EX-99.1 3 financialrevision.htm FINANCIAL REVISION Financial revision
EXHIBIT 99.1
 
Rowan Companies, Inc.
News Release                                 2800 Post Oak Boulevard, Suite 5450
                                              Houston, Texas 77056 (713) 621-7800

FOR IMMEDIATE RELEASE                                                  March 9, 2005

ROWAN REVISES 2004 FINANCIAL INFORMATION
AND DISCLOSES MATERIAL WEAKNESS IN INTERNAL CONTROL

HOUSTON, TEXAS - Rowan Companies, Inc. (NYSE: RDC) (“Rowan”) today announced that its previously released condensed financial information for the quarter and year ended December 31, 2004 has been revised. As adjusted, Rowan’s after-tax income from continuing operations for the year ended December 31, 2004 is $26.4 million or $.25 per share, its after-tax loss from discontinued aviation operations is $27.6 million or $.26 per share, and its net loss is $1.3 million or $.01 per share.

The registered public accounting firm Deloitte & Touche LLP has completed their audit and has issued an unqualified opinion with respect to Rowan’s consolidated financial statements to be included in our 2004 Annual Report to stockholders.

The Company has made several adjustments and reclassifications to the unaudited consolidated financial information that was released on January 19, 2005, which had the following full year effects:

·  
Consolidated revenues were reduced by $1.4 million or less than 1%
·  
Income from operations was reduced by $1.4 million or 2.4%
·  
After-tax income from continuing operations was reduced by $0.8 million or 1¢ per share
·  
The after-tax loss from discontinued operations was increased by $8.9 million or 8¢ per share, due to a deferred tax miscalculation which understated the loss on the sale of our aviation operations
·  
As a result, net income was reduced by $9.8 million or 9¢ per share
·  
Net operating cash flows were reduced $3.4 million or 2.9%
·  
Working capital was increased by $4.6 million or less than 1%
·  
Total assets were increased by $11.2 million or less than 1%

The Company has determined that the aggregate effects of these adjustments are not material to any previous annual or interim period.


EXHIBIT 99.1

We have completed our assessment of the effectiveness of our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. Based upon our documentation and testing, Rowan did not maintain effective internal control over financial reporting as of December 31, 2004 within the context of the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our assessment identified a pervasive internal control deficiency that represented a material weakness. The control deficiency resulted from the lack of effective detective and monitoring controls within internal control over financial reporting. These conditions were manifested in a number of adjustments to the financial statements for the year ended December 31, 2004 that, although not material in the aggregate, affect various financial statement line items. We are working hard throughout the Rowan organization to remedy all internal control deficiencies relative to COSO and expect to be fully compliant by the end of 2005.

Rowan Companies, Inc. is a major provider of international and domestic contract drilling services. The Company also operates a mini-steel mill, a manufacturing facility that produces heavy equipment for the mining and timber industries, and a drilling products division that has designed or built about one-third of all mobile offshore jack-up drilling rigs, including all 24 operated by the Company. The Company’s stock is traded on the New York Stock Exchange and the Pacific Exchange - Stock & Options. Common Stock trading symbol: RDC. For additional information, contact William C. Provine, Vice-President - Investor Relations, at 713-960-7575 or visit Rowan’s website at 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.
 
 
 
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EXHIBIT 99.1
ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands)
 
 
 
 
 
 
 
 
 
 
 DECEMBER 31
 
 
 
 
2004
 
 
2003
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
465,977
 
$
57,809
 
Accounts receivable
 
 
143,509
 
 
111,709
 
Inventories
 
 
171,709
 
 
157,645
 
Other current assets
 
 
33,498
 
 
69,157
 
  Total current assets
 
 
814,693
 
 
396,320
 
Property, plant and equipment - net
 
 
1,661,898
 
 
1,614,597
 
Other assets
 
 
15,695
 
 
17,150
 
Assets of discontinued aviation operations
 
 
 
 
 
162,742
 
  TOTAL
 
$
2,492,286
 
$
2,190,809
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current maturities of long-term debt
 
$
64,922
 
$
55,267
 
Other current liabilities
 
 
169,878
 
 
87,188
 
  Total current liabilities
 
 
234,800
 
 
142,455
 
Long-term debt
 
 
574,350
 
 
569,067
 
Other liabilities
 
 
274,252
 
 
318,482
 
Lliabilities of discontinued aviation operations
 
 
 
 
 
23,975
 
Stockholders' equity
 
 
1,408,884
 
 
1,136,830
 
  TOTAL
 
$
2,492,286
 
$
2,190,809
 
 
 
 
 
 
 
 
 
