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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___ TO ___
ROWAN COMPANIES, INC.
Incorporated in Delaware Commission File I. R. S. Employer
Number 1-5491 Identification:
75-0759420
5450 Transco Tower
2800 Post Oak Boulevard, Houston, Texas 77056-6196
Registrant's telephone number, including area code: (713) 621-7800
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, $.125 Par Value New York Stock Exchange
Pacific Stock Exchange
11-7/8% Senior Notes due 2001 New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___.
The aggregate market value as of March 1, 1995 of the Common Stock
held by non-affiliates of the registrant was approximately $500 million.
The number of shares of Common Stock, $.125 par value, outstanding at
March 1, 1995 was 84,310,787.
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K
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Annual Report to Stockholders for
fiscal year ended December 31, 1994 Parts I, II and IV
Proxy Statement for the 1995 Annual
Meeting of Stockholders Part III
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TABLE OF CONTENTS
Page
PART I
Item 1. Business .................................................... 1
Contract Drilling .................................................. 1
Offshore Operations ............................................. 1
Onshore Operations .............................................. 3
Contracts ....................................................... 3
Competition ..................................................... 4
Regulations and Hazards ......................................... 5
Aircraft Operations ................................................ 7
Contracts ....................................................... 8
Competition ..................................................... 8
Regulations and Hazards ......................................... 9
Manufacturing Operations............................................ 9
Raw Materials.................................................... 10
Competition...................................................... 10
Regulations and Hazards.......................................... 11
Employees .......................................................... 12
Item 2. Properties .................................................. 13
Drilling Rigs ...................................................... 13
Aircraft ........................................................... 16
Manufacturing Facilities............................................ 16
Item 3. Legal Proceedings ........................................... 16
Item 4. Submission of Matters to a Vote of Security Holders ......... 17
Additional Item. Executive Officers of the Registrant ................ 17
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters ....................................... 19
Item 6. Selected Financial Data ..................................... 19
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 19
Item 8. Financial Statements and Supplementary Data ................. 19
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure ....................... 19
PART III
Item 10. Directors and Executive Officers of the Registrant .......... 19
Item 11. Executive Compensation ...................................... 19
Item 12. Security Ownership of Certain Beneficial Owners
and Management ............................................ 20
Item 13. Certain Relationships and Related Transactions .............. 20
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K ....................................... 20
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PART I
ITEM 1. BUSINESS
Rowan Companies, Inc. (the "Company"), organized in 1947 as a Delaware
corporation and a successor to a contract drilling business conducted since
1923 under the name Rowan Drilling Company, Inc., is engaged principally in the
contract drilling of oil and gas wells in domestic and foreign areas. As noted
below, it also provides aircraft services and, since February 1994, has
operated a mini-steel mill, a heavy equipment manufacturing plant and a marine
rig construction yard through the purchase of the net assets of Marathon
LeTourneau Company.
Offshore operations of the Company consist primarily of contract
drilling services utilizing mobile rigs, principally a fleet of 20
self-elevating drilling platforms ("jack-up rigs"), including three heavy duty
cantilever jack-up rigs ("Gorilla Class rigs"). Beginning in 1992, the Company
moved towards Total Project Management, an approach to drilling operations
which emphasizes drilling and completing wells on a turnkey basis. In that same
year it began providing offshore platform installation and removal services.
The Company provides contract and charter helicopter and fixed-wing
aircraft services, with its fleet consisting on March 31, 1995 of 89
helicopters and 17 fixed-wing aircraft. The Company's aircraft services
include flightseeing, medivac transportation, forest fire control and support
for oil and gas related operations out of its two primary bases in Alaska and
Louisiana. In addition, the Company provides airline services in Alaska using
its fixed-wing aircraft. Since 1991, the Company has owned a 49% interest in a
Dutch-based joint venture company, KLM ERA Helicopters B.V. ("KLM ERA"), which
owns a fleet consisting of 10 helicopters in the Dutch and British sectors of
the North Sea.
In February 1994, the Company purchased through its wholly-owned
subsidiary, LeTourneau, Inc., the net assets of Marathon LeTourneau Company.
LeTourneau, Inc. operates a mini-steel mill that recycles scrap and produces
alloy steel and steel plate; a manufacturing facility that produces heavy
equipment for the mining, timber and transportation industries including, among
other things, front-end loaders up to 50 ton capacity and trucks up to 240
ton capacity; and a marine group that has built over one-third of all mobile
offshore jack-up drilling rigs, including all 20 operated by Rowan.
Information regarding revenues, operating profit, identifiable assets
and export sales of the Company's industry segments and foreign and domestic
operations for each of the three years in the period ended December 31, 1994,
is incorporated by reference herein and provided in Footnote 10 of the Notes to
Consolidated Financial Statements on pages 25 and 26 of the Company's Annual
Report to Stockholders for the fiscal year ended December 31, 1994 ("Annual
Report"), incorporated portions of which are filed as Exhibit 13 hereto.
In the years 1992, 1993 and 1994, the Company had revenues from
individual customers representing 10% or more of consolidated revenues as
follows: Conoco - 11% for 1992; Phillips Petroleum Company - 17% for 1993 and
AMOCO Corp. - 10% for 1994. Such revenues were primarily from drilling
operations.
For a discussion of the Company's availability of funds for future
operations and estimated capital expenditures for 1995, see "Liquidity and
Capital Resources" under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on page 14 of the Annual Report, which
information is incorporated herein by reference.
CONTRACT DRILLING
In 1994, drilling operations generated an operating profit (income
from operations before deducting general and administrative expenses) of
$174,000.
Offshore Operations
At December 31, 1994, the Company's drilling fleet consisted of 20
deep-water jack-up rigs (eight conventional and twelve cantilever, including
three Gorilla Class rigs in the latter category), one semi-submersible rig and
three submersible barge
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rigs. The Company owns all of the rigs comprising its fleet except for two
cantilever jack-up rigs leased under sale/leaseback arrangements expiring in
1999 and 2000.
Since completing a major drilling rig expansion program conducted in
the early to mid-1980s, the Company's capital expenditures have been primarily
for improvements to existing drilling rigs and the purchase of aircraft.
Adding to these capital expenditures were the purchases of the 49% interest in
KLM ERA and the net assets of Marathon LeTourneau in 1991 and 1994,
respectively. See ITEM 2. PROPERTIES on page 13 of this Form 10-K for
additional information with respect to the operating status of the Company's
rigs.
The Gorilla Class rigs are a heavier class of jack-up rig, intended to
drill up to 30,000 feet in water depths up to 328 feet in extreme hostile
environments (winds up to 100 miles per hour and seas up to 90 feet). Each
Gorilla Class rig is equipped with a "top-drive", a drilling system costing
approximately $1.25 million which assists in faster drilling while reducing the
hazard of the drill string sticking, and is particularly advantageous in the
case of horizontal drilling.
Of the Company's other jack-up rigs, six Class 116-C rigs and one
Class 116 rig have been modified to provide (but to a lesser extent than
Gorilla Class rigs) the capability of operating in hostile environments. The
Company's nine Class 116-C jack-up rigs, two Class 116 jack-up rigs, two Class
84 jack-up rigs and two of its four Class 52 jack-up rigs have been equipped
with top-drive drilling systems.
In 1989, the Company acquired a patent (U. S. Patent No. 4,103,503)
applicable to the transfer of a drilling rig substructure from a jack-up type
drilling unit to a fixed platform. In conjunction with technology contained in
the patent, the Company has developed additional substructure transfer or "skid
base" technology which has allowed the Company's conventional jack-up rigs to
work over wells on a production platform that heretofore required a cantilever
jack-up or platform rig. At March 31, 1995, two Class 116 jack-up rigs, two
Class 84 jack-up rigs and one of its Class 52 jack-up rigs have been equipped
with skid base units.
In 1992, the Company purchased a 550-ton ABS certified crane and
formed a new subsidiary for conducting offshore platform installation and
removal services. Utilizing the skid base technology discussed above, the
drilling package on a jack-up rig can be skidded off to allow the heavy-lift
crane to be skidded on, thereby transforming the unit into a crane barge or,
reversing the process, transforming the unit back into a drilling rig. The
Company has a patent (U.S. Patent No. 5,388,930) to cover such technology. At
March 31, 1995, one Class 52 jack-up rig had been modified to provide this dual
purpose capability and is able to operate in water depths up to 225 feet.
In the last three years, the Company's rigs located in the North Sea
have undergone modifications in order to meet new offshore safety standards
being implemented in the United Kingdom. The Company's four Class 116-C
jack-up rigs presently in the North Sea are subject to undergoing more
modifications pending the finalization of the safety standards being negotiated
for each rig. Some of the safety standards under government consideration,
many of which the Company has already modified its North Sea rigs to meet, are
as follows: a minimum of two independent sources of sea water for firefighting;
a temporary safe refuge for personnel near the escape capsules which will
provide a high degree of protection from fire, smoke and gas inhalation and
will contain additional safety, communication and survival gear; additional
enclosed motorized escape capsules; and expanded smoke and gas protection in
the crew quarters. Because of continued market weakness in the North Sea, the
Company moved drilling rigs to other markets as follows: one Gorilla Class
jack-up in 1992 and another in 1994, one Class 116-C jack-up in 1992 and one
Class 116 jack-up in 1992.
Since 1970, the Company has pursued a policy of concentrating on
jack-up rigs. Jack-ups are utilized for both offshore exploratory and
development drilling and, in certain areas, for well workover operations. The
Company operates larger deep-water type jack-up rigs capable of drilling to
depths of 20,000 to 30,000 feet in maximum water depths ranging from 225 to 450
feet, depending on the size of the rig and its location. A jack-up rig
consists of a floating hull with three independent elevating legs. The
Company's rigs are equipped with propulsion thrusters to assist in towing. The
entire drilling unit, consisting of the drilling rig, supplies, crew quarters,
loading and unloading facilities, helicopter landing deck and other related
equipment,
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is mounted on the hull. At the drilling site, the legs are lowered until they
penetrate the ocean floor, and the platform hull is jacked up on the legs to the
desired elevation above the water. The platform hull then serves as a drilling
platform until the well is completed and the operation is reversed by lowering
the platform hull into the water and towing it to the next drilling site. The
cantilever feature contained on the Company's newer jack-ups provides for the
extension of the portion of the drilling platform containing the drilling rig
over fixed production platforms so that the drilling rig may be utilized to
perform development or workover operations on the platforms with a minimum of
interruption to production.
The Company's semi-submersible rig is utilized principally for
offshore exploratory drilling from a floating position in waters to depths of
1,000 feet. A semi-submersible drilling rig consists of a drilling platform
raised above multiple hulls by columns. The hulls are flooded so as to be
submerged beneath the surface, in which position the rig is anchored during
drilling operations. The same type of equipment which is contained on a jack-up
rig is mounted on the drilling platform. After completion of the well, the
submerged hull is deballasted to reduce vessel draft and facilitate towing,
assisted by its own thrusters, to another drilling location.
