Delaware
|
75-0759420
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
2800 Post Oak
Boulevard, Suite 5450 Houston, Texas
|
77056-6189
|
(Address of principal executive offices)
|
(Zip Code)
|
|
|
Page
No.
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PART
I.
|
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Item
1.
|
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1
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3
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4
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5
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Item
2.
|
13
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Item
3.
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27
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Item
4.
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27
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PART
II.
|
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|
Item
1.
|
28
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Item
1A.
|
Risk Factors |
28
|
Item
2.
|
28
|
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Item 4. | Submission of Matters to a Vote of Security Holders |
28
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Item
6.
|
29
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30
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||||||
ROWAN COMPANIES, INC. AND
SUBSIDIARIES
|
|||||||
(IN THOUSANDS, EXCEPT SHARE
AMOUNTS)
|
|||||||
(Unaudited) |
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 213,861 | $ | 222,428 | ||||
Receivables
- trade and other
|
368,101 | 484,962 | ||||||
Inventories
- at cost:
|
||||||||
Raw
materials and supplies
|
357,378 | 337,503 | ||||||
Work-in-progress
|
163,873 | 213,177 | ||||||
Finished
goods
|
715 | 749 | ||||||
Prepaid
expenses and other current assets
|
96,648 | 59,466 | ||||||
Deferred
tax assets - net
|
45,145 | 50,902 | ||||||
Total
current assets
|
1,245,721 | 1,369,187 | ||||||
PROPERTY,
PLANT AND EQUIPMENT - at cost:
|
||||||||
Drilling
equipment
|
3,631,026 | 3,503,590 | ||||||
Manufacturing
plant and equipment
|
254,377 | 249,725 | ||||||
Construction
in progress
|
541,907 | 425,182 | ||||||
Other
property and equipment
|
138,705 | 126,915 | ||||||
Property,
plant and equipment - gross
|
4,566,015 | 4,305,412 | ||||||
Less
accumulated depreciation and amortization
|
1,238,137 | 1,157,884 | ||||||
Property, plant and
equipment - net
|
3,327,878 | 3,147,528 | ||||||
Other
assets
|
25,418 | 32,177 | ||||||
TOTAL
ASSETS
|
$ | 4,599,017 | $ | 4,548,892 | ||||
See
Notes to Unaudited Condensed Consolidated Financial
Statements.
|
ROWAN COMPANIES, INC. AND
SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS (continued)
|
|
(IN THOUSANDS, EXCEPT SHARE
AMOUNTS)
|
|
(Unaudited) |
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Current
maturities of long-term debt
|
$ | 64,922 | $ | 64,922 | ||||
Accounts
payable - trade
|
119,155 | 235,048 | ||||||
Deferred
revenues
|
189,430 | 174,086 | ||||||
Billings
in excess of uncompleted contract costs and estimated
profit
|
47,925 | 57,119 | ||||||
Accrued
compensation and related employee costs
|
69,039 | 108,060 | ||||||
Accrued
income taxes
|
4,907 | 58,317 | ||||||
Other
current liabilities
|
45,179 | 47,090 | ||||||
Total
current liabilities
|
540,557 | 744,642 | ||||||
Long-term
debt - less current maturities
|
323,099 | 355,560 | ||||||
Other
liabilities
|
374,673 | 362,026 | ||||||
Deferred
income taxes - net
|
463,316 | 426,848 | ||||||
Commitments
and contingent liabilities (Notes 7 and 8)
|
- | - | ||||||
STOCKHOLDERS'
EQUITY:
|
||||||||
Preferred
stock, $1.00 par value:
|
||||||||
Authorized
5,000,000 shares issuable in series:
|
||||||||
Series
C Preferred Stock, authorized 9,606 shares, none
outstanding
|
- | - | ||||||
Series
A Junior Preferred Stock, authorized 1,500,000 shares, none
issued
|
- | - | ||||||
Common
stock, $.125 par value:
|
||||||||
Authorized
150,000,000 shares; issued 113,857,236 shares at
|
||||||||
June
30, 2009 and 113,115,830 shares at December 31, 2008
|
14,233 | 14,141 | ||||||
Additional
paid-in capital
|
1,072,860 | 1,063,202 | ||||||
Retained
earnings
|
2,030,305 | 1,802,022 | ||||||
Cost
of 111,745 and 79,948 treasury shares, respectively
|
(3,010 | ) | (2,533 | ) | ||||
Accumulated
other comprehensive loss
|
(217,016 | ) | (217,016 | ) | ||||
Total
stockholders' equity
|
2,897,372 | 2,659,816 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 4,599,017 | $ | 4,548,892 | ||||
See
Notes to Unaudited Condensed Consolidated Financial
Statements.
