<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
[ ] 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.
---------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5491 75-0759420
------------------------------ --------------- ---------------
(State or other jurisdiction of Commission File (I.R.S. Employer
incorporation or organization) Number Identification No.)
5450 Transco Tower, 2800 Post Oak Boulevard, Houston, Texas 77056-6196
- ----------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(713) 621-7800
--------------------------------------------------
Registrant's telephone number, including area code
Inapplicable
- ------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 number of shares of common stock, $.125 par value, outstanding at
July 31, 1998 was 85,169,657.
<PAGE> 2
ROWAN COMPANIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
PART I. Financial Information:
Consolidated Balance Sheet --
June 30, 1998 and December 31, 1997..................2
Consolidated Statement of Income --
Three and Six Months Ended June 30, 1998
and 1997.............................................4
Consolidated Statement of Cash Flows --
Six Months Ended June 30, 1998 and 1997..............5
Notes to Consolidated Financial Statements...........6
Management's Discussion and Analysis
of Financial Condition and Results
of Operations........................................8
PART II. Other Information:
Other Information...................................13
Exhibits and Reports on Form 8-K....................13
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------- ------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ................................. $ 140,177 $ 108,332
Receivables - trade and other ............................. 138,805 133,627
Inventories - at cost:
Raw materials and supplies .............................. 83,572 69,621
Work-in-progress ........................................ 35,074 25,974
Finished goods .......................................... 763 6,321
Prepaid expenses .......................................... 8,412 7,694
Deferred tax assets ....................................... 25,163 60,809
---------- ----------
Total current assets ......................... 431,966 412,378
---------- ----------
INVESTMENT IN AND ADVANCES TO 49% OWNED COMPANY ............. -- 25,737
---------- ----------
PROPERTY, PLANT AND EQUIPMENT - at cost:
Drilling equipment ........................................ 982,132 965,292
Aircraft and related equipment ............................ 209,669 202,044
Manufacturing plant and equipment ......................... 68,235 60,902
Construction in progress .................................. 270,953 195,996
Other property and equipment .............................. 106,835 94,476
---------- ----------
Total ........................................ 1,637,824 1,518,710
Less accumulated depreciation and amortization ............ 864,706 841,550
---------- ----------
Property, plant and equipment - net......... 773,118 677,160
---------- ----------
OTHER ASSETS AND DEFERRED CHARGES ........................... 6,308 6,860
---------- ----------
TOTAL ........................................ $1,211,392 $1,122,135
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
-2-
<PAGE> 4
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable and current maturities of long-term debt ............................ $ 6,378
Accounts Payable -- Trade.......................................................... 26,495 $ 22,839
Deferred revenue .................................................................. 11,403 14,927
Other current liabilities ......................................................... 49,656 43,760
---------- ----------
Total current liabilities ................................................ $ 93,932 $ 81,526
---------- ----------
LONG-TERM DEBT - less current maturities .............................................. 254,218 256,150
---------- ----------
OTHER LIABILITIES ..................................................................... 47,647 50,457
---------- ----------
DEFERRED CREDITS:
Income taxes ...................................................................... 74,162 74,956
Gain on sale/leaseback transactions ............................................... 4,362 5,948
---------- ----------
Total deferred credits ................................................... 78,524 80,904
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value:
Authorized 5,000,000 shares issuable in series:
Series A Preferred Stock, authorized 2,300 shares, none outstanding
Series III Preferred Stock, authorized 10,300 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 88,625,726
shares at June 30, 1998 and 88,162,101 shares
at December 31, 1997 ........................................................ 11,078 11,020
Additional paid-in capital ............................................................ 418,371 411,812
Retained earnings ..................................................................... 319,899 232,751
Less cost of 1,957,919 and 1,457,919 treasury shares, respectively .................... 12,277 2,485
---------- ----------
Total stockholders' equity ............................................... 737,071 653,098
---------- ----------
TOTAL .................................................................... $1,211,392 1,122,135
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
-3-
<PAGE> 5
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For The Three Months For The Six Months
Ended June 30, Ended June 30,
----------------------- ----------------------
1998 1997 1998 1997
-------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Drilling services ......................................... $ 131,424 $ 102,942 $ 255,649 $ 192,545
Manufacturing sales and services .......................... 45,227 34,594 82,704 71,238
Aviation services ......................................... 27,589 27,249 49,801 45,767
--------- --------- --------- ---------
Total ............................................ 204,240 164,785 388,154 309,550
--------- --------- --------- ---------
COSTS AND EXPENSES:
Drilling services ......................................... 56,907 47,873 105,418 113,844
Manufacturing sales and services .......................... 38,723 30,429 69,647 62,514