 
-3-
EXHIBIT 99.1
 
ROWAN COMPANIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands Except Per Share Amounts)
                           
                           
 
  
 THREE MONTHS
    
TWELVE MONTHS
  
 
  
 ENDED DECEMBER 31,
    
ENDED DECEMBER 31,
  
     
2004
 
 
2003
 
 
2004
 
 
2003
  
REVENUES:
                          
  Drilling services
  
$
137,460
  
$
123,806
  
$
500,928
  
$
421,412
  
  Manufacturing sales and services
    
64,703
   
48,246
   
207,573
   
137,043
 
    Total
    
202,163
   
172,052
   
708,501
   
558,455
 
COSTS AND EXPENSES:
                          
  Drilling services
    
82,862
   
87,331
   
355,188
   
330,124
 
  Manufacturing sales and services
    
55,986
   
40,686
   
178,087
   
114,644
 
  Depreciation and amortization
    
19,903
   
19,286
   
77,828
   
69,362
 
  Selling, general and administrative
    
12,217
   
8,587
   
40,721
   
36,095
 
    Total
    
170,968
   
155,890
   
651,824
   
550,225
 
INCOME FROM OPERATIONS
    
31,195
   
16,162
   
56,677
   
8,230
 
OTHER INCOME (EXPENSE):
                          
  Interest expense
    
(5,478
)
  
(5,158
)
  
(20,911
)
  
(20,027
)
  Less: interest capitalized
    
533
   
685
   
2,195
   
4,142
 
  Interest income
    
1,721
   
101
   
4,408
   
1,124
 
  Other - net
    
128
   
119
   
416
   
477
 
    OTHER INCOME (EXPENSE) - NET
    
(3,096
)
  
(4,253
)
  
(13,892
)
  
(14,284
)
INCOME (LOSS) BEFORE INCOME TAXES
    
28,099
   
11,909
   
42,785
   
(6,054
)
Provision (credit) for income taxes
    
11,607
   
4,327
   
16,414
   
(2,114
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
    
16,492
   
7,582
   
26,371
   
(3,940
)
Loss from discontinued aviation operations, net of tax
    
(14,264
)
  
(3,137
)
  
(27,644
)
  
(3,834
)
NET INCOME (LOSS)
  
$
2,228
  
$
4,445
  
$
(1,273
)
$
(7,774
)
PER SHARE AMOUNTS:
                          
Income (loss) from continuing operations
  
$
0.15
  
$
0.08
  
$
0.25
  
$
(0.04
)
Loss from discontinued aviation operations, net of tax
  
$
(0.13
)
$
(0.03
)
$
(0.26
)
$
(0.04
)
Net income (loss)
  
$
0.02
  
$
0.05
  
$
(0.01
)
$
(0.08
)
AVERAGE DILUTED SHARES
    
108,521
   
96,044
   
105,472
   
93,820
 
                           
 
 
-4-
EXHIBIT 99.1
 
ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
               
 
 TWELVE MONTHS
  
 
  
 ENDED DECEMBER 31
  
     
2004
 
 
2003
 
CASH PROVIDED BY (USED IN):
              
  Operations:
              
    Net income (loss)
  
$
(1,273
)
$
(7,774
)
    Adjustments to reconcile net income (loss) to net cash provided by operations:
              
      Depreciation and amortization
    
95,650
   
86,851
 
      Loss on sale of aviation operations
    
24,441
       
      Deferred income taxes
    
866
   
(3,677
)
      Other - net
    
11,465
   
7,847
 
    Net changes in current assets and liabilities
    
(14,857
)
  
(34,596
)
    Net changes in other noncurrent assets and liabilities
    
815
   
(401
)
  Net cash provided by operations
    
117,107
   
48,250
 
               
  Investing activities:
              
    Property, plant and equipment additions
    
(136,886
)
  
(250,463
)
    Net proceeds from sale of aviation operations
    
117,014
       
    Proceeds from disposals of property, plant and equipment
    
14,680
   
7,060
 
  Net cash used in investing activities
    
(5,192
)
  
(243,403
)
               
  Financing activities:
              
    Proceeds from borrowings
    
70,842
   
111,490
 
    Repayments of borrowings
    
(55,904
)
  
(42,458
)
    Proceeds from common stock offering, net of issue costs
    
264,952
       
    Proceeds from stock option and convertible debenture plans
    
15,945
   
5,592
 
  Net cash provided by financing activities
    
295,835
   
74,624
 
               
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
407,750
   
(120,529
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
58,227
   
178,756
 
CASH AND CASH EQUIVALENTS, END OF PERIOD
  
$
465,977
  
$
58,227
  
               
 
-5-