|
ROWAN COMPANIES, INC. AND SUBSIDIARIES
|
|
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
|
(Unaudited) |
For
The Three Months
|
For
The Six Months
|
|||||||||||||||
Ended
June 30,
|
Ended
June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
REVENUES:
|
||||||||||||||||
Drilling
services
|
$ | 320,807 | $ | 367,380 | $ | 701,177 | $ | 707,801 | ||||||||
Manufacturing
sales and services
|
161,353 | 219,762 | 275,791 | 364,830 | ||||||||||||
Total
revenues
|
482,160 | 587,142 | 976,968 | 1,072,631 | ||||||||||||
COSTS
AND EXPENSES:
|
||||||||||||||||
Drilling
operations (excluding items shown below)
|
136,840 | 163,238 | 282,221 | 319,777 | ||||||||||||
Manufacturing
operations (excluding items shown below)
|
147,388 | 179,417 | 238,196 | 305,581 | ||||||||||||
Depreciation
and amortization
|
42,609 | 33,461 | 83,108 | 66,552 | ||||||||||||
Selling,
general and administrative
|
24,720 | 30,773 | 49,296 | 58,172 | ||||||||||||
Loss
(gain) on disposals of property and equipment
|
60 | (1,507 | ) | (4,641 | ) | (6,882 | ) | |||||||||
Total
costs and expenses
|
351,617 | 405,382 | 648,180 | 743,200 | ||||||||||||
INCOME
FROM OPERATIONS
|
130,543 | 181,760 | 328,788 | 329,431 | ||||||||||||
OTHER
INCOME (EXPENSE):
|
||||||||||||||||
Interest
expense
|
(2,457 | ) | (4,329 | ) | (5,600 | ) | (9,895 | ) | ||||||||
Less
interest capitalized
|
2,343 | 4,329 | 5,107 | 9,168 | ||||||||||||
Interest
income
|
201 | 1,189 | 532 | 4,364 | ||||||||||||
Other
- net
|
2,422 | 909 | 3,836 | 1,244 | ||||||||||||
Other
income - net
|
2,509 | 2,098 | 3,875 | 4,881 | ||||||||||||
INCOME
BEFORE INCOME TAXES
|
133,052 | 183,858 | 332,663 | 334,312 | ||||||||||||
Provision
for income taxes
|
36,469 | 63,250 | 104,380 | 115,079 | ||||||||||||
NET
INCOME
|
$ | 96,583 | $ | 120,608 | $ | 228,283 | $ | 219,233 | ||||||||
PER
SHARE AMOUNTS:
|
||||||||||||||||
Net
income - basic
|
$ | .85 | $ | 1.07 | $ | 2.01 | $ | 1.95 | ||||||||
Net
income - diluted
|
$ | .85 | $ | 1.06 | $ | 2.01 | $ | 1.94 | ||||||||
See
Notes to Unaudited Condensed Consolidated Financial
Statements.
|
ROWAN COMPANIES, INC. AND SUBSIDIARIES
|
|
(IN
THOUSANDS)
|
(Unaudited) |
For
The Six Months
|
||||||||
Ended
June 30,
|
||||||||
2009
|
2008
|
|||||||
CASH
PROVIDED BY (USED IN):
|
||||||||
Operations:
|
||||||||
Net
income
|
$ | 228,283 | $ | 219,233 | ||||
Adjustments
to reconcile net income to net cash provided by
operations:
|
||||||||
Depreciation
and amortization
|
83,108 | 66,552 | ||||||
Deferred
income taxes
|
42,225 | 28,119 | ||||||
Provision
for pension and postretirement benefits
|
23,431 | 14,911 | ||||||
Stock-based
compensation expense
|
6,004 | 6,652 | ||||||
Postretirement
benefit claims paid
|
(1,740 | ) | (1,360 | ) | ||||
Gain
on disposals of property, plant and equipment
|
(4,641 | ) | (6,882 | ) | ||||
Contributions
to pension plans
|
(16,685 | ) | (13,259 | ) | ||||
Changes
in current assets and liabilities:
|
||||||||
Receivables
- trade and other
|
107,881 | (13,750 | ) | |||||
Inventories
|
24,397 | (65,509 | ) | |||||
Prepaid
expenses and other current assets
|
(37,182 | ) | (23,786 | ) | ||||
Accounts
payable
|
(156,294 | ) | 20,919 | |||||
Accrued
income taxes
|
(53,410 | ) | (11,391 | ) | ||||
Deferred
revenues
|
15,344 | (17,670 | ) | |||||
Billings
in excess of uncompleted contract costs and estimated