The Company's submersible barge rigs are used in shallow coastal and
inland waters in depths up to 26 feet for exploratory, development and workover
drilling. A submersible barge rig consists of a drilling rig with crew
quarters mounted on an elevated platform on top of a floating hull. At the
drilling site the hull is flooded so that it rests on the bottom and the
elevated platform protruding above the water serves as a stationary drilling
platform.
Onshore Operations
The Company has drilling equipment, personnel and camps available on a
contract basis for exploration and development of onshore areas. It currently
owns 17 land rigs located as follows: deep-well rigs - eight in the Anadarko
and Permian basins of Oklahoma and Texas and one in Mississippi; winterized
rigs - five in Alaska; and trailer-mounted rigs - three in Argentina.
In the first half of 1994, five of the Company's land rigs completed a
three-year drilling contract in Venezuela and all were returned to the United
States where three of the five had sporadic work in the second half of 1994.
Subsequently, three of these rigs have been moved to Argentina to perform a
two-year drilling contract that commenced in late March 1995. Two of the rigs
presently located in Oklahoma are scheduled to be moved to Argentina to perform
multiple well drilling contracts. Except for one deep-well rig that worked
most of the last two and a half quarters of 1994 in Texas and one winterized
land rig in Alaska that worked in the first quarter of 1992, another that
worked in the first quarter of 1993 and another that worked for most of the
first four months of 1994, the deep-well land rigs based in Texas, Oklahoma and
Alaska have been idle since mid-1988 due to inadequate rates. Accordingly,
seven of the Company's land rigs remained "mothballed" at March 31, 1995. The
cost of maintaining these rigs is modest and the remaining investment in the
rigs is not significant.
The drilling equipment comprising an onshore rig consists basically of
engines, drawworks or hoist, derrick, pumps to circulate the drilling fluid,
drill pipe and drilling bits. The type of rig required by a customer depends
upon the anticipated well depth, terrain and conditions in the drilling area.
Contracts
The Company's policy with regard to day rates and contract durations
depends upon the prevailing strength or weakness of the market. During periods
when the offshore rig markets are weak and declining rates prevail, the Company
generally pursues a policy of entering into lower rate contracts to remain in a
competitive position and to offset the substantial cost of maintaining and
reactivating stacked rigs. During those times when the markets are strong and
increasing rates prevail, the Company's policy is generally one of negotiating
short rather than long-term contracts for its offshore rigs because such policy
allows the Company to maximize its ability to obtain the benefit of rate
increases and to pass through cost increases to customers.
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The Company's drilling contracts are obtained either through
competitive bidding or individual negotiations. Rates obtained depend upon the
type of equipment used, its availability and its location, as well as the type
of operations involved. Both offshore and onshore contracts for use of the
Company's drilling equipment are "well-to-well", "multiple well" or, except for
work done on a turnkey basis, for a fixed term generally ranging from four to
twelve months. Well-to-well contracts are cancelable at the option of either
party upon completion of drilling at any one site, and fixed-term contracts
customarily provide for termination by either party if drilling operations are
suspended for extended periods by events of force majeure. While most current
fixed-term contracts are for relatively short periods, some fixed-term and
well-to-well contracts continue for a longer period than the original term or
for a specific series of wells. Contracts, particularly those for offshore
operations, generally contain renewal or extension provisions exercisable at
the option of the customer at prices mutually agreeable to the Company and the
customer and, in many cases, provide for additional payments for mobilization
and demobilization. Most of the Company's drilling contracts in the North Sea
are well-to-well contracts or short-term contracts of similar duration lasting
60-120 days, while most of the company's current contracts in the gulf of
Mexico are well-to-well contracts lasting 30-45 days.
The Company's drilling contracts, other than those for work done on a
turnkey basis, provide for drilling compensation on a day rate basis. In the
case of contracts for work done on a turnkey basis, the Company's compensation
is contingent on the Company successfully drilling a well to a specified depth
for a fixed price. In the event certain operational problems occur which cause
the Company to be unable to reach the specified turnkey depth, the Company may
not be entitled to any portion of the turnkey price thereby causing it to
absorb substantial out-of-pocket expenses. For this reason, wells drilled on a
turnkey basis generally involve greater economic risk to the Company than
wells drilled on a day rate basis. Contracts for work in foreign countries
generally provide for payment in United States dollars except for minimal
amounts required to meet local expenses.
Contracts for platform installation and removal services typically
contain the same types of provisions and features described herein for drilling
contracts.
The Company believes that the contract status of its onshore and
offshore rigs is more informative than backlog calculations, and that backlog
information is neither calculable nor meaningful given the cancellation options
contained in, and the short duration of, fixed-term contracts and the
indeterminable duration of well-to-well and multiple well contracts. See ITEM
2. PROPERTIES on page 13 of this Form 10-K for the contract status of rigs as
of March 31, 1995.
Competition
The Company encounters continual competition in securing domestic and
foreign drilling contracts from approximately 40 offshore drilling contractors
operating or having available to operate about 530 mobile rigs, approximately
13 major domestic drilling contractors operating or having available to operate
43 land rigs in the deep-well market in the Permian and Anadarko Basins, and
five domestic drilling contractors operating or having available to operate
about 21 winterized land rigs on the Alaskan North Slope. The Argentina land
rig market is currently in a state of expansion, thereby causing the number of
contractors and rigs to be indeterminable. Some of the Company's competitors
with greater financial and other resources may be in a better position than the
Company to make the continuous capital investments required to make
technological improvements to existing equipment or to replace equipment that
becomes obsolete. Furthermore, a few of the Company's competitors have been
substantially relieved of debt burdens by bankruptcy proceedings.
Technological advances in equipment, particularly offshore equipment,
may cause older equipment having lower capital costs to be less suitable for
some proposed drilling operations. As a result, the Company carried out over
the 1980-1986 period a drilling rig expansion program and since 1987 a drilling
rig modification program, both designed to provide the Company's fleet with
jack-ups reflecting recent technological advancements and which generally meet
known government-imposed safety and pollution control requirements.
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The offshore markets in which the Company competes are chosen on the
basis of those which offer the greatest market potential and are generally
located in the more politically stable areas of the world. Accordingly, since
1989 the Company has moved drilling rigs from one offshore market to another as
follows: one Class 116-C jack-up rig from the North Sea to Southeast Asia in
1990 and then to Alaska in 1993; one Gorilla Class rig from the Gulf of Mexico
to offshore eastern Canada in 1990; one submersible barge rig from the Gulf of
Mexico to Gabon, West Africa in 1991 and back to the Gulf of Mexico in 1992;
one Class 116 jack-up rig from the Gulf of Mexico to the North Sea and back to
the Gulf of Mexico, both in 1992; one Class 116-C jack-up rig from the North
Sea to the Gulf of Mexico in 1992; one Gorilla Class rig from the North Sea to
Trinidad in 1992; one Class 52 jack-up rig from the Gulf of Mexico to Colombia
in 1992 and back to the Gulf of Mexico in 1993; two submersible barges from
Southeast Asia to the Gulf of Mexico in 1993; one class 116-C rig from Alaska
to the Gulf of Mexico in 1994; and one Gorilla Class rig from the North Sea to
the Gulf of Mexico in 1994. Relocation of drilling rigs from one geographic
location to another is dependent upon changing market dynamics with moves
occurring only when the likelihood of higher returns make such action
economical. At March 31, 1995, 14 jack-ups were located in the Gulf of Mexico,
four jack-ups were located in the North Sea, one jack-up was located offshore
eastern Canada, one jack-up was located offshore Trinidad, one semi-submersible
rig was located in the Gulf of Mexico and three submersible barges were located
in the Gulf of Mexico.
A number of factors affect a drilling contractor's ability both
onshore and offshore to obtain contracts at a profitable rate within an area.
Such factors include the location and availability of equipment, its
suitability for the project, the comparative cost of the equipment, the
competence of personnel and the reputation of the contractor. The ability to
obtain a profitable rate of return is also dependent upon receiving adequate
rates to compensate for the added cost of moving equipment to drilling
locations. See "Contracts" beginning on page 3 of this Form 10-K concerning
the pricing policies pursued by the Company under various market conditions.
The Company markets its drilling services by directly contacting
present and potential customers, including large international energy
companies, many smaller energy companies and foreign government-owned or
controlled energy companies. Downsizings by major energy companies, coupled
with the significant reductions of exploration by such companies in offshore
U.S. waters, have resulted in the Company adapting its marketing efforts such
that increasing emphasis is placed on targeting small independent operators.
Because the exploration activities of the Company's present and potential
customers are impacted by state, federal and foreign regulations associated
with the production and transportation of oil and gas, the demand for the
Company's drilling services is impacted accordingly.
In the case of offshore platform installation and removal services,
the Company competes against approximately 12 contractors operating or having
available to operate about 19 mobile derrick barges in the Gulf of Mexico
market. Because the Company is a relatively new entrant in this field, many of
the Company's competitors have the advantage of having offered these services
for a longer period of time, including the benefits of established
technological know-how and more extensive customer bases.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 12 through 14 of the Annual Report, the
information under which caption is incorporated herein by reference, for a
discussion of current industry conditions and their impact on operations.
Regulations and Hazards
The offshore and onshore operations of the Company are subject to many
hazards. In the drilling business, inherent hazards include blowouts and well
fires, which could cause personal injury, suspend drilling operations,
seriously damage or destroy the equipment involved and cause substantial
damage to producing formations and the surrounding areas. Offshore drilling
operations and platform installation and removal operations are also subject to
the hazards incident to marine operations, either on site or while under tow,
such as capsizing, collision or grounding. Raising and lowering the legs of
jack-up rigs into the ocean bottom and ballasting semi-submersible units
require skillful handling to avoid capsizing or other serious damage. Drilling
deviated holes into high pressure formations is a complex process and problems
frequently occur. The process of removing platforms and caissons using
underwater
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explosives involves substantial risks and requires a significant amount of skill
in order to confine the resulting destruction to the intended areas.
The Company believes that it is adequately insured for physical damage
to its rigs, and for marine liabilities, workers compensation, Maritime
Employees Liability, automobile liability and for various other types of
exposures customarily encountered in providing the Company's services. Certain
of the Company's liability insurance policies specifically exclude coverage for
fines, penalties and punitive or exemplary damages. Under current conditions,
the Company anticipates that its present insurance coverage will be maintained,
but no assurance can be given that insurance coverage will continue to be
available at rates considered reasonable, that self-insured amounts or
deductibles will not increase or that certain types of coverage will be
available at any cost.
Foreign operations are subject to certain political, economic and
other uncertainties not encountered in domestic operations, including risks of
expropriation of equipment as well as expropriation of a particular energy
company operator's property and drilling rights, taxation policies, customs
restrictions, currency rate fluctuations and the general hazards associated
with foreign sovereignty over certain areas in which operations are conducted.
The Company attempts to minimize the risk of currency rate fluctuations by
generally denominating contract payment terms in United States dollars.
