CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | ||
In Thousands | Mar. 31, 2010
| Dec. 31, 2009
|
CURRENT ASSETS: | ||
Cash and cash equivalents | $522,146 | $639,681 |
Receivables - trade and other | 420,153 | 343,642 |
Inventories - raw materials and supplies | 258,418 | 309,682 |
Inventories - work-in-progress | 165,193 | 141,036 |
Inventories - finished goods | 4,207 | 941 |
Prepaid expenses and other current assets | 50,915 | 76,744 |
Deferred tax assets - net | 39,153 | 38,071 |
Total current assets | 1,460,185 | 1,549,797 |
PROPERTY, PLANT AND EQUIPMENT - at cost: | ||
Drilling equipment | 3,995,929 | 3,975,006 |
Manufacturing plant and equipment | 248,274 | 251,882 |
Construction in progress | 607,809 | 528,669 |
Other property and equipment | 146,085 | 144,337 |
Property, plant and equipment - gross | 4,998,097 | 4,899,894 |
Less accumulated depreciation and amortization | 1,361,753 | 1,320,409 |
Property, plant and equipment - net | 3,636,344 | 3,579,485 |
Other assets | 78,086 | 81,412 |
TOTAL ASSETS | 5,174,615 | 5,210,694 |
CURRENT LIABILITIES: | ||
Current maturities of long-term debt | 58,563 | 64,922 |
Accounts payable - trade | 105,434 | 124,562 |
Deferred revenues | 124,482 | 139,398 |
Billings in excess of costs and estimated profits on uncompleted contracts | 25,368 | 25,226 |
Accrued compensation and related employee costs | 67,238 | 110,526 |
Accrued income taxes | 38,182 | 40,990 |
Accrued interest | 9,981 | 20,100 |
Other current liabilities | 38,364 | 42,548 |
Total current liabilities | 467,612 | 568,272 |
Long-term debt - less current maturities | 775,223 | 787,490 |
Other liabilities | 282,464 | 278,862 |
Deferred income taxes - net | 471,006 | 465,700 |
STOCKHOLDERS' EQUITY | ||
Common Stock | 14,299 | 14,237 |
Additional paid-in capital | 1,081,596 | 1,078,337 |
Retained earnings | 2,234,149 | 2,169,526 |
Cost of treasury shares | (1,413) | (1,409) |
Accumulated other comprehensive loss | (150,321) | (150,321) |
Total stockholders' equity | 3,178,310 | 3,110,370 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $5,174,615 | $5,210,694 |
PARENTHETICAL DATA TO THE CONSO
PARENTHETICAL DATA TO THE CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | ||
Mar. 31, 2010
| Dec. 31, 2009
| |
Preferred stock, par value per share | $1 | $1 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value per share | 0.125 | 0.125 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 114,383,650 | 113,885,661 |
Treasury shares | 52,477 | 52,342 |
Series C Preferred Stock [Member] | ||
Preferred stock, shares authorized | 9,606 | 9,606 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, shares issued | 0 | 0 |
Series A Junior Preferred Stock [Member] | ||
Preferred stock, shares authorized | 1,500,000 | 1,500,000 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, shares issued | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $) | ||
In Thousands, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
REVENUES: | ||
Drilling services | $330,984 | $380,370 |
Manufacturing sales and services | 101,421 | 114,438 |
Total revenues | 432,405 | 494,808 |
COSTS AND EXPENSES: | ||
Drilling services (excluding items below) | 136,547 | 145,381 |
Manufacturing sales and services (excluding items below) | 84,570 | 90,808 |
Depreciation and amortization | 45,492 | 40,499 |
Selling, general and administrative | 25,797 | 24,576 |
Gain on disposals of property and equipment | (129) | (4,701) |
Material charge - manufacturing inventories (Note 10) | 42,024 | 0 |
Total costs and expenses | 334,301 | 296,563 |
INCOME FROM OPERATIONS | 98,104 | 198,245 |
OTHER INCOME (EXPENSE): | ||
Interest expense | (12,970) | (3,143) |
Interest capitalized | 7,291 | 2,764 |
Interest income | 181 | 331 |
Other - net | 1,545 | 1,414 |
Total other income (expense) - net | (3,953) | 1,366 |
INCOME BEFORE INCOME TAXES | 94,151 | 199,611 |
Provision for income taxes | 29,528 | 67,911 |
NET INCOME | $64,623 | $131,700 |
PER SHARE AMOUNTS: | ||
Net income - basic | 0.57 | 1.16 |
Net income - diluted | 0.56 | 1.16 |
1_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Statement of Cash Flows [Abstract] | ||