profit
|
(9,194 | ) | (32,401 | ) | ||||
Other
current liabilities
|
(24,648 | ) | 8,589 | |||||
Net
changes in other noncurrent assets and liabilities
|
(1,949 | ) | (14,368 | ) | ||||
Net
cash provided by operations
|
224,930 | 164,599 | ||||||
Investing
activities:
|
||||||||
Capital
expenditures
|
(210,265 | ) | (319,112 | ) | ||||
Proceeds
from disposals of property, plant and equipment
|
5,472 | 19,245 | ||||||
Change
in restricted cash balance
|
- | 50,000 | ||||||
Net
cash used in investing activities
|
(204,793 | ) | (249,867 | ) | ||||
Financing
activities:
|
||||||||
Repayments
of borrowings
|
(32,461 | ) | (32,461 | ) | ||||
Payment
of cash dividends
|
- | (22,345 | ) | |||||
Proceeds
from stock option and convertible debenture plans and
other
|
3,757 | 34,689 | ||||||
Net
cash used in financing activities
|
(28,704 | ) | (20,117 | ) | ||||
DECREASE
IN CASH AND CASH EQUIVALENTS
|
(8,567 | ) | (105,385 | ) | ||||
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
222,428 | 284,458 | ||||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 213,861 | $ | 179,073 | ||||
See
Notes to Unaudited Condensed Consolidated Financial
Statements.
|
1.
|
General
|
2.
|
Segment
Information
|
Three
Months
|
Six
Months
|
|||||||||||||||
Ended
June 30,
|
Ended
June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenues:
|
||||||||||||||||
Drilling
Services
|
$ | 320.8 | $ | 367.4 | $ | 701.2 | $ | 707.8 | ||||||||
Manufacturing:
|
||||||||||||||||
Drilling
Products and Systems
|
141.8 | 258.9 | 286.4 | 429.0 | ||||||||||||
Mining,
Forestry and Steel Products
|
54.7 | 61.5 | 98.0 | 115.5 | ||||||||||||
Eliminations
|
(35.1 | ) | (100.7 | ) | (108.6 | ) | (179.7 | ) | ||||||||
Total
Manufacturing
|
161.4 | 219.7 | 275.8 | 364.8 | ||||||||||||
Total
revenues from external customers
|
$ | 482.2 | $ | 587.1 | $ | 977.0 | $ | 1,072.6 | ||||||||
Income
from operations:
|
||||||||||||||||
Drilling
Services
|
$ | 127.9 | $ | 158.0 | $ | 315.0 | $ | 301.6 | ||||||||
Manufacturing:
|
||||||||||||||||
Drilling
Products and Systems
|
3.7 | 39.0 | 30.2 | 53.7 | ||||||||||||
Mining,
Forestry and Steel Products
|
8.9 | 6.4 | 14.0 | 8.8 | ||||||||||||
Eliminations
|
(9.9 | ) | (21.7 | ) | (30.4 | ) | (34.7 | ) | ||||||||
Total
Manufacturing
|
2.7 | 23.7 | 13.8 | 27.8 | ||||||||||||
Total
income from operations
|
$ | 130.6 | $ | 181.7 | $ | 328.8 | $ | 329.4 |
3.
|
Earnings
Per Share
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Average
common shares outstanding
|
113,596 | 112,921 | 113,362 | 112,192 | ||||||||||||
Dilutive
securities:
|
||||||||||||||||
Stock
options
|
46 | 874 | 53 | 903 | ||||||||||||
Convertible
debentures
|
- | 47 | - | 200 | ||||||||||||
Average
shares for diluted calculations
|
113,642 | 113,842 | 113,415 | 113,295 | ||||||||||||
Net
income
|
$ | 96,583 | $ | 120,608 | $ | 228,283 | $ | 219,233 | ||||||||
Net
income per share:
|
||||||||||||||||
Basic
|
$ | .85 | $ | 1.07 | $ | 2.01 | $ | 1.95 | ||||||||
Diluted
|
$ | .85 | $ | 1.06 | $ | 2.01 | $ | 1.94 | ||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Stock
options
|
1,792 | 63 | 1,792 | 63 | ||||||||||||
Stock
appreciation rights
|
514 | - | 514 | - | ||||||||||||
Convertible
debentures
|
35 | - | 35 | - | ||||||||||||
2,341 | 63 | 2,341 | 63 | |||||||||||||
4.