Many aspects of the operations of the Company are subject to
government regulation, including those relating to equipping and operating
vessels, drilling practices and methods and the level of taxation. In
addition, various countries (including the United States) have regulations
relating to environmental protection and pollution control affecting drilling
operations. Recent events have also increased the sensitivity of the oil and
gas industry to environmental matters. The Company may be liable for damages
resulting from pollution of offshore waters and, under United States
regulations, must establish financial responsibility. Generally, the Company
is substantially indemnified under drilling contracts compensated on a day rate
basis from pollution damages, except in certain cases of pollution emanating
above the surface of land or water from spills of pollutants, or in the case of
pollutants emanating from the Company's drilling rigs, but no assurance can be
given regarding the enforceability of such indemnification provisions.
In performing a contract for work done on a turnkey basis, the Company
is normally responsible for certain risks that would customarily be assumed by
the customer under a contract compensated on a day rate basis. These risks
include liability for pollution resulting from a blowout or uncontrolled flow
from the well bore, an underground blowout, the cost of controlling a wild well
and the expense to redrill a well which has blown out. The Company carries
insurance to cover such risks and generally obtains an indemnity from its
customers with respect to liabilities exceeding the amount of insurance carried
by the Company.
The Company believes that it complies with all material legislation
and regulations affecting its operations in the drilling of oil and gas wells,
and in controlling the discharge of wastes. To date the Company has made
significant modifications to its rigs located in the Gulf of Mexico in order to
reduce waste and rain water discharge from such rigs and believes that it could
operate those rigs at "zero discharge" without material additional
expenditures. Other than these expenditures and those relating to the
previously discussed United Kingdom safety standards, compliance has not, to
date, materially affected the capital expenditures, earnings or competitive
position of the Company, although these measures add to the costs of operating
drilling equipment in some instances, and in others they may operate to reduce
drilling activity. Further legislation or regulation may reasonably be
anticipated, but the effects thereof on operations cannot be predicted.
The Company is subject to the requirements of the federal Occupational
Safety and Health Act ("OSHA") and comparable state statutes. The OSHA hazard
communication standard, the Environmental Protection Agency "community
right-to-know" regulations under Title III of the Federal Superfund Amendment
and Reauthorization Act and comparable state statutes require the Company to
organize and report certain information about the hazardous materials used in
its operations to employees, state and local government authorities, and local
citizens.
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AIRCRAFT OPERATIONS
The Company provides charter and contract helicopter and fixed-wing
aircraft services principally in Alaska, the coastal areas of Louisiana and
Texas, and the western United States. In Alaska, a diversified range of
services has been developed to include tourism, commercial fishing support and
medical evacuation as well as support for forest fire control, mining
operations and seismic testing. Additionally, the fixed-wing division of the
Company conducts scheduled airline service between six cities from a hub in
Anchorage and to 18 villages from a hub in Bethel, Alaska. Services provided
offshore Louisiana and Texas are primarily to oil and gas related industries.
In the western United States, the majority of helicopter services are provided
to governmental agencies in support of forest fire control and to a lesser
extent support of construction, seismic testing and onshore and offshore oil
field support. The Company also provides airborne environmental survey
services.
In 1991, the Company acquired a 49% interest in KLM Helikopters B.V.,
a wholly-owned subsidiary of KLM Royal Dutch Airlines, as a means of gaining
access to the North Sea aviation market. The joint venture company, renamed
KLM ERA Helicopters B.V., currently owns 10 helicopters and leases two others.
Operating locations and the numbers of helicopters deployed at March 31, 1995
were as follows: eight in the Dutch sector of the North Sea, two in Croatia,
and two in the British sector of the North Sea, which helicopters are leased by
a wholly-owned subsidiary of KLM ERA. KLM ERA serves principally the offshore
oil and gas drilling, production and service companies operating in the Dutch
Sector of the North Sea.
Based on the number of helicopters operating, the Company is the
largest helicopter operator in Alaska. It provides charter services from bases
at Anchorage, Deadhorse (on the North Slope), Fairbanks, Juneau, Kenai and
Valdez. The Company's charter and contract services are provided throughout
Alaska with particular emphasis in the oil, mining and high density tourist
regions within the state.
Helicopters are usually operated on a seasonal basis in Alaska because
of the prevalent climatic conditions. The peak utilization period in Alaska is
May through September, with the winter months comprising the least active
period. The seasonal nature of the Alaska business has been ameliorated in
prior years by moving helicopters on a limited basis to the Gulf of Mexico area
and, more recently, moving helicopters to the West and Northwest regions of the
United States and various overseas locations, the most recent being Trinidad
and China.
Since 1983, the Company has operated a scheduled commuter airline
service in Alaska encompassing the transportation of passengers, mail and
cargo. The Company currently serves Valdez, Kenai, Homer, Kodiak, Iliamna and
Cordova from its base hub in Anchorage. In addition, it services 18 remote
villages from its hub in Bethel, Alaska. The Company operates under a code
sharing agreement with Alaska Airlines which is the largest carrier of
passengers from the contiguous United States to Alaska. The Company's commuter
airline is the largest airline operation of that type within the state of
Alaska and is the 4th largest carrier of passengers into and out of the
Anchorage International Airport, including the large jet carriers.
Since 1979, the Company has been providing charter and contract
helicopter services in the Gulf of Mexico area primarily to the offshore oil
and gas industry. Operations are conducted from the division office in Lake
Charles, Louisiana and from bases in the Louisiana cities of Morgan City,
Cameron, New Iberia, Intracoastal City, Venice, Fourchon and Houma and the
Texas cities of Sabine Pass and Houston. Based upon the number of helicopters
operating, the Company is the third largest helicopter operator in the Gulf of
Mexico.
In 1987, upon receiving FAA certification, the Company began
manufacturing and marketing, from its Gulf Coast Division facility at Lake
Charles, Louisiana, a composite external auxiliary fuel tank for use on Bell
205, 212 and 412 helicopters and the military "Huey" helicopter. The tank
system provides enhanced range with nominal drag while increasing the passenger
seats available. Sales to date have been to both military and civilian
customers. Other aircraft accessories are also manufactured at the facility.
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In June 1990, the Company expanded its airborne environmental service
capabilities by acquiring the patents, rights and equipment relating to two
unique airborne remote sensing technologies - an Airborne Ground Penetrating
Radar ("AGPR") and an Airborne Cathodic Monitoring System ("ACMS"). The AGPR
system is used primarily for the detection of subsurface contaminants,
including free hydrocarbons. In addition, the system can be used for finding
subsurface coal veins, water tables and tunnels, drums, tanks and other
man-made objects. The ACMS system is used to provide an early warning of
potential corrosion failure of underground pipelines. Mounted on a helicopter,
this system can survey up to 300 miles of pipeline per day and provides a
substantial cost savings compared to conventional techniques. Both services
are now marketed from the Company's Reno, Nevada facility following the closing
of the Company's Santa Maria facility in early 1995.
As previously noted, the Company has operated helicopters in various
overseas locations, including Croatia and Macedonia where the Company had as
many as six owned and two 49%-owned helicopters working for the United Nations
at various times in 1994.
In 1994, aviation operations generated an operating profit (income
from operations before deducting general and administrative expenses) of $4.6
million.
Contracts
The Company's flight services generally are engaged by customers by
entering into master service agreements, term contracts or day-to-day charter
arrangements. Master service agreements provide for incremental payments based
on usage, in some instances with fixed terms ranging from one month to one
year, and are cancelable upon notice by either party in 30 days or less. Some
contracts are not cancelable by either party and generally provide for
payments, depending upon the term, as follows: less than one month - either
incremental payments based on usage or incremental payments based on usage plus
a base daily rental; and one month to one year - incremental payments based on
usage plus a base monthly rental. Under day-to-day charters, the compensation
arrangement is the same as that of term contracts having a term of less than
one month. Payment, duration and cancellation features of the agreements,
contracts and charter arrangements used by KLM ERA are similar in nature and in
principle to those used in the Company's domestic operations. Because master
service agreements and day-to-day charters are the most common types of
engagements for its flight services, the Company believes that the contract
status of its aircraft as discussed in the following paragraph is more
informative than backlog information, which it believes is neither calculable
nor meaningful.
Company owned aircraft available for contract use and day charters on
March 31, 1995 consisted of 89 helicopters (of which 49 were based in Alaska
and 40 in the Gulf of Mexico area) and 17 fixed-wing aircraft that were based
in Alaska. The contract status as of March 31, 1995 consisted of: 27 master
helicopter service agreements and 28 aircraft term contracts (24 helicopters
and 4 fixed-wing aircraft). The remaining aircraft were being operated under
day charters or were available for operation under day charter or contract
arrangements.
KLM ERA owned aircraft available for contract use and day charters on
March 31, 1995 consisted of 8 helicopters based in The Netherlands and two in
Great Britain. The contract status of such aircraft as of March 31, 1995
consisted of: five master service agreements and five term contracts.
Competition
Although the Company maintains the largest helicopter operation in
Alaska in terms of numbers of aircraft and revenues, it encounters intense
competition from several other companies which furnish similar services.
Approximately six other operators compete directly with the Company in Alaska
on a contract or charter basis. The Company competes over its scheduled
airline routes with up to four other carriers. In the Gulf of Mexico area, the
Company competes directly with five other operators and ranks third in the
number of helicopters operating with approximately 6% of the market. A number
of other helicopter operators compete with the Company in the West and
Northwest regions of the United States and in overseas locations.
At present, KLM ERA has only one competitor in the Dutch sector of the
North Sea. KLM ERA's share of this helicopter market is estimated to be in
excess of 65%.
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Regulations and Hazards
The operation of scheduled airline services in the United States
requires a certificate under the Federal Aviation Act of 1958, as presently
administered by the Department of Transportation. The granting of a
certificate is conditioned upon a showing of financial ability and operational
expertise. A similar certificate authorizing the right to operate a charter
service is not required by any jurisdiction in the Company's operating areas.
KLM ERA holds the necessary certificates for operating aircraft in The
Netherlands and, since June 1993, in the U.K sector of the North Sea. Other
operating certificates will be obtained on a case by case basis depending upon
the contracts to be awarded.
Operation of helicopters and fixed-wing aircraft, particularly under
weather conditions prevailing in Alaska, is considered potentially hazardous,
although the Company conducts rigorous safety training programs to minimize
these hazards. The Company believes that it is adequately protected by public
liability and property damage insurance, including hull insurance against loss
of equipment, but carries no insurance against loss of earnings.
Although the area of Croatia in which the Company's helicopters are
flying for the United Nations is not a combat area at present, the region is
highly unstable.
The Company believes that KLM ERA is adequately protected by public
liability and property damage insurance, including hull insurance against loss
of equipment.
