SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 16, 2003
ROWAN COMPANIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION)
1-5491 75-0759420
(COMMISSION FILE NUMBER ) (IRS EMPLOYER IDENTIFICATION NO.)
2800 POST OAK BOULEVARD
SUITE 5450
HOUSTON, TEXAS 77056-6127
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE, INCLUDING ZIP CODE)
(713) 621-7800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit
Number Exhibit Description
------ -------------------
99 Press release of Rowan Companies, Inc. dated April 16, 2003
ITEM 9. REGULATION FD DISCLOSURE (INFORMATION PROVIDED UNDER ITEM 12 - RESULTS
OF OPERATIONS AND FINANCIAL CONDITION).
The following information is disclosed pursuant to Item 12 - Results of
Operations and Financial Condition. It is being furnished under Item 9 of this
Form 8-K in accordance with the interim guidance provided in SEC Release No.
33-8216.
On April 16, 2003, Rowan Companies, Inc. issued a press release announcing
its results for the first quarter of 2003. The press release is attached as
Exhibit 99.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ROWAN COMPANIES, INC.
By: /s/ E. E. THIELE
-------------------------------------------
E. E. Thiele,
Senior Vice President - Administration
and Finance and Principal Financial Officer
Dated: April 17, 2003
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
Exhibit
Number Exhibit Description
------ -------------------
99 Press release of Rowan Companies, Inc. dated April 16, 2003
EXHIBIT 99
ROWAN COMPANIES, INC.
NEWS RELEASE 2800 POST OAK BOULEVARD, SUITE 5450
HOUSTON, TEXAS 77056 (713) 621-7800
FOR IMMEDIATE RELEASE April 16, 2003
HOUSTON, TEXAS -- ROWAN REPORTS FIRST QUARTER FINANCIAL RESULTS.
For the three months ended March 31, 2003, the Company incurred a net loss
of $17.2 million, or $.18 per share, on revenues of $131.4 million, compared to
net income of $87.7 million, or $.92 per share, on revenues of $137.8 million in
the first quarter of 2002. First quarter 2002 results included net proceeds from
the settlement of the Gorilla V contract dispute, which increased net income by
approximately $102 million, or $1.07 per share. Excluding the effects of the
settlement, the Company's first quarter 2002 results would have been a net loss
of approximately $14 million, or $.15 per share.
Rowan's Gulf of Mexico rig utilization was 90% during the first quarter of
2003, versus 93% in the fourth quarter of 2002 and 83% in the year-earlier
period, and our average Gulf of Mexico day rate of $34,700 decreased by $800, or
2%, from the fourth quarter of 2002, but was up by $5,400, or 18%, from the
year-earlier period. Land rig utilization was 66% during the first quarter of
2003, versus 68% in the fourth quarter of 2002 and 58% in the year-earlier
period, and our average land rig day rate of $9,800 increased by $300, or 3%,
from the fourth quarter of 2002, but was down by $900, or 8%, from the
year-earlier period.
Bob Palmer, Chairman and Chief Executive Officer, commented, "For the past
year, as energy prices have gyrated, we have cautioned that our business outlook
was uncertain. Industry rig utilization responded to this uncertainty, thus day
rates have remained depressed. Rowan's financial results for the first quarter
were our worst in eight years.
"In spite of $5.00 natural gas, the jack-up rig count in the Gulf of Mexico
is languishing around 90. True, Rowan's jack-up utilization in the Gulf of
Mexico held at 94% during the first quarter, and is at 100% at the moment, but
our average jack-up rates declined by almost $1,000 per day from the fourth
quarter. The principal reason for Rowan's poor financial results for the first
quarter, however, was our inability to contract Gorillas V and VII, a problem
that we now believe to be resolved.
"We now believe that more favorable business conditions are on the horizon.
First, Rowan's rigs are concentrated offshore in the Gulf of Mexico or onshore
along the Gulf Coast, and most are drilling for natural gas. Second, the
Minerals Management Service's proposed rule granting royalty relief to existing
offshore leases for shelf wells drilled below 15,000 feet should prove of
benefit to Rowan. Third, Gorilla VII's minimum 18-month drilling/production
assignment in the North Sea begins June 1st. In addition, after a long wait, we
believe Gorilla V soon will commence an up to three well assignment offshore
eastern Canada. These two events should increase our revenues by almost $300,000
per day, or around $9 million per month.
-1-
"Thus, we are optimistic that second quarter 2003 will witness a dramatic
turn in our efforts to return to profitability."
