EX-99.1 3 release4q06.htm RELEASE 4Q06 Release 4Q06
 
EXHIBIT 99

News Release
 
Rowan Companies, Inc.
2800 Post Oak Boulevard, Suite 5450
   Houston, Texas 77056 (713) 621-7800

 
FOR IMMEDIATE RELEASE                                                                              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 1st 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
 
                           
 
 
 
-4-
 
 
 

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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