Net Income | $64,623 | $131,700 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation and amortization | 45,492 | 40,499 |
Deferred income taxes | 4,224 | 24,964 |
Provision for pension and postretirement benefits | 9,632 | 11,662 |
Stock-based compensation expense | 2,955 | 2,969 |
Gain on disposals of property and equipment | (129) | (4,701) |
Postretirement benefit claims paid | (874) | (817) |
Contributions to pension plans | (34,532) | (7,324) |
Changes in current assets and liabilities: | ||
Receivables - trade and other | (76,511) | 36,157 |
Inventories | 24,288 | (13,410) |
Prepaid expenses and other current assets | 25,829 | 10,539 |
Accounts payable | (32,763) | (114,241) |
Accrued income taxes | (2,808) | (13,575) |
Deferred revenues | (14,916) | 2,665 |
Billings in excess of costs and estimated profits on uncompleted contracts | 142 | 2,060 |
Other current liabilities | (23,281) | (31,049) |
Net changes in other noncurrent assets and liabilities | (1,559) | (822) |
Net cash (used in) provided by operations | (10,188) | 77,276 |
Cash provided by (used in) investing activities: | ||
Capital expenditures | (89,576) | (93,631) |
Proceeds from disposals of property, plant and equipment | 323 | 5,310 |
Net cash used in investing activities | (89,253) | (88,321) |
Cash provided by (used in) financing activities: | ||
Repayments of borrowings | (18,707) | (18,707) |
Proceeds from stock option plans and other | 613 | 116 |
Net cash used in financing activities | (18,094) | (18,591) |
DECREASE IN CASH AND CASH EQUIVALENTS | (117,535) | (29,636) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 639,681 | 222,428 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $522,146 | $192,792 |
General
General | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 1 - General | Note 1 - General The condensed consolidated financial statements of Rowan Companies, Inc. ("Rowan" or the "Company") included in this Form 10-Q have been prepared without audit in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission.Certain information and notes have been condensed or omitted as permitted by those rules and regulations.The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2009. Rowan believes the accompanying unaudited condensed consolidated 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.Rowan's results of operations and cash flows for the interim periods are not necessarily indicative of results to be expected for the full year.(See discussion under "Material Charge" in Note 10.) |
Segment Information
Segment Information | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 2 - Segment Information | Note 2 - Segment Information Rowan has three principal operating segments - Drilling Services, Drilling Products and Systems, and Mining, Forestry and Steel Products.The largest of these is the Drilling Services segment, which provides onshore and offshore oil and gas contract drilling services on a daily-rate basis.The Drilling Products and Systems segment manufactures equipment and parts for the drilling industry featuring jack-up rigs, rig kits and related components and parts, mud pumps, drawworks, top drives, rotary tables, other rig equipment, variable-speed motors, drives and other electrical components.The Mining, Forestry and Steel Products segment manufactures large-wheeled mining and timber equipment and related parts, and carbon and alloy steel plate.The Drilling Products and Systems and Mining, Forestry and Steel Products segments operate under the Company's wholly owned subsidiary, LeTourneau Technologies, Inc ("LeTourneau"). The following table presents certain financial information by operating segment for the three months ended March 31, 2010 and 2009 (in millions): 2010 2009 Revenues: Drilling Services $ 331.0 $ 380.4 Manufacturing: Drilling Products and Systems 96.0 144.6 Mining, Forestry and Steel Products 51.1 43.3 Eliminations (45.7 ) (73.5 ) Total Manufacturing 101.4 114.4 Total revenues from external customers $ 432.4 $ 494.8 Income (loss) from operations: Drilling Services $ 136.9 $ 187.1 Manufacturing: Drilling Products and Systems (38.4 ) 26.5 Mining, Forestry and Steel Products 11.2 5.1 Eliminations (11.6 ) (20.5 ) Total Manufacturing (38.8 ) 11.1 Total income from operations $ 98.1 $ 198.2 |
