England and Wales | 98-1023315 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
2800 Post Oak Boulevard, Suite 5450, Houston, Texas | 77056-6189 |
(Address of principal executive offices) | (Zip Code) |
Page | ||
• | prices of oil and natural gas and industry expectations about future prices and impacts of global financial or economic downturns; |
• | changes in the offshore drilling market, including fluctuations in worldwide rig supply and demand, competition or technology, including as a result of delivery of newbuild drilling units; |
• | variable levels of drilling activity and expenditures in the energy industry, whether as a result of actions by OPEC, global capital markets and liquidity, prices of oil and natural gas or otherwise, which may result in decreased demand and/or cause us to idle or stack additional rigs; |
• | possible termination, suspension or renegotiation of drilling contracts (with or without cause) as a result of general and industry economic conditions, distressed financial condition of our customers, force majeure, mechanical difficulties, delays, labor disturbances, strikes, performance or other reasons; payment or operational delays by our customers; or restructuring or insolvency of significant customers; |
• | changes or delays in actual contract commencement dates, contract option exercises, contract revenues, contract awards; |
• | our ability to enter into, and the terms of, future drilling contracts for drilling units whose contracts are expiring and drilling units currently idled or stacked; |
• | drilling permit and operations delays, moratoria or suspensions, new and future regulatory, legislative or permitting requirements (including requirements related to certification and testing of blowout preventers and other equipment or otherwise impacting operations), future lease sales, changes in laws, rules and regulations that have or may impose increased financial responsibility, additional oil spill contingency plan requirements and other governmental actions that may result in claims of force majeure or otherwise adversely affect our drilling contracts or operations; |
• | governmental regulatory, legislative and permitting requirements affecting drilling operations or compliance obligations in the areas in which our rigs operate; |
• | tax matters, including our effective tax rates, tax positions, results of audits, tax disputes, changes in tax laws, treaties and regulations, tax assessments and liabilities for taxes; |
• | economic volatility and political, legal and tax uncertainties following the vote in the U.K. to exit the European Union (“Brexit”) and any subsequent referendum in Scotland to seek independence from the U.K.; |
• | downtime, lost revenue and other risks associated with drilling operations, operating hazards, or rig relocations and transportation, including rig or equipment failure, collisions, damage and other unplanned repairs, the availability of transport vessels, hazards, self-imposed drilling limitations and other delays due to weather conditions, work stoppages or otherwise, and the availability or high cost of insurance coverage for certain offshore perils or associated removal of wreckage or debris and other losses; |
• | access to spare parts, equipment and personnel to maintain, upgrade and service our fleet; |
• | potential cost overruns and other risks inherent to construction, repair, upgrades, inspections or enhancement of drilling units, unexpected delays in rig and equipment delivery and engineering or design issues following shipyard delivery, delays in acceptance by our customers, or delays in the dates our drilling units will enter a shipyard, be transported and delivered, enter service or return to service; |
• | operating hazards, including environmental or other liabilities, risks, expenses or losses, whether related to well-control issues, collisions, groundings, blowouts, fires, explosions, weather or hurricane delays or damage, losses or liabilities (including wreckage or debris removal) or otherwise; |
• | our ability to retain highly skilled personnel on commercially reasonable terms, whether due to competition , cost cutting initiatives, labor regulations, unionization or otherwise; our ability to seek and receive visas for our personnel to work in our areas of operation in a timely manner; |
• | governmental action and political and economic uncertainties, including uncertainty or instability resulting from civil unrest, military or political demonstrations, strikes, or outbreak or escalation of armed hostilities or other crises in oil or natural gas producing areas in which we operate, which may result in expropriation, nationalization, confiscation or deprivation of assets, extended business interruptions, suspended operations, or suspension and/or termination of contracts and payment disputes based on force majeure events; |
• | terrorism, piracy, cyber-breaches, outbreaks of any disease or epidemic and other related travel restrictions, political instability, hostilities, acts of war, nationalization, expropriation, confiscation or deprivation of our assets or military action impacting our operations, assets or financial performance in any of our areas of operations; |
• | the outcome of legal proceedings, or other claims or contract disputes, including any inability to collect receivables or resolve significant contractual or day rate disputes, any renegotiation, nullification, cancellation or breach of contracts with customers or other parties; |
• | potential for additional asset impairments; |
• | our liquidity, adequacy of cash flows to meet obligations, or our ability to access or obtain financing and other sources of capital, such as in the debt or equity capital markets; |
• | volatility in currency exchange rates and limitations on our ability to use or convert illiquid currencies; |
• | effects of accounting changes and adoption of accounting policies; |
• | potential unplanned expenditures and funding requirements, including investments in pension plans and other benefit plans; and |
• | other important factors described from time to time in the reports filed by us with the Securities and Exchange Commission and the New York Stock Exchange. |
September 30, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 1,037.5 | $ | 484.2 | |||
Receivables - trade and other | 440.5 | 410.5 | |||||
Prepaid expenses and other current assets | 28.6 | 26.6 | |||||
Total current assets | 1,506.6 | 921.3 | |||||
PROPERTY AND EQUIPMENT: | |||||||
Drilling equipment | 8,955.8 | 8,930.4 | |||||
Other property and equipment | 134.6 | 137.7 | |||||
Property and equipment - gross | 9,090.4 | 9,068.1 | |||||
Less accumulated depreciation and amortization | 1,947.1 | 1,662.3 | |||||
Property and equipment - net | 7,143.3 | 7,405.8 | |||||
Other assets | 15.1 | 20.2 | |||||
$ | 8,665.0 | $ | 8,347.3 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Current portion of long-term debt | $ | 357.1 | $ | — | |||
Accounts payable - trade | 82.2 | 109.6 | |||||
Deferred revenues | 78.4 | 33.1 | |||||
Accrued liabilities | 160.1 | 186.0 | |||||
Total current liabilities | 677.8 | 328.7 | |||||
Long-term debt, less current portion | 2,288.5 | 2,692.4 | |||||
Other liabilities | 356.7 | 357.9 | |||||
Deferred income taxes - net | 184.8 | 195.8 | |||||
Commitments and contingent liabilities (Note 4) | |||||||
SHAREHOLDERS' EQUITY: | |||||||
Class A Ordinary Shares, $0.125 par value, 126.0 and 125.9 shares issued at September 30, 2016, and December 31, 2015 | 15.7 | 15.7 | |||||
Additional paid-in capital | 1,467.9 | 1,458.5 | |||||
Retained earnings | 3,854.8 | 3,509.8 | |||||
Cost of 0.6 and 1.1 treasury shares at September 30, 2016, and December 31, 2015, respectively | (7.1 | ) | (12.2 | ) | |||
Accumulated other comprehensive loss | (174.1 | ) | (199.3 | ) | |||
Total shareholders' equity | 5,157.2 | 4,772.5 | |||||
$ | 8,665.0 | $ | 8,347.3 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
REVENUES | $ | 379.4 | $ | 545.4 | $ | 1,491.4 | $ | 1,601.2 | |||||||
COSTS AND EXPENSES: | |||||||||||||||
Direct operating costs (excluding items below) | 186.0 | 247.6 | 598.3 | 757.3 | |||||||||||
Depreciation and amortization | 102.2 | 104.1 | 301.2 | 289.2 | |||||||||||
Selling, general and administrative | 23.5 | 29.7 | 76.5 | 88.4 | |||||||||||
Loss on disposals of property and equipment | 1.2 | 2.3 | 5.3 | 2.1 | |||||||||||
Material charges and other operating items | 32.9 | 332.3 | 32.9 | 337.3 | |||||||||||
Total costs and expenses | 345.8 | 716.0 | 1,014.2 | 1,474.3 | |||||||||||
INCOME (LOSS) FROM OPERATIONS | 33.6 | (170.6 | ) | 477.2 | 126.9 | ||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Interest expense, net of interest capitalized | (39.4 | ) | (41.3 | ) | (116.6 | ) | (104.9 | ) | |||||||
Gain on extinguishment of debt | — | — | 2.4 | — | |||||||||||
Interest income | 1.2 | 0.2 | 2.1 | 0.8 | |||||||||||
Other - net | (2.1 | ) | (1.8 | ) | (5.4 | ) | (2.9 | ) | |||||||
Total other (expense), net | (40.3 | ) | (42.9 | ) | (117.5 | ) | (107.0 | ) | |||||||
INCOME (LOSS) BEFORE INCOME TAXES | (6.7 | ) | (213.5 | ) | 359.7 | 19.9 | |||||||||
Provision (benefit) for income taxes | (12.2 | ) | 25.9 | 14.7 | 50.9 | ||||||||||
NET INCOME (LOSS) | $ | 5.5 | $ | (239.4 | ) | $ | 345.0 | $ | (31.0 | ) | |||||
NET INCOME (LOSS) PER SHARE - BASIC | $ | 0.04 | $ | (1.92 | ) | $ | 2.75 | $ | (0.25 | ) | |||||
NET INCOME (LOSS) PER SHARE - DILUTED | $ | 0.04 | $ | (1.92 | ) | $ | 2.73 | $ | (0.25 | ) | |||||
CASH DIVIDENDS DECLARED PER SHARE | $ | — | $ | 0.10 | $ | — | $ | 0.30 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
NET INCOME (LOSS) | $ | 5.5 | $ | (239.4 | ) | $ | 345.0 | $ | (31.0 | ) | |||||
OTHER COMPREHENSIVE INCOME: | |||||||||||||||
Net changes in pension and other postretirement plan assets and benefit obligations recognized in other comprehensive income, net of income tax expense of $10.3 for the three and nine months ended September 2016 (See Note 3) | 19.2 | — | 19.2 | — | |||||||||||
Net reclassification adjustment for amounts recognized in net income (loss) as a component of net periodic benefit cost, net of income tax expense of $0.5 and $1.9 for the three months ended September 30, 2016 and 2015, and $3.2 and $5.5 for the nine months ended September 30, 2016 and 2015, respectively (See Notes 3 and 8) | 1.0 | 3.4 | 6.0 | 10.2 | |||||||||||
20.2 | 3.4 | 25.2 | 10.2 | ||||||||||||
COMPREHENSIVE INCOME (LOSS) | $ | 25.7 | $ | (236.0 | ) | $ | 370.2 | $ | (20.8 | ) |
Nine months ended September 30, | |||||||
2016 | 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | 345.0 | $ | (31.0 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operations: | |||||||
Depreciation and amortization | 301.2 | 290.1 | |||||
Deferred income taxes | (21.9 | ) | (0.7 | ) | |||
Provision for pension and other postretirement benefits | 13.0 | 23.8 | |||||
Share-based compensation expense | 25.9 | 24.5 | |||||
Loss on disposals of property and equipment | 5.3 | 2.1 | |||||
Other postretirement benefit claims paid | (6.6 | ) | (3.5 | ) | |||
Contributions to pension plans | (16.1 | ) | (11.0 | ) | |||
Noncash loss on debt extinguishment | 0.3 | — | |||||
Contingent payment derivative | (4.2 | ) | — | ||||
Asset impairment charges | 34.3 | 329.8 | |||||
Changes in current assets and liabilities: | |||||||
Receivables - trade and other | (30.0 | ) | 36.9 | ||||
Prepaid expenses and other current assets | 2.1 | (8.3 | ) | ||||
Accounts payable | (18.3 | ) | 28.3 | ||||
Accrued income taxes | 13.6 | 3.2 | |||||
Deferred revenues | 45.3 | 12.0 | |||||
Other current liabilities | (28.6 | ) | (40.1 | ) | |||
Net changes in other noncurrent assets and liabilities | 28.3 | 2.8 | |||||
Net cash provided by operating activities | 688.6 | 658.9 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Capital expenditures | (88.5 | ) | (674.8 | ) | |||
Proceeds from disposals of property and equipment | 1.1 | 5.1 | |||||
Net cash used in investing activities | (87.4 | ) | (669.7 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from borrowings | — | 220.0 | |||||
Reductions of long-term debt | (47.9 | ) | (220.0 | ) | |||
Dividends paid | — | (37.9 | ) | ||||
Net cash used in financing activities | (47.9 | ) | (37.9 | ) | |||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 553.3 | (48.7 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 484.2 | 339.2 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 1,037.5 | $ | 290.5 |
Shares outstanding | Class A ordinary shares/ Common stock | Additional paid-in capital | Retained earnings | Treasury shares | Accumulated other comprehensive income (loss) | Total shareholders' equity | ||||||||||||||||||||
Balance, January 1, 2015 | 124.6 | $ | 15.6 | $ | 1,436.9 | $ | 3,467.0 | $ | (8.0 | ) | $ | (220.1 | ) | $ | 4,691.4 | |||||||||||
Net shares issued (acquired) under share-based compensation plans | 0.2 | 0.1 | 0.4 | — | (4.0 | ) | — | (3.5 | ) | |||||||||||||||||
Share-based compensation | — | — | 18.3 | — | — | — | 18.3 | |||||||||||||||||||
Excess tax deficit from share-based compensation plans | — | — | (2.5 | ) | — | — | — | (2.5 | ) | |||||||||||||||||
