRD QUARTER 2008 OPERATING RESULTS
 
 
FOR IMMEDIATE RELEASE                                                                                                                                            November 4, 2008
 
HOUSTON, TEXAS – For the three months ended September 30, 2008, Rowan Companies, Inc. (RDC – NYSE) generated net income of $114.1 million or $1.00 per share, compared to $130.8 million or $1.16 per share in the third quarter of 2007 and $120.6 million or $1.06 per share in the second quarter of 2008.  Revenues were $527.1 million in the third quarter of 2008, compared to $502.2 million in the third quarter of 2007 and $587.1 million in the second quarter of 2008.

The third quarter 2008 results included $21.4 million, or $0.12 per share, of gains on asset sales, compared to $1.1 million, or less than $0.01 per share, in the third quarter of 2007 and $1.5 million, or $0.01 per share, in the second quarter of 2008.

Rowan’s offshore rig utilization was 95% during the third quarter of 2008, compared to 96% in the second quarter of 2008 and 99% in the prior-year quarter, with much of the downtime in 2008 associated with rig relocations or modifications.  The Company’s average offshore day rate was $161,100 during the third quarter of 2008, down by $500 or less than 1% from the second quarter of 2008 and up by $2,900 or 2% over the third quarter of 2007.  Rowan’s land rig utilization was 97% during the third quarter of 2008, unchanged from the second quarter of 2008 and up from 96% in the prior-year quarter.  The Company’s average land rig day rate was $20,900 during the third quarter of 2008, down by $1,700 or 8% from the second quarter of 2008 and by $2,400 or 10% from the third quarter of 2007.

Rowan’s drilling operations generated revenues of $357.1 million during the third quarter of 2008, down by 3% from both the second quarter of 2008 and the prior-year quarter.  The Company’s income from drilling operations was $166.9 million or 47% of revenues during the third quarter of 2008, up by 6% over the second quarter of 2008, but down by 9% from the third quarter of 2007.

Rowan’s manufacturing operations generated external revenues of $170.0 million during the third quarter of 2008, down by 23% from the second quarter of 2008, but up by 27% over the prior-year quarter.  The Company’s income from manufacturing operations was $5.3 million during the third quarter of 2008, down by 78% from the second quarter of 2008 and by 64% from the third quarter of 2007.

 
Danny McNease, Chairman and Chief Executive Officer, commented, “As previously reported, our third quarter financial performance was impacted by Hurricane Ike, which caused the loss of our oldest offshore drilling rig, the Rowan-Anchorage, and significantly disrupted our Houston manufacturing operations.

“The recent capital markets and commodity price weakness have adversely affected opportunities for monetizing our investment in LTI for what we believe to be adequate value for Rowan stockholders.  Therefore, at this time, we are not pursuing any further negotiations with potential partners.  However, we will continue to review all strategic options, including a spin-off of LTI to our stockholders.  We do not anticipate that a transaction, if any, will be completed until capital market conditions improve significantly.

“Continuing weakness in capital markets and commodity prices will, eventually, affect customer demand for our products and services, though we have experienced little impact thus far.  To the contrary, we have over the past two months added significantly to our backlog of business, including almost $300 million of term drilling contracts for our two newbuild jack-ups to be delivered later this month.  We see continuing firm demand in both domestic and foreign markets for the right type of equipment having a proven drilling organization behind it.

“Thus, we remain optimistic for the prospects of our seven other jack-ups currently under construction or on order, though we are reviewing the scheduled timing of our third and fourth 240-C class jack-up rigs, currently planned for delivery in 2010 and 2011, for opportunities to preserve near-term liquidity.  Of course, it’s our continuing ownership of LTI that gives us the flexibility to alter these construction schedules, if that becomes necessary."

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: Suzanne M. McLeod, Director of Investor Relations, 713-960-7517.  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)
  
             
             
   
SEPTEMBER 30
  
   
2008
    
2007
  
ASSETS
            
             
Cash  and  cash  equivalents
   $ 152.7     $ 341.3  
Accounts  receivable
     421.4       414.1  
Inventories
     600.5       481.7  
Other  current  assets
     91.7       91.0  
     Total  current  assets
     1,266.3       1,328.1  
Restricted  cash
     -       50.0  
Property,  plant  and  equipment  -  net
     2,987.5       2,375.3  
Other  assets
     33.1       41.6  
     TOTAL
   $ 4,286.9     $ 3,795.0  
                 
                 
LIABILITIES  AND  STOCKHOLDERS'  EQUITY
                
                 
Current  maturities  of  long-term  debt
   $ 64.9     $ 64.9  
Accounts  payable
     187.6       119.9  
Other  current  liabilities
     304.3       349.2  
     Total  current  liabilities
     556.8       534.0  
Long-term  debt
     369.3       434.2  
Other  liabilities
     668.6       622.8  
Stockholders'  equity
     2,692.2       2,204.0  
     TOTAL
   $ 4,286.9     $ 3,795.0  
 
 
 
 
 
 

 
 
 
 
 
-3-
 

 
ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  
Unaudited (In Millions Except Per Share Amounts)
  