|
Pension
and Other Postretirement Benefits
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Service
cost
|
$ | 4,477 | $ | 3,371 | $ | 8,905 | $ | 6,741 | ||||||||
Interest
cost
|
8,405 | 7,650 | 16,718 | 15,300 | ||||||||||||
Expected
return on plan assets
|
(7,233 | ) | (7,281 | ) | (14,387 | ) | (14,562 | ) | ||||||||
Recognized
actuarial loss
|
4,040 | 1,467 | 8,056 | 3,966 | ||||||||||||
Amortization
of prior service cost
|
(63 | ) | (64 | ) | (125 | ) | (127 | ) | ||||||||
Total
net pension cost
|
$ | 9,626 | $ | 5,143 | $ | 19,167 | $ | 11,318 | ||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Service
cost
|
$ | 631 | $ | 509 | $ | 1,254 | $ | 1,018 | ||||||||
Interest
cost
|
1,244 | 1,105 | 2,474 | 2,209 | ||||||||||||
Recognized
actuarial loss
|
155 | 68 | 310 | 138 | ||||||||||||
Amortization
of transition obligation
|
165 | 164 | 328 | 329 | ||||||||||||
Amortization
of prior service cost
|
(51 | ) | (50 | ) | (101 | ) | (101 | ) | ||||||||
Total
other postretirement benefit cost
|
$ | 2,144 | $ | 1,796 | $ | 4,265 | $ | 3,593 | ||||||||
5.
|
Cash
and Cash Equivalents
|
6.
|
Construction
Projects in Process
|
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Total
contract value of long-term projects in process (or not yet
begun)
|
$ | 199.2 | $ | 290.7 | ||||
Payments
received
|
132.2 | 168.6 | ||||||
Revenues
recognized
|
86.1 | 119.7 | ||||||
Costs
recognized
|
54.1 | 74.5 | ||||||
Payments
received in excess of revenues recognized
|
46.1 | 48.9 | ||||||
Billings
in excess of uncompleted contract costs
|
||||||||
and
estimated profit
|
$ | 47.9 | $ | 57.1 | ||||
Uncompleted
contract costs and estimated profit
|
||||||||
in
excess of billings (included in other current assets)
|
$ | 1.8 | $ | 8.2 | ||||
7.
|
Commitments
|
Total
estimated project costs
|
Total
costs incurred through June 30, 2009
|
Projected
costs for the remainder of 2009
|
Projected
costs in 2010 and 2011
|
|||||||||||||
Ralph
Coffman (240C)
|
$ | 244 | $ | 187 | $ | 57 | $ | - | ||||||||
Joe
Douglas (240C)
|
254 | 62 | 40 | 152 | ||||||||||||
EXL
#1
|
187 | 127 | 30 | 30 | ||||||||||||
EXL
#2
|
187 | 81 | 65 | 41 | ||||||||||||
EXL
#3
|
187 | 56 | 57 | 74 | ||||||||||||
EXL
#4 1
|
187 | 29 | 19 | 139 | ||||||||||||
$ | 1,246 | $ | 542 | $ | 268 | $ | 436 |
8.
|
Legal
Proceedings
|
|
The
construction of Rowan’s fourth Tarzan Class jack-up
rig, the J.P.
Bussell, was originally subcontracted to an outside Gulf of Mexico
shipyard, Signal International LLC (“Signal”), and scheduled for delivery
in the third quarter of 2007 at a total cost of approximately $145
million. As a result of various problems encountered on the
project, Rowan exercised its right to take over the rig construction
pursuant to the terms of the construction contract, and Signal turned the
rig over to the Company in March 2008. The rig was later
completed by the Company more than one year behind schedule, and its final
cost was approximately 40% over the original
estimate. Accordingly, Rowan has declared Signal in breach of
contract and initiated court proceedings styled Rowan Companies, Inc. and
LeTourneau Technologies, Inc. vs. Signal International LLC in the
269th
Judicial District Court of Harris County, Texas, to recover the
cost to complete the rig over and above the agreed contract price and
other damages, plus interest. Signal filed a separate
counterclaim against Rowan styled Signal International LLC vs.