Aviation services ......................................... 25,212 23,733 48,792 43,797
Depreciation and amortization ............................. 12,397 11,423 24,276 22,790
General and administrative ................................ 4,766 4,291 9,269 8,583
--------- --------- --------- ---------
Total ............................................ 138,005 117,749 257,402 251,528
--------- --------- --------- ---------
INCOME FROM OPERATIONS ........................................ 66,235 47,036 130,752 58,022
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense .......................................... (4,114) (6,194) (8,391) (13,538)
Less interest capitalized ................................. 3,960 2,166 7,385 4,107
Gain on disposals of property, plant and equipment ........ 195 54 672 948
Interest income ........................................... 1,748 920 3,450 2,236
Other - net ............................................... 75 75 206 147
--------- --------- --------- ---------
Other income (expense) - net ..................... 1,864 (2,979) 3,322 (6,100)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES .................................... 68,099 44,057 134,074 51,922
Provision for income taxes ................................ 23,710 3,477 46,926 3,711
--------- --------- --------- ---------
INCOME BEFORE EXTRAORDINARY CHARGE ............................ 44,389 40,580 87,148 48,211
Extraordinary charge from early redemption of debt ........ 3,478
--------- --------- --------- ---------
NET INCOME (Note 4) ........................................... $ 44,389 $ 40,580 $ 87,148 $ 44,733
========= ========= ========= =========
PER SHARE OF COMMON STOCK (Note 5):
Basic:
Income before extraordinary charge...................... $ .51 $ .47 $ 1.00 $ .56
Extraordinary charge from early redemption of debt ..... .04
--------- --------- --------- ---------
Net income ............................................. $ .51 $ .47 $ 1.00 $ .52
========= ========= ========= =========
Diluted:
Income before extraordinary charge...................... $ .50 $ .46 $ .98 $ .55
Extraordinary charge from early redemption of debt ..... .04
--------- --------- --------- ---------
Net income ............................................. $ .50 $ .46 $ .98 $ .51
========= ========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE> 6
ROWAN COMPANIES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
For The Six Months
Ended June 30,
----------------------------
1998 1997
-------- --------
(Unaudited)
<S> <C> <C>
CASH PROVIDED BY (USED IN):
Operations:
Net income ................................................................... $ 87,148 $ 44,733
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization ............................................. 24,276 22,790
Gain on disposals of property, plant and equipment ........................ (672) (948)
Compensation expense ...................................................... 2,509 2,467
Change in sale/leaseback payable .......................................... (6,326) (7,666)
Amortization of sale/leaseback gain ....................................... (1,586) (1,586)
Provision for pension and postretirement benefits ......................... 3,046 3,739
Deferred income taxes ..................................................... 34,852 2,497
Extraordinary charge from early redemption of debt ........................ 3,550
Other - net ............................................................... 71 1,625
Changes in current assets and liabilities:
Receivables- trade and other .............................................. (5,178) (11,534)
Inventories ............................................................... (16,892) (13,954)
Other current assets ...................................................... (718) 5,268
Current liabilities ....................................................... (19) 6,792
Net changes in other noncurrent assets and liabilities ....................... 1,788 17
--------- ---------
Net cash provided by operations .................................................. 122,299 57,790
--------- ---------
Investing activities:
Property, plant and equipment additions ...................................... (114,997) (77,445)
Proceeds from disposals of property, plant and equipment .................... 1,135 2,351
Proceeds from disposition of investment in 49% owned company ................. 19,550
Repayments from affiliates ................................................... 226
--------- ---------
Net cash used in investing activities ............................................ (94,312) (74,868)
--------- ---------
Financing activities:
Proceeds from borrowings .................................................... 40,602 38,569
Repayments of borrowings ..................................................... (36,156) (50,163)
Payments to acquire treasury stock ........................................... (2,080)
Premium on redemption of debt ................................................ (3,000)
Other - net .................................................................. 1,492 957
--------- ---------
Net cash provided by (used in) financing activities .............................. 3,858 (13,637)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .................................... 31,845 (30,715)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ...................................... 108,332 97,225
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ............................................ $ 140,177 $ 66,510
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
-5-
<PAGE> 7
ROWAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements of the Company included herein
have been prepared without audit pursuant to generally accepted
accounting principles and the rules and regulations of the Securities
and Exchange Commission. Certain information and notes have been
condensed or omitted pursuant to such rules and regulations and the
Company believes that the disclosures included herein are adequate. It
is suggested that these condensed financial statements be read in
conjunction with the financial statements and related notes included in
the Company's 1997 Annual Report to Stockholders incorporated by
reference in the Form 10-K for the year ended December 31, 1997.
2. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments and reclassifications,
which are of a normal recurring nature, necessary to present fairly its
financial position as of June 30, 1998 and December 31, 1997, and the
results of its operations for the three and six month periods ended June
30, 1998 and 1997 and its cash flows for the six months ended June 30,
1998 and 1997.
3. The results of operations for the three and six month periods ended June
30, 1998 are not necessarily indicative of the results to be expected
for the full year.
4. The Company's adoption, effective January 1, 1998, of Statements of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income", and No. 132, "Employers' Disclosures about Pension and Other
Postretirement Benefits", did not materially affect its financial
statement disclosure. For the periods presented herein, the Company has
no items of "other comprehensive income" as defined in Statement 130.
-6-
<PAGE> 8
5 Computation of basic and diluted earnings per share is as follows (in
thousands except per share amounts):
<TABLE>
<CAPTION>
For The For The
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1998 1997 1998 1997
------- ------ ------- -------
<S> <C> <C> <C> <C>
Weighted average shares of common
stock outstanding .......................................... 87,014 85,932 86,931 85,779
Stock options and related (treasury stock method) ............. 1,270 1,523 1,307 1,564
Shares issuable from assumed conversion
of floating rate subordinated debentures ................... 956 1,328 961 1,351
------- ------- ------- -------
Weighted average shares for diluted
earnings per share calculation ............................. 89,240 88,783 89,199 88,694
======= ======= ======= =======
Income before extraordinary charge ............................ $44,389 $40,580 $87,148 $48,211
Extraordinary charge from early redemption of debt ............ 3,478
------- ------- ------- -------
Net income for basic calculation .............................. 44,389 40,580 87,148 44,733
Subordinated debenture interest, net of
income tax effect .......................................... 80 158
------- ------- ------- -------
Net income for diluted calculation ............................ $44,389 $40,660 $87,148 $44,891
======= ======= ======= =======
Basic earnings per share:
Income before extraordinary charge ......................... $ .51 $ .47 $ 1.00 $ .56
Extraordinary charge ....................................... .04
------- ------- ------- -------
Net income ................................................. $ .51 $ .47 $ 1.00 $ .52
======= ======= ======= =======
Diluted earnings per share:
Income before extraordinary charge ......................... $ .50 $ .46 $ .98 $ .55
Extraordinary charge ....................................... .04
------- ------- ------- -------
Net income ................................................. $ .50 $ .46 $ .98 $ .51
======= ======= ======= =======
</TABLE>
-7-
<PAGE> 9
ROWAN COMPANIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
Six Months Ended June 30, 1998 Compared to
Six Months Ended June 30, 1997
The Company achieved net income of $87.1 million in the first half of 1998
compared to $44.7 million in the same period of 1997. This enhanced performance
resulted primarily from increased offshore drilling day rates and improved
manufacturing operations. The prior period results were after charges of $20
million from concluding the Company's turnkey business and $3.5 million from
redeeming early certain 11 7/8% Senior Notes.
A comparison of the revenues and operating profit (loss) from drilling,
manufacturing, aviation and consolidated operations for the first six months of
1998 and 1997, respectively, is reflected below (dollars in thousands):
<TABLE>
<CAPTION>
Drilling Manufacturing Aviation Consolidated
--------------------- ----------------------- ------------------------- -----------------------
1998 1997 1998 1997 1998 1997 1998 1997
------- ------- ------ ------ ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $255,649 $192,545 $ 82,704 $ 71,238 $ 49,801 $ 45,767 $388,154 $309,550
Percent of Consolidated
Revenues 66% 62% 21% 23% 13% 15% 100% 100%
Operating Profit (Loss) (1) $134,971 $ 63,514 $ 10,512 $ 6,817 $ (5,462) $ (3,726) $140,021 $ 66,605
</TABLE>
- -------------------------------------------------------------
(1) Income (loss) from operations before deducting general and administrative
expenses.