Retirement benefit adjustments, net of taxes of $5.5 | — | — | — | — | — | 10.2 | 10.2 | |||||||||||||||||||
Dividends | — | — | — | (37.9 | ) | — | — | (37.9 | ) | |||||||||||||||||
Net loss | — | — | — | (31.0 | ) | — | — | (31.0 | ) | |||||||||||||||||
Balance, September 30, 2015 | 124.8 | $ | 15.7 | $ | 1,453.1 | $ | 3,398.1 | $ | (12.0 | ) | $ | (209.9 | ) | $ | 4,645.0 | |||||||||||
Balance, January 1, 2016 | 124.8 | $ | 15.7 | $ | 1,458.5 | $ | 3,509.8 | $ | (12.2 | ) | $ | (199.3 | ) | $ | 4,772.5 | |||||||||||
Net shares issued (acquired) under share-based compensation plans | 0.6 | — | (9.5 | ) | — | 5.1 | — | (4.4 | ) | |||||||||||||||||
Share-based compensation | — | — | 16.3 | — | — | — | 16.3 | |||||||||||||||||||
Excess tax benefit from share-based compensation plans | — | — | 2.6 | — | — | — | 2.6 | |||||||||||||||||||
Retirement benefit adjustments, net of taxes of $13.5 | — | — | — | — | — | 25.2 | 25.2 | |||||||||||||||||||
Net income | — | — | — | 345.0 | — | — | 345.0 | |||||||||||||||||||
Balance, September 30, 2016 | 125.4 | $ | 15.7 | $ | 1,467.9 | $ | 3,854.8 | $ | (7.1 | ) | $ | (174.1 | ) | $ | 5,157.2 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Average common shares outstanding | 125.4 | 124.8 | 125.3 | 124.5 | |||||||
Effect of dilutive securities - share-based compensation | 1.3 | — | 1.1 | — | |||||||
Average shares for diluted computations | 126.7 | 124.8 | 126.4 | 124.5 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Share options and appreciation rights | 1.6 | 1.3 | 1.7 | 1.4 | |||||||
Restricted share units | 0.7 | 1.2 | 1.3 | 1.7 | |||||||
Total potentially dilutive shares | 2.3 | 2.5 | 3.0 | 3.1 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Service cost | $ | 4.6 | $ | 4.3 | $ | 12.2 | $ | 12.7 | |||||||
Interest cost | 6.7 | 8.0 | 19.7 | 23.8 | |||||||||||
Expected return on plan assets | (9.9 | ) | (10.6 | ) | (29.7 | ) | (31.5 | ) | |||||||
Amortization of net loss | 5.6 | 6.4 | 15.8 | 19.1 | |||||||||||
Amortization of prior service credit | (1.2 | ) | (1.1 | ) | (3.7 | ) | (3.4 | ) | |||||||
Total net pension cost | $ | 5.8 | $ | 7.0 | $ | 14.3 | $ | 20.7 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Service cost | $ | — | $ | 0.3 | $ | 0.2 | $ | 1.0 | |||||||
Interest cost | 0.4 | 0.7 | 1.4 | 2.1 | |||||||||||
Amortization of net loss | 0.2 | — | 0.2 | — | |||||||||||
Amortization of prior service credit | (2.9 | ) | — | (3.1 | ) | — | |||||||||
Total other postretirement benefit cost | $ | (2.3 | ) | $ | 1.0 | $ | (1.3 | ) | $ | 3.1 |
Liability increase (decrease) | Accumulated other comprehensive income (loss) | Deferred tax liability increase (decrease) | |||||||||
Plan change benefit | $ | (39.9 | ) | $ | 25.9 | $ | 14.0 | ||||
Remeasurement loss | 5.2 | (3.4 | ) | (1.8 | ) | ||||||
Actuarial loss | 5.2 | (3.3 | ) | (1.9 | ) | ||||||
Total | $ | (29.5 | ) | $ | 19.2 | $ | 10.3 |
Fair value | |||
Balance sheet classification | September 30, 2016 | ||
Derivative: | |||
Contingent Payment Derivative | |||
Prepaid expenses and other current assets | $ | 4.2 |
Amount of gain (loss) recognized in income (loss) | ||||||||||
Derivative | Classification of gain (loss) recognized in income (loss) | Three months ended September 30, 2016 | Nine months ended September 30, 2016 | |||||||
Contingent Payment Derivative | Other - net | $ | (2.2 | ) | $ | (2.0 | ) |
• | Level 1 – Quoted prices for identical instruments in active markets; |
• | Level 2 – Quoted market prices for similar instruments in active markets; quoted prices for identical instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and |
• | Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable, such as those used in pricing models or discounted cash flow methodologies, for example. |
Estimated fair value measurements | |||||||||||||||
Fair value | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant other unobservable inputs (Level 3) | ||||||||||||
September 30, 2016: | |||||||||||||||
Assets - cash equivalents | $ | 1,022.8 | $ | 1,022.8 | $ | — | $ | — | |||||||
Derivative | 4.2 | — | — | 4.2 | |||||||||||
Other assets | 9.1 | 9.1 | — | — | |||||||||||
December 31, 2015: | |||||||||||||||
Assets - cash equivalents | $ | 465.4 | $ | 465.4 | $ | — | $ | — | |||||||
Other assets | 13.5 | 13.5 | — | — |
Estimated fair value measurements | |||||||||||||||||||
Fair value | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant other unobservable inputs (Level 3) | Total gains (losses) | |||||||||||||||
2016: | |||||||||||||||||||
Property and equipment, net (1) | $ | 9.3 | $ | — | $ | — | $ | 9.3 | $ | (34.3 | ) | ||||||||
2015: | |||||||||||||||||||
Property and equipment, net (2) | $ | 128.0 | $ | — | $ | — | $ | 128.0 | $ | (329.8 | ) | ||||||||
(1) This represents a non-recurring fair value measurement made at September 30, 2016 for five of our jack-up drilling units. | |||||||||||||||||||
(2) This represents a non-recurring fair value measurement made at September 30, 2015 for ten of our jack-up drilling units. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Amounts recognized as a component of net periodic pension and other postretirement benefit cost: | |||||||||||||||
Amortization of net loss | $ | (5.8 | ) | $ | (6.5 | ) | $ | (16.0 | ) | $ | (19.1 | ) | |||
Amortization of prior service credit | 4.3 | 1.2 | 6.8 | 3.4 | |||||||||||
Total before income taxes | (1.5 | ) | (5.3 | ) | (9.2 | ) | (15.7 | ) | |||||||
Income tax benefit | 0.5 | 1.9 | 3.2 | 5.5 | |||||||||||
Total reclassifications for the period, net of income taxes | $ | (1.0 | ) | $ | (3.4 | ) | $ | (6.0 | ) | $ | (10.2 | ) |
September 30, 2016 | December 31, 2015 | ||||||
Trade | $ | 426.9 | $ | 395.7 | |||
Income tax | 6.6 | 4.5 | |||||
Other | 7.0 | 10.3 | |||||
Total receivables - trade and other | $ | 440.5 | $ | 410.5 |
September 30, 2016 | December 31, 2015 | ||||||
Pension and other postretirement benefits | $ | 14.0 | $ | 31.4 | |||
Compensation and related employee costs | 61.1 | 73.6 | |||||
Interest | 34.2 | 44.3 | |||||
Income taxes | 37.6 | 23.9 | |||||
Other | 13.2 | 12.8 | |||||
Total accrued liabilities | $ | 160.1 | $ | 186.0 |
September 30, 2016 | December 31, 2015 | ||||||
5% Senior Notes, due September 2017 ($357.7 million and $366.6 million principal amount, respectively; 5.2% effective rate) | $ | 357.1 | $ | 365.5 | |||
7.875% Senior Notes, due August 2019 ($396.5 million and $435.5 million principal amount, respectively; 8.0% effective rate) | 394.7 | 432.9 | |||||
4.875% Senior Notes, due June 2022 ($700 million principal amount; 4.7% effective rate) | 705.5 | 706.2 | |||||
4.75% Senior Notes, due January 2024 ($400 million principal amount; 4.8% effective rate) | 397.3 | 397.1 | |||||
5.4% Senior Notes, due December 2042 ($400 million principal amount; 5.4% effective rate) | 394.9 | 394.7 | |||||
5.85% Senior Notes, due January 2044 ($400 million principal amount; 5.9% effective rate) | 396.1 | 396.0 | |||||
Total carrying value | 2,645.6 | 2,692.4 | |||||
Current portion | 357.1 | — | |||||
Carrying value, less current portion | $ | 2,288.5 | $ | 2,692.4 |
• | the prior-year period’s discrete tax expense for the establishment of a full valuation allowance on the U.S. deferred tax assets; |
• | the current period discrete tax benefit for the decrease in the U.S. valuation allowance due to additional current earnings in other comprehensive income related to the change in our postretirement benefit plan; |
• | a change in the geographic mix of earnings including a reduction of income in the high tax jurisdictions; and |
• | a partial offset by the prior-year period’s discrete additional tax benefit for the U.S. -impaired assets. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Deepwater: | |||||||||||||||
Revenues | $ | 135.1 | $ | 220.9 | $ | 699.0 | $ | 529.7 | |||||||
Operating expenses: | |||||||||||||||
Direct operating costs (excluding items below) | 52.4 | 77.8 | 175.4 | 207.3 | |||||||||||
Depreciation and amortization | 28.8 | 27.6 | 86.0 | 66.4 | |||||||||||
Selling, general and administrative | — | — | — | — | |||||||||||
Other operating items | 0.1 | — | 0.4 | — | |||||||||||
Income from operations | $ | 53.8 | $ | 115.5 | $ | 437.2 | $ | 256.0 | |||||||
Jack-ups: | |||||||||||||||
Revenues | $ | 244.3 | $ | 324.5 | $ | 792.4 | $ | 1,071.5 | |||||||
Operating expenses: | |||||||||||||||
Direct operating costs (excluding items below) | 133.6 | 169.8 | 422.9 | 550.0 | |||||||||||
Depreciation and amortization | 71.5 | 73.2 | 211.0 | 213.2 | |||||||||||
Selling, general and administrative | — | — | — | — | |||||||||||
Other operating items | 33.6 | 333.5 | 37.3 | 338.5 | |||||||||||
Income (loss) from operations | $ | 5.6 | $ | (252.0 | ) | $ | 121.2 | (30.2 | ) | ||||||
Unallocated costs and other: | |||||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | — | |||||||
Operating expenses: | |||||||||||||||
Direct operating costs (excluding items below) | — | — | — | — | |||||||||||
Depreciation and amortization | 1.9 | 3.3 | 4.2 | 9.6 | |||||||||||
Selling, general and administrative | 23.5 | 29.7 | 76.5 | 88.4 | |||||||||||
Other operating items | 0.4 | 1.1 | 0.5 | 0.9 | |||||||||||
Loss from operations | $ | (25.8 | ) | $ | (34.1 | ) | $ | (81.2 | ) | $ | (98.9 | ) | |||
Consolidated: | |||||||||||||||
Revenues | $ | 379.4 | $ | 545.4 | $ | 1,491.4 | $ | 1,601.2 | |||||||
Operating expenses: | |||||||||||||||
Direct operating costs (excluding items below) | 186.0 | 247.6 | 598.3 | 757.3 | |||||||||||
Depreciation and amortization | 102.2 | 104.1 | 301.2 | 289.2 | |||||||||||
Selling, general and administrative | 23.5 | 29.7 | 76.5 | 88.4 | |||||||||||
Other operating items | 34.1 | 334.6 | 38.2 | 339.4 | |||||||||||
Income (loss) from operations | $ | 33.6 | $ | (170.6 | ) | $ | 477.2 | $ | 126.9 |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
CURRENT ASSETS: | |||||||||||||||||||
Cash and cash equivalents | $ | 5.1 | $ | 359.8 | $ | 672.6 | $ | — | $ | 1,037.5 | |||||||||
Receivables - trade and other | — | 1.3 | 439.2 | — | 440.5 | ||||||||||||||
Prepaid expenses and other current assets | 0.5 | 18.4 | 9.7 | — | 28.6 | ||||||||||||||
Total current assets | 5.6 | 379.5 | 1,121.5 | — | 1,506.6 | ||||||||||||||
Property and equipment - gross | — | 616.5 | 8,473.9 | — | 9,090.4 | ||||||||||||||
Less accumulated depreciation and amortization | — | 264.6 | 1,682.5 | — | 1,947.1 | ||||||||||||||
Property and equipment - net | — | 351.9 | 6,791.4 | — | 7,143.3 | ||||||||||||||
Investments in subsidiaries | 5,155.9 | 6,186.8 | — | (11,342.7 | ) | — | |||||||||||||
Due from affiliates | 0.7 | 578.9 | 58.2 | (637.8 | ) | — | |||||||||||||
Other assets | — | 4.8 | 10.3 | — | 15.1 | ||||||||||||||
$ | 5,162.2 | $ | 7,501.9 | $ | 7,981.4 | $ | (11,980.5 | ) | $ | 8,665.0 | |||||||||
CURRENT LIABILITIES: | |||||||||||||||||||
Current portion of long-term debt | $ | — | $ | 357.1 | $ | — | $ | — | $ | 357.1 | |||||||||
Accounts payable - trade | 0.6 | 18.9 | 62.7 | — | 82.2 | ||||||||||||||
Deferred revenues | — | — | 78.4 | — | 78.4 | ||||||||||||||
Accrued liabilities | 0.3 | 90.1 | 69.7 | — | 160.1 | ||||||||||||||
Total current liabilities | 0.9 | 466.1 | 210.8 | — | 677.8 | ||||||||||||||
Long-term debt, less current portion | — | 2,288.5 | — | — | 2,288.5 | ||||||||||||||
Due to affiliates | 0.1 | 59.1 | 578.6 | (637.8 | ) | — | |||||||||||||
Other liabilities | 4.0 | 277.2 | 75.5 | — | 356.7 | ||||||||||||||
Deferred income taxes - net | — | 540.3 | 144.0 | (499.5 | ) | 184.8 | |||||||||||||
Shareholders' equity | 5,157.2 | 3,870.7 | 6,972.5 | (10,843.2 | ) | 5,157.2 | |||||||||||||
$ | 5,162.2 | $ | 7,501.9 | $ | 7,981.4 | $ | (11,980.5 | ) | $ | 8,665.0 |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
CURRENT ASSETS: | |||||||||||||||||||
Cash and cash equivalents | $ | 17.3 | $ | 9.5 | $ | 457.4 | $ | — | $ | 484.2 | |||||||||
Receivables - trade and other | 0.1 | 1.4 | 409.0 | — | 410.5 | ||||||||||||||
Prepaid expenses and other current assets | 0.4 | 19.3 | 6.9 | — | 26.6 | ||||||||||||||
Total current assets | 17.8 | 30.2 | 873.3 | — | 921.3 | ||||||||||||||
Property and equipment - gross | — | 592.8 | 8,475.3 | — | 9,068.1 | ||||||||||||||
Less accumulated depreciation and amortization | — | 242.7 | 1,419.6 | — | 1,662.3 | ||||||||||||||
Property and equipment - net | — | 350.1 | 7,055.7 | — | 7,405.8 | ||||||||||||||
Investments in subsidiaries | 4,763.3 | 6,028.2 | — | (10,791.5 | ) | — | |||||||||||||
Due from affiliates | 0.6 | 1,218.2 | 55.8 | (1,274.6 | ) | — | |||||||||||||
Other assets | — | 5.0 | 15.2 | — | 20.2 | ||||||||||||||
$ | 4,781.7 | $ | 7,631.7 | $ | 8,000.0 | $ | (12,066.1 | ) | $ | 8,347.3 | |||||||||
CURRENT LIABILITIES: | |||||||||||||||||||
Accounts payable - trade | $ | 1.0 | $ | 19.1 | $ | 89.5 | $ | — | $ | 109.6 | |||||||||
Deferred revenues | — | — | 33.1 | — | 33.1 | ||||||||||||||
Accrued liabilities | 0.7 | 119.4 | 65.9 | — | 186.0 | ||||||||||||||
Total current liabilities | 1.7 | 138.5 | 188.5 | — | 328.7 | ||||||||||||||
Long-term debt, less current portion | — | 2,692.4 | — | — | 2,692.4 | ||||||||||||||
Due to affiliates | 2.9 | 55.8 | 1,215.9 | (1,274.6 | ) | — | |||||||||||||
Other liabilities | 4.6 | 304.7 | 48.6 | — | 357.9 | ||||||||||||||
