EXHIBIT 99.1
News Release
Rowan Companies, Inc.
2800 Post Oak Boulevard, Suite 5450
Houston, Texas 77056 (713) 621-7800
FOR IMMEDIATE RELEASE & #160; March 1, 2006
ROWAN REPORTS RECORD QUARTERLY REVENUES AND
IMPROVED OPERATING RESULTS; 2005 REVENUES EXCEED $1 BILLION
HOUSTON, TEXAS -- For the three months ended December 31, 2005, Rowan Companies, Inc. (RDC - NYSE) generated income from continuing operations of $69.5 million, or 63¢ per share, compared to $16.4 million, or 15¢ per share, in the same period of 2004. Revenues were a record $317.4 million in the fourth quarter of 2005, compared to $190.7 million in the fourth quarter of 2004. The current period results included gains on asset sales and insurance recoveries in excess of hurricane losses that together contributed approximately 14¢ per share, net of tax.
The Company generated income from continuing operations of $217.8 million, or $1.97 per share, on revenues of $1,068.8 million during the year ended December 31, 2005, compared to income from continuing operations of $27.5 million, or 26¢ per share, on revenues of $679.7 million during 2004. Net income was $229.8 million, or $2.08 per share, in 2005, compared to a net loss of $1.3 million, or 1¢ per share, in 2004.
Rowan’s offshore rig utilization decreased to 93% during the fourth quarter of 2005, from 99% during the comparable 2004 period, as three rigs entered the shipyard in December in preparation for their relocation to Saudi Arabia. The Company’s average Gulf of Mexico day rate was a record $92,100 during the fourth quarter of 2005, up $17,700, or 24%, from the third quarter of 2005 and up $41,400, or 82%, from the fourth quarter of 2004. Rowan’s land rig utilization was 89% during the fourth quarter of 2005, up from 83% in the comparable 2004 period. The Company’s average land rig day rate was $21,100 during the fourth quarter of 2005, up $2,300, or 12%, from the third quarter of 2005 and up $7,300, or 53%, from the fourth quarter of 2004.
As previously reported, during Hurricanes Katrina and Rita, Rowan lost four jack-up rigs and had one jack-up severely damaged. During the fourth quarter, the Company recognized the excess of insurance proceeds received over the carrying value of the lost equipment of approximately $23 million.
The Company experienced 71 fewer rig operating days in December as a result of shipyard modifications made to three rigs contracted to Saudi Aramco prior to their January 2006 departure for Saudi Arabia. Rowan will receive $44.7 million in fees for shipyard time, modifications and mobilization of the three rigs. Such fees will be recognized as revenues over the three-year contract period, beginning when the rigs commence drilling operations in March or April 2006. Labor and other routine operating costs related to these rigs are being expensed as incurred.
Danny McNease, Chairman and Chief Executive Officer, commented, “Our drilling and manufacturing businesses continue to reach new heights and our near-term outlook remains very favorable. Our drilling fleet is effectively fully utilized and our backlog of contracts continues to grow. Nine of our 20 offshore rigs currently have commitments that extend into 2007 or beyond, and we are aggressively pursuing additional long-term drilling assignments at favorable rates.
“Rowan’s average offshore day rate worldwide is currently around $134,000 or more than 28% higher than our average during the fourth quarter. Absent a significant change in market fundamentals, we believe that the global competition for quality rigs will intensify in 2006 and that the upward pressure on day rates will continue.
“Expansion of our drilling fleet continues at a rapid pace. By the end of 2006, we should have completed construction of 12 additional 2000 horsepower land rigs, nine of which are committed under long-term contracts. The Hank Boswell, our third Tarzan Class jack-up, will also have been delivered. At that time, our fourth Tarzan Class rig should be approximately 50% complete and we will have made significant progress toward building the first of our newest jack-up design, the 240C.
“Of course, none of this would be possible without our manufacturing division, which implements our construction program while also developing innovative oilfield and other products and generating record revenues. At year end, our external backlog of orders was a record $388 million and included work remaining on one jack-up rig and five rig kits that should provide approximately $225 million in additional revenues over the next two to three years. Also included were orders for 19 mining loaders and log stackers and 63 mud pumps that will be delivered in 2006.”
Rowan Companies, Inc. is a major provider of international and domestic contract drilling services. The Company also owns and operates a manufacturing division that produces equipment for the drilling, mining and timber industries. The Company’s stock is traded on the New York Stock Exchange and the Pacific Exchange - Stock & Options. Common Stock trading symbol: RDC. Contact: William C. Provine, Vice-President - Investor Relations, 713-960-7575. Website: www.rowancompanies.com
This report contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs and future expected financial performance of the Company that are based on current expectations and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected by the Company. Among the factors that could cause actual results to differ materially include oil and natural gas prices, the level of offshore expenditures by energy companies, energy demand, the general economy, including inflation, weather conditions in the Company’s principal operating areas and environmental and other laws and regulations. Other relevant factors have been disclosed in the Company’s filings with the U.S. Securities and Exchange Commission.