As reflected above, the Company's consolidated operating results more than
doubled to $140 million, or 36% of revenues, when comparing the first halves of
1998 and 1997. Day rate drilling revenues increased by $63.1 million or 33% as
the Company's offshore fleet achieved 97% utilization during the first half of
1998, compared to 99% in the first half of 1997, and a 34% increase in average
day rates between periods. Related expenses increased by $11.8 million or 13%
between periods primarily as a result of higher wages and rig mobilization
costs.
First half 1997 operating results included a loss from concluding the Company's
turnkey drilling operations of approximately $20 million. The Company currently
has no turnkey wells in progress nor any plans for additional turnkey work at
this time.
The 54% improvement shown above in the Company's manufacturing profitability
between periods primarily reflects the increased contribution of the marine
group. During the first half of 1998, the Company provided design and components
("LeTourneau kit") toward the construction of two new Super 116 Class rigs. One
kit was essentially complete at June 30, 1998 and the other should be completed
by year end. The division's external backlog was $47.4 million at June 30, 1998.
Manufacturing operations exclude approximately $51 million of products and
services provided to the Company's drilling division during the
-8-
<PAGE> 10
first half of 1998, most of which was attributable to construction progress on
Rowan Gorillas V and VI, compared to $32 million in the same period of 1997.
The aviation operating results in both periods reflect the normal reduced flying
activity in Alaska throughout much of the first four months of the year,
although the 1998 results were hampered primarily due to higher wages and
aircraft maintenance costs. The Company's disposition in January 1998 of its 49%
interest in the Dutch helicopter joint venture KLM ERA did not have a material
impact on its first half 1998 results of operations.
Three Months Ended June 30, 1998 Compared to
Three Months Ended June 30, 1997
The Company achieved net income of $44.4 million in the second quarter of 1998
compared to $40.6 million in the same period of 1997. This enhanced performance
resulted primarily from increased offshore drilling day rates and improved
manufacturing operations.
A comparison of the revenues and operating profit (loss) from drilling,
manufacturing, aviation and consolidated operations for the second quarters of
1998 and 1997, respectively, is reflected below (dollars in thousands):
<TABLE>
<CAPTION>
Drilling Manufacturing Aviation Consolidated
----------------------------- ------------------------- ------------------------ ----------------------------
1998 1997 1998 1997 1998 1997 1998 1997
-------------- ------------- ----------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 131,424 $ 102,942 $ 45,227 $ 34,594 $ 27,589 $ 27,249 $ 204,240 $ 164,785
Percent of
Consolidated
Revenues 64% 62% 22% 21% 14% 17% 100% 100%
Operating Profit
(Loss) $ 66,700 $ 47,497 $ 5,188 $ 3,121 $ (887) $ 709 $ 71,001 $ 51,327
</TABLE>
As reflected above, the Company's consolidated operating results improved by
$19.7 million or 38% when comparing the second quarters of 1998 and 1997. Day
rate drilling revenues increased by $28.5 million or 28% as the Company's
offshore fleet achieved 95% utilization during the second quarter of 1998,
compared to 100% in the second quarter of 1997, and a 31% increase in average
day rates between periods. Related expenses increased by $8.7 million or about
18% between periods primarily as a result of higher wages and rig mobilization
costs.
The 66% improvement shown above in the Company's manufacturing profitability
between periods primarily reflects the increased contribution of the marine
group. During the second quarter of 1998, the Company completed one of the two
Super 116 Class rig kits it sold in 1997. The second kit should be completed by
year-end 1998. The division's external backlog was $47.4 million at June 30,
1998. Manufacturing operations exclude approximately $29 million of products and
services provided to the Company's drilling division during the second quarter
of 1998, most of which was attributable to construction progress on Rowan
Gorillas V and VI, compared to $16 million in the same period of 1997.
The Company's aviation operations experienced the normal seasonal improvement in
flying activity in Alaska during both periods, although the 1998 results were
hampered primarily due to higher wages and aircraft maintenance costs.