MANUFACTURING OPERATIONS
In 1994, LeTourneau, Inc. ("LeTourneau"), a wholly-owned subsidiary of
the Company, acquired the net assets of Marathon LeTourneau Company, which is
headquartered in Longview, Texas. As more fully detailed below, LeTourneau
operates a manufacturing facility that produces heavy equipment, a mini-steel
mill that recycles scrap and produces steel plate and forging ingots and a
marine group that has built over one-third of all mobile offshore jack-up
drilling rigs, including all 20 operated by the Company. The Company holds a
number of patents on its inventions and the "LeTourneau" name is considered to
be significant to its manufacturing operation.
The mining equipment product line of LeTourneau includes off-road
trucks with capacities of 190, 200 and 240 tons and loaders with bucket
capacities of 17, 22, 28 and 33 cubic yards. LeTourneau's loaders and trucks
are generally used in coal, gold, copper, iron ore and other mines. Both the
loaders and the trucks utilize the LeTourneau diesel electric-drive systems
with solid state controls. The primary benefit of the diesel electric-drive
system is to allow large, mobile equipment to stop, start and reverse without
gear shifting and high maintenance braking. LeTourneau loaders can load
LeTourneau rear-dump trucks and competitive trucks in the 85 ton to 240 ton
size range. LeTourneau's mining equipment and parts are distributed through a
world-wide network of independent distributors and a captive distribution
company serving the Western United States.
The forestry equipment product line includes diesel electric powered
log stackers having either two or four wheel drive configurations with load
capacities ranging from 40 to 65 tons. LeTourneau is the only manufacturer
that sells electrically powered jib cranes with ratings from 25,000 to 52,000
lbs. at a reach of 100 to 150 feet and having a 360 degree rotation. The
forestry equipment is marketed primarily in North America through independent
distributors and a captive distribution network in the Northwestern United
States.
LeTourneau's material handling equipment line includes the manufacture
and sale of several different types of equipment called intermodals. These
include 50 ton capacity, diesel electric, gantry cranes and large forklift type
vehicles, called side porters, used for lifting, transporting and stacking
large shipping containers and trailers at ports and rail yards. Gantry Cranes
equipped with a spreader can lift containers from the top and also have
retractable arms which are used in loading and unloading piggyback trailers.
Gantry cranes not having a spreader can span up to
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seven rows plus a truck aisle and stack 9 ft. 6 inch containers up to five
high. The intermodal equipment is marketed primarily in North America through
independent distributors and a captive distribution network in the Northwestern
United States.
LeTourneau also sells parts and components to repair and maintain
mining, forestry and intermodal equipment. Equipment parts are marketed
through one dealer and a captive distribution company in the United States with
17 parts stocking branches, one dealer in Canada with over 19 parts stocking
branches, and 31 international dealers with over 50 parts stocking locations.
LeTourneau's mini-steel mill located in Longview, Texas produces
carbon and alloy plate products and specialty steel. LeTourneau concentrates
on "niche" markets that require alloy, specialty steel grades, or "exotic"
versions of carbon steel products including mold steels, tool steels, aircraft
quality steels, stainless steel and Hydrogen Induced Cracking steels. External
steel sales, which are garnered through a direct sales force of LeTourneau
employees, consist primarily of steel plate, but also include forging ingots
and value-added fabrication of steel products. Steel products are generally
sold to steel service centers, fabricators, manufacturers, forge shops and
brokers. The market for carbon steel plate products and fabricated products is
regional and encompasses Texas, Oklahoma, Louisiana, Mississippi and Arkansas.
The Steel Group ships alloy and specialty grades of plate products nationally
and exports quantities to Mexico and Canada. The forging ingot market is
concentrated in the Gulf Coast region of Texas. Carbon and alloy plate
products are also used internally in the production of heavy equipment and
parts.
LeTourneau's marine group has a shipyard in Vicksburg, Mississippi for
the construction of mobile self-elevating offshore drilling platforms.
LeTourneau has built over one-third of all mobile offshore jack-up drilling
rigs, including all 20 operated by the Company utilizing this and other
shipyards. The marine group has the capability of providing engineering
support and spare parts to the drilling industry. This facility is currently
closed, and the ongoing rig component manufacturing and marine repair service
businesses, as well as a marine design engineering business, are now located at
the Company's Longview, Texas facility.
In 1994, manufacturing operations generated an operating profit
(income from operations before deducting general and administrative expenses)
of $7.7 million and had a firm backlog for all of its product lines at March 1,
1995 of $27 million.
LeTourneau, engages in a limited amount of research and product
development, primarily to develop larger capacity trucks and loaders used in
the mining industry. The Company evaluates on an ongoing basis the LeTourneau
product and service lines with the intention of making enhancements.
Raw Materials
The principal raw material utilized in LeTourneau's manufacturing
operations is steel plate, most of which is supplied by LeTourneau's mini-steel
mill. Other required materials are generally available in sufficient
quantities through purchases in the open market to meet its manufacturing
needs. LeTourneau does not believe that it is dependent on any single supplier.
Competition
LeTourneau's large trucks and loaders compete worldwide with several
competitors. The company believes it is the third or fourth largest supplier of
this size and type of equipment in the world. The loader market also includes
vigorous competition from smaller-sized equipment. Large loaders compete
against four manufacturers of loaders and the electric mining shovels and
LeTourneau trucks compete against three manufacturers.
The market for LeTourneau forestry and intermodal equipment is also
characterized by vigorous competition. Even though the company's jib crane is
unique, it does encounter competition from other equipment manufacturers that
offer alternate methods for meeting the requirements. The number of major
competitors by type of equipment are as follows: log stackers - four, jib
cranes - three, side porters - six, and gantry cranes - more than ten.
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13
LeTourneau's mini-steel mill encounters competition from a total of
eight major competitors, with the breakdown by product line being as follows:
plate products - four; fabricated products - two and forging ingots - two.
The competition LeTourneau encounters in the parts business is
extremely fragmented with only three other companies being considered to be
competitors. Vendors supplying parts directly to end-users and well-fitters
who obtain parts and copy them to supply less expensive and lower quality
substitutes represent more intense competition than that of direct competitors.
In order to be competitive in the mining and forestry heavy equipment
markets, LeTourneau offers warranties at the time of purchase as well as parts
guarantees. Warranties, which are based upon stipulated years of ownership or
hours of usage, whichever occurs first, generally cover the drive train and, in
the case of LeTourneau trucks, cover the frame. Parts consumption guaranties
and maintenance and repair contracts are also made on the same basis.
LeTourneau pursues a parts return policy, which provides that returned parts
must be in new, usable condition, be in current production and be readily
resalable.
There are no other significantly active competitors in the marine rig
construction and support industry due to the current low demand. However, if
demand for marine rigs increases, new competitors could be expected to enter
the market.
Historically, the make up of LeTourneau's customer base has been such
that none of the product lines have been dependent upon any one customer or
small group of customers.
Regulations and Hazards
LeTourneau's manufacturing operations and facilities are subject to
regulation by a variety of local, state and federal agencies which regulate
safety and the discharge of materials into the environment, including the
Environmental Protection Agency (EPA), the Texas Natural Resources Conservation
Commission (TNRCC) and the Mississippi Department of Environmental Quality.
LeTourneau's manufacturing facilities are also subject to the requirements of
the Occupational Safety Health Act and comparable state statutes.
Hazardous materials are generated at LeTourneau's Longview plant in
association with the steel making process. Industrial waste water generated at
the mini-steel mill facility for cooling operations is recirculated and quality
tests are conducted regularly. The facility has permits for waste water
discharges, solid waste disposal and air emissions. Waste products considered
hazardous by the EPA are disposed of by shipment to an EPA or state permitted
waste disposal facility.
As a part of the acquisition of the net assets of Marathon LeTourneau
Company, the sellers agreed to remediate certain environmental conditions at
the Longview, Texas and Vicksburg, Mississippi sites. This work will be
performed over the next 25 years. The remediation efforts include, among other
things, post-closure care for a landfill at the Longview facility closed by
Marathon LeTourneau Company prior to LeTourneau's acquisition.
LeTourneau jack-up designs are subject to regulatory approvals by
various agencies depending upon the customer's selection of geographic areas
where the rig will qualify for drilling. The rules vary by location and are
subject to frequent change. These rules primarily relate to safety and
environmental issues in addition to those which classify the jack-up as a
vessel.
LeTourneau may be liable for damages resulting from pollution of air,
land and inland waters associated with its manufacturing operations.
LeTourneau believes that compliance with environmental protection laws and
regulations will have no material effect on its capital expenditures, earnings
or competitive position during 1995. Although further legislation or
regulation pertaining to the protection of the environment may reasonably be
anticipated, the effects thereof on LeTourneau's manufacturing operations
cannot be accurately predicted.
As a manufacturing company, LeTourneau may be responsible for certain
risks associated with the use of its products. These risks include product
liability claims
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for personal injury and/or death, property damage, loss of use of product,
business interruption and necessary legal expenses to defend LeTourneau against
such claims. LeTourneau carries insurance which it believes adequately covers
such risks. LeTourneau did not assume certain liabilities of Marathon
LeTourneau Company, such as product liability and tort claims, associated with
all products manufactured, produced, marketed or distributed prior to the date
of the acquisition.
LeTourneau anticipates incurring expenses associated with the warranty
of its products, including those existing at the date of the acquisition. In
the non-marine business segments, dealers of LeTourneau's products perform the
warranty work for the manufacturer, and in the marine segment, LeTourneau
generally performs warranty work directly.
Employees
The total number of employees of the Company at March 15, 1995 and at
December 31, 1994, 1993 and 1992 were as follows: 3,507, 3,484, 2,560 and
2,333, respectively. Some of the employees included in these numbers
are not United States citizens. None of the Company's employees are covered by
collective bargaining agreements with labor unions. The Company considers
relations with its employees to be satisfactory.
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ITEM 2. PROPERTIES
The Company leases as its corporate headquarters 57,800 square feet of
space in an office tower located at 2800 Post Oak Boulevard in Houston, Texas.
DRILLING RIGS
The following is a summary of the principal drilling equipment owned or
operated by the Company and in service at March 31, 1995. See "Liquidity and
Capital Resources" as appearing in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on page 14 in the Annual Report
which page is incorporated herein by reference.