                         
                         
   
THREE MONTHS
    
NINE MONTHS
  
   
ENDED SEPTEMBER 30
    
ENDED SEPTEMBER 30
  
   
2008
    
2007
    
2008
    
2007
  
                         
REVENUES
   $ 527.1     $ 502.2     $ 1,599.7     $ 1,471.5  
                                 
COSTS  AND  EXPENSES:
                                
Operations
     312.5       252.9       937.9       832.2  
Depreciation  and  amortization
     36.2       29.8       102.8       86.3  
Selling,  general  and  administrative
     27.6       22.5       85.7       67.8  
Gain  on  sale  of  property  and  equipment
     (21.4 )     (1.1 )     (28.3 )     (39.8 )
Total
     354.9       304.1       1,098.1       946.5  
INCOME  FROM  OPERATIONS
     172.2       198.1       501.6       525.0  
Net  interest  and  other  income
     (0.9 )     1.7       4.0       3.4  
INCOME  BEFORE  INCOME  TAXES
     171.3       199.8       505.6       528.4  
Provision  for  income  taxes
     57.2       69.0       172.3       183.1  
NET  INCOME
   $ 114.1     $ 130.8     $ 333.3     $ 345.3  
                                 
NET  INCOME  PER  DILUTED  SHARE
   $ 1.00     $ 1.16     $ 2.94     $ 3.08  
                                 
AVERAGE  DILUTED  SHARES
     113.8       112.6       113.5       112.1  
                                 
                                 
NOTE: See pages 6 and 7 for supplemental operating information.
                          
 
 
 
 
 
 
 


 
 
 
 
 
-4-
 
 
 
 
 
ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  
Unaudited (In Millions)
  
             
   
NINE MONTHS
  
   
ENDED SEPTEMBER 30
  
   
2008
    
2007
  
CASH  PROVIDED  BY  (USED  IN):
            
   Operations:
            
      Net income
   $ 333.3     $ 345.3  
      Adjustments  to  reconcile  net  income  to  net cash  provided  by  operations:
                
         Depreciation  and  amortization
     102.8       86.3  
         Deferred  income  taxes
     38.0       30.1  
         Gain  on  sale  of  assets
     (28.3 )     (39.8 )
         Other -  net
     9.0       17.6  
      Net  changes  in  current  assets  and  liabilities
     (17.7 )     (133.6 )
      Net  changes  in  other  noncurrent  assets  and  liabilities
     (3.5 )     15.9  
   Net  cash  provided  by  operations
     433.6       321.8  
                 
   Investing  activities:
                
      Property,  plant  and  equipment  additions
     (618.5 )     (318.7 )
      Proceeds  from  disposals  of  property,  plant  and  equipment
     53.4       44.9  
      Decrease  in  Restricted  cash  balance
     50.0       106.1  
   Net  cash  provided  by  (used  in)  investing  activities
     (515.1 )     (167.7 )
                 
   Financing  activities:
                
      Proceeds from borrowings
     80.0       -  
      Repayments  of  borrowings
     (131.2 )     (51.2 )
      Payment  of  cash  dividends
     (33.7 )     (33.2 )
      Proceeds  from  equity  compensation  plans  and  other
     34.6       13.6  
   Net  cash  used  in  financing  activities
     (50.3 )     (70.8 )
                 
INCREASE  (DECREASE)  IN  CASH  AND  CASH  EQUIVALENTS
     (131.8 )     83.3  
CASH  AND  CASH  EQUIVALENTS,  BEGINNING  OF  PERIOD
     284.5       258.0  
CASH  AND  CASH  EQUIVALENTS,  END  OF  PERIOD
   $ 152.7     $ 341.3  
 
 
 
 
 


 

 
 
 
 
-5-
 

 
ROWAN  COMPANIES,  INC.
SUPPLEMENTAL  DRILLING  INFORMATION
Unaudited  (dollars  in  millions,  except  where  otherwise  indicated )
                                             
             
THREE  MONTHS  ENDED
             
September 30, 2008
  
June 30, 2008
  
September 30, 2007
             
$ (a)
  
Elims.
  
$ (b)
% Revs.
  
$ (a)
  
Elims.
  
$ (b)
% Revs.
  
$
% Revs.
                                             
DRILLING  OPERATIONS:
                                      
 
Revenues
        
 $    357.1
      
 $    357.1
     100
  
 $    367.4
      
 $    367.4
     100
  
 $    368.8
     100
 
Operating  costs  (excluding  items  shown  below)
  
     (164.3)
  
 $  1.0
  
     (163.3)
      (46)
  
     (164.6)
  
 $  1.3
  
     (163.3)
      (44)
  
     (145.4)
      (39)
 
Depreciation  and  amortization  expense
    
       (32.2)
      
       (32.2)
        (9)
  
       (29.7)
      
       (29.7)
        (8)
  
       (25.3)
        (7)
 
Selling,  general  and  administrative  expenses (c)
  
       (16.2)
      
       (16.2)
        (5)
  
       (17.9)
      
       (17.9)
        (5)
  
