EXHIBIT 99.1
News Release
Rowan Companies, Inc.
2800 Post Oak Boulevard, Suite 5450
Houston, Texas 77056 (713) 621-7800
FOR IMMEDIATE RELEASE & #160; July 25, 2006
ROWAN REPORTS RECORD OPERATING RESULTS
HOUSTON, TEXAS -- For the three months ended June 30, 2006, Rowan Companies, Inc. (RDC-NYSE) generated record net income of $109.7 million, or 98¢ per share, compared to $42.3 million, or 39¢ per share, in the same period of 2005 and $59.1 million, or 53¢ per share, in the first quarter of 2006. Revenues were a record $382.9 million in the second quarter of 2006, compared to $244.6 million in the second quarter of 2005 and $299.8 million in the first quarter of 2006.
Current quarter results included $24.4 million, or 14¢ per share, of gains on asset sales, compared to $11.4 million, or 7¢ per share, in the second quarter of 2005 and $2.5 million, or 2¢ per share, in the first quarter of 2006. The second quarter 2005 results also included $0.9 million, or less than 1¢ per share, of after-tax loss from discontinued operations.
For the six months ended June 30, 2006, Rowan generated net income of $168.8 million, or $1.51 per share, compared to $85.7 million, or 78¢ per share, in the same period of 2005. Revenues were $682.7 million during the first half of 2006 compared to $467.0 million in the first half of 2005. The 2005 results included $12.0 million, or 11¢ per share, of after-tax income from discontinued operations.
Rowan’s offshore rig utilization was 93% during the second quarter of 2006, down from 96% in the comparable 2005 period, as the Company’s four rigs in Saudi Arabia did not commence operations until well into April. The utilization of Rowan’s other available 15 offshore rigs was 96% during the second quarter of 2006. The Company’s average offshore day rate was a record $143,900 during the second quarter of 2006, up $15,300, or 12%, from the first quarter of 2006 and up $74,100, or 106%, from the second quarter of 2005.
Rowan’s land rig utilization was 100% during the second quarter of 2006, up from 89% in the comparable 2005 period. The Company’s average land rig day rate was $22,400 during the second quarter of 2006, up $200, or 1%, from the first quarter of 2006 and up $5,300, or 31%, from the second quarter of 2005.
The Company’s external manufacturing backlog was a record $567 million at June 30, and included $330 million in the marine group, $139 million in the drilling products group and $53 million in the equipment group.
Danny McNease, Chairman and Chief Executive Officer, commented, “Our second quarter operating results were the best in the Company’s 83-year history. With half of our offshore fleet contracted well into 2007 or beyond, and a manufacturing backlog that stretches into 2008, our prospects for future revenues and earnings have never been brighter. Additions to capacity carried out during 2006 and planned over the next three years should enhance opportunities for further growth in our drilling and manufacturing businesses.
“We believe that worldwide demand for competitive jack-up rigs will continue to exceed the available supply, that the migration of rigs from the Gulf of Mexico to international markets will continue and, as a result, that overall drilling day rates will remain firm. Barring a collapse in oil, natural gas or other commodity prices, we expect worldwide demand for new rigs and rig kits, related drilling products and mining and timber equipment to remain strong.”
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 NYSE Arca. 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) | |||||||
JUNE 30 | |||||||
2006 | 2005 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 488,331 | $ | 487,821 | |||
Accounts receivable | 375,489 | 169,962 | |||||
Inventories | 263,325 | 179,899 | |||||
Other current assets | 85,389 | 65,502 | |||||
Total current assets | 1,212,534 | 903,184 | |||||
Property, plant and equipment - net | 1,953,704 | 1,694,709 | |||||
Other assets | 36,177 | 15,565 | |||||
Assets of discontinued operations | - | 3,667 | |||||
TOTAL | $ | 3,202,415 | $ | 2,617,125 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current maturities of long-term debt | $ | 64,922 | $ | 64,922 | |||
Other current liabilities | 360,041 | 133,045 | |||||
Total current liabilities | 424,963 | 197,967 | |||||
Long-term debt | 517,865 | 573,180 | |||||