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ROWAN COMPANIES, INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
Unaudited (In Thousands) | |||||||
DECEMBER 31 | |||||||
2005 | 2004 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 675,903 | $ | 465,977 | |||
Accounts receivable | 253,194 | 132,445 | |||||
Inventories | 196,010 | 164,113 | |||||
Other current assets | 83,025 | 32,910 | |||||
Assets of discontinued operations | - | 11,652 | |||||
Total current assets | 1,208,132 | 807,097 | |||||
Property, plant and equipment - net | 1,720,734 | 1,669,494 | |||||
Other assets | 46,317 | 15,695 | |||||
TOTAL | $ | 2,975,183 | $ | 2,492,286 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current maturities of long-term debt | $ | 64,922 | $ | 64,922 | |||
Other current liabilities | 275,691 | 165,814 | |||||
Liabilities of discontinued operations | - | 4,064 | |||||
Total current liabilities | 340,613 | 234,800 | |||||
Long-term debt | 550,326 | 574,350 | |||||
Other liabilities | 464,505 | 274,252 | |||||
Stockholders' equity | 1,619,739 | 1,408,884 | |||||
TOTAL | $ | 2,975,183 | $ | 2,492,286 |
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ROWAN COMPANIES, INC. | |||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
Unaudited (In Thousands Except Per Share Amounts) | |||||||||||||
FOR THE THREE MONTHS | FOR THE TWELVE MONTHS | ||||||||||||
ENDED DECEMBER 31 | ENDED DECEMBER 31 | ||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||
REVENUES: | |||||||||||||
Drilling services | $ | 215,059 | $ | 126,022 | $ | 775,356 | $ | 472,103 | |||||
Manufacturing sales and services | 102,373 | 64,703 | 293,426 | 207,573 | |||||||||
TOTAL | 317,432 | 190,725 | 1,068,782 | 679,676 | |||||||||
COSTS AND EXPENSES: | |||||||||||||
Drilling services | 105,784 | 73,735 | 394,595 | 326,687 | |||||||||
Manufacturing sales and services | 87,377 | 55,659 | 253,688 | 177,041 | |||||||||
Depreciation and amortization | 20,983 | 20,103 | 81,204 | 78,489 | |||||||||
Selling, general and administrative | 17,805 | 12,217 | 65,092 | 40,721 | |||||||||
Gain on sales of property and equipment | (1,486 | ) | (533 | ) | (52,449 | ) | (1,747 | ) | |||||
Gain on hurricane-related events | (22,855 | ) | - | (13,948 | ) | - | |||||||
TOTAL | 207,608 | 161,181 | 728,182 | 621,191 | |||||||||
INCOME FROM OPERATIONS | 109,824 | 29,544 | 340,600 | 58,485 | |||||||||
OTHER INCOME (EXPENSE): | |||||||||||||
Interest expense | (6,934 | ) | (5,478 | ) | (25,802 | ) | (20,911 | ) | |||||
Less interest capitalized | 762 | 533 | 3,803 | 2,195 | |||||||||
Interest income | 6,383 | 1,721 | 16,843 | 4,408 | |||||||||
Gain on sales of investments | - | - | 9,553 | - | |||||||||
Other - net | (55 | ) | 128 | 473 | 416 | ||||||||
OTHER INCOME (EXPENSE) - NET | 156 | (3,096 | ) | 4,870 | (13,892 | ) | |||||||
INCOME BEFORE INCOME TAXES | 109,980 | 26,448 | 345,470 | 44,593 | |||||||||
Provision for income taxes | 40,493 | 10,062 | 127,633 | 17,108 | |||||||||
INCOME FROM CONTINUING OPERATIONS | 69,487 | 16,386 | 217,837 | 27,485 | |||||||||
Income (loss) from discontinued operations, net of tax | - | (14,158 | ) | 11,963 | (28,758 | ) | |||||||
NET INCOME (LOSS) | $ | 69,487 | $ | 2,228 | $ | 229,800 | $ | (1,273 | ) | ||||
PER DILUTED SHARE AMOUNTS: | |||||||||||||
Income from continuing operations | $ | .63 | $ | .15 | $ | 1.97 | $ | .26 | |||||
Income (loss) from discontinued operations, net of tax | $ | - | $ | (.13 | ) | $ | .11 | $ | (.27 | ) | |||
Net income (loss) | $ | .63 | $ | .02 | $ | 2.08 | $ | (.01 | ) | ||||
AVERAGE DILUTED SHARES | 110,967 | 108,519 | 110,316 | 107,133 |
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ROWAN COMPANIES, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
Unaudited (In Thousands) | |||||||
FOR THE TWELVE MONTHS | |||||||
ENDED DECEMBER 31 | |||||||
2005 | 2004 | ||||||
CASH PROVIDED BY (USED IN): | |||||||
Operations: | |||||||
Net income (loss) | $ | 229,800 | $ | (1,273 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operations: | |||||||
Depreciation and amortization | 81,291 | 95,650 | |||||
Deferred income taxes | 121,660 | 866 | |||||
Contributions to pension plans | (89,207 | ) | (19,494 | ) | |||
Net (gain) loss on asset disposals | (50,238 | ) | 17,596 | ||||
Other - net | 26,310 | 37,804 | |||||
Net changes in current assets and liabilities | 19,486 | (14,857 | ) | ||||
Net changes in other noncurrent assets and liabilities | (5,932 | ) | 815 | ||||
Net cash provided by operations | 333,170 | 117,107 | |||||
Investing activities: | |||||||
Property, plant and equipment additions | (199,798 | ) | (136,886 | ) | |||
Proceeds from asset disposals | 120,713 | 131,694 | |||||
Net cash used in investing activities | (79,085 | ) | (5,192 | ) | |||
Financing activities: | |||||||
Proceeds from borrowings | 37,909 | 70,842 | |||||
Repayments of borrowings | (61,933 | ) | (55,904 | ) | |||
Proceeds from stock option and convertible debenture plans | 34,008 | 15,945 | |||||
Payments of cash dividends | (54,143 | ) | - | ||||
Proceeds from common stock offering, net of issue costs | - | 264,952 | |||||
Net cash provided by (used in) financing activities | (44,159 | ) | 295,835 | ||||
INCREASE IN CASH AND CASH EQUIVALENTS | 209,926 | 407,750 | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 465,977 | 58,227 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 675,903 | $ | 465,977 |
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