EX-99 2 release4q08.htm PRESS RELEASE release4q08.htm
 
EXHIBIT 99

News Release
 
Rowan Companies, Inc.
2800 Post Oak Boulevard, Suite 5450
   Houston, Texas 77056 (713) 621-7800
ROWAN REPORTS FOURTH QUARTER 2008 OPERATING RESULTS
 
 
FOR IMMEDIATE RELEASE                                                                                                                                            February 26, 2009
 
HOUSTON, TEXAS – For the three months ended December 31, 2008, Rowan Companies, Inc. (RDC – NYSE) generated net income of $94.3 million or $0.83 per share, compared to $138.5 million or $1.23 per share in the fourth quarter of 2007 and $114.1 million or $1.00 per share in the third quarter of 2008.  Revenues were $613.0 million in the fourth quarter of 2008, compared to $623.6 million in the fourth quarter of 2007 and $527.1 million in the third quarter of 2008.  Excluding the nonrecurring gains and expenses described below, earnings for the fourth quarter were $144.8 million or $1.28 per share.

The fourth quarter 2008 results included $111.2 million, or $0.68 per share of impairment charges and other expenses, partially offset by $39.5 million, or $0.23 per share, of gains on asset disposals.  The charges and other expenses included a $62 million reserve against excess manufacturing inventories, $14 million to write off goodwill, a $12 million charge against a cancelled rig construction project, $13 million related to the aborted sale of our manufacturing operations, and $10 million of severance costs.  The gains resulted primarily from Hurricane Ike insurance recoveries.  The comparable periods included no impairment charges or other nonrecurring expenses, but included gains on asset disposals of $0.7 million, or less than $0.01 per share, in the fourth quarter of 2007 and $21.4 million, or $0.12 per share, in the third quarter of 2008.

For the year ended December 31, 2008, the Company generated net income of $427.6 million or $3.77 per share on revenues of $2.2 billion, compared to net income of $483.8 million or $4.31 per share on revenues of $2.1 billion in 2007.  Excluding the nonrecurring gains and expenses described above, earnings for the full year 2008 were $460.7 million or $4.06 per share.

Rowan’s drilling operations generated revenues of $386.7 million in the fourth quarter of 2008, up by 8% over the third quarter of 2008 and by 4% over the prior-year quarter, due primarily to higher average offshore utilization and day rates.  The Company’s income from drilling operations was $201.7 million in the fourth quarter of 2008, up by 21% over the third quarter of 2008 and by 18% over the fourth quarter of 2007.


 
 
 

Rowan’s manufacturing operations generated external revenues of $226.3 million in the fourth quarter of 2008, up by 33% over the third quarter of 2008, but down by 10% from the prior-year quarter.  As a result of certain charges and other expenses as described above, the Company incurred a loss from manufacturing operations of $45.2 million in the fourth quarter of 2008, compared to operating income of $5.3 million in the third quarter of 2008 and $38.3 million in the fourth quarter of 2007.  Excluding the charges and other expenses, income from manufacturing operations was $41.6 million, or 18% of revenues in the fourth quarter of 2008, compared to 3% in the third quarter of 2008 and 15% in the fourth quarter of 2007.

Matt Ralls, President and Chief Executive Officer, commented, “We are very pleased with the strong performance of both our drilling and manufacturing operations in the fourth quarter of 2008, resulting in total year profitability that was the second highest in the Company’s history. However, ongoing reductions by our customers in their spending plans for 2009 will put downward pressure on day rates until prices for oil and natural gas improve and credit markets begin to function more normally.   