       (15.8)
        (4)
 
Gain  on  sale  of  property  and  equipment
  
         21.5
      
         21.5
         6
  
           1.5
      
           1.5
         0
  
           1.2
         0
   
Income  from  operations
      
 $    165.9
  
 $  1.0
  
 $    166.9
       47
  
 $    156.7
  
 $  1.3
  
 $    158.0
       43
  
 $    183.5
       50
   
EBITDA (d)
        
 $    176.6
  
 $  1.0
  
 $    177.6
       50
  
 $    184.9
  
 $  1.3
  
 $    186.2
       51
  
 $    207.6
       56
                                             
OFFSHORE  RIG  DAYS:
                                      
 
Operating
                
       1,817
            
       1,840
    
       1,907
  
 
Available
                
       1,915
            
       1,911
    
       1,932
  
   
Utilization
                
95%
            
96%
    
99%
  
                                             
LAND  RIG  DAYS:
                                      
 
Operating
                
       2,620
            
       2,604
    
       2,391
  
 
Available
                
       2,710
            
       2,672
    
       2,484
  
   
Utilization
                
97%
            
97%
    
96%
  
                                             
AVERAGE  DAY  RATES  (in  thousands):
                                    
 
Gulf  of  Mexico  rigs
              
 $    131.4
            
 $    126.6
    
 $    132.1
  
 
Middle  East  rigs
              
       159.2
            
       153.5
    
       151.8
  
 
North  Sea  rigs
                
       238.3
            
       225.1
    
       238.4
  
 
All  offshore  rigs
              
       161.1
            
       161.6
    
       158.2
  
 
Land  rigs
                
         20.9
            
         22.6
    
         23.3
  
                                           
 
   
(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
             
September 30, 2008
  
June 30, 2008
  
September 30, 2007
             
$ (a)
% Revs.
  
Elims.
  
$ (b)
% Revs.
  
$ (a)
% Revs.
  
Elims.
  
$ (b)
% Revs.
  
$
% Revs.
                                                 
MANUFACTURING  OPERATIONS:
                                        
 
Revenues
        
 $   248.4
   100
  
 $  (78.4)
  
 $  170.0
   100
  
 $   320.4
   100
  
$ (100.7)
  
 $  219.7
   100
  
 $   133.4
    100
 
Operating  costs (excluding  items  shown  below)
  
     (212.8)
    (86)
  
       63.6
  
   (149.2)
    (88)
  
     (258.4)
    (81)
  
      79.0
  
   (179.4)
    (82)
  
    (107.5)
    (81)
 
Depreciation  and  amortization  expense
  
         (4.0)
      (2)
      
       (4.0)
      (2)
  
         (3.8)
      (1)
      
       (3.8)
      (2)
  
        (4.5)
      (3)
 
Selling,  general  and  administrative  expenses (c)
  
       (11.4)
      (5)
      
     (11.4)
      (7)
  
       (12.8)
      (4)
      
     (12.8)
      (6)
  
        (6.7)
      (5)
 
Gain  (loss)  on  sale  of  property  and  equipment
  
         (0.1)
      (0)
      
       (0.1)
      (0)
  
             -
        -
      
           -
        -
  
        (0.1)
      (0)
   
Income  from  operations
      
 $     20.1
       8
  
 $  (14.8)
  
 $      5.3
       3
  
 $     45.4
     14
  
 $ (21.7)
  
 $    23.7
     11
  
 $     14.6
      11
   
EBITDA (d)
        
 $     24.2
     10
  
 $  (14.8)
  
 $      9.4
       6
  
 $     49.2
     15
  
 $ (21.7)
  
 $    27.5
     13
  
 $     19.2
      14
                                                 
                                                 
REVENUES:
                                            
 
Drilling  Products  and  Systems
    
 $   189.3
     76
  
 $  (78.4)
  
 $  110.9
     65
  
 $   258.9
     81
  
$ (100.7)
  
 $  158.2
     72
  
 $     83.7
      63
 
Mining,  Forestry  and  Steel  Products
    
        59.1
     24
  
           -
  
       59.1
     35
  
        61.5
     19
  
          -
  
       61.5
     28
  
        49.7
      37
   
Total
        
 $   248.4
   100
  
 $  (78.4)
  
 $  170.0
   100
  
 $   320.4
   100
  
$ (100.7)
  
 $  219.7
   100
  
 $   133.4
    100
                                                 
                                                 
MANUFACTURING  BACKLOG:
                                        
 
Drilling  Products  and  Systems
    
 $1,409.3
    
 $(846.8)
  
 $  562.5
    
 $1,159.8
    
$ (877.8)
  
 $  282.0
    
 $   342.6
  
 
Mining,  Forestry  and  Steel  Products
    
      131.5
    
           -
  
     131.5
    
        75.4
    
          -
  
       75.4
    
        62.3
  
   
Total
        
 $1,540.8
    
 $(846.8)
  
 $  694.0
    
 $1,235.2
    
$ (877.8)
  
 $  357.4
    
 $   404.9
  
                                                 
 
   
(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-