COMMITMENTS AND CONTINGENT LIABILITIES

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

COMMITMENTS AND CONTINGENT LIABILITIES

The Company has operating leases covering office space and equipment.  Certain of the leases are subject to escalations based on increases in building operating costs.  Rental expense attributable to continuing operations was $9.3 million in 2013, $8.0 million in 2012 and $5.6 million in 2011.

At December 31, 2013, future minimum payments to be made under noncancelable operating leases were as follows (in thousands):

2014	$	7,099
2015	5,470
2016	4,984
2017	4,857
2018	4,798
Later years	20,876
	$	48,084

The following table presents the status of the Company’s rigs under construction as of December 31, 2013.  Project costs include capitalized interest (in millions):

	Actual/scheduled delivery date	Total estimated project costs		Total costs incurred through Dec. 31, 2013		Projected costs in 2014		Projected costs in 2015		Total future costs
Rowan Renaissance	January 2014	$	729	$	290	$	439	$	—	$	439
Rowan Resolute	June 2014	741		285		456		—		456
Rowan Reliance	October 2014	730		207		519		4		523
Rowan Relentless	March 2015	747		188		108		451		559
		$	2,947	$	970	$	1,522	$	455	$	1,977

In addition, the Company expects to incur approximately $205 million of capital expenditures in 2014 for mobilization, commissioning, riser gas-handling equipment, software certifications and drillship fleet spares to support its deepwater operations.

We have commitments for other purchase obligations totaling $190 million at December 31, 2013.

We periodically employ letters of credit in the normal course of our business, and had outstanding letters of credit of approximately $27.2 million at December 31, 2013.

Uncertain tax positions – In 2009 the Company recognized a $25.4 million tax benefit as a result of applying the facts of a third-party tax case to the Company’s situation.  That case provided a more favorable tax treatment for certain foreign contracts entered into in prior years.  This position is currently under audit and has been challenged by IRS field agents.  We have appealed their findings and expect to come to a conclusion within the next twelve months.  We plan to vigorously defend our position and continue to believe that we will more likely than not prevail (see Note 11).

Asbestos related claims – We are from time to time a party to various lawsuits filed by current or former employees that are incidental to our operations in which the claimants seek unspecified amounts of monetary damages for personal injury, including injuries purportedly resulting from exposure to asbestos on our drilling rigs.  At December 31, 2013, there were approximately 27 asbestos related lawsuits in which we are one of many defendants.  These lawsuits have been filed in the state courts ofLouisiana, Mississippi and Texas.  We intend to vigorously defend against the litigation.  We are unable to predict the ultimate outcome of these lawsuits; however, we do not believe the ultimate resolution of these matters will have a material adverse effect on our financial position, results of operations or cash flows.  

We are involved in various legal proceedings incidental to our businesses and are vigorously defending our position in all such matters. The Company believes that there are no known contingencies, claims or lawsuits that could have a material effect on its financial position, results of operations or cash flows.