“Fortunately, we have a very strong financial position and have 67% of our total offshore rig days currently committed in 2009.  And, despite the current weakness in worldwide rig markets, the combination of our high spec rig fleet, our highly skilled workforce, and our reputation for operational excellence gives us confidence that we can achieve above market day rates and utilization for our equipment in all market conditions.“

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)
  
             
             
   
DECEMBER 31
  
   
2008
    
2007
  
             
ASSETS
            
             
Cash  and  cash  equivalents
   $ 222.4     $ 284.5  
Accounts  receivable
     485.0       478.0  
Inventories
     551.4       456.4  
Other  current  assets
     110.4       84.1  
     Total  current  assets
     1,369.2       1,303.0  
Restricted  cash
     -       50.0  
Property,  plant  and  equipment  -  net
     3,147.5       2,487.8  
Other  assets
     32.2       34.5  
     TOTAL
   $ 4,548.9     $ 3,875.3  
                 
                 
LIABILITIES  AND  STOCKHOLDERS'  EQUITY
                
                 
Current  maturities  of  long-term  debt
   $ 64.9     $ 64.9  
Accounts  payable
     235.0       100.9  
Other  current  liabilities
     444.7       329.8  
     Total  current  liabilities
     744.6       495.6  
Long-term  debt
     355.6       420.5  
Other  liabilities
     788.9       610.8  
Stockholders'  equity
     2,659.8       2,348.4  
     TOTAL
   $ 4,548.9     $ 3,875.3  
                 


 
 
 
 

 
 
 
 
 
-3-
 
 
 
 
 
 


ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  
Unaudited (In Millions Except Per Share Amounts)
  
                         
                         
                         
   
THREE MONTHS
    
TWELVE MONTHS
  
   
ENDED DECEMBER 31
    
ENDED DECEMBER 31
  
   
2008
    
2007
    
2008
    
2007
  
                         
REVENUES
   $ 613.0     $ 623.6     $ 2,212.7     $ 2,095.0  
                                 
COSTS  AND  EXPENSES:
                                
  Operations
     316.7       355.8       1,254.6       1,187.9  
Depreciation  and  amortization
     38.6       32.5       141.4       118.8  
Selling,  general  and  administrative
     29.4       27.1       115.2       94.9  
Gain  on  disposals  of  property  and  equipment
     (39.4 )     (0.7 )     (67.8 )     (40.5 )
Material  charges  and  other  operating  expenses
     111.2       -       111.2       -  
Total
     456.5       414.7       1,554.6       1,361.1  
INCOME  FROM  OPERATIONS
     156.5       208.9       658.1       733.9  
Net  interest  and  other  income
     (8.1 )     1.7       (4.0 )     5.2  
INCOME  BEFORE  INCOME  TAXES
     148.4       210.6       654.1       739.1  
Provision  for  income  taxes
     54.1       72.1       226.5       255.3  
NET  INCOME
   $ 94.3     $ 138.5     $ 427.6     $ 483.8  
                                 
NET  INCOME  PER  DILUTED  SHARE
   $ 0.83     $ 1.23     $ 3.77     $ 4.31  
                                 
AVERAGE  DILUTED  SHARES
     113.1       112.6       113.3       112.3  
                                 
                                 
                                 
NOTE: See pages 6 and 7 for supplemental operating information.
                          


 
 
 
 
 
-4-
 
 
 
 


ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  
Unaudited (In Millions)
  
             
   
TWELVE MONTHS
  
   
ENDED DECEMBER 31
  
   
2008
    
2007
  
CASH  PROVIDED  BY  (USED  IN):
            
   Operations:
            
      Net income
   $ 427.6     $ 483.8  
      Adjustments  to  reconcile  net  income  to  net cash  provided  by  operations:
                
         Depreciation  and  amortization
     141.4       118.8  
         Deferred  income  taxes
     51.1       51.2  
         Gain  on  disposals  of  assets
     (67.8 )     (40.5 )
         Other -  net
     27.1       33.0  
      Net  changes  in  current  assets  and  liabilities
     131.9       (225.4 )
      Net  changes  in  other  noncurrent  assets  and  liabilities
     (16.9 )     11.7  
   Net  cash  provided  by  operations
     694.4       432.6  
                 
   Investing  activities:
                
