8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 27, 2007

ROWAN COMPANIES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	1-5491	75-0759420
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	file Number)	Identification No.)

2800 POST OAK BOULEVARD
SUITE 5450
HOUSTON, TEXAS	77056-6127
(Address of principal executive offices)	(zip code)

(713) 621-7800

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

Item 2.02 - Results of Operations and Financial Condition

The following information is disclosed pursuant to Item 2.02 - Results of Operations and Financial Condition:

On February 27, 2007, Rowan Companies, Inc. issued a press release announcing its operating results for the fourth quarter of 2006. The press release is attached as Exhibit 99.

Item 9.01 - Financial Statements and Exhibits

(c) Exhibits

Exhibit
Number	Exhibit Description
99	Press release of Rowan Companies, Inc. dated February 27, 2007 announcing its operating results for the fourth quarter of 2006

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

       ROWAN COMPANIES, INC.

                              By: /s/ W. H. WELLS_________________

        W. H. Wells,

        Vice President - Finance and Chief Financial Officer

Dated: February 27, 2007

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INDEX TO EXHIBITS

Exhibit
Number	Exhibit Description
99	Press release of Rowan Companies, Inc. dated February 27, 2007 announcing its operating results for the fourth quarter of 2006

 

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EX-99.1

EXHIBIT 99

News Release

Rowan Companies, Inc.

2800 Post Oak Boulevard, Suite 5450

   Houston, Texas 77056 (713) 621-7800

FOR IMMEDIATE RELEASE                 & #160;      February 27, 2007

ROWAN REPORTS RECORD ANNUAL REVENUES AND PROFITS

HOUSTON, TEXAS - For the year ended December 31, 2006, Rowan Companies, Inc. (RDC - NYSE) generated income from continuing operations of $317.0 million or $2.84 per share on revenues of $1,510.7 million, compared to income from continuing operations of $217.8 million or $1.97 per share on revenues of $1,068.8 million during 2005. Net income was $318.2 million or $2.85 per share in 2006, compared to $229.8 million or $2.08 per share in 2005.

For the three months ended December 31, 2006, the Company generated income from continuing operations of $62.4 million or 56¢ per share on $410.9 million of revenues, compared to income from continuing operations of $69.5 million or 63¢ per share on revenues of $317.4 million in the same period of 2005. Current quarter results included $12.8 million or 10¢ per share of charges related to environmental matters, while the prior year quarter included $24.3 million or 14¢ per share of gains on asset disposals.

Rowan’s offshore rig utilization decreased to 81% during the fourth quarter of 2006, from 93% during the comparable 2005 period. The Company realized 164 net fewer operating days during the current quarter from five rigs that were either preparing for or mobilizing to overseas assignments. Rowan’s overall average offshore day rate was $144,500 during the fourth quarter of 2006, up by $40,300 or 39% from the comparable 2005 period but down by $2,300 or less than 2% from the third quarter of 2006.

Rowan’s land rig utilization was 95% during the fourth quarter of 2006, up from 89% in the comparable 2005 period. The Company experienced 557 more operating days between periods as a result of the eight new rigs that were completed during 2006. Rowan’s average land rig day rate was $22,700 during the fourth quarter of 2006, up by $1,500 or 7% from the comparable 2005 period but down by $300 or less than 2% from the third quarter of 2006.

The Company’s external manufacturing backlog was $530 million at December 31, 2006, or more than one-third higher than the prior year level, and included $264 million of rigs, kits and components in the Offshore Products group, $190 million of pumps and land rig packages in the Drilling Systems group and $23 million of motors, drives and controls in the Power Systems group.

Danny McNease, Chairman and Chief Executive Officer, commented, “Rowan’s 2006 operating results were easily the best in the Company’s 83-year history. During the year, we successfully diversified our drilling operations away from the Gulf of Mexico market and obtained several long-term commitments that have dramatically improved our future revenue and earnings visibility.

“These actions negatively affected our 2006 operating results, however, as rig relocations temporarily halt the recognition of contract revenues. Our fourth quarter operating results, in particular, experienced an estimated $48 million revenue shortfall associated with relocating rigs, based upon average day rates then in effect. The first quarter of 2007 will be similarly impacted.

“As previously reported, our operating costs have also increased, in large part due to more extensive rig maintenance and greater parts and supply purchases, especially for the relocating rigs, and higher rig insurance premiums. Our labor costs have included a significant increment for expatriates working in the Middle East and the cost of duplicative local personnel undergoing training. In addition, our fourth quarter 2006 operating results included $12.8 million of environmental costs, including a $9 million charge for fines and environmental fund payments that we expect to pay in connection with a previously reported Department of Justice investigation and $3.8 million of incremental remediation expenses related to our Longview, Texas steel mill. We do not anticipate further charges will be incurred relating to either of these matters.