Other liabilities | 495,579 | 353,530 | |||||
Stockholders' equity | 1,764,008 | 1,492,448 | |||||
TOTAL | $ | 3,202,415 | $ | 2,617,125 | |||
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ROWAN COMPANIES, INC. | |||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
Unaudited (In Thousands Except Per Share Amounts) | |||||||||||||
THREE MONTHS | SIX MONTHS | ||||||||||||
ENDED JUNE 30 | ENDED JUNE 30 | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
REVENUES: | |||||||||||||
Drilling services | $ | 280,110 | $ | 182,637 | $ | 497,212 | $ | 342,916 | |||||
Manufacturing sales and services | 102,776 | 61,923 | 185,461 | 124,036 | |||||||||
Total | 382,886 | 244,560 | 682,673 | 466,952 | |||||||||
COSTS AND EXPENSES: | |||||||||||||
Drilling services | 121,389 | 99,182 | 230,184 | 188,607 | |||||||||
Manufacturing sales and services | 81,125 | 51,687 | 146,512 | 108,361 | |||||||||
Depreciation and amortization | 21,951 | 20,106 | 42,062 | 39,960 | |||||||||
Selling, general and administrative | 16,895 | 16,086 | 35,404 | 29,346 | |||||||||
Gain on sale of property and equipment | (24,432 | ) | (9,592 | ) | (26,976 | ) | (10,182 | ) | |||||
Total | 216,928 | 177,469 | 427,186 | 356,092 | |||||||||
INCOME FROM OPERATIONS | 165,958 | 67,091 | 255,487 | 110,860 | |||||||||
OTHER INCOME (EXPENSE): | |||||||||||||
Interest expense | (7,128 | ) | (6,318 | ) | (14,125 | ) | (12,174 | ) | |||||
Less: interest capitalized | 2,261 | 1,088 | 3,620 | 1,859 | |||||||||
Interest income | 6,948 | 3,565 | 15,277 | 6,111 | |||||||||
Gain on sale of investments | - | 1,852 | - | 9,553 | |||||||||
Other - net | (61 | ) | 233 | 71 | 569 | ||||||||
OTHER INCOME (EXPENSE) - NET | 2,020 | 420 | 4,843 | 5,918 | |||||||||
INCOME BEFORE INCOME TAXES | 167,978 | 67,511 | 260,330 | 116,778 | |||||||||
Provision for income taxes | 58,287 | 24,325 | 91,534 | 43,053 | |||||||||
INCOME FROM CONTINUING OPERATIONS | 109,691 | 43,186 | 168,796 | 73,725 | |||||||||
Income (loss) from discontinued operations, net of tax | - | (920 | ) | - | 11,963 | ||||||||
NET INCOME | $ | 109,691 | $ | 42,266 | $ | 168,796 | $ | 85,688 | |||||
PER SHARE AMOUNTS: | |||||||||||||
Income from continuing operations | $ | 0.98 | $ | 0.39 | $ | 1.51 | $ | 0.67 | |||||
Income from discontinued operations, net of tax | $ | - | $ | - | $ | - | $ | 0.11 | |||||
Net income | $ | 0.98 | $ | 0.39 | $ | 1.51 | $ | 0.78 | |||||
AVERAGE DILUTED SHARES | 111,951 | 109,752 | 111,864 | 109,567 | |||||||||
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ROWAN COMPANIES, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
Unaudited (In Thousands) | |||||||
SIX MONTHS | |||||||
ENDED JUNE 30 | |||||||
2006 | 2005 | ||||||
CASH PROVIDED BY (USED IN): | |||||||
Operations: | |||||||
Net income | $ | 168,796 | $ | 85,688 | |||
Adjustments to reconcile net income to net cash provided by operations: | |||||||
Depreciation and amortization | 42,062 | 40,047 | |||||
Deferred income taxes | 57,176 | 44,847 | |||||
Contributions to pension plans | (920 | ) | (66,052 | ) | |||
Gain on sale of assets | (26,976 | ) | (40,471 | ) | |||
Other - net | 22,281 | 13,822 | |||||
Net changes in current assets and liabilities | (178,763 | ) | (25,046 | ) | |||
Net changes in other noncurrent assets and liabilities | 15,043 | 65 | |||||
Net cash provided by operations | 98,699 | 52,900 | |||||
Investing activities: | |||||||
Property, plant and equipment additions | (258,091 | ) | (76,059 | ) | |||
Proceeds from disposals of property, plant and equipment | 34,305 | 23,900 | |||||
Proceeds from sale of boat purchase options | - | 20,866 | |||||
Proceeds from sale of investments | - | 9,553 | |||||
Net cash used in investing activities | (223,786 | ) | (21,740 | ) | |||
Financing activities: | |||||||
Proceeds from borrowings | - | 28,302 | |||||
Repayments of borrowings | (32,461 | ) | (29,472 | ) | |||
Payment of cash dividends | (38,462 | ) | (26,935 | ) | |||
Proceeds from option and debenture plans and other | 8,438 | 18,789 | |||||
Net cash used in financing activities | (62,485 | ) | (9,316 | ) | |||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (187,572 | ) | 21,844 | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 675,903 | 465,977 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 488,331 | $ | 487,821 | |||
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