      Property,  plant  and  equipment  additions
     (829.2 )     (462.6 )
      Proceeds  from  disposals  of  property,  plant  and  equipment
     97.7       45.8  
      Decrease  in  Restricted  cash  balance
     50.0       106.1  
   Net  cash  provided  by  (used  in)  investing  activities
     (681.5 )     (310.7 )
                 
   Financing  activities:
                
      Proceeds from borrowings
     80.0       -  
      Repayments  of  borrowings
     (144.9 )     (64.9 )
      Payment  of  cash  dividends
     (45.0 )     (44.4 )
      Proceeds  from  equity  compensation  plans  and  other
     34.9       13.9  
   Net  cash  used  in  financing  activities
     (75.0 )     (95.4 )
                 
INCREASE  (DECREASE)  IN  CASH  AND  CASH  EQUIVALENTS
     (62.1 )     26.5  
CASH  AND  CASH  EQUIVALENTS,  BEGINNING  OF  PERIOD
     284.5       258.0  
CASH  AND  CASH  EQUIVALENTS,  END  OF  PERIOD
   $ 222.4     $ 284.5  
                 


 

 
 
 
 
-5-
 
 

 
ROWAN  COMPANIES,  INC.
SUPPLEMENTAL  DRILLING  INFORMATION
Unaudited  (dollars  in  millions,  except  where  otherwise  indicated )
                                             
             
THREE  MONTHS  ENDED
             
December 31, 2008
  
September 30, 2008
  
December 31, 2007
             
$ (a)
  
Elims.
  
$ (b)
% Revs.
  
$ (a)
  
Elims.
  
$ (b)
% Revs.
  
$
% Revs.
                                             
DRILLING  OPERATIONS:
                                      
 
Revenues
        
 $    386.7
      
 $    386.7
     100
  
 $    357.1
      
 $    357.1
     100
  
 $    372.4
     100
 
Operating  costs  (excluding  items  shown  below)
  
     (147.1)
  
 $  0.4
  
     (146.7)
      (38)
  
     (164.3)
  
 $  1.0
  
     (163.3)
      (46)
  
     (154.6)
      (42)
 
Depreciation  and  amortization  expense
    
       (34.7)
      
       (34.7)
        (9)
  
       (32.2)
      
       (32.2)
        (9)
  
       (27.1)
        (7)
 
Selling,  general  and  administrative  expenses (c)
  
       (18.6)
      
       (18.6)
        (5)
  
       (16.2)
      
       (16.2)
        (5)
  
       (20.8)
        (6)
 
Gain  on  sale  of  property  and  equipment
  
         39.6
      
         39.6
       10
  
         21.5
      
         21.5
         6
  
           0.7
         0
 
Material  charges  and  other  operating  expenses
  
       (24.6)
      
       (24.6)
        (6)
  
             -
      
             -
          -
  
             -
          -
   
Income  from  operations
      
 $    201.3
  
 $  0.4
  
 $    201.7
       52
  
 $    165.9
  
 $  1.0
  
 $    166.9
       47
  
 $    170.6
       46
   
EBITDA (d)
        
 $    221.0
  
 $  0.4
  
 $    221.4
       57
  
 $    176.6
  
 $  1.0
  
 $    177.6
       50
  
 $    197.0
       53
                                             
OFFSHORE  RIG  DAYS:
                                      
 
Operating
                
       1,911
            
       1,817
    
       1,868
  
 
Available
                
       1,926
            
       1,915
    
       1,932
  
   
Utilization
                
99%
            
95%
    
97%
  
                                             
LAND  RIG  DAYS:
                                      
 
Operating
                
       2,485
            
       2,620
    
       2,444
  
 
Available
                
       2,758
            
       2,710
    
       2,596
  
   
Utilization
                
90%
            
97%
    
94%
  
                                             
AVERAGE  DAY  RATES  (in  thousands):
                                    
 
Gulf  of  Mexico  rigs
              
 $    144.6
            
 $    131.4
    
 $    133.3
  
 
Middle  East  rigs
              
       156.9
            
       159.2
    
       152.7
  
 
North  Sea  rigs
                
       272.1
            
       238.3
    
       257.9
  
 
All  offshore  rigs
              
       170.1
            
       161.1
    
       164.3
  
 
Land  rigs
                
         23.7
            
         20.9
    
         23.0
  
                                             
   
(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
             
December 31, 2008
  
September 30, 2008
  
December 31, 2007
             
$ (a)
% Revs.
  