OFFSHORE
(b)
Depth: Year Contracting Party/
Water/ in (l) Type of Contract
Name/Class (a) Drilling Service Location (m) Estimated Release Date
-------------- ------------- ------- ------------- --------------------------
Cantilever Jack-up Rigs:
Rowan Gorilla II 450'/30,000' 1984 Gulf of Mexico Kerr McGee Corporation
200-C (d) (e) (h) (l) Multiple Well (m) June 1995
Rowan Gorilla III 328'/30,000' 1984 Eastern Canada LASMO Nova Scotia Limited
200-C (d) (e) (l) Term (m) January 1997
Rowan Gorilla IV 328'/30,000' 1986 Trinidad Amoco Trinidad Oil Company
200-C (d) (e) (l) Multiple Well (m) April 1995
Rowan-California 225'/30,000' 1983 North Sea Phillips Petroleum U.K. Limited
116-C (c) (e) (l) Multiple Well (m) November 1995
Rowan-Halifax 225'/30,000' 1982 North Sea Mobil North Sea Limited
116-C (c) (e) (i) (l) Multiple Well (m) October 1995
Cecil Provine 225'/30,000' 1982 North Sea Amoco (U.K.) Exploration Company
116-C (c) (e) (j) (l) Multiple Well (m) December 1995
Arch Rowan 225'/30,000' 1981 North Sea Amoco (U.K.) Exploration Company
116-C (c) (e) (l) Multiple Well (m) December 1995
Gilbert Rowe 350'/30,000' 1981 Gulf of Mexico Samedan Oil Company
116-C (c) (e) (h) (l) Multiple Well (m) June 1995
Charles Rowan 350'/30,000' 1981 Gulf of Mexico Amoco Production Company
116-C (c) (e) (h) (l) Multiple Well (m) October 1995
Rowan-Paris 350'/30,000' 1980 Gulf of Mexico Amoco Production Company
116-C (e) (h) (l) Multiple Well (m) May 1995
Rowan-Middletown 350'/30,000' 1980 Gulf of Mexico Amoco Production Company
116-C (e) (h) (l) Multiple Well (m) November 1995
Rowan-Fort Worth 350'/30,000' 1978 Gulf of Mexico Walter Oil & Gas Corporation
116-C (e) (h) (l) Multiple Well (m) August 1995
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ITEM 2. PROPERTIES
OFFSHORE(Continued)
(b)
Depth: Year Contracting Party/
Water/ in (l) Type of Contract
Name/Class (a) Drilling Service Location (m) Estimated Release Date
-------------- ------------- ------- ------------- --------------------------
Conventional Jack-up Rigs:
Rowan-Juneau 300'/30,000' 1977 Gulf of Mexico Shell Offshore, Inc.
116 (c) (e) (f) (l) Single Well (Turnkey) (m) May 1995
Rowan-Odessa 350'/30,000' 1977 Gulf of Mexico Not Committed
116 (e) (f) (h)
Rowan-Louisiana 350'/30,000' 1975 Gulf of Mexico King Ranch Oil & Gas, Inc.
84 (e) (f) (h) (l) Multiple Well (m) April 1995
Rowan-Alaska 350'/30,000' 1975 Gulf of Mexico Forcenergy Gas Exploration, Inc.
84 (e) (f) (h) (l) Multiple Well (m) July 1995
Rowan-Texas 250'/20,000' 1973 Gulf of Mexico Not Committed
52
Rowan-Anchorage 250'/20,000' 1972 Gulf of Mexico Sonat Exploration Company
52 (e) (l) Single Well (m) April 1995
Rowan-New Orleans 250'/20,000' 1971 Gulf of Mexico American Exploration Company
52 (f) (g) (l) Crane operation (m) April 1995
Rowan-Houston 250'/20,000' 1970 Gulf of Mexico Forcenergy Gas Exploration, Inc.
52 (e) (l) Multiple Well (m) May 1995
Semi-Submersible Rig:
Rowan-Midland 1,000'/25,000' 1976 Gulf of Mexico Ashland Exploration, Inc.
(l) Multiple Well (m) August 1995
Submersible Barges:
Rowan-Fourchon 24'/30,000' 1970 Gulf of Mexico Flores & Rucks
(l) Multiple Well (m) July 1995
Rowan-Fairbanks 26'/25,000' 1975 Gulf of Mexico Cold Stacked
Rowan-Morgan City 26'/25,000' 1973 Gulf of Mexico Kerr McGee Corporation
(l) Multiple Well (m) July 1995
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ITEM 2. PROPERTIES
(Continued)
ONSHORE (k)
Contracting Party/
Maximum (l) Type of Contract
Description Drilling Depth Location (m) Estimated Release Date
------------ ---------------- --------- -------------------------------
One rig 18,000'-30,000' Oklahoma Davis Petroleum
(l) Single Well(Turnkey)(m) March 1995
Argentina (n) Triton Energy, Inc.
(l) Multiple Well (m) December 1995
One rig 18,000'-30,000' Oklahoma Davis Petroleum
(l) Single Well(Turnkey)(m) May 1995
Argentina (o) Argentina Hunt Oil Company
(l) Multiple Well (m) December 1995
One rig 18,000'-30,000' Texas Phillips Petroleum
(l) Multiple Well (m) August 1995
One rig 18,000'-30,000' Mississippi Amerada Hess
(l) Multiple Well (m) May 1995
Five rigs 18,000'-30,000' Oklahoma & Texas Not committed
Three rigs 10,000' Argentina YPF S.A.
(l) Term (m) August 1996
Five rigs 20,000' Alaska Not Committed
----------
(a) Classes 200-C ("Gorilla"), 116-C, 116, 84 and 52 are nomenclature
assigned by LeTourneau, Inc. to jack-ups of its design and construction.
(b) Indicates rated water depth in current location and rated drilling depth,
respectively.
(c) Unit modified to increase operating capability in hostile environments.
(d) Gorilla Class unit designed for extreme hostile environment capability.
(e) Unit equipped with a "top-drive" drilling system.
(f) Unit equipped with a "skid base" unit.
(g) Unit equipped with drilling/heavy-lift crane option.
(h) Unit equipped with leg extensions.
(i) Rig sold December 1984 and leased back for 15 years.
(j) Rig sold December 1985 and leased back for 15 years.
(k) Onshore rigs, including the three used rigs purchased in 1991, were
constructed at various dates between 1960 and 1982, utilizing, in some
instances, new as well as used equipment. Most of the older rigs have
been substantially rebuilt subsequent to their respective dates of
construction.
(l) Refer to "Contracts" on page 3 of this Form 10-K for definition of types
of contracts.
(m) Indicates estimated completion date of work to be performed.
(n) Rig scheduled for shipment to Argentina in May 1995.
(o) Rig scheduled for shipment to Argentina in June 1995.
The Company's drilling division leases and, in some cases, owns various
operating and administrative facilities generally consisting of office,
maintenance and storage space in the states of Alaska, Texas and Louisiana and,
on a foreign basis, in the countries of Canada, Argentina, England, Scotland,
The Netherlands, and Trinidad.
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AIRCRAFT
At March 31, 1995 the U.S.-based Company-owned helicopter fleet
consisted of 14 twin-engine turbine IFR rated Bell 212 helicopters (14
passenger), 16 twin-engine turbine IFR rated Bell 412 helicopters (14
passenger), 30 twin-engine turbine MBB BO-105CBS helicopters (five passenger),
two Aerospatiale 332L Super Puma helicopters (19 passenger) and 27 various
single-engine turbine helicopters (four to six passenger). The U.S.-based
fixed-wing fleet of Company-owned aircraft consisted of four Convair 580s (50
passenger), nine DeHavilland Twin Otters (9-19 passenger), two DeHavilland Dash
8s (37 passenger), one Lear Jet 35A (six passenger) and one Beechcraft King Air
200C (six passenger).
Helicopters owned by KLM ERA on March 31, 1995 consisted of five
twin-engine turbine IFR rated Sikorsky S-61N helicopters (26 passenger) and
five twin-engine turbine IFR rated Sikorsky S-76B helicopters (13 passenger).
The Company's principal aircraft bases in Alaska, all located on
leased property, are a fixed-wing air service center (57,000 square feet of
hangar, repair and office facilities) at Anchorage International Airport, with
an adjacent helicopter hangar facility (14,800 square feet) and hangar, office
and repair facilities at Fairbanks International Airport (13,000 square feet).
The Company also maintains similar, smaller helicopter facilities in Alaska at
Deadhorse, Juneau, Valdez and Yakutat.
The Company's principal facilities to accommodate its Gulf of Mexico
operations are located on leased property at Lake Charles Regional Airport.The
facilities, comprising 53,000 square feet, include helicopter hangars, a repair
facility and an operations and administrative building. The Company also
operates a helicopter facility (20,700 square feet of hangar, repair and office
facilities) located on leased property at the Terrebonne Airport in Houma,
Louisiana and a helicopter facility (5,700 square feet of hangar, repair and
office facilities) located on leased property in New Iberia, Louisiana.
KLM ERA's principal facility to accommodate its operations in the
Dutch sector of the North Sea is a base located in Den Helder. The facility,
comprising 35,000 square feet, includes a helicopter hangar, a repair facility
and an operations and administrative building. A facility located in Amsterdam
was shutdown and consolidated with the Den Helder operations in March 1995.
Manufacturing Facilities
LeTourneau's principal manufacturing facility and headquarters are
located in Longview, Texas on approximately 2,400 acres with about 1.2 million
square feet under roof. Included within the facility are: A mini-steel mill
having approximately 330,000 square feet of covered work space and housing two
25-ton electric arc furnaces having an aggregate 120,000 tons per year
capacity; a fabrication shop having approximately 300,000 square feet of
covered work space and housing a 3,000 ton vertical bender for making roll-ups
or flattening materials up to 2 1/2 inches thick by 11 feet wide; a machine
shop having approximately 140,000 square feet of covered work space and housing
various types of machinery; and an assembly shop having approximately 124,000
square feet and housing various types of machinery.
The marine group's facility located in Vicksburg, Mississippi is
located on 1,850 acres of land and has approximately 476,000 square feet of
covered work space. This facility is currently closed and the businesses
formerly carried on at this location have been relocated to the Longview, Texas
facility.
The LeTourneau Portland Division's distributor for forest products in
the Northwestern United States, is located on a six acre site in Troutdale,
Oregon with approximately 22,000 square feet of building space.
The Western Mining Division of LeTourneau headquartered in Tucson,
Arizona is housed in a 20,000 square foot leased facility. It functions as the
distributor for LeTourneau's mining equipment products in the Western United
States.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved from time to time in litigation arising out of
the conduct of the Company's operations and other matters, not all the
potential liabilities with respect to which are covered by the terms of the
Company's insurance policies. While the Company
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is unable to predict the ultimate liabilities which may result from such
litigation, the Company believes that no such litigation in which the Company
was involved as of March 31, 1995 will have a material adverse effect on the
financial position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's common
stockholders during the fourth quarter of the fiscal year ended December 31,
1994.
ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
The names, positions, years of accredited service and ages of the
officers of the Company and certain officers of the Company's wholly-owned
subsidiaries, Era Aviation, Inc. and LeTourneau Inc., as of March 31, 1995 are
listed below. Officers of all three entities are normally appointed annually
by the entities' Board of Directors at the bylaws-prescribed meetings held in
the spring and serve at the discretion of the Board of Directors. There are no
family relationships among these officers, nor any arrangements or
understandings between any officer and any other person pursuant to which the
officer was selected.