LeTourneau, Inc., in the U.S. District Court, Southern District of
Texas, Houston Division, alleging breach of contract and claiming
unspecified damages for cost overruns. That case has been
administratively stayed in favor of the State Court proceeding filed by
the Company. Signal reasserted its claimed damages for amounts
owed and additional costs incurred, totaling approximately $63 million as
a counterclaim in the State Court suit. The Company intends to
vigorously defend its rights under the contract. The Company
does not believe that it is probable that Signal will prevail in its claim
and has made no accrual for such at June 30,
2009.
|
9.
|
Stock-Based
Compensation
|
10.
|
Income
Taxes
|
11.
|
Other
Financial Statement Disclosures
|
12.
|
Subsequent
Events
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||||||||||||||||||||||
2009
|
2008
|
%
Change
|
2009
|
2008
|
%
Change
|
|||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Drilling
|
$ | 320.8 | $ | 367.4 | -13 | % | $ | 701.2 | $ | 707.8 | -1 | % | ||||||||||||
Manufacturing:
|
||||||||||||||||||||||||
Drilling
Products and Systems
|
106.7 | 158.2 | -33 | % | 177.8 | 249.3 | -29 | % | ||||||||||||||||
Mining,
Forestry and Steel Products
|
54.7 | 61.5 | -11 | % | 98.0 | 115.5 | -15 | % | ||||||||||||||||
Total
Manufacturing
|
161.4 | 219.7 | -27 | % | 275.8 | 364.8 | -24 | % | ||||||||||||||||
Total
revenues
|
$ | 482.2 | $ | 587.1 | -18 | % | $ | 977.0 | $ | 1,072.6 | -9 | % | ||||||||||||
Costs
and expenses:
|
||||||||||||||||||||||||
Drilling
|
$ | 192.9 | $ | 209.4 | -8 | % | $ | 386.2 | $ | 406.2 | -5 | % | ||||||||||||
Manufacturing:
|
||||||||||||||||||||||||
Drilling
Products and Systems
|
112.9 | 140.9 | -20 | % | 178.0 | 230.3 | -23 | % | ||||||||||||||||
Mining,
Forestry and Steel Products
|
45.8 | 55.1 | -17 | % | 84.0 | 106.7 | -21 | % | ||||||||||||||||
Total
Manufacturing
|
158.7 | 196.0 | -19 | % | 262.0 | 337.0 | -22 | % | ||||||||||||||||
Total
costs and expenses
|
$ | 351.6 | $ | 405.4 | -13 | % | $ | 648.2 | $ | 743.2 | -13 | % | ||||||||||||
Operating
income (loss):
|
||||||||||||||||||||||||
Drilling
|
$ | 127.9 | $ | 158.0 | -19 | % | $ | 315.0 | $ | 301.6 | 4 | % | ||||||||||||
Manufacturing:
|
||||||||||||||||||||||||
Drilling
Products and Systems
|
(6.2 | ) | 17.3 | -136 | % | (0.2 | ) | 19.0 | -101 | % | ||||||||||||||
Mining,
Forestry and Steel Products
|
8.9 | 6.4 | 39 | % | 14.0 | 8.8 | 59 | % | ||||||||||||||||
Total
Manufacturing
|
2.7 | 23.7 | -89 | % | 13.8 | 27.8 | -50 | % | ||||||||||||||||
Total
operating income
|
$ | 130.6 | $ | 181.7 | -28 | % | $ | 328.8 | $ | 329.4 | 0 | % | ||||||||||||
Net
income
|
$ | 96.6 | $ | 120.6 | -20 | % | $ | 228.3 | $ | 219.2 | 4 | % | ||||||||||||
Three
months ended June 30,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Revenues
|
$ | 320.8 | 100 | % | $ | 367.4 | 100 | % | ||||||||
Operating
costs
|
(136.8 | ) | -43 | % | (163.3 | ) | -44 | % | ||||||||
Depreciation
expense
|
(38.7 | ) | -12 | % | (29.7 | ) | -8 | % | ||||||||
Selling,
general and administrative expenses
|
(17.4 | ) | -5 | % | (17.9 | ) | -5 | % | ||||||||
Net
gain on property disposals
|
- | 0 | % | 1.5 | 0 | % | ||||||||||
Operating
income
|
$ | 127.9 | 40 | % | $ | 158.0 | 43 | % | ||||||||
Offshore
fleet:
|
||||||||||||||||
Average
day rate
|
$ | 177,200 | $ | 161,600 | ||||||||||||
Rig
utilization
|
78 | % | 96 | % | ||||||||||||
Revenue-producing
days
|
1,561 | 1,840 | ||||||||||||||
Land
fleet:
|
||||||||||||||||
Average
day rate
|
$ | 22,400 | $ | 22,600 | ||||||||||||
Rig
utilization
|
60 | % | 97 | % | ||||||||||||
Revenue-producing
days
|
1,721 | 2,604 | ||||||||||||||
Increase
|
||||
(Decrease)
|
||||
Addition
of the J.P.