Deferred income taxes - net | — | 522.9 | 150.8 | (477.9 | ) | 195.8 | |||||||||||||
Shareholders' equity | 4,772.5 | 3,917.4 | 6,396.2 | (10,313.6 | ) | 4,772.5 | |||||||||||||
$ | 4,781.7 | $ | 7,631.7 | $ | 8,000.0 | $ | (12,066.1 | ) | $ | 8,347.3 |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
REVENUES | $ | — | $ | 5.4 | $ | 378.5 | $ | (4.5 | ) | $ | 379.4 | ||||||||
COSTS AND EXPENSES: | |||||||||||||||||||
Direct operating costs (excluding items below) | — | (2.0 | ) | 191.3 | (3.3 | ) | 186.0 | ||||||||||||
Depreciation and amortization | — | 5.3 | 96.7 | 0.2 | 102.2 | ||||||||||||||
Selling, general and administrative | 5.7 | — | 19.2 | (1.4 | ) | 23.5 | |||||||||||||
Loss on disposals of property and equipment | — | 0.5 | 0.7 | — | 1.2 | ||||||||||||||
Material charges and other operating items | — | — | 32.9 | — | 32.9 | ||||||||||||||
Total costs and expenses | 5.7 | 3.8 | 340.8 | (4.5 | ) | 345.8 | |||||||||||||
INCOME (LOSS) FROM OPERATIONS | (5.7 | ) | 1.6 | 37.7 | — | 33.6 | |||||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||||
Interest expense, net of interest capitalized | — | (39.4 | ) | (0.6 | ) | 0.6 | (39.4 | ) | |||||||||||
Interest income | — | 1.0 | 0.8 | (0.6 | ) | 1.2 | |||||||||||||
Other - net | 5.4 | (5.4 | ) | (2.1 | ) | — | (2.1 | ) | |||||||||||
Total other income (expense), net | 5.4 | (43.8 | ) | (1.9 | ) | — | (40.3 | ) | |||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (0.3 | ) | (42.2 | ) | 35.8 | — | (6.7 | ) | |||||||||||
Benefit for income taxes | — | (2.9 | ) | (5.2 | ) | (4.1 | ) | (12.2 | ) | ||||||||||
Equity in earnings of subsidiaries, net of tax | 5.8 | (158.1 | ) | — | 152.3 | — | |||||||||||||
NET INCOME (LOSS) | $ | 5.5 | $ | (197.4 | ) | $ | 41.0 | $ | 156.4 | $ | 5.5 |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
REVENUES | $ | — | $ | 15.9 | $ | 543.5 | $ | (14.0 | ) | $ | 545.4 | ||||||||
COSTS AND EXPENSES: | |||||||||||||||||||
Direct operating costs (excluding items below) | — | 1.0 | 259.4 | (12.8 | ) | 247.6 | |||||||||||||
Depreciation and amortization | — | 6.8 | 97.2 | 0.1 | 104.1 | ||||||||||||||
Selling, general and administrative | 5.5 | (1.8 | ) | 27.3 | (1.3 | ) | 29.7 | ||||||||||||
Loss on disposals of property and equipment | — | 0.5 | 1.8 | — | 2.3 | ||||||||||||||
Material charges and other operating items | — | — | 332.3 | — | 332.3 | ||||||||||||||
Total costs and expenses | 5.5 | 6.5 | 718.0 | (14.0 | ) | 716.0 | |||||||||||||
INCOME (LOSS) FROM OPERATIONS | (5.5 | ) | 9.4 | (174.5 | ) | — | (170.6 | ) | |||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||||
Interest expense, net of interest capitalized | — | (41.3 | ) | (14.0 | ) | 14.0 | (41.3 | ) | |||||||||||
Interest income | 0.6 | 13.1 | 0.5 | (14.0 | ) | 0.2 | |||||||||||||
Other - net | 5.6 | (5.7 | ) | (1.7 | ) | — | (1.8 | ) | |||||||||||
Total other income (expense), net | 6.2 | (33.9 | ) | (15.2 | ) | — | (42.9 | ) | |||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 0.7 | (24.5 | ) | (189.7 | ) | — | (213.5 | ) | |||||||||||
Provision (benefit) for income taxes | — | 24.8 | (11.8 | ) | 12.9 | 25.9 | |||||||||||||
Equity in earnings of subsidiaries, net of tax | (240.1 | ) | (182.1 | ) | — | 422.2 | — | ||||||||||||
NET LOSS | $ | (239.4 | ) | $ | (231.4 | ) | $ | (177.9 | ) | $ | 409.3 | $ | (239.4 | ) |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
REVENUES | $ | — | $ | 41.3 | $ | 1,488.0 | $ | (37.9 | ) | $ | 1,491.4 | ||||||||
COSTS AND EXPENSES: | |||||||||||||||||||
Direct operating costs (excluding items below) | — | 5.2 | 627.0 | (33.9 | ) | 598.3 | |||||||||||||
Depreciation and amortization | — | 14.0 | 286.5 | 0.7 | 301.2 | ||||||||||||||
Selling, general and administrative | 19.5 | — | 61.7 | (4.7 | ) | 76.5 | |||||||||||||
Loss on disposals of property and equipment | — | 0.6 | 4.7 | — | 5.3 | ||||||||||||||
Material charges and other operating items | — | — | 32.9 | — | 32.9 | ||||||||||||||
Total costs and expenses | 19.5 | 19.8 | 1,012.8 | (37.9 | ) | 1,014.2 | |||||||||||||
INCOME (LOSS) FROM OPERATIONS | (19.5 | ) | 21.5 | 475.2 | — | 477.2 | |||||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||||
Interest expense, net of interest capitalized | — | (116.6 | ) | (3.7 | ) | 3.7 | (116.6 | ) | |||||||||||
Interest income | — | 4.2 | 1.6 | (3.7 | ) | 2.1 | |||||||||||||
Gain on extinguishment of debt | — | 2.4 | — | — | 2.4 | ||||||||||||||
Other - net | 15.8 | (15.8 | ) | (5.4 | ) | — | (5.4 | ) | |||||||||||
Total other income (expense), net | 15.8 | (125.8 | ) | (7.5 | ) | — | (117.5 | ) | |||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (3.7 | ) | (104.3 | ) | 467.7 | — | 359.7 | ||||||||||||
Provision for income taxes | — | 19.3 | 17.3 | (21.9 | ) | 14.7 | |||||||||||||
Equity in earnings of subsidiaries, net of tax | 348.7 | 30.8 | — | (379.5 | ) | — | |||||||||||||
NET INCOME (LOSS) | $ | 345.0 | $ | (92.8 | ) | $ | 450.4 | $ | (357.6 | ) | $ | 345.0 |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
REVENUES | $ | — | $ | 49.2 | $ | 1,600.0 | $ | (48.0 | ) | $ | 1,601.2 | ||||||||
COSTS AND EXPENSES: | |||||||||||||||||||
Direct operating costs (excluding items below) | — | 5.8 | 796.0 | (44.5 | ) | 757.3 | |||||||||||||
Depreciation and amortization | — | 14.8 | 273.6 | 0.8 | 289.2 | ||||||||||||||
Selling, general and administrative | 16.7 | 0.3 | 75.7 | (4.3 | ) | 88.4 | |||||||||||||
Loss on disposals of property and equipment | — | 0.5 | 1.6 | — | 2.1 | ||||||||||||||
Material charges and other operating items | — | — | 337.3 | — | 337.3 | ||||||||||||||
Total costs and expenses | 16.7 | 21.4 | 1,484.2 | (48.0 | ) | 1,474.3 | |||||||||||||
INCOME (LOSS) FROM OPERATIONS | (16.7 | ) | 27.8 | 115.8 | — | 126.9 | |||||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||||
Interest expense, net of interest capitalized | — | (104.9 | ) | (20.5 | ) | 20.5 | (104.9 | ) | |||||||||||
Interest income | 0.8 | 19.7 | 0.8 | (20.5 | ) | 0.8 | |||||||||||||
Other - net | 16.8 | (16.8 | ) | (2.9 | ) | — | (2.9 | ) | |||||||||||
Total other income (expense), net | 17.6 | (102.0 | ) | (22.6 | ) | — | (107.0 | ) | |||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | 0.9 | (74.2 | ) | 93.2 | — | 19.9 | |||||||||||||
Provision for income taxes | — | 27.2 | 30.5 | (6.8 | ) | 50.9 | |||||||||||||
Equity in earnings of subsidiaries, net of tax | (31.9 | ) | (158.6 | ) | — | 190.5 | — | ||||||||||||
NET INCOME (LOSS) | $ | (31.0 | ) | $ | (260.0 | ) | $ | 62.7 | $ | 197.3 | $ | (31.0 | ) |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
NET INCOME (LOSS) | $ | 5.5 | $ | (197.4 | ) | $ | 41.0 | $ | 156.4 | $ | 5.5 | ||||||||
OTHER COMPREHENSIVE INCOME: | |||||||||||||||||||
Net changes in pension and other postretirement plan assets and benefit obligations recognized in other comprehensive income, net of income taxes | 19.2 | 19.2 | — | (19.2 | ) | 19.2 | |||||||||||||
Net reclassification adjustments for amount recognized in net income (loss) as a component of net periodic benefit cost, net of income taxes | 1.0 | 1.0 | — | (1.0 | ) | 1.0 | |||||||||||||
20.2 | 20.2 | — | (20.2 | ) | 20.2 | ||||||||||||||
COMPREHENSIVE INCOME (LOSS) | $ | 25.7 | $ | (177.2 | ) | $ | 41.0 | $ | 136.2 | $ | 25.7 |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
NET LOSS | $ | (239.4 | ) | $ | (231.4 | ) | $ | (177.9 | ) | $ | 409.3 | $ | (239.4 | ) | |||||
OTHER COMPREHENSIVE INCOME: | |||||||||||||||||||
Net reclassification adjustments for amount recognized in net loss as a component of net periodic benefit cost, net of income taxes | 3.4 | 3.4 | — | (3.4 | ) | 3.4 | |||||||||||||
COMPREHENSIVE LOSS | $ | (236.0 | ) | $ | (228.0 | ) | $ | (177.9 | ) | $ | 405.9 | $ | (236.0 | ) |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
NET INCOME (LOSS) | $ | 345.0 | $ | (92.8 | ) | $ | 450.4 | $ | (357.6 | ) | $ | 345.0 | |||||||
OTHER COMPREHENSIVE INCOME: | |||||||||||||||||||
Net changes in pension and other postretirement plan assets and benefit obligations recognized in other comprehensive income, net of income taxes | 19.2 | 19.2 | — | (19.2 | ) | 19.2 | |||||||||||||
Net reclassification adjustments for amount recognized in net income (loss) as a component of net periodic benefit cost, net of income taxes | 6.0 | 6.0 | — | (6.0 | ) | 6.0 | |||||||||||||
25.2 | 25.2 | — | (25.2 | ) | 25.2 | ||||||||||||||
COMPREHENSIVE INCOME (LOSS) | $ | 370.2 | $ | (67.6 | ) | $ | 450.4 | $ | (382.8 | ) | $ | 370.2 |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
NET INCOME (LOSS) | $ | (31.0 | ) | $ | (260.0 | ) | $ | 62.7 | $ | 197.3 | $ | (31.0 | ) | ||||||
OTHER COMPREHENSIVE INCOME: | |||||||||||||||||||
Net reclassification adjustments for amount recognized in net income (loss) as a component of net periodic benefit cost, net of income taxes | 10.2 | 10.2 | — | (10.2 | ) | 10.2 | |||||||||||||
COMPREHENSIVE INCOME (LOSS) | $ | (20.8 | ) | $ | (249.8 | ) | $ | 62.7 | $ | 187.1 | $ | (20.8 | ) |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | $ | (9.2 | ) | $ | (27.8 | ) | $ | 804.1 | $ | (78.5 | ) | $ | 688.6 | ||||||
INVESTING ACTIVITIES: | |||||||||||||||||||
Capital expenditures | — | (31.2 | ) | (57.3 | ) | — | (88.5 | ) | |||||||||||
Proceeds from disposals of property and equipment | — | 0.4 | 0.7 | — | 1.1 | ||||||||||||||
Collections on subsidiary notes receivables | — | 580.8 | — | (580.8 | ) | — | |||||||||||||
Investments in consolidated subsidiaries | (0.2 | ) | (204.6 | ) | — | 204.8 | — | ||||||||||||
Net cash provided by (used in) investing activities | (0.2 | ) | 345.4 | (56.6 | ) | (376.0 | ) | (87.4 | ) | ||||||||||
FINANCING ACTIVITIES: | |||||||||||||||||||
Advances (to) from affiliates | (2.8 | ) | 80.6 | (76.6 | ) | (1.2 | ) | — | |||||||||||
Contributions from parent/issuer | — | — | 204.8 | (204.8 | ) | — | |||||||||||||
Reductions of long-term debt | — | (47.9 | ) | (580.8 | ) | 580.8 | (47.9 | ) | |||||||||||
Dividends paid | — | — | (79.7 | ) | 79.7 | — | |||||||||||||
Net cash provided by (used in) financing activities | (2.8 | ) | 32.7 | (532.3 | ) | 454.5 | (47.9 | ) | |||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (12.2 | ) | 350.3 | 215.2 | — | 553.3 | |||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 17.3 | 9.5 | 457.4 | — | 484.2 | ||||||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 5.1 | $ | 359.8 | $ | 672.6 | $ | — | $ | 1,037.5 |
Rowan plc (Parent) | RCI (Issuer) | Non-guarantor subsidiaries | Consolidating adjustments | Consolidated | |||||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | $ | (3.7 | ) | $ | 22.6 | $ | 687.5 | $ | (47.5 | ) | $ | 658.9 | |||||||
INVESTING ACTIVITIES: | |||||||||||||||||||
Capital expenditures | — | (14.8 | ) | (660.0 | ) | — | (674.8 | ) | |||||||||||
Proceeds from disposals of property and equipment | — | 2.8 | 2.3 | — | 5.1 | ||||||||||||||
Advances on subsidiary notes receivables | — | (481.3 | ) | — | 481.3 | — | |||||||||||||
Collections on subsidiary notes receivables | 7.0 | 434.2 | — | (441.2 | ) | — | |||||||||||||
Investments in consolidated subsidiaries | — | (36.7 | ) | — | 36.7 | — | |||||||||||||
Net cash provided by (used in) investing activities | 7.0 | (95.8 | ) | (657.7 | ) | 76.8 | (669.7 | ) | |||||||||||
FINANCING ACTIVITIES: | |||||||||||||||||||
Advances (to) from affiliates | (10.5 | ) | 42.8 | (30.8 | ) | (1.5 | ) | — | |||||||||||
Contributions from issuer | — | — | 36.7 | (36.7 | ) | — | |||||||||||||
Proceeds from borrowings | — | 220.0 | 481.3 | (481.3 | ) | 220.0 | |||||||||||||
Reductions of long-term debt | — | (220.0 | ) | (441.2 | ) | 441.2 | (220.0 | ) | |||||||||||
Dividends paid | (37.9 | ) | — | (49.0 | ) | 49.0 | (37.9 | ) | |||||||||||
Net cash provided by (used in) financing activities | (48.4 | ) | 42.8 | (3.0 | ) | (29.3 | ) | (37.9 | ) | ||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (45.1 | ) | (30.4 | ) | 26.8 | — | (48.7 | ) | |||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 45.9 | 48.6 | 244.7 | — | 339.2 | ||||||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 0.8 | $ | 18.2 | $ | 271.5 | $ | — | $ | 290.5 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues (in millions): | |||||||||||||||
Deepwater | $ | 135.2 | $ | 215.9 | $ | 696.5 | $ | 514.0 | |||||||
Jack-ups | 239.6 | 317.6 | 777.2 | 1,051.4 | |||||||||||
Subtotal - Day rate revenues | 374.8 | 533.5 | 1,473.7 | 1,565.4 | |||||||||||
Other revenues(1) | 4.6 | 11.9 | 17.7 | 35.8 | |||||||||||
Total revenues | $ | 379.4 | $ | 545.4 | $ | 1,491.4 | $ | 1,601.2 | |||||||
Revenue-producing days: | |||||||||||||||
Deepwater | 276 | 353 | 962 | 830 | |||||||||||
Jack-ups | 1,509 | 1,921 | 4,610 | 6,094 | |||||||||||
Total revenue-producing days | 1,785 | 2,275 | 5,572 | 6,924 | |||||||||||
Available days: (2) | |||||||||||||||
Deepwater | 368 | 368 | 1,096 | 895 | |||||||||||
Jack-ups | 2,208 | 2,412 | 6,576 | 7,308 | |||||||||||
Total available days | 2,576 | 2,780 | 7,672 | 8,203 | |||||||||||
Average day rate (in thousands): (3) | |||||||||||||||
Deepwater (4) | $ | 490.0 | $ | 610.9 | $ | 575.5 | $ | 619.4 | |||||||
Jack-ups | $ | 158.8 | $ | 165.3 | $ | 168.6 | $ | 172.5 | |||||||
Total fleet (4) | $ | 210.1 | $ | 234.5 | $ | 238.9 | $ | 226.1 | |||||||