Years of
Accredited
Name Position Service Age
-------------------- -------------------------------- ---------- -----
Executive Officers of the Registrant:
C. R. Palmer Chairman of the Board, President 34 60
and Chief Executive Officer
R. G. Croyle Executive Vice President 21 52
D. F. McNease Senior Vice President, Drilling 21 43
E. E. Thiele Senior Vice President, Finance, 25 55
Administration and Treasurer
J. Earl Beckman(1) Vice President, Manufacturing 1 57
John L. Buvens Vice President, Legal 14 39
James B. Davis Vice President, Engineering 21 44
C. W. Johnson(2) Vice President, Aviation 17 51
Mark A. Keller Vice President, Marketing - 3 42
North American Drilling
Paul L. Kelly Vice President, Special Projects 12 55
Bill S. Person Vice President, Industrial Relations 27 46
William C. Provine Vice President, Investor Relations 8 48
Other Officers of the Registrant:
William H. Wells Controller 1 33
Mark H. Hay Secretary and Assistant Treasurer 16 50
P. G. Wheeler Assistant Treasurer 20 47
Lynda A. Aycock Assistant Treasurer and 23 48
Assistant Secretary
Certain Officer of Era Aviation, Inc.:
James Vande Voorde Vice President 21 55
(1) Also serves as President and Chief Executive Officer of LeTourneau, Inc.
(2) Also serves as President and Chief Operating Officer of Era Aviation, Inc.
Each of the executive officers and other officers of the Company as well
as the officers of Era Aviation, Inc. and LeTourneau, Inc. listed above
continuously served in the position shown above for more than the past five
years except as noted in the following paragraphs.
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Since October 1993, Mr. Croyle's principal occupation has been in the
position set forth. For more than five years prior to that time, Mr. Croyle
served as Vice President, Legal of the Company.
Since October 1993, Mr. McNease's principal occupation has been in the
position set forth. From April 1991 to October 1993, Mr. McNease served as
Vice President, Drilling of the Company. For more than five years prior to
that time, he served as Vice President of Rowandrill, Inc., a subsidiary of the
Company.
Since April 1994, Mr. Thiele's principal occupation has been in the
position set forth. From January 1994 to April 1994, Mr. Thiele served in the
position of Vice President, Finance, Administration and Treasurer. From
February 1989 to January 1994, he served as Vice President, Finance and
Administration.
Since April 1994, Mr. Beckman's principal occupation has been in the
position set forth. From February 1994 to present, Mr. Beckman has also served
in the position of President and Chief Executive Officer of LeTourneau, Inc, a
subsidiary of the Company. For more than five years prior to that time, he
served as President of Marathon LeTourneau Company, a company whose net assets
were purchased by LeTourneau, Inc. in February 1994. Marathon LeTourneau was
not, and is not now, a parent, subsidiary or affiliate of the Company.
Since October 1993, Mr. Buvens' principal occupation has been in the
position set forth. For more than five years prior to that time, Mr. Buvens
served as an Attorney for the Company.
Since October 1993, Mr. Davis' principal occupation has been in the
position set forth. From January 1990 to October 1993, Mr. Davis served as
Manager of Engineering/Purchasing & Chief Engineer of the Company. From June
1989 to January 1990, he served as an Engineer for the Company. For more than
five years prior to that time, he served as a Tool Pusher for the Company.
Since April 1994, Mr. Johnson's principal occupation has been in the
position set forth. From December 1993 to present, Mr. Johnson has also served
in the position of President and Chief Operating Officer of Era Aviation, Inc.,
a subsidiary of the Company. For more that five years prior to that time, he
served as Executive Vice President of Era.
Since April 1994, Mr. Keller's principal occupation has been in the
position set forth. From July 1992 to present and April 1993 to present, Mr.
Keller has also served in the positions of Vice President of Terminator, Inc.
and Rowandrill, Inc., respectively, both subsidiaries of the Company. From
April 1992 to July 1992, Mr. Keller served as Marketing Coordinator for
Terminator, Inc. For more than five years prior to April 1992, he served as
Senior Vice President of Chiles Offshore Corp. Chiles is not a parent,
subsidiary or affiliate of the Company.
Since October 1993, Mr. Person's principal occupation has been in the
position set forth. From April 1990 to October 1993, Mr. Person served as
Director of British American Offshore Limited, a subsidiary of the Company.
For more than five years prior to that time, he served as Manager of Industrial
Relations of the Company.
Since October 1993, Mr. Provine's principal occupation has been in the
position set forth. For more than five years prior to that time, Mr. Provine
served as Vice President of Rowandrill, Inc., a subsidiary of the Company.
Since joining the Company in March 1994, Mr. Wells' occupation has
been in the position set forth. For more than five years prior to that time,
Mr. Wells served in various positions with the independent accounting firm of
Deloitte & Touche LLP, including Audit Manager and, most recently, Senior Audit
Manager. Deloitte & Touche is not a parent, subsidiary or affiliate of the
Company but does serve as the Company's independent auditors.
Since April 1994, Ms. Aycock's principal occupation has been in the
position set forth. From October 1993 to April 1994, Ms. Aycock served in the
position of Assistant Treasurer. For more than five years prior to that time,
Ms. Aycock served as an Accountant for the Company.
In addition to serving in the position shown above, Mr. Wheeler has
also served as Corporate Tax Director of the Company for more than five years.
-18-
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information required hereunder regarding the Common Stock price
range and cash dividend information for 1994 and 1993 and the number of holders
of Common Stock is set forth on page 27 of the Company's Annual Report under the
title "Common Stock Price Range, Cash Dividends and Stock Splits", and is
incorporated herein by reference, except for the final two paragraphs under such
title. Also incorporated herein by reference to the Annual Report is the fifth
paragraph in the right hand column appearing on page 14 within "Management's
Discussion and Analysis of Financial Condition and Results of Operations", such
paragraph provides information pertinent to the Company's ability to pay cash
dividends subject to certain restrictions. The Company's Common Stock is listed
on the New York Stock Exchange and the Pacific Stock Exchange.
ITEM 6. SELECTED FINANCIAL DATA
The information required hereunder is set forth on page 10 of the
Company's Annual Report under the title "Financial Review" and is incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required hereunder is set forth on pages 12, 13 and 14
under the title "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's Annual Report and is incorporated herein
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Refer to ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K on page 20 of this Form 10-K for a listing of financial statements
of the registrant and its subsidiaries, all of which financial statements are
incorporated by reference under this item.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information provided under the columns entitled Name, Principal
Occupation for the Past Five Years, Age and Year First Became Director in the
table on pages 5 and 6, in footnotes (1) and (3) on page 6 and in the paragraph
following footnote (5) on page 4 of the Proxy Statement for the Company's 1995
Annual Meeting of Stockholders (the "Proxy Statement") is incorporated herein by
reference. There are no family relationships among the directors or nominees
for directors and the executive officers of the Company, nor any arrangements or
understandings between any director or nominee for director and any other person
pursuant to which such director or nominee for director was selected. Except as
otherwise indicated, each director or nominee for director of the Company has
been employed or engaged for the past five years in the principal occupation set
forth opposite his name in the information incorporated by reference. See
ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT on pages 17 and 18 of this
Form 10-K for information relating to executive officers.
ITEM 11. EXECUTIVE COMPENSATION
The standard arrangement for compensating directors described under the
title, "Director Compensation" at the bottom of page 11 of the Proxy Statement
and the information appearing under the titles "Summary Compensation Table",
"Option Grants in Last Fiscal Year", "Aggregated Option Exercises in Last Fiscal
Year and Fiscal Year-End Option Values", "Option Plans", "Convertible Debenture
Incentive Plan" and "Pension Plan" on pages 7 through 11 of the Proxy Statement
are incorporated herein by reference. In accordance with
-19-
22
the instructions to Item 402 of Regulation S-K, the information contained
in the Proxy Statement under the titles "Board Compensation Committee Report on
Executive Compensation" and "Stockholder Return Performance Presentation" shall
not be deemed to be filed as part of this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information regarding security ownership of certain beneficial
owners and management of the Company set forth under the headings "Voting
Securities Outstanding" appearing on page 2 and "Security Ownership of
Management and Principal Stockholders" appearing on pages 2 through 4 of the
Proxy Statement is incorporated herein by reference.
The business address of all directors is the principal executive offices
of the Company as set forth on the facing page of this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain business relationships and transactions
between the Company and certain of the directors of the Company under the
heading "Certain Transactions" appearing on page 15 of the Proxy Statement is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. Financial Statements
The following financial statements and independent auditors'
report, included in the Annual Report, are incorporated herein
by reference:
Page of 1994
Annual Report
-------------
Independent Auditors' Report............................. 15
Consolidated Balance Sheet,
December 31, 1994 and 1993.............................. 16
Consolidated Statement of Operations for the
Years Ended December 31, 1994, 1993 and 1992 ........... 17
Consolidated Statement of Changes in Stockholders'
Equity for the Years Ended December 31, 1994, 1993 and
1992 ................................................... 18
Consolidated Statement of Cash Flows for
the Years Ended December 31, 1994, 1993 and 1992........ 19
Notes to Consolidated Financial Statements............... 20
Selected Quarterly Financial Data (Unaudited) for
the Quarters Ended March 31, June 30, September 30
and December 31, 1994 and 1993.......................... 27
2. Financial Statement Schedules
Financial Statement Schedules I, II, III, IV, and V are not included
in this Form 10-K because such schedules are not required, not significant or
because the required information is shown in Notes to the Consolidated
Financial Statements of the Company's Annual Report.
3. Exhibits:
Unless otherwise indicated below as being incorporated by reference to
another filing of the Company with the Securities and Exchange
Commission, each of the following exhibits is filed herewith:
-20-
23
3a Restated Certificate of Incorporation of the Company, dated February 17, 1984, incorporated by reference to: Exhibit
3a to the Company's Form 10-K for the fiscal year ended December 31, 1983 (File No. 1-5491); Exhibit 4.2 to the
Company's Registration Statement on Form S-3 (Registration No. 33-13544); and Exhibits 4a, 4b, 4c and 4d below.
3b Bylaws of the Company amended as of April 23, 1993, incorporated by reference to Exhibit 3 to the Company's Form 10-Q
for the quarter ended March 31, 1993 (File No. 1-5491).
4a Certificate of Designation of the Company's $2.125 Convertible Exchangeable Preferred Stock incorporated by reference
to Exhibit 4.2 to the Company's Registration Statement on Form S-3 (Registration No. 33-6476).
4b Certificate of Designation of the Company's Series I Preferred Stock incorporated by reference to Exhibit 4b to the
Company's Form 10-K for the fiscal year ended December 31, 1986 (File No.1-5491).
4c Certificate of Designation of the Company's Series II Preferred Stock incorporated by reference to Exhibit 4c to the
Company's Form 10-K for the fiscal year ended December 31, 1987 (File No.1-5491).
4d Certificate of Designation of the Companies Series III Preferred Stock.
4e Certificate of Designation of the Company's Series A Junior Preferred Stock dated March 2, 1992 incorporated by
reference to Exhibit 4d to the Company's Form 10-K for the fiscal year ended December 31, 1991 (File No. 1-5491).
4f Amendment Nos. 1 and 2 dated September 19, 1994 and September 26, 1994, respectively, to the Rights Agreement dated
as of February 25, 1992 between the Company and Citibank, N.A. as Rights Agent.