Bussell and Rowan-Mississippi1
|
$ | 23.9 | ||
Higher
average offshore day rates
|
16.0 | |||
Addition
of four land rigs2
|
6.5 | |||
Loss
of the Rowan-Anchorage3
|
(5.4 | ) | ||
Lower
land rig utilization
|
(25.9 | ) | ||
Lower
offshore rig utilization
|
(55.3 | ) | ||
Reimbursables
and other, net
|
(6.4 | ) | ||
Net
decrease
|
$ | (46.6 | ) | |
Three
months ended June 30,
|
||||||||
2009
|
2008
|
|||||||
Gulf
of Mexico:
|
||||||||
Number
of rigs
|
9 | 8 | ||||||
Revenues
|
$ | 84,125 | $ | 96,082 | ||||
Average
day rate
|
$ | 150,400 | $ | 126,600 | ||||
Utilization
|
66 | % | 98 | % | ||||
Middle
East:
|
||||||||
Number
of rigs
|
9 | 9 | ||||||
Revenues
|
$ | 102,324 | $ | 117,333 | ||||
Average
day rate
|
$ | 144,700 | $ | 153,500 | ||||
Utilization
|
86 | % | 93 | % | ||||
North
Sea:
|
||||||||
Number
of rigs
|
2 | 2 | ||||||
Revenues
|
$ | 52,314 | $ | 41,390 | ||||
Average
day rate
|
$ | 285,400 | $ | 225,100 | ||||
Utilization
|
100 | % | 100 | % | ||||
Other
international:
|
||||||||
Number
of rigs
|
2 | 2 | ||||||
Revenues
|
$ | 40,622 | $ | 47,161 | ||||
Average
day rate
|
$ | 314,000 | $ | 289,300 | ||||
Utilization
|
71 | % | 100 | % |
Six
months ended June 30,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Revenues
|
$ | 701.2 | 100 | % | $ | 707.8 | 100 | % | ||||||||
Operating
costs
|
(282.2 | ) | -40 | % | (319.8 | ) | -45 | % | ||||||||
Depreciation
expense
|
(75.5 | ) | -11 | % | (58.9 | ) | -8 | % | ||||||||
Selling,
general and administrative expenses
|
(33.2 | ) | -5 | % | (34.4 | ) | -5 | % | ||||||||
Net
gain on property disposals
|
4.7 | 1 | % | 6.9 | 1 | % | ||||||||||
Operating
income
|
$ | 315.0 | 45 | % | $ | 301.6 | 43 | % | ||||||||
Offshore
fleet:
|
||||||||||||||||
Average
day rate
|
$ | 175,200 | $ | 160,700 | ||||||||||||
Rig
utilization
|
85 | % | 94 | % | ||||||||||||
Revenue-producing
days
|
3,402 | 3,585 | ||||||||||||||
Land
fleet:
|
||||||||||||||||
Average
day rate
|
$ | 24,100 | $ | 22,900 | ||||||||||||
Rig
utilization
|
67 | % | 93 | % | ||||||||||||
Revenue-producing
days
|
3,776 | 4,962 |
Increase
|
||||
(Decrease)
|
||||
Addition
of the J.P.
Bussell and Rowan-Mississippi1
|
$ | 57.7 | ||
Higher
average offshore day rates
|
27.0 | |||
Addition
of four land rigs2
|
12.4 | |||
Higher
average land day rates
|
3.3 | |||
Loss
of the Rowan-Anchorage3
|
(10.7 | ) | ||
Lower
land rig utilization
|
(38.6 | ) | ||
Lower
offshore rig utilization
|
(53.8 | ) | ||
Reimbursables
and other, net
|
(3.9 | ) | ||
Net
decrease
|
$ | (6.6 | ) | |
Six
months ended June 30,
|
||||||||
2009
|
2008
|
|||||||
Gulf
of Mexico:
|
||||||||
Number
of rigs
|
10 | 8 | ||||||
Revenues
|
$ | 208,269 | $ | 175,482 | ||||
Average
day rate
|
$ | 153,400 | $ | 120,600 | ||||
Utilization
|
77 | % | 95 | % | ||||
Middle
East:
|
||||||||
Number
of rigs
|
9 | 9 | ||||||
Revenues
|
$ | 222,819 | $ | 226,950 | ||||
Average
day rate
|
$ | 147,600 | $ | 152,600 | ||||
Utilization
|
92 | % | 91 | % | ||||
North
Sea:
|
||||||||
Number
of rigs
|
2 | 2 | ||||||
Revenues
|
$ | 102,425 | $ | 85,803 | ||||
Average
day rate
|
$ | 282,600 | $ | 234,400 | ||||
Utilization
|
99 | % | 99 | % | ||||
Other
international:
|
||||||||
Number
of rigs
|
1 | 2 | ||||||
Revenues
|
$ | 71,478 | $ | 96,785 | ||||
Average
day rate
|
$ | 320,400 | $ | 288,300 | ||||
Utilization
|
81 | % | 96 | % |
Three
months ended June 30,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Revenues
|