-9-
<PAGE> 11
Perceptible trends in the offshore drilling markets in which the Company is
currently operating and the number of Company-operated rigs in each of those
markets are as follows:
<TABLE>
<CAPTION>
AREA RIGS PERCEPTIBLE INDUSTRY TRENDS
- --------------------------- ------------- -----------------------------------------------------
<S> <C> <C>
Gulf of Mexico 14 Reduced exploration and development activity in the
near-term
North Sea 5 Generally stable levels of drilling activity for jack-up
rigs
Eastern Canada 2 Improving demand
</TABLE>
Perceptible trends in the aviation markets in which the Company is currently
operating and the number of Company-operated aircraft based in each of those
markets are as follows:
<TABLE>
<CAPTION>
AREA AIRCRAFT PERCEPTIBLE INDUSTRY TRENDS
- ------------------------ ------------------- ----------------------------------------------------
<S> <C> <C>
Alaska 70 Normal seasonal improvement
Gulf of Mexico 49 Moderately improving market conditions
</TABLE>
The drilling and aviation markets in which the Company competes frequently
experience significant changes in supply and demand. Offshore drilling
utilization and day rates are primarily a function of the demand for drilling
services, as measured by the level of exploration and development expenditures,
and the supply of capable drilling equipment. These expenditures, in turn, are
affected by many factors such as existing and newly discovered oil and natural
gas reserves, political and regulatory policies, seasonal weather patterns,
contractual requirements under leases or concessions, trends in finding and
extraction costs and, probably most influential, oil and natural gas prices. The
Company's aviation operations are also affected by such factors, as flying in
support of offshore energy operations remains a major source of business and
Alaska operations are hampered each winter. The volatile nature of such factors
prevents the Company from being able to accurately predict whether existing
market conditions or the perceptible market trends reflected in the preceding
tables will continue. In response to fluctuating market conditions, the Company
can, as it has done in the past, relocate its drilling rigs and aircraft from
one geographic area to another, but only when such moves are economically
justified.
In recent months, the prolonged weakness in oil prices has led to a reduction in
drilling, primarily impacting jack-ups in the Gulf of Mexico. As some energy
companies have suspended portions of their drilling programs and reduced their
1998 drilling budgets, the Company has experienced curtailed drilling
assignments and, in many instances, has had to accept lower day rates in an
effort to maintain utilization of its rig fleet. Many of the Company's Gulf of
Mexico rigs are currently working at day rates well below those obtained during
the just-completed second quarter. At current levels, the Company should
continue to operate profitably. However, there can be no assurance that the
Company's operations will not be more adversely affected should current
conditions persist or that market conditions will not deteriorate further.
The Company's manufacturing operations are considerably less volatile than its
drilling and aviation operations and, given current order backlog and barring
unforeseen circumstances, should continue to contribute positive operating
results throughout the remainder of 1998.
-10-
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
A comparison of key balance sheet figures and ratios as of June 30, 1998 and
December 31, 1997 is as follows (dollars in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
<S> <C> <C>
Cash and cash equivalents $140,177 $108,332
Current assets $431,966 $412,378
Current liabilities $93,932 $81,526
Current ratio 4.60 5.06
Notes payable and current maturities of long-term debt $6,378 -
Long-term debt $254,218 $256,150
Stockholders' equity $737,071 $653,098
Long-term debt/total capitalization .26 .28
</TABLE>
Reflected in the comparison above are the effects in the first half of 1998 of
net cash provided by operations of $122.3 million, capital expenditures of $115
million, proceeds from borrowings of $40.6 million, repayments of borrowings of
$36.2 million and proceeds from the disposition of the Company's 49% interest in
KLM ERA Helicopters of $19.6 million.
Capital expenditures during the first half of 1998 were primarily related to
construction of Rowan Gorilla V and Rowan Gorilla VI, each being an enhanced
version of the Company's Gorilla Class jack-ups featuring a combination drilling
and production capability. Gorilla V recently completed its relocation from the
Company's Vicksburg, Mississippi shipyard to its Sabine Pass, Texas facility for
final outfitting and should be completed and commence operations in the North
Sea during the fourth quarter. The Company has financed $153.1 million of the
cost of Gorilla V through two fixed rate bank notes guaranteed by the Maritime
Administration of the U. S. Department of Transportation under its Title XI
Program. The notes require semiannual repayments beginning in January 1999, with
final payments due in July 2010, and bear interest as follows: $67 million at
6.94% and $86.1 million at 6.15%.
Construction of Gorilla VI should be completed during the second quarter of 2000
and the Company is pursuing outside financing on terms and conditions similar to
those obtained for Gorilla V.
The Company has begun ordering long lead-time items for Rowan Gorilla VII and
expects construction to be completed about one year following delivery of
Gorilla VI. The Company intends to pursue outside financing for Gorilla VII if
necessary, but believes that internally generated working capital may be
sufficient to fund its construction. There can be no assurance that working
capital will be adequate throughout the period required to complete construction
or that outside financing will be available. The Company expects the total
construction cost of Gorillas V, VI and VII will be in the range of $550 to 600
million.