4g Rights Agreement as amended dated as of February 25, 1992 between the Company and Citibank, N.A. as Rights Agent.
4h Indenture dated December 1, 1991 between the Company and Bankers Trust Company, as Trustee, relating to the Company's
11-7/8% Senior Notes due 2001 incorporated by reference to Exhibit 28.1 to the Company's Current Report on Form 8-K
dated December 12, 1991 (File No. 1-5491).
4i Specimen Common Stock certificate, incorporated by reference to Exhibit 4g to the Company's Form 10-K for the fiscal
year ended December 31, 1992 (File No. 1-5491).
4j Form of Promissory Note dated November 30, 1994 between the purchasers of Series III Floating Rate Subordinated
Convertible Debentures due 2004 and the Company.
10a 1980 Nonqualified Stock Option Plan of the Company together with form of Stock Option Agreement related thereto
incorporated by reference to Exhibit 5.10 to the Company's Registration Statement on Form S-7 (Registration
No. 2-68622).
10b 1988 Nonqualified Stock Option Plan of the Company as amended together with form of Stock Option Agreement related
thereto incorporated by reference to Exhibit 10b of the Company's Form 10-K for the fiscal year ended December 31,
1992 (File No. 1-5491).
10c Amendment No. 1 dated October 25, 1990, to all then outstanding Stock Option Agreements related to the 1980
Nonqualified Stock Option Plan of the Company incorporated by reference to Exhibit 10c to the Company's Form 10-K
for the fiscal year ended December 31, 1990 (File No. 1-5491).
10d Amendment No. 2 dated May 23, 1991, to all then outstanding Stock Option Agreements related to the 1980 Nonqualified
Stock Option Plan of the Company incorporated by reference to Exhibit 10d to the Company's Form 10-K for the fiscal
year ended December 31, 1991 (File No. 1-5491).
10e Amendment No. 1 dated October 25, 1990, to all then outstanding Stock Option Agreements related to the 1988
Nonqualified Stock Option Plan of the Company incorporated by reference to Exhibit 10d to the Company's Form 10-K
for the fiscal year ended December 31, 1990 (File No. 1-5491).
-21-
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10f Amendment No. 2 dated May 23, 1991, to all then outstanding Stock Option Agreements related to the 1988 Nonqualified
Stock Option Plan of the Company incorporated by reference to Exhibit 10f to the Company's Form 10-K for the fiscal
year ended December 31, 1991 (File No. 1-5491).
10g Amendment Nos. 1 and 2 dated June 12, 1986 and October 21, 1994, respectively, to the 1986 Convertible Debenture
Incentive Plan of the Company.
10h 1986 Convertible Debenture Incentive Plan of the Company as amended.
10i Pension Restoration Plan of the Company incorporated by reference to Exhibit 10h to the Company's Form 10-K for the
fiscal year ended December 31, 1992 (File No. 1-5491).
10j Pension Restoration Plan of LeTourneau, Inc.
10k Credit Agreement dated September 22, 1986 (including amendatory letter dated March 25, 1987) and First Preferred
Ship Mortgage dated November 7, 1986 between the Company and Marathon LeTourneau Company incorporated by reference
to Exhibit 10c to the Company's Form 10-K for the fiscal year ended December 31, 1986 and amendatory letter dated
February 21, 1992 incorporated by reference to Exhibit 10h to the Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
10L Participation Agreement dated December 1, 1984 between the Company and Textron Financial Corporation et al. and
Bareboat Charter dated December 1, 1984 between the Company and Textron Financial Corporation et al. incorporated by
reference to Exhibit 10c to the Company's Form 10-K for the fiscal year ended December 31, 1985 (File No. 1-5491).
10M Participation Agreement dated December 1, 1985 between the Company and Eaton Leasing Corporation et. al. and Bareboat
Charter dated December 1, 1985 between the Company and Eaton Leasing Corporation et. al. incorporated by reference
to Exhibit 10d to the Company's Form 10-K for the fiscal year ended December 31, 1985 (File No.1-5491).
10n Corporate Continuing Guaranty dated December 31, 1986 between Shearson Lehman Brothers Holdings Inc. and the Company
incorporated by reference to Exhibit 10h to the Company's Form 10-K for the fiscal year ended December 31, 1986 (File
No.1-5491).
10o Corporate Continuing Guaranty dated September 10, 1987 between Shearson Lehman Brothers Holdings Inc. and the Company
incorporated by reference to Exhibit 10i to the Company's Form 10-K for the fiscal year ended December 31, 1987 (File
No.1-5491).
10p Cross-Border Corporate Continuing Guaranty dated May 29, 1991 between Citicorp and the Company's wholly-owned
subsidiary, Rowan International, Inc. incorporated by reference to Exhibit 10o to the Company's Form 10-K for the
fiscal year ended December 31, 1991 (File No. 1-5491).
10q Amendment No. 1 dated April 1, 1994 to the Consulting Agreement dated March 1, 1991 between the Company and C. W.
Yeargain.
10r Consulting Agreement as amended dated March 1, 1991 between the Company and C. W. Yeargain.
10s Acquisition Agreement dated as of November 7, 1991, among KLM Royal Dutch Airlines, Blue Yonder I B.V., KLM
Helikopters B.V. and Rowan Aviation (Netherlands) B.V. incorporated by reference to Exhibit 28.1 to the Company's
Current Report on Form 8-K dated November 7, 1991 (File No. 1-5491).
10t Business Loan Agreement dated January 27, 1993 between Key Bank of Alaska and the Company's wholly-owned subsidiary,
Era Aviation, Inc. incorporated by reference to Exhibit 10s to the Company's Form 10-K for the fiscal year ended
December 31, 1992 (File No. 1-5491).
-22-
25
10u Asset Purchase Agreement dated as of November 12, 1993, among Rowan Companies, Inc., Rowan Equipment, Inc., General
Cable Corporation, Marathon LeTourneau Company, Marathon LeTourneau Sales & Service Company and Marathon LeTourneau
Australia Pty. Ltd. incorporated by reference to the Company's Current Report on Form 8-K dated February 11, 1994
(File No. 1-5491).
11 Computation of Primary and Fully Diluted Earnings (Loss) Per Share for the years ended December 31, 1994, 1993 and
1992 appearing on page 26 in this Form 10-K.
*13 Annual Report to Stockholders for fiscal year ended December 31, 1994.
21 Subsidiaries of the Registrant as of March 31, 1995.
23 Independent Auditors' Consent.
24 Powers of Attorney pursuant to which names were affixed to this Form 10-K for the fiscal year ended December 31, 1994.
27 Financial Data Schedule for the year ended December 31, 1994.
The Company agrees to furnish to the Commission upon request a copy of
all instruments defining the rights of holders of long-term debt of the Company
and its subsidiaries.
___________
* Only portions specifically incorporated herein are deemed to be filed.
EXECUTIVE COMPENSATION PLANS
AND ARRANGEMENTS
Compensatory plans in which directors and executive officers of the
Company participate are listed as follows:
o 1980 Nonqualified Stock Option Plan of the Company together
with form of Stock Option Agreement related thereto incorporated
by reference to Exhibit 5.10 to the Company's Registration
Statement on Form S-7 (Registration No. 2-68622); Amendment No. 1
dated October 25, 1990, to all then outstanding Stock Option
Agreements related to such Plan incorporated by reference to
Exhibit 10c to the Company's Form 10-K for the fiscal year
ended December 31, 1990 (File No. 1-5491); and Amendment No. 2
dated May 23, 1991, to all then outstanding Stock Option
Agreements related to such Plan incorporated by reference to
Exhibit 10d to the Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
o 1988 Nonqualified Stock Option Plan of the Company as amended
together with form of Stock Option Agreement related thereto
incorporated by reference to Exhibit 10b to the Company's Form 10-K
for the fiscal year ended December 31, 1992 (File No. 1-5491;
Amendment No. 1 dated October 25, 1990, to all then outstanding
Stock Option Agreements related to such Plan incorporated by
reference to Exhibit 10d to the Company's Form 10-K for the fiscal
year ended December 31, 1990 (File No. 1-5491); and Amendment No. 2
dated May 23, 1991, to all then outstanding Stock Option Agreements
related to such Plan incorporated by reference to Exhibit 10f to
the Company's Form 10-K for the fiscal year ended December 31,
1991 (File No. 1-5491).
o 1986 Convertible Debenture Incentive Plan of the Company as amended
included as Exhibit 10h to this Form 10K.
o Pension Restoration Plan of the Company incorporated by reference
to Exhibit 10h to the Company's Form 10-K for the fiscal year
ended December 31, 1992 (File 1-5491).
o Pension Restoration Plan of LeTourneau, Inc. included as Exhibit
10j to this Form 10k.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the fourth
quarter of fiscal year 1994.
-23-
26
For the purposes of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933,
the undersigned registrant hereby undertakes as follows, which undertaking
shall be incorporated by reference into registrant Registration Statements on
Form S-8 Nos. 2-67866 (filed May 22, 1980), 2-58700, as amended by
Post-Effective Amendment No. 4 (filed June 11, 1980), 33-33755, as amended by
Amendment No. 1 (filed March 29, 1990),33-61444 (filed April 23, 1993),
33-51103 (filed November 18, 1993) 33-51105 (filed November 18, 1993) and
33-51109 (filed November 18, 1993):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the act and will be governed by the final
adjudication of such issue.
-24-
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
ROWAN COMPANIES, INC.
By: C. R. PALMER
(C. R. Palmer, Chairman of
the Board, President and
Chief Executive Officer)
Date: March 31, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
C. R. PALMER Chairman of the Board, President March 31, 1995
(C. R. Palmer) and Chief Executive Officer
E. E. THIELE Principal Financial Officer March 31, 1995
(E. E. Thiele)
WILLIAM H. WELLS Principal Accounting Officer March 31, 1995
(William H. Wells)
*RALPH E. BAILEY Director March 31, 1995
(Ralph E. Bailey)
*HENRY O. BOSWELL Director March 31, 1995
(Henry O. Boswell)
*H. E. LENTZ Director March 31, 1995
(H. E. Lentz)
*WILFRED P. SCHMOE Director March 31, 1995
(Wilfred P. Schmoe)
*CHARLES P. SIESS, JR. Director March 31, 1995
(Charles P. Siess, Jr.)