Earnings Per Share
Earnings Per Share | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 3 - Earnings Per Share | Note 3 - Earnings Per Share A reconciliation of basic and diluted shares for the three months ended March 31, 2010 and 2009 follows (in thousands): 2010 2009 Average common shares outstanding - basic 112,857 113,126 Add: Dilutive shares issuable under stock-based compensation plans 1,610 46 Average diluted shares 114,467 113,172 There were no adjustments to net income required for purposes of computing diluted earnings per share. The following table sets forth the share effects of securities excluded from the diluted calculations for the three months ended March 31, 2010 and 2009, because they were antidilutive.Options and other potentially dilutive securities are antidilutive when the exercise or conversion price exceeds the average market price of the Company's common stock during the period (in thousands): 2010 2009 Employee and director stock options 618 1,814 Stock appreciation rights 158 - Shares issuable upon conversion of debentures 35 35 Total potentially dilutive shares 811 1,849 |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 4 - Pension and Other Postretirement Benefits | Note 4 - Pension and Other Postretirement Benefits Rowan sponsors defined benefit pension plans covering substantially all of its employees, and provides health care and life insurance benefits upon retirement for certain employees. Net periodic pension cost recognized for the three months ended March 31, 2010 and 2009 included the following components (in thousands): 2010 2009 Service cost $ 3,925 $ 4,428 Interest cost 7,652 8,313 Expected return on plan assets (7,527 ) (7,154 ) Recognized actuarial loss 5,303 4,016 Amortization of prior service cost (1,647 ) (62 ) Total net pension cost $ 7,706 $ 9,541 6 Table of Contents ROWAN COMPANIES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Other postretirement benefit cost recognized for the three months ended March 31, 2010 and 2009 included the following components (in thousands): 2010 2009 Service cost $ 583 $ 623 Interest cost 1,135 1,230 Recognized actuarial loss 97 155 Amortization of transition obligation 163 163 Amortization of prior service cost (51 ) (50 ) Total other postretirement benefit cost $ 1,927 $ 2,121 During the three months ended March 31, 2010, Rowan contributed $35.4 million to its pension and other postretirement benefit plans and expects to make additional contributions to such plans totaling approximately $25.4 million during the remainder of 2010. |
Cash and Cash Equivalents
Cash and Cash Equivalents | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 5 - Cash and Cash Equivalents | Note 5 - Cash and Cash Equivalents Certain of Rowan's debt securities are government-guaranteed through the Title XI program of the U.S. Department of Transportation's Maritime Administration ("MARAD").At the Company's request, MARAD waived certain windstorm insurance coverage requirements under the loan agreements, for which the Company agreed to maintain a minimum cash balance, which is currently $25 million.Rowan remains subject to restrictions on the use of certain insurance proceeds should the Company experience future windstorm losses.Each of these security provisions will be released by MARAD should Rowan be able to obtain windstorm coverage that satisfies the original terms of its debt agreements. |
Construction Contracts in Proce
Construction Contracts in Process | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 6 - Construction Contracts in Process | Note 6 - Construction Contracts in Process The following table summarizes the status of long-term manufacturing contracts in process.Payments, revenues and costs are cumulative from inception of the contract through the date indicated.Payments include those received for contracts in progress or not yet begun and completed contracts with outstanding collections (in thousands): March 31, December 31, 2010 2009 Total contract value of long-term contracts in process or not yet begun $ 202,279 $ 204,201 Payments received 142,801 119,653 Revenues recognized 120,564 102,155 Costs recognized 73,210 61,407 Payments