Utilization: (5) | |||||||||||||||
Deepwater | 75 | % | 96 | % | 88 | % | 93 | % | |||||||
Jack-ups | 68 | % | 80 | % | 70 | % | 83 | % | |||||||
Total fleet | 69 | % | 82 | % | 73 | % | 84 | % | |||||||
(1) Other revenues, which are primarily revenues received for contract reimbursable costs, are excluded from the computation of average day rate. | |||||||||||||||
(2) Available days are defined as the aggregate number of calendar days (excluding days for which a rig is cold-stacked) in the period, or, with respect to new rigs entering service, the number of calendar days in the period from the date the rig was placed in service. | |||||||||||||||
(3) Average day rate is computed by dividing day rate revenues by the number of revenue-producing days, including fractional days. Day rate revenues include the contractual rates and amounts received in lump sum, such as for rig mobilization or capital improvements, which are amortized over the initial term of the contract. Revenues attributable to reimbursable expenses are excluded from average day rates. | |||||||||||||||
(4) Average day rate for the nine months ended September 30, 2016 includes operating days for the Rowan Relentless up to the contract termination which was 143 days for the nine months ended September 30, 2016. | |||||||||||||||
(5) Utilization is the number of revenue-producing days, including fractional days, divided by the number of available days. |
Three months ended September 30, | ||||||||||||||
2016 | 2015 | Change | % Change | |||||||||||
Deepwater: | ||||||||||||||
Revenues | $ | 135.1 | $ | 220.9 | $ | (85.8 | ) | (39 | )% | |||||
Operating expenses: | ||||||||||||||
Direct operating costs (excluding items below) | 52.4 | 77.8 | (25.4 | ) | (33 | )% | ||||||||
Depreciation and amortization | 28.8 | 27.6 | 1.2 | 4 | % | |||||||||
Selling, general and administrative | — | — | — | n/m | ||||||||||
Other operating items | 0.1 | — | 0.1 | n/m | ||||||||||
Income from operations | $ | 53.8 | $ | 115.5 | $ | (61.7 | ) | (53 | )% | |||||
Jack-ups: | ||||||||||||||
Revenues | $ | 244.3 | $ | 324.5 | $ | (80.2 | ) | (25 | )% | |||||
Operating expenses: | ||||||||||||||
Direct operating costs (excluding items below) | 133.6 | 169.8 | (36.2 | ) | (21 | )% | ||||||||
Depreciation and amortization | 71.5 | 73.2 | (1.7 | ) | (2 | )% | ||||||||
Selling, general and administrative | — | — | — | n/m | ||||||||||
Other operating items | 33.6 | 333.5 | (299.9 | ) | n/m | |||||||||
Income (loss) from operations | $ | 5.6 | $ | (252.0 | ) | $ | 257.6 | n/m | ||||||
Unallocated costs and other: | ||||||||||||||
Revenues | $ | — | $ | — | $ | — | n/m | |||||||
Operating expenses: | ||||||||||||||
Direct operating costs (excluding items below) | — | — | — | n/m | ||||||||||
Depreciation and amortization | 1.9 | 3.3 | (1.4 | ) | (42 | )% | ||||||||
Selling, general and administrative | 23.5 | 29.7 | (6.2 | ) | (21 | )% | ||||||||
Other operating items | 0.4 | 1.1 | (0.7 | ) | n/m | |||||||||
Loss from operations | $ | (25.8 | ) | $ | (34.1 | ) | $ | 8.3 | (24 | )% | ||||
Total company: | ||||||||||||||
Revenues | $ | 379.4 | $ | 545.4 | $ | (166.0 | ) | (30 | )% | |||||
Direct operating costs (excluding items below) | 186.0 | 247.6 | (61.6 | ) | (25 | )% | ||||||||
Depreciation and amortization | 102.2 | 104.1 | (1.9 | ) | (2 | )% | ||||||||
Selling, general and administrative | 23.5 | 29.7 | (6.2 | ) | (21 | )% | ||||||||
Other operating items | 34.1 | 334.6 | (300.5 | ) | n/m | |||||||||
Income (loss) from operations | 33.6 | (170.6 | ) | 204.2 | n/m | |||||||||
Other (expense), net | (40.3 | ) | (42.9 | ) | 2.6 | (6 | )% | |||||||
Loss before income taxes | (6.7 | ) | (213.5 | ) | 206.8 | (97 | )% | |||||||
Provision (benefit) for income taxes | (12.2 | ) | 25.9 | (38.1 | ) | n/m | ||||||||
Net income (loss) | $ | 5.5 | $ | (239.4 | ) | $ | 244.9 | n/m | ||||||
“n/m” means not meaningful. |
Decrease | |||
Lower drillship utilization | $ | (47.3 | ) |
Lower drillship day rates | (33.3 | ) | |
Lower reimbursable revenues | (5.2 | ) | |
Decrease | $ | (85.8 | ) |
Increase (decrease) | |||
Lower jack-up utilization | $ | (68.3 | ) |
Lower jack-up day rates | (9.8 | ) | |
Lower reimbursable revenues | (2.3 | ) | |
Higher other revenue | 0.2 | ||
Net decrease | $ | (80.2 | ) |
Decrease | |||
Decrease due to idle drillship | $ | (7.4 | ) |
Reduction in drillship direct operating expense | (6.0 | ) | |
Lower reimbursable costs | (5.2 | ) | |
Reduction in shore base costs and other | (6.8 | ) | |
Decrease | $ | (25.4 | ) |
Increase (decrease) | |||
Decrease due to idle or cold-stacked rigs | $ | (34.8 | ) |
Reduction in shore base costs and other | (3.5 | ) | |
Lower reimbursable costs | (2.3 | ) | |
Increase in jack-up direct operating expense | 4.4 | ||
Net decrease | $ | (36.2 | ) |
• | the prior-year period’s discrete tax expense for the establishment of a full valuation allowance on the U.S. deferred tax assets; |
• | the current period discrete tax benefit for the decrease in the U.S. valuation allowance due to additional current earnings in other comprehensive income related to the change in our postretirement benefit plan; |
• | a change in the geographic mix of earnings including a reduction of income in the high tax jurisdictions; and |
• | a partial offset by the prior-year period’s discrete additional tax benefit for the U.S. -impaired assets. |
Nine months ended September 30, | ||||||||||||||
2016 | 2015 | Change | % Change | |||||||||||
Deepwater: | ||||||||||||||
Revenues | $ | 699.0 | $ | 529.7 | $ | 169.3 | 32 | % | ||||||
Operating expenses: | ||||||||||||||
Direct operating costs (excluding items below) | 175.4 | 207.3 | (31.9 | ) | (15 | )% | ||||||||
Depreciation and amortization | 86.0 | 66.4 | 19.6 | 30 | % | |||||||||
Selling, general and administrative | — | — | — | n/m | ||||||||||
Other operating items | 0.4 | — | 0.4 | n/m | ||||||||||
Income from operations | $ | 437.2 | $ | 256.0 | $ | 181.2 | 71 | % | ||||||
Jack-ups: | ||||||||||||||
Revenues | $ | 792.4 | $ | 1,071.5 | $ | (279.1 | ) | (26 | )% | |||||
Operating expenses: | ||||||||||||||
Direct operating costs (excluding items below) | 422.9 | 550.0 | (127.1 | ) | (23 | )% | ||||||||
Depreciation and amortization | 211.0 | 213.2 | (2.2 | ) | (1 | )% | ||||||||
Selling, general and administrative | — | — | — | n/m | ||||||||||
Other operating items | 37.3 | 338.5 | (301.2 | ) | n/m | |||||||||
Income (loss) from operations | $ | 121.2 | $ | (30.2 | ) | $ | 151.4 | n/m | ||||||
Unallocated costs and other: | ||||||||||||||
Revenues | $ | — | $ | — | $ | — | n/m | |||||||
Operating expenses: | ||||||||||||||
Direct operating costs (excluding items below) | — | — | — | n/m | ||||||||||
Depreciation and amortization | 4.2 | 9.6 | (5.4 | ) | (56 | )% | ||||||||
Selling, general and administrative | 76.5 | 88.4 | (11.9 | ) | (13 | )% | ||||||||
Other operating items | 0.5 | 0.9 | (0.4 | ) | n/m | |||||||||
Loss from operations | $ | (81.2 | ) | $ | (98.9 | ) | $ | 17.7 | (18 | )% | ||||
Total company: | ||||||||||||||
Revenues | $ | 1,491.4 | $ | 1,601.2 | $ | (109.8 | ) | (7 | )% | |||||
Direct operating costs (excluding items below) | 598.3 | 757.3 | (159.0 | ) | (21 | )% | ||||||||
Depreciation and amortization | 301.2 | 289.2 | 12.0 | 4 | % | |||||||||
Selling, general and administrative | 76.5 | 88.4 | (11.9 | ) | (13 | )% | ||||||||
Other operating items | 38.2 | 339.4 | (301.2 | ) | n/m | |||||||||
Income from operations | 477.2 | 126.9 | 350.3 | 276 | % | |||||||||
Other (expense), net | (117.5 | ) | (107.0 | ) | (10.5 | ) | 10 | % | ||||||
Income before income taxes | 359.7 | 19.9 | 339.8 | n/m | ||||||||||
Provision for income taxes | 14.7 | 50.9 | (36.2 | ) | (71 | )% | ||||||||
Net income (loss) | $ | 345.0 | $ | (31.0 | ) | $ | 376.0 | n/m | ||||||
“n/m” means not meaningful. |
Increase (decrease) | |||
Contract Termination for Rowan Relentless and related items | $ | 142.7 | |
Addition of the Rowan Reliance and Rowan Relentless in February and June of 2015, respectively, net of idle time in the current period | 77.0 | ||
Higher drillship utilization | 2.5 | ||
Lower drillship average day rates | (39.7 | ) | |
Lower reimbursable revenues | (13.2 | ) | |
Net increase | $ | 169.3 |
Increase (Decrease) | |||
Lower jack-up utilization | $ | (254.6 | ) |
Lower jack-up average day rates | (18.9 | ) | |
Lower reimbursable revenues | (6.7 | ) | |
Impact of jack-up sold in 2015 | (0.7 | ) | |
Higher other revenue | 1.8 | ||
Net decrease | $ | (279.1 | ) |
Increase (decrease) | |||
Addition of the Rowan Reliance and Rowan Relentless | $ | 19.7 | |
Reduction in drillship direct operating expense | (23.0 | ) | |
Lower reimbursable costs | (13.2 | ) | |
Decrease due to idle drillship | (7.4 | ) | |
Reduction in shore base costs and other | (8.0 | ) | |
Net decrease | $ | (31.9 | ) |
Decrease | |||
Decrease due to idle or cold-stacked rigs | $ | (84.9 | ) |
Reduction in jack-up direct operating expense | (17.3 | ) | |
Reduction in shore base costs and other | (18.2 | ) | |
Lower reimbursable costs | (6.7 | ) | |
Decrease | $ | (127.1 | ) |
• | the prior-year period’s discrete tax expense for the establishment of a full valuation allowance on the U.S. deferred tax assets; |
• | the current period discrete tax benefit for the decrease in the U.S. valuation allowance due to additional current earnings in other comprehensive income related to the change in our postretirement benefit plan; |
• | a change in the geographic mix of earnings including a reduction of income in the high tax jurisdictions; and |
• | a partial offset by the prior-year period’s additional tax benefit for the U.S. -impaired assets. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Deepwater: | |||||||||||
Idle | 25.0 | % | — | 12.0 | % | — | |||||
Out-of-service | — | — | 0.2 | % | — | ||||||
Operational downtime | — | 4.0 | % | 0.1 | % | 7.2 | % | ||||
Jack-up: | |||||||||||
Idle | 26.5 | % | 15.5 | % | 24.2 | % | 12.1 | % | |||
Out-of-service | 4.1 | % | 4.0 | % | 4.7 | % | 3.4 | % | |||
Operational downtime | 1.5 | % | 1.0 | % | 1.4 | % | 1.3 | % |
September 30, 2016 | December 31, 2015 | ||||||
Cash and cash equivalents | $ | 1,037.5 | $ | 484.2 | |||
Current assets | $ | 1,506.6 | $ | 921.3 | |||
Current liabilities | $ | 677.8 | $ | 328.7 | |||
Current ratio | 2.22 | 2.80 | |||||
Current portion of long-term debt | $ | 357.1 | $ | — | |||
Long-term debt, less current portion | $ | 2,288.5 | $ | 2,692.4 | |||
Shareholders' equity | $ | 5,157.2 | $ | 4,772.5 | |||
Debt-to-capitalization ratio | 34 | % | 36 | % |
Nine months ended September 30, | |||||||
2016 | 2015 | ||||||
Net cash provided by operating activities | $ | 688.6 | $ | 658.9 | |||
Capital expenditures | (88.5 | ) | (674.8 | ) | |||
Net borrowings (reductions) of debt | (47.9 | ) | — | ||||
Payment of cash dividends | — | (37.9 | ) | ||||
Proceeds from disposals of property and equipment | 1.1 | 5.1 | |||||
Total net source (use) | $ | 553.3 | $ | (48.7 | ) |
October 18, 2016 | |||||||||||
Jack-ups | Deepwater | Total | |||||||||
US GOM | $ | 5.4 | $ | 673.0 | $ | 678.4 | |||||
Middle East | 1,087.5 | — | 1,087.5 | ||||||||
North Sea | 275.9 | — | 275.9 | ||||||||
Central and South America | 118.1 | — | 118.1 | ||||||||
Total backlog | $ | 1,486.9 | $ | 673.0 | $ | 2,159.9 |
October 18, 2016 | |||||||||||
Jack-ups | Deepwater | Total | |||||||||
2016 | $ | 165.8 | $ | 105.9 | $ | 271.7 | |||||
2017 | 673.4 | 404.6 | 1,078.0 | ||||||||
2018 | 298.6 | 162.5 | 461.1 | ||||||||
2019 | 65.0 | — | 65.0 | ||||||||
2020 and later years | 284.1 | — | 284.1 | ||||||||
Total backlog | $ | 1,486.9 | $ | 673.0 | $ | 2,159.9 |
Decrease in Asset Value | |||
10% decrease in WTI spot price | $ | 2.2 | |
10% decrease in expected volatility | $ | 0.2 |
Month ended | Total number of shares acquired (1) | Average price paid per share 1 | Total number of shares purchased as part of publicly announced plans or programs (2) | Approximate dollar value of shares that may yet be purchased under the plans or programs (2) | |||||||||
Balance forward | $ | — | |||||||||||
July 31, 2016 | 1,390 | $16.95 | — | — | |||||||||
August 31, 2016 | 2,247 | 14.43 | — | — | |||||||||
September 30, 2016 | 808 | 12.72 | — | — | |||||||||
Total | 4,445 | $14.91 | — | ||||||||||
(1) The total number of shares acquired reflects shares acquired from employees by an affiliated employee benefit trust (EBT) upon forfeiture of nonvested awards or in satisfaction of tax withholding requirements. The price paid for shares acquired as a result of forfeitures is the par value of $0.125 per share. The price paid for shares acquired in satisfaction of withholding taxes is the share price on the date of the transaction. In February 2015, we issued 1.1 million shares to the EBT, which shares were acquired at a price equal to the par value of $0.125 per share. There were no shares repurchased under any share repurchase program during the third quarter of 2016. | |||||||||||||