“By the end of March 2007, we expect to have all current relocations completed and all affected rigs again producing revenues. The infrastructure added for our Middle East operations should begin to reduce our cost of rig maintenance and the reduction of expatriate rig personnel should begin to relieve related labor and travel expenses. Our insurance coverage renews on April 1^st and we are unsure at this point of the impact of any rate changes. Our repositioning of rigs has reduced our exposure to Gulf of Mexico hurricanes and should reduce our cost of coverage.

“Our manufacturing operations have continued to expand our line of innovative drilling products and we are confident that we will continue to make market inroads in 2007.”

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.

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ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited (In Thousands)
		DECEMBER 31
		2006		2005
ASSETS
Cash and cash equivalents	$	258,041	$	675,903
Accounts receivable		418,985		253,194
Inventories		345,095		196,010
Other current assets		80,728		83,025
Total current assets		1,102,849		1,208,132
Restricted cash		156,077		-
Property, plant and equipment - net		2,133,226		1,720,734
Other assets		43,246		46,317
TOTAL	$	3,435,398	$	2,975,183
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt	$	64,922	$	64,922
Other current liabilities		451,784		275,691
Total current liabilities		516,706		340,613
Long-term debt		485,404		550,326
Other liabilities		559,242		464,505
Stockholders' equity		1,874,046		1,619,739
TOTAL	$	3,435,398	$	2,975,183

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ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited (In Thousands Except Per Share Amounts)
		FOR THE THREE MONTHS						FOR THE TWELVE MONTHS
		ENDED DECEMBER 31						ENDED DECEMBER 31
		2006			2005			2006			2005
REVENUES:
Drilling services	$	280,659		$	215,059		$	1,067,448		$	775,356
Manufacturing sales and services		130,288			102,373			443,286			293,426
TOTAL		410,947			317,432			1,510,734			1,068,782
COSTS AND EXPENSES:
Drilling services		148,494			105,784			511,664			394,595
Manufacturing sales and services		111,316			87,377			372,219			253,688
Depreciation and amortization		24,599			20,983			89,971			81,204
Selling, general and administrative		18,722			17,805			71,452			65,092
Loss (gain) on sales of property and equipment		11			(1,486	)		(29,266	)		(52,449	)
Charge for estimated environmental fine		9,000			-			9,000			-
Gain on hurricane-related events		-			(22,855	)		-			(13,948	)
TOTAL		312,142			207,608			1,025,040			728,182
INCOME FROM OPERATIONS		98,805			109,824			485,694			340,600
OTHER INCOME (EXPENSE):
Interest expense		(6,998	)		(6,934	)		(28,321	)		(25,802	)
Less interest capitalized		1,165			762			7,756			3,803
Interest income		6,256			6,383			28,023			16,843
Gain on sales of investments		-			-			-			9,553
Other - net		368			(55	)		202			473
OTHER INCOME (EXPENSE) - NET		791			156			7,660			4,870
INCOME BEFORE INCOME TAXES		99,596			109,980			493,354			345,470
Provision for income taxes		37,186			40,493			176,377			127,633
INCOME FROM CONTINUING OPERATIONS		62,410			69,487			316,977			217,837
Income from discontinued operations, net of tax		-			-			1,269			11,963
NET INCOME	$	62,410		$	69,487		$	318,246		$	229,800
PER DILUTED SHARE AMOUNTS:
Income from continuing operations	$	.56		$	.63		$	2.84		$	1.97
Income from discontinued operations, net of tax	$	-		$	-		$	.01		$	.11
Net income	$	.56		$	.63		$	2.85		$	2.08
AVERAGE DILUTED SHARES		111,630			110,967			111,775			110,316

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ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (In Thousands)
		FOR THE TWELVE MONTHS
		ENDED DECEMBER 31
		2006			2005
CASH PROVIDED BY (USED IN):
Operations:
Net income	$	318,246		$	229,800
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		89,971			81,291
Deferred income taxes		94,287			121,660
Contributions to pension plans		(6,229	)		(89,207	)
Net (gain) loss on asset disposals		(29,266	)		(50,238	)
Other - net		52,232			26,310
Net changes in current assets and liabilities		(221,617	)		19,486
Net changes in other noncurrent assets and liabilities		(5,555	)		(5,932	)
Net cash provided by operations		292,069			333,170
Investing activities:
Property, plant and equipment additions		(479,082	)		(199,798	)
Proceeds from asset disposals		39,082			120,713
Increase in restricted cash balance		(156,077	)		-
Net cash used in investing activities		(596,077	)		(79,085	)
Financing activities:
Proceeds from borrowings		-			37,909
Repayments of borrowings		(64,922	)		(61,933	)
Proceeds from stock option and convertible debenture plans		9,176			34,008
Payments of cash dividends		(60,488	)		(54,143	)
Other		2,380			-
Net cash used in financing activities		(113,854	)		(44,159	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(417,862	)		209,926
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		675,903			465,977
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	258,041		$	675,903

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