*PETER SIMONIS Director March 31, 1995
(Peter Simonis)
*C. W. YEARGAIN Director March 31, 1995
(C. W. Yeargain)
* BY C. R. PALMER
(C. R. Palmer, Attorney-in-fact)
-25-
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EXHIBIT 11
ROWAN COMPANIES, INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY
DILUTED EARNINGS (LOSS) PER SHARE
(in thousands except per share amounts)
For the Year Ended December 31
-----------------------------------------------------
1994 1993 1992
-------- -------- --------
Weighted average shares of common stock
outstanding 84,092 78,924 73,021
Stock options (treasury stock method) 1,436 (A) 1,377 (A) 1,305 (A)
-------------------------------------------------------
Weighted average shares for primary
earnings (loss) per share calculation 85,528 80,301 74,326
Stock options (treasury stock method) 30 (A)
Shares issuable from assumed conversion
of floating rate subordinated
convertible debentures 612 (A) 516 (A) 652 (A)
-------------------------------------------------------
Weighted average shares for fully diluted
earnings (loss) per share calculation 86,140 80,817 75,008
=======================================================
Net income (loss) for primary calculation $ (22,989) $ (13,259) $ (73,753)
Subordinated debenture interest 301 282 353
-------------------------------------------------------
Net income (loss) for fully diluted
calculation $ (22,688) $ (12,977) $ (73,400)
=======================================================
Primary earnings (loss) per share $ (0.27) $ (0.17) $ (0.99)
=======================================================
Fully diluted earnings (loss) per share $ (0.26)(B) $ (0.16)(B) $ (0.98)(B)
=======================================================
Note: Reference is made to Note 1 to Consolidated Financial Statements
regarding computation of per share amounts.
(A) Included in accordance with Regulation S-K Item 601(b)(11) although not
required to be provided for by Accounting Principles Board Opinion No. 15
because the effect is insignificant.
(B) This calculation is submitted in accordance with regulation S-K Item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an antidilutive result.
29
EXHIBIT INDEX
Page 1 Of 4
Footnote Exhibit
Reference Number Exhibit Description
------------- ----------- --------------------------------------------------
(1) 3a Restated Certificate of Incorporation of the
Company, dated February 17, 1984, incorporated by
reference to: Exhibit 3a to the Company's Form 10-K
for the fiscal year ended December 31, 1983 (File
No. 1-5491); Exhibit 4.2 to the Company's
Registration Statement on Form S-3 (Registration No.
33-13544); and Exhibits 4a, 4b, 4c and 4d below.
(1) 3b Bylaws of the Company amended as of April 23, 1993,
incorporated by reference to Exhibit 3 to the
Company's Form 10-Q for the quarter ended March 31,
1993 (File No. 1-5491).
(1) 4a Certificate of Designation of the Company's $2.125
Convertible Exchangeable Preferred Stock
incorporated by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-3
(Registration No. 33-6476).
(1) 4b Certificate of Designation of the Company's Series I
Preferred Stock incorporated by reference to Exhibit
4b to the Company's Form 10-K for the fiscal year
ended December 31, 1986 (File No.1-5491).
(1) 4c Certificate of Designation of the Company's Series
II Preferred Stock incorporated by reference to
Exhibit 4c to the Company's Form 10-K for the fiscal
year ended December 31, 1987 (File No.1-5491).
(2) 4d Certificate of Designation of the Companies Series
III Preferred Stock.
(1) 4e Certificate of Designation of the Company's Series A
Junior Preferred Stock dated March 2, 1992
incorporated by reference to Exhibit 4d to the
Company's Form 10-k for the fiscal year ended
December 31, 1991 (File No. 1-5491).
(2) 4f Amendment Nos. 1 and 2 dated September 19, 1994 and
September 26, 1995, respectively, to the Rights
Agreement dated as of February 25, 1992 between the
Company and Citibank, N.A. as Rights Agent.
(2) 4g Rights Agreement as Amended dated as of February 25,
1992 between the Company and Citibank, N.A. as
Rights Agent.
(1) 4h Indenture dated December 1, 1991 between the Company
and Bankers Trust Company, as Trustee, relating to
the Company's 11-7/8% Senior Notes due 2001
incorporated by reference to Exhibit 28.1 to the
Company's Current Report on Form 8-k dated December
12, 1991 (File No. 1-5491).
(1) 4i Specimen Common Stock Certificate, incorporated by
reference to Exhibit 4g to the Company's Form 10-K
for the fiscal year ended December 31, 1992 (File
No. 1-5491).
30
EXHIBIT INDEX
Page 2 Of 4
Footnote Exhibit
Reference Number Exhibit Description
------------- --------- --------------------------------------------------
(2) 4j Form of Promissory Note dated November 30, 1994
between the purchasers of Series III Floating Rate
Subordinated Convertible Debentures due 2004 and the
Company.
(1) 10a 1980 Nonqualified Stock Option Plan of the Company
together with Form of Stock Option Agreement related
thereto incorporated by reference to Exhibit 5.10 to
the Company's Registration Statement on Form S-7
(Registration No. 2-68622).
(1) 10b 1988 Nonqualified Stock Option Plan of the Company
as amended together with form of Stock Option
Agreement related thereto incorporated by reference
to Exhibit 10b of the Company's Form 10-K for the
fiscal year ended December 31, 1992 (File No.
1-5491).
(1) 10c Amendment No. 1 dated October 25, 1990, to all then
outstanding Stock Option Agreements related to the
1980 Nonqualified Stock Option Plan of the Company
incorporated by reference to Exhibit 10c to the
Company's Form 10-K for the fiscal year ended
December 31, 1990 (File No. 1-5491).
(1) 10d Amendment No. 2 dated May 23, 1991, to all then
outstanding Stock Option Agreements related to the
1980 Nonqualified Stock Option Plan of the Company
incorporated by reference to Exhibit 10d to the
Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
(1) 10e Amendment No. 1 dated October 25, 1990, to all then
outstanding Stock Option Agreements related to the
1988 Nonqualified Stock Option Plan of the Company
incorporated by reference to Exhibit 10d to the
Company's Form 10-K for the fiscal year ended
December 31, 1990 (File No. 1-5491).
(1) 10f Amendment No. 2 dated May 23, 1991, to all then
outstanding Stock Option Agreements related to the
1988 Nonqualified Stock Option Plan of the Company
incorporated by reference to Exhibit 10f to the
Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
(2) 10g Amendment Nos. 1 and 2 Dated June 12, 1986 and
October 21, 1994, respectively, to the 1986
Convertible Debenture Incentive Plan of the Company.
(2) 10h 1986 Convertible Debenture Incentive Plan of the
Company as amended.
(1) 10i Pension Restoration Plan of the Company incorporated
by reference to Exhibit 10h to the Company's Form
10-K for the fiscal year ended December 31, 1992
(File No. 1-5491).
(2) 10j Pension Restoration Plan of LeTourneau, Inc.
31
EXHIBIT INDEX
Page 3 Of 4
Footnote Exhibit
Reference Number Exhibit Description
------------- ----------- -----------------------------------------------
(1) 10k Credit Agreement dated September 22, 1986 (including
amendatory letter dated March 25, 1987) and First
Preferred Ship Mortgage dated November 7, 1986
between the Company and Marathon LeTourneau Company
incorporated by reference to Exhibit 10c to the
Company's Form 10-K for the fiscal year ended
December 31, 1986 and amendatory letter dated
February 21, 1992 incorporated by reference to
Exhibit 10h to the Company's Form 10-K for the
fiscal year ended December 31, 1991 (File No.
1-5491).
(1) 10l Participation Agreement dated December 1, 1984
between the Company and Textron Financial
Corporation et. al. and Bareboat Charter dated
December 1, 1984 between the Company and Textron
Financial Corporation et. al. incorporated by
reference to Exhibit 10c to the Company's Form 10-K
for the fiscal year ended December 31, 1985 (File
No. 1-5491).
(1) 10m Participation Agreement dated December 1, 1985
between the Company and Eaton Leasing Corporation
et. al. and Bareboat Charter dated December 1, 1985
between the Company and Eaton Leasing Corporation
et. al. incorporated by reference to Exhibit 10d to
the Company's Form 10-K for the fiscal year ended
December 31, 1985 (File No. 1-5491).
(1) 10n Corporate Continuing Guaranty dated December 31,
1986 between Shearson Lehman Brothers Holdings Inc.
and the Company incorporated by reference to Exhibit
10h to the Company's Form 10-K for the fiscal year
ended December 31, 1986 (File No. 1-5491).
(1) 10o Corporate Continuing Guaranty dated September 10,
1987 between Shearson Lehman Brothers Holdings Inc.
and the Company incorporated by reference to Exhibit
10i to the Company's Form 10-K for the fiscal year
ended December 31, 1987 (File No. 1-5491).
(1) 10p Cross-Border Corporate Continuing Guaranty dated May
29, 1991 between Citicorp and the Company's
wholly-owned subsidiary, Rowan International, Inc.
incorporated by reference to Exhibit 10o to the
Company's Form 10-K for the fiscal year ended
December 31, 1991 (File No. 1-5491).
(2) 10q Amendment No. 1 dated April 1, 1994 to the
Consulting Agreement dated March 1, 1991 between the
Company and C. W. Yeargain.
(2) 10r Consulting Agreement as amended dated March 1, 1991
between the Company and C. W. Yeargain.
(1) 10s Acquisition Agreement dated as of November 7, 1991,
among KLM Royal Dutch Airlines, Blue Yonder I B.V.,
KLM Helikopters B.V. and Rowan Aviation
(Netherlands) B.V. incorporated by reference to
Exhibit 28.1 to the Company's Current Report on Form
8-K dated November 7, 1991 (File No. 1-5491).
32
EXHIBIT INDEX
Page 4 Of 4
Footnote Exhibit
Reference Number Exhibit Description
--------- ----------- --------------------------------------------
(1) 10t Business Loan Agreement dated January 27, 1993
between Key Bank of Alaska and the Company's
wholly-owned subsidiary, Era Aviation, Inc.
incorporated by reference to Exhibit 10s to the
Company's Form 10-K for the fiscal year ended
December 31, 1992 (File No. 1-5491).
(1) 10u Asset Purchase Agreement dated as of November 12,
1993, among Rowan Companies, Inc., Rowan Equipment,
Inc., General Cable Corporation, Marathon LeTourneau
Company, Marathon LeTourneau Sales & Service Company
and Marathon LeTourneau Australia Pty. Ltd.
incorporated by reference to the Company's Current
Report on Form 8-k dated February 11, 1994 (File No.
1-5491).
(3) 11 Computation of Primary and Fully Diluted Earnings
(Loss) Per Share for the years ended December 31,
1994, 1993 and 1992 appearing on page 26 in this
Form 10-K.
(4) 13 Annual Report to Stockholders for fiscal year ended
December 31, 1994.
(2) 21 Subsidiaries of the Registrant as of March 31, 1995.
(2) 23 Independent Auditors' Consent.
(2) 24 Powers of Attorney pursuant to which names were
affixed to this Form 10-K for the fiscal year ended
December 31, 1994.
(2) 27 Financial Data Schedule for the year ended December
31, 1994.
__________________________________________
(1) Incorporated herein by reference to another filing of the company
with the Securities and Exchange Commission as indicated.
(2) Included herein.
(3) Included in Form 10-K on page 26.
(4) Included herein. See ITEM 1, ITEMS 5-8 and Subpart (a)1. of ITEM 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K on
pages 20 through 23 on Form 10-K for specific portions
incorporated herein by reference.