(2) The ability to make share repurchases is subject to the discretion of the Board of Directors and the limitations set forth in the Companies Act, which generally provide that share repurchases may only be made out of distributable reserves. In addition, U.K. law also generally prohibits a company from repurchasing its own shares through “off market purchases” without the prior approval of shareholders, which approval is valid for a maximum period of five years. Prior to and in connection with the redomestication, we obtained approval to purchase our own shares. To effect such repurchases, we entered into a purchase agreement with a specified dealer in July 2012, pursuant to which we may purchase up to a maximum of 50,000,000 shares over a five-year period, subject to an annual cap of 10% of the shares outstanding at the beginning of each applicable year. Subject to Board approval, share repurchases may be commenced or suspended from time to time without prior notice and, in accordance with the shareholder approval and U.K. law, any shares repurchased by us will be cancelled. This authority to repurchase shares terminates in April 2017 unless otherwise reapproved by our shareholders prior to that time. U.K. law prohibits us from conducting “on market purchases” because our shares are not traded on a recognized investment exchange in the U.K. |
10.1** | Retention Bonus Letter for T. Fred Brooks, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on August 11, 2016 (File No. 1-5491). |
10.2 | Nomination and Support Agreement between Rowan Companies plc and Blue Harbour Group LP and Blue Barbour Holdings, LLC, dated August 22, 2016, incorporated by reference to Exhibit 99.2 of the Company’s Current Report on Form 8-K filed on August 23, 2016 (File No. 1-5491). |
31.1* | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1* | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2* | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS* | XBRL Instance Document. |
101.SCH* | XBRL Taxonomy Extension Schema Document. |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. |
ROWAN COMPANIES PLC | ||
(Registrant) | ||
Date: November 1, 2016 | /s/ STEPHEN M. BUTZ | |
Stephen M. Butz | ||
Executive Vice President and | ||
Chief Financial Officer | ||
Date: November 1, 2016 | /s/ DENNIS S. BALDWIN | |
Dennis S. Baldwin | ||
Chief Accounting Officer |
1. | I have reviewed this Form 10-Q of Rowan Companies plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 1, 2016 | /s/ THOMAS P. BURKE | |
Thomas P. Burke | ||
President and Chief Executive Officer |
1. | I have reviewed this Form 10-Q of Rowan Companies plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 1, 2016 | /s/ STEPHEN M. BUTZ | |
Stephen M. Butz | ||
Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented. |
Date: November 1, 2016 | /s/ THOMAS P. BURKE | |
Thomas P. Burke | ||
President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented. |
Date: November 1, 2016 | /s/ STEPHEN M. BUTZ | |
Stephen M. Butz | ||
Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 25, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ROWAN COMPANIES PLC | |
Entity Central Index Key | 0000085408 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 125,439,127 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
SHAREHOLDERS' EQUITY: | ||
Treasury shares | 0.6 | 1.1 |
Common Class A [Member] | ||
SHAREHOLDERS' EQUITY: | ||
Common stock, par value (in dollars per share) | $ 0.125 | $ 0.125 |
Common stock, shares issued | 126.0 | 125.9 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
NET INCOME (LOSS) | $ 5.5 | $ (239.4) | $ 345.0 | $ (31.0) |
OTHER COMPREHENSIVE INCOME: | ||||
Net changes in pension and other postretirement plan assets and benefit obligations recognized in other comprehensive income, net of income tax expense of $10.3 for the three and nine months ended September 2016 (See Note 3) | 19.2 | 0.0 | 19.2 | 0.0 |
Net reclassification adjustment for amounts recognized in net income (loss) as a component of net periodic benefit cost, net of income tax expense of $0.5 and $1.9 for the three months ended September 30, 2016 and 2015, and $3.2 and $5.5 for the nine months ended September 30, 2016 and 2015, respectively (See Notes 3 and 8) | 1.0 | 3.4 | 6.0 | 10.2 |
OTHER COMPREHENSIVE INCOME | 20.2 | 3.4 | 25.2 | 10.2 |
COMPREHENSIVE INCOME (LOSS) | $ 25.7 | $ (236.0) | $ 370.2 | $ (20.8) |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net changes in pension and other postretirement plan assets and benefit obligations recognized in other comprehensive, tax expense | $ 10.3 | $ 10.3 | ||
Net reclassification adjustments for amounts recognized in net income (loss) as a component of net periodic benefit cost, tax expense | $ 0.5 | $ 1.9 | $ 3.2 | $ 5.5 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Statement of Stockholders' Equity [Abstract] | ||
Retirement benefit adjustments, taxes | $ 13.5 | $ 5.5 |
Nature of Operations and Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Basis of Presentation | Nature of Operations and Basis of Presentation Rowan Companies plc, a public limited company incorporated under the laws of England and Wales, is a global provider of offshore contract drilling services to the international oil and gas industry. Our fleet currently consists of 31 mobile offshore drilling units, including 27 self-elevating jack-up drilling units and four ultra-deepwater drillships. We contract our drilling rigs, related equipment and work crews primarily on a day-rate basis in markets throughout the world, currently including the United States Gulf of Mexico (US GOM), the United Kingdom (U.K.) and Norwegian sectors of the North Sea, the Middle East and Trinidad. The financial statements included in this Form 10-Q are presented in United States (U.S.) dollars and include the accounts of Rowan Companies plc (“Rowan plc”) and its direct and indirect subsidiaries. Unless the context otherwise requires, the terms “Rowan,” “Company,” “we,” “us” and “our” are used to refer to Rowan plc and its consolidated subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The financial statements included in this Form 10-Q have been prepared without audit in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and notes have been condensed or omitted as permitted by those rules and regulations. The preparation of our condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management believes the accompanying financial statements contain all adjustments, which are of a normal recurring nature unless otherwise noted, necessary for a fair statement of the results for the interim periods presented. The Company’s results of operations and cash flows for the interim periods are not necessarily indicative of results to be expected for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Customer Contract Termination and Settlement On May 23, 2016, the Company reached an agreement with Freeport-McMoRan Oil and Gas LLC (“FMOG”) and its parent company, Freeport-McMoRan Inc. (“FCX”) in connection with the drilling contract for the drillship Rowan Relentless (“FMOG Agreement”), which was scheduled to terminate in June 2017. The FMOG Agreement provided that the drilling contract be terminated immediately, and that FCX pay the Company $215 million to settle outstanding receivables and early termination of the contract, of which $85 million was received through June 30, 2016 and the remaining $130 million was received in the third quarter 2016. In addition, the Company may also receive two additional contingent payments from FCX, payable on September 30, 2017, of $10 million and $20 million depending on the average price of West Texas Intermediate (“WTI”) crude oil over a 12-month period beginning June 30, 2016. The $10 million payment will be due if the average price over the period is greater than $50 per barrel and the additional $20 million payment will be due if the average price over the period is greater than $65 per barrel (“FMOG Provision”) (See Note 6). The Company warm-stacked the Rowan Relentless in order to reduce costs. During the quarter ended June 30, 2016, the Company recognized $173.2 million in revenue for the Rowan Relentless, including $130.9 million for the cancelled contract value, $6.2 million for the fair value of the derivative associated with the FMOG Provision (See Note 6), $5.6 million for previously deferred revenue related to the contract, and $30.5 million for operations through May 22, 2016. Day Rate Concessions On June 1, 2016, the Company executed a contract extension for the Rowan Viking of 270 days for $275,000 per day following the primary term of the original contract in exchange for day rate concessions reducing the day rate for the primary term from $345,528 per day to $275,000 per day. This reduced day rate was applied to January 1, 2016 through November 6, 2017, and as a result, the Company recorded a reduction to revenue for amounts earned under this contract during the period from January 1, 2016 through March 31, 2016 of $6.3 million in the second quarter of 2016. Customer Contract Amendment On September 15, 2016, the Company amended its contract with Cobalt International Energy, L.P. (“Cobalt”), for the drillship Rowan Reliance, which was scheduled to conclude on February 1, 2018. The amendment provides that the Company will receive cash settlement payments totaling $95.9 million, that the drillship remains at its current day rate of approximately $582,000 and that the drilling contract may be terminated as early as March 31, 2017. The Company received cash payments of $45.0 million on September 15, 2016 and $31.3 million on October 3, 2016, and expects to receive a final cash payment of $19.6 million on or before March 31, 2017. In addition, if Cobalt continues its operations with the Rowan Reliance after March 31, 2017, the day rate will be reduced to approximately $262,000 per day for the remaining operating days through February 1, 2018 (subject to further adjustment thereafter). Cobalt International Energy, Inc., the parent of Cobalt, also committed to use the Company as its exclusive provider of comparable drilling services for a period of five years. As the Company has the obligation and intent to have the drillship or a substitute available through the pre-amended contract scheduled end date, in certain circumstances, the $95.9 million settlement was recorded as a deferred revenue liability. As of September 30, 2016, $57.5 million and $38.4 million of the deferred revenue liability is classified as current and noncurrent, respectively, and is included in Deferred Revenue, and Other Liabilities, respectively, in the Condensed Consolidated Balance Sheet. Amortization of deferred revenue will begin on April 1, 2017 and extend no further than the pre-amended contract scheduled end date. New Accounting Pronouncements Revenue Recognition – In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which sets forth a global standard for revenue recognition and replaces most existing industry-specific guidance. We will be required to adopt the new standard in annual and interim periods beginning January 1, 2018. The amendments may be applied using a retrospective, modified retrospective or prospective with a cumulative catch-up approach. We are evaluating the standard and have not yet determined our implementation method upon adoption or what impact adoption will have on our financial statements. Presentation of Deferred Taxes – In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities to present deferred tax assets and deferred tax liabilities in balance sheets as noncurrent. We will be required to adopt the new standard in annual and interim periods beginning January 1, 2017. The amendments in this ASU may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We are evaluating the standard and have not yet determined our implementation method. Lease Accounting – In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires the balance sheet recognition of lease assets and lease liabilities by lessees for leases previously classified as operating leases under prior GAAP. We will be required to adopt the new standard in annual and interim periods beginning January 1, 2019. Lessees and lessors will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, including a number of optional practical expedients that entities may elect to apply. We are evaluating the standard and have not yet determined our implementation method upon adoption or what impact adoption will have on our consolidated financial statements. Stock Compensation – In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting, which simplifies several aspects of accounting for employee share-based payment awards, including the accounting for income taxes, withholding taxes and forfeitures, as well as classification on the statement of cash flows. We will be required to adopt the amended guidance in annual and interim reports beginning January 1, 2017, with early adoption permitted. We are in the process of determining the method of adoption and the impact this amendment will have on our consolidated financial statements. Financial Instruments – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the FASB's guidance on the impairment of financial instruments. The ASU adds to US GAAP an impairment model that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. We will be required to adopt the amended guidance in annual and interim reports beginning January 1, 2020, with early adoption permitted for fiscal years beginning after December 15, 2018. We are in the process of evaluating the impact this amendment will have on our consolidated financial statements. Statement of Cash Flows - In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on eight cash flow classification issues with the objective of reducing differences in practice. We will be required to adopt the amendments in this ASU in annual and interim periods beginning January 1, 2018, with early adoption permitted. Adoption is required to be on a retrospective basis, unless impracticable for any of the amendments, in which case a prospective application is permitted. We are in the process of evaluating the impact these amendments will have on our consolidated financial statements. Income Taxes - In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. We will be required to adopt the amendments in this ASU in the annual and interim periods beginning January 1, 2018, with early adoption permitted at the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The application of the amendments will require the use of a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. We are evaluating the standard and the impact it will have on our consolidated financial statements. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table sets forth a reconciliation of basic and diluted shares (in millions):