$ | 106.7 | 100 | % | $ | 158.2 | 100 | % | ||||||||
Operating
costs
|
(107.7 | ) | -101 | % | (131.4 | ) | -83 | % | ||||||||
Depreciation
expense
|
(2.2 | ) | -2 | % | (2.3 | ) | -1 | % | ||||||||
Selling,
general and administrative expenses
|
(3.0 | ) | -3 | % | (7.2 | ) | -5 | % | ||||||||
Operating
income (loss)
|
$ | (6.2 | ) | -6 | % | $ | 17.3 | 11 | % | |||||||
·
|
A
decrease of $22.8 million attributable to $42.6 million recognized on
shipments of land rigs and component packages in 2009, down from $65.4
million in 2008;
|
·
|
A
decrease of $16.2 million attributable to $0.4 million recognized on
shipments of top drives in 2009, down from $16.6 million in
2008;
|
·
|
A
decrease of $13.3 million attributable to $24.5 million of revenues
recognized on three offshore rig kit projects in progress in 2009, as
compared to $37.8 million recognized on six projects in
2008.
|
Six
months ended June 30,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Revenues
|
$ | 177.8 | 100 | % | $ | 249.3 | 100 | % | ||||||||
Operating
costs
|
(166.5 | ) | -94 | % | (212.2 | ) | -85 | % | ||||||||
Depreciation
expense
|
(4.4 | ) | -2 | % | (4.7 | ) | -2 | % | ||||||||
Selling,
general and administrative expenses
|
(7.1 | ) | -4 | % | (13.4 | ) | -5 | % | ||||||||
Operating
income (loss)
|
$ | (0.2 | ) | 0 | % | $ | 19.0 | 8 | % | |||||||
·
|
A
decrease of $36.8 million attributable to $48.2 million recognized on
shipments of land rigs and component packages in 2009, down from $85.0
million in 2008;
|
·
|
A
decrease of $29.9 million attributable to $50.6 million of revenues
recognized on four offshore rig kit projects in progress in 2009, as
compared to $80.5 million recognized on six projects in
2008;
|
·
|
A
decrease of $17.4 million attributable to $0.7 million of revenues
recognized on shipments of top drives in 2009, down from $18.1 million in
2008;
|
·
|
An
increase of $9.1 million attributable to $27.8 million recognized on 29
mud pumps shipped in 2009, up from $18.7 million on 27 pumps in
2008.
|
Three
months ended June 30,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Revenues
|
$ | 54.7 | 100 | % | $ | 61.5 | 100 | % | ||||||||
Operating
costs
|
(39.7 | ) | -73 | % | (48.0 | ) | -78 | % | ||||||||
Depreciation
expense
|
(1.6 | ) | -3 | % | (1.5 | ) | -2 | % | ||||||||
Selling,
general and administrative expenses
|
(4.5 | ) | -8 | % | (5.6 | ) | -9 | % | ||||||||
Operating
income
|
$ | 8.9 | 16 | % | $ | 6.4 | 10 | % | ||||||||
Six
months ended June 30,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
|||||||||||||
Revenues
|
$ | 98.0 | 100 | % | $ | 115.5 | 100 | % | ||||||||
Operating
costs
|
(71.7 | ) | -73 | % | (93.4 | ) | -81 | % | ||||||||
Depreciation
expense
|
(3.1 | ) | -3 | % | (2.9 | ) | -3 | % | ||||||||
Selling,
general and administrative expenses
|
(9.2 | ) | -9 | % | (10.4 | ) | -9 | % | ||||||||
Operating
income
|
$ | 14.0 | 14 | % | $ | 8.8 | 8 | % | ||||||||
·
|
Worldwide
jack-up utilization is currently 73%, down from about 90% at year-end
2008;
|
·
|
Total
jack-up demand is currently at 325 rigs, off 17% from the September 2008
peak;
|
·
|
Demand
for premium jack-ups, which are independent-leg, cantilevered jack-ups
able to operate in water depths greater than 300 feet, is currently at
194, off 10% from the peak set in December
2008;
|
·
|
There
are 70 jack-ups currently under construction or on order for completion by
2012, of which only 13% are
contracted.