received in excess of revenues recognized 22,237 17,498 Billings in excess of costs and estimated profits on uncompleted contracts (included in current liabilities) $ 25,368 $ 25,226 Costs and estimated profits in excess of billings on uncompleted contracts (included in prepaid expenses and other current assets) $ 3,131 $ 7,728 During the three months ended March 31, 2010, Rowan recognized approximately $18.4 million of manufacturing revenues and $11.9 million of related costs under the percentage-of-completion method of accounting, as compared to $26.1 million of revenues and $16.2 million of costs for the comparable period of 2009. |
Commitments
Commitments | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 7 - Commitments | Note 7 - Commitments The following table presents the status of all of the Company's rigs under construction as of March 31, 2010.Amounts include capitalized interest (in millions): Total estimated project costs Total costs incurred through March 31, 2010 Projected costs for the remainder of 2010 Projected costs in 2011 Projected costs in 2012 Joe Douglas (240C) $ 257 $ 91 $ 81 $ 85 $ - EXL #1 192 175 17 - - EXL #2 193 160 33 - - EXL #3 195 135 60 - - EXL #4 197 47 70 49 31 Total rigs under construction $ 1,034 $ 608 $ 261 $ 134 $ 31 Rowan periodically employs letters of credit or other bank-issued guarantees in the normal course of its businesses, and had outstanding letters of credit of approximately $43.1 million at March 31, 2010. |
Legal Proceedings
Legal Proceedings | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 8 - Legal Proceedings | Note 8 - Legal Proceedings During 2005, Rowan lost four offshore rigs, including the Rowan-Halifax, and incurred significant damage on a fifth as a result of Hurricanes Katrina and Rita.The Company had leased the Rowan-Halifax under a charter agreement that commenced in 1984 and was scheduled to expire in March 2008.The rig was insured for $43.4 million, a value that Rowan believes to be more than sufficient to satisfy its obligations under the charter agreement, and by a margin sufficient to cover the $6.3 million carrying value of Rowan equipment installed on the rig.However, the parties holding interests in the rig under the charter claimed that the rig should have been insured for its fair market value and sought recovery from Rowan for compensation above the insured value.Thus, Rowan assumed no insurance proceeds related to the Rowan-Halifax and recorded a charge during 2005 for the full carrying value of its equipment.On November 3, 2005, the Company filed a declaratory judgment action styled Rowan Companies, Inc. vs. Textron Financial Corporation and Wilmington Trust Company as Owner Trustee of the Rowan-Halifax 116-C Jack-Up Rig in the 215th Judicial District Court of Harris County, Texas. The owner interests filed a counterclaim for a variety of relief, claiming a right to payment under the charter based on a post-casualty rig valuation of approximately $83 million.The insurance proceeds were placed in escrow.The district court ultimately granted judgment against Rowan for the difference between (a) what Rowan had already paid to the Owner Trustee out of the escrowed insurance proceeds and (b) that rig valuation.On March 31, 2009, the Court of Appeals for the 14th District of Texas reversed this judgment, holding that the Company's interpretation of the charter was substantially correct, but directing Rowan to pay additional amounts due under the charter.The Company has since made this payment out of the escrowed insurance proceeds.In addition, the Court of Appeals remanded the case for further proceedings in the district court to resolve additional issues and to determine the parties' respective rights to the balance of the escrowed insurance proceeds, which is currently $21.4 million.The owner interests filed a motion for rehearing of the Court of Appeals' decision.On October 8, 2009, the Court of Appeals denied the motion, but issued a substitute opinion to clarify the scope of the remand.The Court of Appeals again held that the trial court is to resolve issues concerning the proper disposition of excess insurance proceeds.The Court of Appeals further held that the owner interests' claim that Rowan breached the charter agreement by failing to maintain adequate insurance remains to be decided by the trial court.The owner interests filed another motion for rehearing, which motion was denied in January 2010.On March 22, 2010, the owner interests filed its petition for review in the Supreme Court of Texas.The Company believes that no further payment is owed to the opposing parties under the charter and intends to pursue that position vigorously in all subsequent court proceedings. 8 Table of Contents ROWAN COMPANIES, INC. |