Share options, share appreciation rights and restricted share units granted under share-based compensation plans are anti-dilutive and excluded from diluted earnings per share when the hypothetical number of shares that could be repurchased under the treasury stock method exceeds the number of shares that can be exercised, or when the Company reports a net loss from continuing operations. Anti-dilutive shares, which could potentially dilute earnings per share in the future, are set forth below (in millions):
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Pension and Other Postretirement Benefits |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits The Company provides defined-benefit pension, health care and life insurance benefits upon retirement for certain full-time employees. Net periodic pension cost recognized during the periods included the following components (in millions):
Other postretirement benefit cost recognized during the periods included the following components (in millions):
On August 10, 2016, the Company communicated changes to the participants of its postretirement benefits plan that was previously frozen to new entrants in 2008. Based on these changes, effective as of January 1, 2017, eligible participants will now receive a health reimbursement account that provides a fixed dollar benefit per year. The impact of these changes to the plan and related, as of August 10, 2016, are presented in the table below (in millions):
The Company records unrealized gains and losses related to net periodic pension and other postretirement benefit cost net of estimated taxes in Accumulated other comprehensive income (loss). The Company has a valuation allowance against its net U.S. deferred tax asset that is not expected to be realized. A portion of this valuation allowance is related to deferred tax benefits or expense as recorded in Accumulated other comprehensive income (loss). During the nine months ended September 30, 2016, the Company contributed $22.7 million to its pension and other postretirement benefit plans and expects to make additional contributions to such plans totaling approximately $8.2 million for the remainder of 2016. |
Commitments and Contingent Liabilities |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities Uncertain tax positions – We have been advised by the U.S. Internal Revenue Service of proposed unfavorable tax adjustments of $85 million including applicable penalties for the open tax years 2009 through 2012. The unfavorable tax adjustments primarily related to the following items: 2009 tax benefits recognized as a result of applying the facts of a third-party tax case that provided favorable tax treatment for certain foreign contracts entered into in prior years to the Company’s situation; transfer pricing; and domestic production activity deduction. We have submitted a formal protest in response to these unfavorable proposed tax adjustments. In years subsequent to 2012, we have similar positions that could be subject to adjustments for the open years. We have provided for amounts that we believe will be ultimately payable under the proposed adjustments and intend to vigorously defend our positions; however, if we determine the provisions for these matters to be inadequate due to new information or we are required to pay a significant amount of additional U.S. taxes and applicable penalties and interest in excess of amounts that have been provided for these matters, our consolidated results of operations and cash flows could be materially and adversely affected. The gross unrecognized tax benefits excluding penalties and interest are $119 million and $65 million as of September 30, 2016 and December 31, 2015, respectively. The increase to gross unrecognized tax benefits was primarily due to tax positions taken of $7 million related to current year-to-date anticipated transfer pricing positions and $42 million related to prior year U.S. interest deductions. Reversal of net unrecognized tax benefits excluding penalties and interest would impact our tax by $66 million. It is reasonable that the existing liabilities for the unrecognized tax benefits may increase or decrease over the next 12 months as a result of audit closures and statute expirations, however, the ultimate timing of the resolution and/or closure of audits is highly uncertain. Letters of credit – We periodically employ letters of credit in the normal course of our business, and had outstanding letters of credit of approximately $9.5 million at September 30, 2016. Pending or threatened litigation – We are involved in various legal proceedings incidental to our business and are vigorously defending our position in all such matters. Although the outcome of such proceedings cannot be predicted with certainty, we do not expect resolution of these matters to have a material effect on our financial position, results of operations or cash flows. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation On February 25, 2016, the Company granted restricted share units (“RSUs”) to employees for annual incentive awards pursuant to our long-term incentive plan with a grant-date fair value aggregating $19.3 million. The awards vest ratably over three years except to the extent they may vest earlier under our retirement policy. The aggregate grant-date fair value, net of estimated forfeitures, was $18.2 million, which will be recognized as compensation expense over a weighted-average period of 2.6 years from the grant date. Additionally, on February 25, 2016, the Company granted to certain members of management performance units (“P-Units”) that have a target value of $100 per unit. The amount ultimately earned with respect to the P-Units will depend on the Company’s total shareholder return (“TSR”) relative to a group of peer companies over a three-year period ending December 31, 2018, and could range from zero to $200 per unit depending on performance. Twenty-five percent of the P-Units’ value is determined by the Company’s relative TSR ranking for each one-year period ended December 31, 2016, 2017, and 2018, respectively, and 25% of the P-Units’ value is determined by the relative TSR ranking for the three-year period ending December 31, 2018. The P-Units cliff vest on the third anniversary following the grant date. Settlement may be in cash or shares at the Board's discretion. The grant-date fair value of the P-Units was estimated to be $8.6 million. Fair value was estimated using a Monte Carlo simulation model, which considers the probabilities of the Company’s TSR ranking at the end of each performance period and the amount of the payout at each rank to determine the probability-weighted expected payout. The Company uses liability accounting to account for the P-Units. Compensation is recognized on a straight-line basis over a maximum period of three years from the grant date and is adjusted for changes in fair value through the vesting date. Estimated liabilities for P-Units as of September 30, 2016, included $9.8 million and $10.6 million classified as current and noncurrent, respectively, compared to $7.6 million and $11.4 million, respectively, at December 31, 2015. Current and noncurrent estimated P-Unit liabilities are included in Accrued Liabilities, and Other Liabilities, respectively, in the Condensed Consolidated Balance Sheets. At September 30, 2016, estimated unrecognized share-based compensation totaled approximately $36.9 million, which is expected to be recognized as compensation expense over a remaining weighted-average period of 1.7 years. |
Derivatives |
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Derivatives | Derivatives The Company determined that the FMOG Provision of the FMOG Agreement is a freestanding financial instrument and that it met the criteria of a derivative instrument (“Contingent Payment Derivative”). The Contingent Payment Derivative was initially recorded to revenue at a fair value of $6.2 million on May 23, 2016, and will be revalued at each reporting date with changes in the fair value reported as non-operating income or expense. The fair value of the Contingent Payment Derivative was determined using a Monte Carlo simulation (See Note 7). The following table provides the fair value of the Company’s derivative as reflected in the Condensed Consolidated Balance Sheet (in millions):
The following table provides the revaluation effect of the Company’s derivative on the Condensed Consolidated Statements of Operations (in millions):
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Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prescribed by US GAAP requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are:
The applicable level within the fair value hierarchy is the lowest level of any input that is significant to the fair value measurement. Derivative The fair value of the Contingent Payment Derivative (Level 3) was estimated using a Monte Carlo simulation model, which calculates the probabilities of the daily closing WTI spot price exceeding the $50 price target and the $65 price target (“Price Targets”), respectively, on a daily averaging basis during the 12-month payment measurement period ending on June 30, 2017. The probabilities are applied to the payout at each Price Target to calculate the probability-weighted expected payout. The following are the significant inputs used in the valuation of the Contingent Payment Derivative: the WTI Spot Price on the valuation date, the expected volatility, and the risk-free interest rate, and the slope of the WTI forward curve, which were $47.48, 37.5%, 0.765% and 5.5% at May 23, 2016, respectively and $48.24, 34.85%, 0.589%, and 9.25% at September 30, 2016, respectively. The expected volatility was estimated from the implied volatility rates of WTI Crude Futures. The risk-free rate was based on yields of U.S. Treasury securities commensurate with the remaining term of the Contingent Payment Derivative. Assets and Liabilities Measured at Fair Value on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):
At September 30, 2016, the Company held a Contingent Payment Derivative in the amount of $4.2 million, which is classified as Prepaid Expenses and Other Current Assets on the Condensed Consolidated Balance Sheet. At September 30, 2016 and December 31, 2015, we held Egyptian pounds in the amount of $9.1 million and $13.5 million, respectively, which are classified as Other Assets on the Condensed Consolidated Balance Sheets. We ceased drilling operations in Egypt in 2014, and are currently working to obtain access to the funds for use outside Egypt to the extent they are not utilized. We can provide no assurance we will be able to convert or utilize such funds in the future. Trade receivables and trade payables, which are required to be measured at fair value, have carrying values that approximate their fair values due to their short maturities. Assets Measured at Fair Value on a Nonrecurring Basis Assets measured at fair value on a nonrecurring basis and whose carrying values were remeasured during the nine months ended September 30 are set forth below (in millions):