|
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Cash
and cash equivalents
|
$ | 213.9 | $ | 222.4 | ||||
Current
assets
|
$ | 1,245.7 | $ | 1,369.2 | ||||
Current
liabilities
|
$ | 540.6 | $ | 744.6 | ||||
Current
ratio
|
2.30 | 1.84 | ||||||
Current
maturities of long-term debt
|
$ | 64.9 | $ | 64.9 | ||||
Long-term
debt
|
$ | 323.1 | $ | 355.6 | ||||
Stockholders'
equity
|
$ | 2,897.4 | $ | 2,659.8 | ||||
Long-term
debt/total capitalization
|
0.10 | 0.12 |
Six
months ended June 30,
|
||||||||
2009
|
2008
|
|||||||
Net
operating cash flows
|
$ | 224.9 | $ | 164.6 | ||||
Net
proceeds from asset disposals
|
5.5 | 19.2 | ||||||
Proceeds
from equity compensation and debenture plans and other
|
3.8 | 34.7 | ||||||
Net
change in restricted cash balance
|
- | 50.0 | ||||||
Capital
expenditures
|
(210.3 | ) | (319.1 | ) | ||||
Debt
repayments
|
(32.5 | ) | (32.5 | ) | ||||
Cash
dividend payments
|
- | (22.3 | ) | |||||
Total
sources (uses)
|
$ | (8.6 | ) | $ | (105.4 | ) | ||
·
|
$83.7
million towards construction of the EXL class
rigs;
|
·
|
$49.6
million towards construction of the 240C class rigs,
comprised of $35.6 million for the Ralph Coffman and $14.0
million for the Joe
Douglas;
|
·
|
$47.9
million for improvements to the existing offshore
fleet;
|
·
|
$6.2
million related to construction of two land rigs, one of which was
completed in the first quarter of 2009 with the other delivered in June
2009.
|
Month
ended
|
Total
number of shares purchased
1
|
Average
price paid per share
|
Total
number of shares purchased as part of publicly announced plans or programs
2
|
Maximum
number of shares that may yet be purchased under the plans or
programs
|
||||||||||||
April
30, 2009
|
18,400 | $ | 14.04 | - | 1,524,600 | |||||||||||
May
31, 2009
|
15,880 | 18.58 | - | 1,524,600 | ||||||||||||
June
30, 2009
|
132 | 20.42 | - | 1,524,600 | ||||||||||||
Total
|
34,412 | $ | 16.16 | - |
4.1
|
Indenture
for Senior Debt Securities dated as of July 21, 2009, between Rowan
Companies, Inc. and U.S. Bank National Association, as trustee
(incorporated by reference to Exhibit 4.1 of the Company’s Current Report
on Form 8-K dated July 21, 2009).
|
4.2
|
First
Supplemental Indenture dated as of July 21, 2009, between Rowan Companies,
Inc. and U.S. Bank National Association, as trustee (incorporated by
reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K dated
July 21, 2009).
|
10.1
|
2009
Rowan Companies, Inc. Incentive Plan (incorporated by reference to
Appendix A of the Company’s definitive proxy statement dated March 19,
2009).
|
10.2
|
Form
of 2009 Stock Appreciation Right Agreement under the 2009 Rowan Companies,
Inc. Incentive Plan.
|
10.3
|
Form
of 2009 Restricted Stock Agreement under the 2009 Rowan Companies, Inc.
Incentive Plan.
|
10.4
|
Form
of Non-Employee Director 2009 Restricted Stock Unit Agreement under the
2009 Rowan Companies, Inc. Incentive Plan.
|
10.5
|
Amendment
No. 1 dated August 4, 2009, to the Commitment to Guarantee Obligations
between Rowan and the Maritime Administration of the U.S. Department of
Transportation (relating to the Bob Keller, formerly
Tarzan
II).
|
10.6
|
Supplement
No. 2 dated August 4, 2009, to Trust Indenture between Rowan and Citibank,
N.A. (relating to the Bob Keller, formerly
Tarzan
II).
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
32.1
|
Certification
of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|
32.2
|
Certification
of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|
101.INS
|
XBRL
Instance Document.
|
101.SCH
|
XBRL
Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase Document.
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase
Document.
|
ROWAN
COMPANIES, INC.
|
||
(Registrant)
|
||
Date: August
10, 2009
|
/s/
W. H. WELLS
|
|
W.
H. Wells
|
||
Vice
President – Finance and
|
||
Chief
Financial Officer
|
||
Date: August
10, 2009
|
/s/
GREGORY M. HATFIELD
|
|
Gregory
M. Hatfield
|
||
Controller
|
||
(Chief
Accounting
Officer)
|