Stock-Based Compensation
Stock-Based Compensation | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 9 - Stock-Based Compensation | Note 9 - Stock-Based Compensation On March 5, 2010, the Company granted restricted stock awards and stock appreciation rights covering a total of 798,846 shares, which vest in one-third increments over a three-year service period, with a fair value aggregating approximately $17.7 million.Grant-date fair value, net of estimated forfeitures, was $17.1 million, which will be amortized on a straight-line basis over three years from the grant date. At March 31, 2010, Rowan had approximately $33.4 million of unrecognized future stock-based compensation expense, which is expected to be recognized over a remaining weighted-average period of 1.7 years |
Other Financial Statement Discl
Other Financial Statement Disclosures | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 10 - Other Financial Statement Disclosures - Fair Value Disclosures | Fair Values of Financial Instruments - The carrying amounts of the Company's cash and cash equivalents, trade receivables and trade payables approximated their fair values due to their short maturities.As of March 31, 2010, the fair values of the Company's debt, which had an aggregate carrying value of $833.8 million, approximated $909 million.Fair values of the Company's debt was estimated based on quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. |
Note 10 - Other Financial Statement Disclosures - Cash Flow, Supplemental Information | Supplemental Cash Flow Information - Accrued capital expenditures, which are excluded from capital expenditures in the Condensed Consolidated Statements of Cash Flows until settlement, were $13.4 million and $36.7 million at March 31, 2010 and 2009, respectively. |
Note 10 - Other Financial Statement Disclosures - Comprehensive Income | Other Comprehensive Income - Rowan had no items of other comprehensive income during the three months ended March 31, 2010 or 2009. |
Note 10 - Other Financial Statement Disclosures - Material Operating Charges | Material Charge - During the first quarter of 2010, the Drilling Products and Systems manufacturing segment performed an assessment of its Houston-based raw materials and supplies inventory.As a result, the Company increased its inventory valuation reserve by approximately $42.0 million and recorded a corresponding charge to its operations during the period to reflect a reduction in the estimated realizable value of items that were deemed to be nonconforming or slow-moving.Such amount is reflected in the Condensed Consolidated Statements of Income on the line, "Material charge - manufacturing inventories." |
Subsequent Events
Subsequent Events | |
3 Months Ended
Mar. 31, 2010 | |
Notes to Financial Statements [Abstract] | |
Note 11 - Subsequent Events | Note 11 - Subsequent Events There were no events or transactions that occurred subsequent to March 31, 2010, requiring recognition or disclosure in the financial statements. |
Document Information
Document Information | |
3 Months Ended
Mar. 31, 2010 | |
Document Information [Text Block] | |
Document Type | 10-Q |
Document Period End Date | 2010-03-31 |
Amendment Flag | false |
Entity Information
Entity Information (USD $) | |||
3 Months Ended
Mar. 31, 2010 | Apr. 30, 2010
| Jun. 30, 2009
| |
Entity [Text Block] | |||
Entity Registrant Name | Rowan Companies Inc | ||
Entity Central Index Key | 0000085408 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $2,200,000,000 | ||
Entity Common Stock, Shares Outstanding | 114,425,813 | ||
Document Fiscal Year Focus | 2,010 | ||
Document Fiscal Period Focus | Q1 |