During the quarter ended September 30, 2016, we conducted an impairment test of our assets and determined that the carrying values for five of our jack-up drilling units were not recoverable from their undiscounted cash flows and exceeded the rigs' estimated fair values measured under an income approach. As a result, we recognized a noncash impairment charge of $34.3 million which is included in Material Charges and Other Operating Items on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016. During the quarter ended September 30, 2015, we conducted an impairment test of our assets and determined that the carrying values for ten of our jack-up drilling units were not recoverable from their undiscounted cash flows and exceeded the rigs' estimated fair values measured under an income approach. As a result, we recognized a noncash impairment charge of $329.8 million which is included in Material Charges and Other Operating Items on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2015. In each case, our estimate of fair value required us to use significant unobservable inputs, which are internally developed assumptions not observable in the market, including assumptions related to future demand for drilling services, estimated availability of rigs, and future day rates, among others. Other Fair Value Measurements Financial instruments not required to be measured at fair value consist of the Company’s publicly traded debt securities. Our publicly traded debt securities had a carrying value of $2.646 billion at September 30, 2016, and an estimated fair value at that date aggregating $2.223 billion, compared to a carrying and fair value of $2.692 billion and $2.072 billion, respectively, at December 31, 2015. Fair values of our publicly traded debt securities were provided by a broker who makes a market in such securities and were measured using a market-approach valuation technique, which is a Level 2 fair value measurement. |
Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders' Equity Reclassifications from Accumulated Other Comprehensive Loss – The following table sets forth the significant amounts reclassified out of each component of accumulated other comprehensive loss and the effect on net income (loss) for the period (in millions):
The Company records unrealized gains and losses related to net periodic pension and other postretirement benefit cost net of estimated taxes in Accumulated other comprehensive income (loss). The Company has a valuation allowance against its net U.S. deferred tax asset that is not expected to be realized. A portion of this valuation allowance is related to deferred tax benefits or expense as recorded in Accumulated other comprehensive income (loss). |
Other Financial Statement Disclosures |
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Other Financial Statement Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Statement Disclosures | Other Financial Statement Disclosures Accounts Receivable – The following table sets forth the components of receivables - trade and other (in millions):
Accrued Liabilities – The following table sets forth the components of accrued liabilities (in millions):
Long-term Debt – Long-term debt consisted of the following (in millions):
In the first quarter of 2016, we paid $15.9 million in cash to retire $16.5 million aggregate principal amount of the 5% Senior Notes due 2017 and 7.875% Senior Notes due 2019, plus accrued interest, and recognized a $0.6 million gain on early extinguishment of debt. Also during the first quarter of 2016, we repurchased an additional $21.4 million aggregate principal amount of the 5% and 7.875% Senior Notes, which settled in April 2016 and resulted in a $1.2 million gain on early extinguishment of debt in the second quarter of 2016. In April 2016, we repurchased $10.0 million aggregate principal amount of the 7.875% Senior Notes which resulted in a $0.6 million gain on early extinguishment of debt in the second quarter of 2016. Supplemental Cash Flow Information – Accrued capital expenditures, which are excluded from capital expenditures in the Condensed Consolidated Statements of Cash Flows until settlement, totaled $23.2 million and $36.5 million at September 30, 2016 and 2015, respectively. Interest capitalized in connection with rig construction projects totaled $16.2 million in the nine months ended September 30, 2015. We did not capitalize any interest for the three months ended September 30, 2015 and the three and nine months ended September 30, 2016. Income Taxes – In accordance with US GAAP for interim reporting, the Company estimates its full-year effective tax rate and applies this rate to its year-to-date pretax income. In addition, the Company separately calculates the tax impact of unusual items, if any. We provide for income taxes based upon the tax laws and rates in effect in the countries in which we conduct operations. The amounts of our provisions are impacted by such laws and rates and the availability of deductions, credits and other benefits in each of the various jurisdictions. Our overall effective tax rate may therefore vary considerably from quarter to quarter and from year to year based on the actual or projected location of operations, levels of income, our consolidated effective income tax rate, deferred intercompany gains or losses, and other factors. We recognized tax benefits of $12.2 million and tax expense of $14.7 million for the three and nine months ended September 30, 2016, respectively, compared to tax expense of $25.9 million and $50.9 million for the comparable periods in 2015. Our effective tax rate was 181.2% as a result of a tax benefit on a pre-tax loss and 4.1% as a result of tax expense on pre-tax income, respectively, for the three and nine months ended September 30, 2016, compared to (12.2)% as a result of tax expense on a pre-tax loss and 256.2% as a result of tax expense on pre-tax income, respectively, for the comparable prior-year periods ended September 30, 2015. The decrease in tax expense of $38.1 million resulting in a tax benefit and the decrease in tax expense of $36.2 million for the three and nine month periods compared to the prior-year periods is primarily attributed to:
The Company has not provided for deferred income taxes on undistributed earnings of its non-U.K. subsidiaries, including non-U.S. entities under Rowan Companies, Inc. (“RCI”). It is the Company’s policy and intention to permanently reinvest outside the U.S. the earnings of non-U.S. entities directly or indirectly owned by RCI. Generally, earnings of non-U.K. entities in which RCI does not have a direct or indirect ownership interest can be distributed to the Company without imposition of either U.K. or local country tax. Material Charges and Other Operating Items – Material charges for the three and nine months ended September 30, 2016 include (i) non-cash asset impairment charges totaling $34.3 million on five jack-up drilling units (See Note 7) and (ii) a $1.4 million reversal of an estimated liability for settlement of a withholding tax matter during a tax amnesty period which was related to a legal settlement for a 2014 termination of a contract for refurbishment work on the Rowan Gorilla III, as noted below in the 2015 periods. Payment of such withholding taxes during the tax amnesty period resulted in the waiver of applicable penalties and interest. Material charges for the three and nine months ended September 30, 2015 includes (i) non-cash asset impairment charges totaling $329.8 million on ten jack-up drilling units (See Note 7) and (ii) adjustments of $2.6 million and $7.6 million, respectively, to an estimated liability for the 2014 contract termination in connection with refurbishment work on the Rowan Gorilla III. A settlement agreement for this matter was signed during the third quarter of 2015. |
Segment Information |
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Segment Information | Segment Information We operate in two principal operating segments – deepwater, which consists of our drillship operations, and jack-ups. Both segments provide one service – contract drilling. The Company evaluates performance primarily based on income from operations. Depreciation and amortization and selling, general and administrative expenses related to our corporate function and other administrative offices have not been allocated to our operating segments for purposes of measuring segment operating income and are included in “Unallocated costs and other.” “Other operating items” consists of non-cash impairment charges, and gains and losses on equipment sales and litigation and related. Segment information for the three and nine months ended September 30, 2016 and 2015 is set forth below (in millions):
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Guarantees of Registered Securities |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees of Registered Securities | Guarantees of Registered Securities RCI, a 100%-owned Delaware subsidiary of Rowan plc, is the issuer of all of our publicly traded debt securities consisting of the following series: 5% Senior Notes due 2017; 7.875% Senior Notes due 2019; 4.875% Senior Notes due 2022; 4.75% Senior Notes due 2024; 5.4% Senior Notes due 2042; and 5.85% Senior Notes due 2044 (the “Senior Notes”). The Senior Notes and amounts outstanding under our revolving credit facility are guaranteed by Rowan plc on a full, unconditional and irrevocable basis. The condensed consolidating financial information that follows is presented on the equity method of accounting in accordance with Rule 3-10 of Regulation S-X in connection with Rowan plc’s guarantee of the Senior Notes. Rowan Companies plc and Subsidiaries Condensed Consolidating Balance Sheets September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Balance Sheets December 31, 2015 (In millions)
Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Operations Three months ended September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Operations Three months ended September 30, 2015 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Operations Nine months ended September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Operations Nine months ended September 30, 2015 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Statements of Comprehensive Income (Loss) Three months ended September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Statements of Comprehensive Income (Loss) Three months ended September 30, 2015 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Statements of Comprehensive Income (Loss) Nine months ended September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Statements of Comprehensive Income (Loss) Nine months ended September 30, 2015 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Cash Flows Nine months ended September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Cash Flows Nine months ended September 30, 2015 (In millions) (Unaudited)
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The financial statements included in this Form 10-Q have been prepared without audit in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and notes have been condensed or omitted as permitted by those rules and regulations. The preparation of our condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management believes the accompanying financial statements contain all adjustments, which are of a normal recurring nature unless otherwise noted, necessary for a fair statement of the results for the interim periods presented. The Company’s results of operations and cash flows for the interim periods are not necessarily indicative of results to be expected for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. |
New Accounting Pronouncements | New Accounting Pronouncements Revenue Recognition – In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which sets forth a global standard for revenue recognition and replaces most existing industry-specific guidance. We will be required to adopt the new standard in annual and interim periods beginning January 1, 2018. The amendments may be applied using a retrospective, modified retrospective or prospective with a cumulative catch-up approach. We are evaluating the standard and have not yet determined our implementation method upon adoption or what impact adoption will have on our financial statements. Presentation of Deferred Taxes – In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities to present deferred tax assets and deferred tax liabilities in balance sheets as noncurrent. We will be required to adopt the new standard in annual and interim periods beginning January 1, 2017. The amendments in this ASU may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We are evaluating the standard and have not yet determined our implementation method. Lease Accounting – In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires the balance sheet recognition of lease assets and lease liabilities by lessees for leases previously classified as operating leases under prior GAAP. We will be required to adopt the new standard in annual and interim periods beginning January 1, 2019. Lessees and lessors will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, including a number of optional practical expedients that entities may elect to apply. We are evaluating the standard and have not yet determined our implementation method upon adoption or what impact adoption will have on our consolidated financial statements. Stock Compensation – In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-based Payment Accounting, which simplifies several aspects of accounting for employee share-based payment awards, including the accounting for income taxes, withholding taxes and forfeitures, as well as classification on the statement of cash flows. We will be required to adopt the amended guidance in annual and interim reports beginning January 1, 2017, with early adoption permitted. We are in the process of determining the method of adoption and the impact this amendment will have on our consolidated financial statements. Financial Instruments – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the FASB's guidance on the impairment of financial instruments. The ASU adds to US GAAP an impairment model that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. We will be required to adopt the amended guidance in annual and interim reports beginning January 1, 2020, with early adoption permitted for fiscal years beginning after December 15, 2018. We are in the process of evaluating the impact this amendment will have on our consolidated financial statements. Statement of Cash Flows - In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on eight cash flow classification issues with the objective of reducing differences in practice. We will be required to adopt the amendments in this ASU in annual and interim periods beginning January 1, 2018, with early adoption permitted. Adoption is required to be on a retrospective basis, unless impracticable for any of the amendments, in which case a prospective application is permitted. We are in the process of evaluating the impact these amendments will have on our consolidated financial statements. Income Taxes - In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. We will be required to adopt the amendments in this ASU in the annual and interim periods beginning January 1, 2018, with early adoption permitted at the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The application of the amendments will require the use of a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. We are evaluating the standard and the impact it will have on our consolidated financial statements. |