The Company estimates remaining 1998 capital expenditures will be between $90
million and $100 million, including approximately $75-80 million for Gorillas V,
VI and VII. The Company may also spend amounts to acquire additional aircraft as
market conditions justify and to upgrade existing offshore rigs and
manufacturing facilities.
In March 1998, the Company repaid the balance of $36.2 million of promissory
notes originally issued in February 1994 in connection with the acquisition of
its manufacturing operations.
-11-
<PAGE> 13
At June 30, 1998, the Company had available $45 million under a $155 million
bank revolving credit facility maturing in October, 2000. The $110 million
outstanding under the credit line bore interest at 6.06% on June 30, 1998.
Based upon current operating levels and the previously discussed market trends,
management believes that 1998 operations, together with existing working capital
and available financial resources, will generate sufficient cash flow to sustain
planned capital expenditures and debt service requirements at least through the
remainder of 1998.
At June 30, 1998, approximately $137 million of the Company's retained earnings
was available for the payment of dividends under the most restrictive provisions
of the Company's debt agreements.
On June 16, 1998, the Company instituted a program of repurchasing up to five
percent of its outstanding Common Stock. At July 31, 1998, the Company had
repurchased more than two percent of its outstanding shares.
The Company believes that its exposure to potential year 2000 software problems
is limited and the costs associated with readying its information systems will
not materially impact its financial position or results of operations. The
Company expects to substantially complete modifications to its information
systems during 1998 and will expense such costs as they are incurred.
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 are the following:
o oil and natural gas prices
o the level of offshore expenditures by energy companies
o the general economy, including inflation
o weather conditions in the Company's principal operating areas
o 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.
-12-
<PAGE> 14
PART II. OTHER INFORMATION
Item 5. Other Information
To be considered for inclusion in the Company's proxy statement and form
of proxy relating to the 1999 Annual Meeting of Stockholders, proposals of
stockholders submitted for consideration at such annual meeting must be received
by the Corporate Secretary at the Company's principal offices, 5450 Transco
Tower, 2800 Post Oak Boulevard, Houston, Texas 77056-6196 no later than
November 15, 1998.
Other stockholder proposal submitted for consideration at the Company's
1999 Annual Meeting of Stockholders (but not for inclusion in the proxy
statement and form of proxy) must be received by the Corporate Secretary of the
Company at the address indicated above no later than January 27, 1999. If such
timely notice of a stockholder proposal is not given, the proposal may not be
brought before the Annual Meeting. If timely notice of a stockholder proposal is
given but is not accompanied by a written statement in compliance with
applicable securities laws, the Company's proxy committee may exercise
discretionary voting authority over proxies with respect to such proposal if
presented at the Company's 1999 Annual Meeting of Stockholders.
Stockholder recommendations to the Nominating Committee of the Company's
Board of Directors with respect to nominees for election as directors must be
received by the Corporate Secretary of the Company at the address indicated
above no later than February 22, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 3 - Bylaws of the Company, as amended
(b) Exhibit 27 - Financial Data Schedule
(c) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant
during the second quarter of fiscal year 1998.
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 thereunto duly authorized.
ROWAN COMPANIES, INC.
(Registrant)
Date: August 14, 1998 /s/ E. E. THIELE
-----------------------------------
E. E. Thiele
Senior Vice President- Finance,
Administration and Treasurer
(Chief Financial Officer)
Date: August 14, 1998 /s/ W. H. WELLS
-----------------------------------
W. H. Wells
Controller
(Chief Accounting Officer)
-13-
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- ------------
<S> <C>
(a) Exhibit 3 - Bylaws of the Company, as amended
(b) Exhibit 27 - Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 3
BYLAWS
AS AMENDED
ROWAN COMPANIES, INC.