Rowan Companies, Inc. is a major provider of international and domestic
offshore contract drilling and aviation services. The Company also operates a
mini-steel mill, a manufacturing facility that produces heavy equipment for the
mining, timber and transportation industries, and a drilling products division
that has designed or built about one-third of all mobile offshore jack-up
drilling rigs, including all 22 operated by the Company. The Company's stock is
traded on the New York Stock Exchange and the Pacific Stock Exchange. Common
Stock trading symbol: RDC. Contact: William C. Provine, Vice-President -
Investor Relations, 713-960-7575. Website: www.rowancompanies.com
This report contains forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including, without limitation,
statements as to the expectations, beliefs and future expected financial
performance of the Company that are based on current expectations and are
subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those projected by the Company. Among the
factors that could cause actual results to differ materially include oil and
natural gas prices, the level of offshore expenditures by energy companies,
energy demand, the general economy, including inflation, weather conditions in
the Company's principal operating areas and environmental and other laws and
regulations. Other relevant factors have been disclosed in the Company's
filings with the U. S. Securities and Exchange Commission.
-2-
ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited (Dollars In Thousands)
MARCH 31
---------
2003 2002
---- ----
ASSETS
Cash and short-term investments $ 115,013 $ 260,687
Accounts receivable 98,069 107,634
Inventories 179,710 149,451
Other current assets 35,412 5,619
Total current assets 428,204 523,391
Property, plant and equipment - net 1,616,098 1,464,392
Other assets 17,829 18,478
TOTAL $ 2,062,131 $ 2,006,261
LIABILITIES AND STOCKHOLDERS' EQUITY
Current maturities of long-term debt $ 47,285 $ 42,458
Other current liabilities 72,990 105,085
Total current liabilities 120,275 147,543
Long-term debt 520,365 453,782
Other liabilities 305,562 202,032
Stockholders' equity 1,115,929 1,202,904
TOTAL $ 2,062,131 $ 2,006,261
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited (Dollars In Thousands Except Per Share Amounts)
FOR THE THREE MONTHS
ENDED MARCH 31
----------------
2003 2002
---- ----
REVENUES:
Drilling services $ 77,886 $ 77,624
Manufacturing sales and services 29,040 31,635
Aviation services 24,429 28,546
TOTAL 131,355 137,805
COSTS AND EXPENSES:
Drilling services 77,510 75,444
Manufacturing sales and services 26,626 29,546
Aviation services 23,434 27,847
Depreciation and amortization 20,310 18,248
General and administrative 6,505 6,395
TOTAL 154,385 157,480
INCOME (LOSS) FROM OPERATIONS (23,030) (19,675)
OTHER INCOME (EXPENSE):
Net proceeds from Gorilla V settlement 157,125
Interest expense (4,859) (4,981)
Less interest capitalized 1,098 1,618
Interest income 522 1,138
Other - net 120 102
OTHER INCOME (EXPENSE) - NET (3,119) 155,002
INCOME (LOSS) BEFORE INCOME TAXES (26,149) 135,327
Provision (credit) for income taxes (8,967) 47,650
NET INCOME (LOSS) $ (17,182) $ 87,677
NET INCOME (LOSS) PER COMMON SHARE:
Basic $ (.18) $ .93
Diluted $ (.18) $ .92
DILUTED SHARES 93,617 95,250
(CONTINUED)
-3-
ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited (In Thousands)
FOR THE THREE MONTHS
ENDED MARCH 31
----------------
2003 2002
---- ----
CASH PROVIDED BY (USED IN):
Operations:
Net income (loss) $ (17,182) $ 87,677
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation and amortization 20,310 18,248
Deferred income taxes (8,636) 10,428
Other - net 4,903 4,899
Net changes in current assets and liabilities (8,839) (47,737)
Net changes in other noncurrent assets and liabilities (403) (193)
Net cash provided by (used in) operations (9,847) 73,322
Investing activities:
Capital expenditures (69,975) (62,850)
Proceeds from disposals of property, plant and equipment 3,576 101
Net cash used in investing activities (66,399) (62,749)
Financing activities:
Proceeds from borrowings 25,852 28,802
Repayments of borrowings (13,504) (13,504)
Payments to acquire treasury stock (2,308)
Proceeds from stock option and convertible debenture plans 155 135
Net cash provided by financing activities 12,503 13,125
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (63,743) 23,698
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 178,756 236,989
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 115,013 $ 260,687
-4-