Elims.
  
$ (b)
% Revs.
  
$ (a)
% Revs.
  
Elims.
  
$ (b)
% Revs.
  
$
% Revs.
                                                 
MANUFACTURING  OPERATIONS:
                                        
 
Revenues
        
 $   351.1
   100
  
 $(124.8)
  
 $  226.3
   100
  
 $   248.4
   100
  
 $ (78.4)
  
 $  170.0
   100
  
 $   251.2
    100
 
Operating  costs (excluding  items  shown  below)
  
     (269.0)
    (77)
  
       99.0
  
   (170.0)
    (75)
  
     (212.8)
    (86)
  
      63.6
  
   (149.2)
    (88)
  
    (201.2)
    (80)
 
Depreciation  and  amortization  expense
  
         (3.9)
      (1)
      
       (3.9)
      (2)
  
         (4.0)
      (2)
      
       (4.0)
      (2)
  
        (5.4)
      (2)
 
Selling,  general  and  administrative  expenses (c)
  
       (10.8)
      (3)
      
     (10.8)
      (5)
  
       (11.4)
      (5)
      
     (11.4)
      (7)
  
        (6.3)
      (3)
 
Gain  (loss)  on  sale  of  property  and  equipment
  
         (0.2)
      (0)
      
       (0.2)
      (0)
  
         (0.1)
      (0)
      
       (0.1)
      (0)
  
            -
         -
 
Material  charges  and  other  operating  expenses
  
       (86.6)
    (25)
      
     (86.6)
    (38)
  
             -
        -
      
           -
        -
  
            -
         -
   
Income  from  operations
      
 $    (19.4)
      (6)
  
 $  (25.8)
  
 $  (45.2)
    (20)
  
 $     20.1
       8
  
 $ (14.8)
  
 $      5.3
       3
  
 $     38.3
      15
   
EBITDA (d)
        
 $    71.3
     20
  
 $  (25.8)
  
 $    45.5
     20
  
 $     24.2
     10
  
 $ (14.8)
  
 $      9.4
       6
  
 $     43.7
      17
                                                 
                                                 
REVENUES:
                                            
 
Drilling  Products  and  Systems
    
 $   257.9
     73
  
 $(124.8)
  
 $  133.1
     59
  
 $   189.3
     76
  
 $ (78.4)
  
 $  110.9
     65
  
 $   182.3
      73
 
Mining,  Forestry  and  Steel  Products
    
        93.2
     27
  
           -
  
       93.2
     41
  
        59.1
     24
  
          -
  
       59.1
     35
  
        68.9
      27
   
Total
        
 $   351.1
   100
  
 $(124.8)
  
 $  226.3
   100
  
 $   248.4
   100
  
 $ (78.4)
  
 $  170.0
   100
  
 $   251.2
    100
                                                 
                                                 
MANUFACTURING  BACKLOG:
                                        
 
Drilling  Products  and  Systems
    
 $   995.9
    
 $(505.2)
  
 $  490.7
    
 $1,409.3
    
$(846.8)
  
 $  562.5
    
 $   295.0
  
 
Mining,  Forestry  and  Steel  Products
    
        71.3
    
           -
  
       71.3
    
      131.5
    
          -
  
     131.5
    
        53.5
  
   
Total
        
 $1,067.2
    
 $(505.2)
  
 $  562.0
    
 $1,540.8
    
$(846.8)
  
 $  694.0
    
 $   348.5
  
                                                 
                                                 
   
(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.




 
 
 
-7-