A DELAWARE CORPORATION
JULY 14, 1998
<PAGE> 2
B Y L A W S
I N D E X
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE I. OFFICES
Section 1. Principal Offices 4
Section 2. Registered Office 4
Section 3. Other Offices 4
ARTICLE II. MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings 4
Section 2. Notice of Meetings 4
Section 3. Quorum 5
Section 4. Annual Meetings; Election of Directors 5
Section 5. Special Meetings 5
Section 6. Voting; Elections; Inspectors; Votes by Ballot 5
Section 7. Conduct of Stockholders' Meetings 6
Section 8. Validity of Proxies; Ballots, etc. 6
Section 9. Stock List 6
ARTICLE III. BOARD OF DIRECTORS
Section 1. Number, Qualification and Nominations 7
Section 2. Classes of Directors and Term of Office 8
Section 3. Newly Created Directorships 8
Section 4. Vacancies 8
Section 5. Compensation 8
ARTICLE IV. MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of Directors 8
Section 2. First Meeting 8
Section 3. Election of Officers 8
Section 4. Regular Meetings 9
Section 5. Special Meetings 9
Section 6. Notice 9
Section 7. Quorum 9
Section 8. Order of Business 9
Section 9. Presumption of Assent 9
Section 10. Action Without a Meeting or Telephone
Conference Meeting 9
</TABLE>
-2-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE V. COMMITTEES
Section 1. Executive Committee and Other Committees 10
Section 2. Procedure; Meetings; Quorum 10
ARTICLE VI. OFFICERS
Section 1. Number, Titles, and Term of Office 11
Section 2. Salaries 11
Section 3. Removal of Officers 11
Section 4. The Chairman of the Board 11
Section 5. Powers and Duties of the President 11
Section 6. Vice Presidents 11
Section 7. Treasurer 12
Section 8. Assistant Treasurer 12
Section 9. Secretary 12
Section 10. Assistant Secretaries 12
ARTICLE VII. INDEMNIFICATION OF DIRECTORS, OFFICERS
EMPLOYEES AND AGENTS
Section 1. Right to Indemnification 12
Section 2. Indemnification of Employees and Agents 13
Section 3. Right of Claimant to Bring Suite 13
Section 4. Nonexclusivity of Rights 14
Section 5. Insurance 14
Section 6. Savings Clause 14
Section 7. Definitions 14
ARTICLE VIII. CAPITAL STOCK
Section 1. Certificates of Stock 14
Section 2. Transfer of Shares 15
Section 3. Ownership of Shares 15
Section 4. Record Date 15
Section 5. Regulations Regarding Certificates 15
Section 6. Dividends 15
Section 7. Lost or Destroyed Certificates 15
ARTICLE IX. MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year 16
Section 2. Seal 16
Section 3. Notice and Waiver of Notice 16
Section 4. Resignations 16
ARTICLE X. AMENDMENTS 16
</TABLE>
-3-
<PAGE> 4
BYLAWS
OF
ROWAN COMPANIES, INC.
AS AMENDED
Article I
Offices
Section 1. Principal Office. The principal office of the Corporation
shall be in the City of Houston, County of Harris, State of Texas.
Section 2. Registered Office. Until the Board of Directors otherwise
determines, the registered office of the Corporation required by law (meaning,
here and hereinafter, as required from time to time by the General Corporation
Law of the State of Delaware) to be maintained in the State of Delaware, shall
be in the City of Wilmington, County of New Castle, State of Delaware, and the
name of the resident agent in charge thereof is The Corporation Trust Company,
or such other office and agent as may be designated from time to time by the
Board of Directors in the manner provided by law. Such registered office need
not be identical to the principal place of business of the Corporation.
Section 3. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
Article II
Meetings of Stockholders
Section 1. Place of Meetings. All meetings of the stockholders shall be
held in the City of Houston at the principal offices of the Corporation or at
such other places as may be designated by the Board of Directors or Executive
Committee and shall be specified or fixed in the notices or waivers of notices
thereof.
Section 2. Notice of Meetings. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the Chairman of the
Board, the President, the Secretary, or the officer or person calling the
meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the stockholder at his address as it appears on the
records of the Corporation, with postage thereon prepaid.
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date, and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
(30) days after the date for the original meeting, or if after the
-4-
<PAGE> 5
adjournment a new record date is fixed for the adjourned meeting, written notice
of the place, date, and time of the adjourned meeting shall be given in
conformity herewith. At any adjourned meeting, any business may be transacted
which might have been transacted at the original meeting.
Section 3. Quorum. The holders of at least a majority of the
outstanding shares entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of stockholders for the
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation or by these Bylaws. If, however, such quorum shall not be
present or represented at any meeting of stockholders, the stockholders entitled
to vote thereat, present in person or represented by proxy, shall have the power
to adjourn the meeting from time to time, without notice other than announcement
at the meeting of the time and place to which the meeting is being adjourned, to
a time when a quorum shall be present or represented. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally called.
A holder of a share shall be treated as being present at a meeting if the holder
of such share is (i) present in person at the meeting or (ii) represented at the
meeting by a valid proxy, whether the proxy card granting such proxy is marked
as casting a vote or abstaining or is left blank.