Earnings Per Share (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic and Diluted Earnings per Share | The following table sets forth a reconciliation of basic and diluted shares (in millions):
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Antidilutive Securities Excluded From Earnings per Share | Anti-dilutive shares, which could potentially dilute earnings per share in the future, are set forth below (in millions):
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Pension and Other Postretirement Benefits (Tables) |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Periodic Pension and Other Postemployment Benefit Costs | Net periodic pension cost recognized during the periods included the following components (in millions):
Other postretirement benefit cost recognized during the periods included the following components (in millions):
On August 10, 2016, the Company communicated changes to the participants of its postretirement benefits plan that was previously frozen to new entrants in 2008. Based on these changes, effective as of January 1, 2017, eligible participants will now receive a health reimbursement account that provides a fixed dollar benefit per year. The impact of these changes to the plan and related, as of August 10, 2016, are presented in the table below (in millions):
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Derivatives (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments, Statements of Financial Performance and Financial Position | The following table provides the fair value of the Company’s derivative as reflected in the Condensed Consolidated Balance Sheet (in millions):
The following table provides the revaluation effect of the Company’s derivative on the Condensed Consolidated Statements of Operations (in millions):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):
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Assets Measured at Fair Value on a Nonrecurring Basis | Assets measured at fair value on a nonrecurring basis and whose carrying values were remeasured during the nine months ended September 30 are set forth below (in millions):
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Shareholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amounts Reclassified out of Each Component of Accumulated Other Comprehensive Loss | The following table sets forth the significant amounts reclassified out of each component of accumulated other comprehensive loss and the effect on net income (loss) for the period (in millions):
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Other Financial Statement Disclosures (Tables) |
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Other Financial Statement Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Receivables - Trade and Other | The following table sets forth the components of receivables - trade and other (in millions):
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Schedule of Accrued Liabilities | The following table sets forth the components of accrued liabilities (in millions):
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Schedule of Long-term Debt | Long-term debt consisted of the following (in millions):
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Information | Segment information for the three and nine months ended September 30, 2016 and 2015 is set forth below (in millions):
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Guarantees of Registered Securities (Tables) |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Balance Sheets | Rowan Companies plc and Subsidiaries Condensed Consolidating Balance Sheets September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Balance Sheets December 31, 2015 (In millions)
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Condensed Consolidating Income Statements | Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Operations Three months ended September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Operations Three months ended September 30, 2015 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Operations Nine months ended September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Operations Nine months ended September 30, 2015 (In millions) (Unaudited)
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Statements of Comprehensive Income (Loss) | Rowan Companies plc and Subsidiaries Statements of Comprehensive Income (Loss) Three months ended September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Statements of Comprehensive Income (Loss) Three months ended September 30, 2015 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Statements of Comprehensive Income (Loss) Nine months ended September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Statements of Comprehensive Income (Loss) Nine months ended September 30, 2015 (In millions) (Unaudited)
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Consolidating Statements of Cash Flows | Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Cash Flows Nine months ended September 30, 2016 (In millions) (Unaudited)
Rowan Companies plc and Subsidiaries Condensed Consolidating Statements of Cash Flows Nine months ended September 30, 2015 (In millions) (Unaudited)
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Earnings Per Share (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Earnings Per Share [Abstract] | ||||
Average common shares outstanding | 125.4 | 124.8 | 125.3 | 124.5 |
Effect of dilutive securities - share-based compensation (in shares) | 1.3 | 0.0 | 1.1 | 0.0 |
Average shares for diluted computations | 126.7 | 124.8 | 126.4 | 124.5 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive shares | 2.3 | 2.5 | 3.0 | 3.1 |
Share Options and Appreciation Rights [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive shares | 1.6 | 1.3 | 1.7 | 1.4 |
Restricted Share Units [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive shares | 0.7 | 1.2 | 1.3 | 1.7 |
Commitments and Contingent Liabilities (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
IRS proposed unfavorable tax adjustments | $ 85.0 | |
Gross unrecognized tax benefits | 119.0 | $ 65.0 |
Unrecognized tax benefits, increase resulting from current year-to-date anticipated transfer pricing positions | 7.0 | |
Unrecognized tax benefits, increase resulting from prior year U.S. interest deductions | 42.0 | |
Tax impact of unrecognized tax benefits, if reversed | 66.0 | |
Outstanding letters of credit | $ 9.5 |
Derivatives - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
May 23, 2016 |
Jun. 30, 2016 |
|
Rowan Relentless [Member] | ||
Derivative [Line Items] | ||
Revenue, fair value of derivative associated with early contract termination agreement | $ 6.2 | $ 6.2 |
Derivatives - Derivative Reflected in the Balance Sheet (Details) $ in Millions |
Sep. 30, 2016
USD ($)
|
---|---|
Prepaid Expenses and Other Current Assets [Member] | |
Derivatives, Fair Value [Line Items] | |
Contingent Payment Derivative | $ 4.2 |
Derivatives - Effect of Derivative on the Consolidated Statements of Operations (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2016 |
|
Other net [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Contingent Payment Derivative | $ (2.2) | $ (2.0) |
Fair Value Measurements - Other Fair Value Measurements (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Carrying value of publicly traded debt securities | $ 2,645.6 | $ 2,692.4 |
Fair value of publicly traded debt securities | $ 2,223.0 | $ 2,072.0 |
Shareholders' Equity (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Amortization of Net Loss [Member] | ||||
Amounts recognized as a component of net periodic pension and other postretirement benefit cost: | ||||
Total before income taxes | $ (5.8) | $ (6.5) | $ (16.0) | $ (19.1) |
Amortization of Prior Service Credit [Member] | ||||
Amounts recognized as a component of net periodic pension and other postretirement benefit cost: | ||||
Total before income taxes | 4.3 | 1.2 | 6.8 | 3.4 |
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | ||||
Amounts recognized as a component of net periodic pension and other postretirement benefit cost: | ||||
Total before income taxes | (1.5) | (5.3) | (9.2) | (15.7) |
Income tax benefit | 0.5 | 1.9 | 3.2 | 5.5 |
Total reclassifications for the period, net of income taxes | $ (1.0) | $ (3.4) | $ (6.0) | $ (10.2) |
Other Financial Statement Disclosures - Components of Receivables (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Financial Statement Disclosures [Abstract] | ||
Trade | $ 426.9 | $ 395.7 |
Income tax | 6.6 | 4.5 |
Other | 7.0 | 10.3 |
Total receivables - trade and other | $ 440.5 | $ 410.5 |
Other Financial Statement Disclosures - Accrued Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Financial Statement Disclosures [Abstract] | ||
Pension and other postretirement benefits | $ 14.0 | $ 31.4 |
Compensation and related employee costs | 61.1 | 73.6 |
Interest | 34.2 | 44.3 |
Income taxes | 37.6 | 23.9 |
Other | 13.2 | 12.8 |
Total accrued liabilities | $ 160.1 | $ 186.0 |
Other Financial Statement Disclosures - Long Term Debt, Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Apr. 30, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Debt Instrument [Line Items] | ||||||||
Gain on extinguishment of debt | $ 0.0 | $ 0.0 | $ 2.4 | $ 0.0 | ||||
Senior Notes [Member] | 5% Senior Notes due September 2017 and 7.875% Senior Notes due August 2019 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Early repayment of debt | $ 15.9 | |||||||
Aggregate amount of debt paid | $ 21.4 | 16.5 | ||||||
Gain on extinguishment of debt | $ 1.2 | $ 0.6 | ||||||
Senior Notes [Member] | 5% Senior Notes, due September 2017 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated rate | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | |||
Senior Notes [Member] | 7.875% Senior Notes, due August 2019 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Aggregate amount of debt paid | $ 10.0 | |||||||
Stated rate | 7.875% | 7.875% | 7.875% | 7.875% | 7.875% | |||
Gain on extinguishment of debt | $ 0.6 |
Other Financial Statement Disclosures - Narrative (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016
USD ($)
drilling_unit
|
Sep. 30, 2015
USD ($)
drilling_unit
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
|
Supplemental Cash Flow Information | ||||
Accrued capital expenditures | $ 23,200,000 | $ 36,500,000 | ||
Interest capitalized in connection with rig construction projects | $ 0 | $ 0 | $ 0 | $ 16,200,000 |
Income Taxes | ||||
Effective tax rate | 181.20% | (12.20%) | 4.10% | 256.20% |
Provision (benefit) for income taxes | $ (12,200,000) | $ 25,900,000 | $ 14,700,000 | $ 50,900,000 |
Decrease in income tax expense as compared to prior year periods | 38,100,000 | 36,200,000 | ||
Property, Plant and Equipment [Line Items] | ||||
Asset impairment charges | 34,300,000 | 329,800,000 | 34,300,000 | 329,800,000 |
Charges related to contract termination | $ 2,600,000 | $ 7,600,000 | ||
Reversal of estimated settlement liaibility | $ 1,400,000 | $ 1,400,000 | ||
Jack-up Rigs [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Number of drilling units impaired | drilling_unit | 5 | 10 |
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