Section 4. Annual Meetings; Election of Directors. An annual meeting of
the stockholders, for the election of directors to succeed those whose terms
expire and for the transaction of such other business as may properly come
before the meeting, shall be held on the fourth Friday in April of each year, at
9:00 a.m., local time, if not a legal holiday, at the principal offices of the
Corporation in Houston, Texas or at such other place, date, and time as the
Board of Directors or Executive Committee shall designate each year. Any
business may be transacted at the annual meeting, except as otherwise provided
by law, the Certificate of Incorporation or these Bylaws.
Section 5. Special Meetings. In addition to any condition that may be
provided for in the Certificate of Incorporation, special meetings of the
stockholders for any purpose or purposes may be called at any time in the
interval between annual meetings by the Chairman of the Board, the President,
the Board of Directors, or the Executive Committee. Special meetings of the
Stockholders may not be called by any other person or persons.
Section 6. Voting; Elections; Inspectors; Votes by Ballot. Unless
otherwise provided in the Certificate of Incorporation, at all meetings of
stockholders, every stockholder of record of any class entitled to vote thereat
shall have one vote for each share of stock standing in his name on the books of
the Corporation on the date for the determination of stockholders entitled to
vote at such meeting, either in person or by proxy appointed by instrument in
writing subscribed by such stockholder or his duly authorized attorney, and
bearing a date not more than three years prior to said meeting unless said
instrument provides for a longer period.
If a quorum exists, action on a matter (including the election of
directors) shall be approved if the votes cast in favor of the matter or
election of the director exceed the votes cast opposing the matter or election
of such director. In determining the number of votes cast, shares abstaining
from voting on a matter (including elections) will not be treated as votes cast.
The provisions of this paragraph will govern with respect to all votes of
stockholders except as otherwise provided for in these Bylaws or in the
Certificate of Incorporation or by some specific
-5-
<PAGE> 6
statutory provision superseding the provisions contained in these Bylaws or the
Certificate of Incorporation.
At any meeting of stockholders, the chairman of the meeting may, and
upon the request of the holders of 10% of the stock present in person or
represented by proxy and entitled to vote at such meeting, shall appoint two
inspectors of election who shall subscribe an oath or affirmation to execute
faithfully the duties of inspectors at such election with strict impartiality
and according to the best of their ability shall canvass the votes and make and
sign a certificate of the results thereof. No candidate for the office of
director shall be appointed as such inspector.
As provided in the Certificate of Incorporation of the Corporation, all
elections of directors shall be viva voce unless one or more stockholders
present at the meeting at which directors are elected shall request in writing
that such election be by ballot. The chairman of the meeting may cause a vote by
ballot to be taken upon any other matter, and such vote by ballot shall be taken
upon the request of the holders of 10% of the stock present and entitled to vote
on such other matter.
Section 7. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board, or if he is
not present, by the President, or if he is not present, by a Vice President, or
if neither the Chairman of the Board, President nor a Vice President is present,
by a chairman elected at the meeting. The Secretary of the Corporation, if
present, shall act as secretary of such meetings, or if he is not present, an
Assistant Secretary shall so act; if neither the Secretary nor an Assistant
Secretary is present, then a secretary shall be appointed by the chairman of the
meeting.
The chairman of any meeting of stockholders shall determine the order
of business and the procedures at the meeting, including such regulation of the
manner of voting which is not otherwise prescribed by law, the Certificate of
Incorporation or these Bylaws.
Section 8. Validity of Proxies; Ballots, etc. At every meeting of the
stockholders, all proxies shall be received and taken charge of, and all ballots
shall be received and canvassed by, the secretary of the meeting who shall
decide all questions touching the qualification of voters, the validity of the
proxies, and the acceptance or rejection of votes, unless inspectors of election
shall have been appointed by the chairman of the meeting, in which event such
inspectors of election shall decide all such questions.
Section 9. Stock List. At least ten (10) days before every meeting of
stockholders, the Secretary shall prepare (or cause to be prepared) a complete
list of stockholders entitled to vote at any meeting of stockholders, arranged
in alphabetical order for each class of stock and showing the address of each
such stockholder and the number of shares registered in his name. Such list
shall be open to the examination of any such stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the identity
of the stockholders entitled to vote at the meeting and the number of shares
held by each of them.
-6-
<PAGE> 7
Article III
Board of Directors
Section 1. Number, Qualification and Nominations. The business and
property of the Corporation shall be managed by the Board of Directors, and
subject to the restrictions imposed by law, the Certificate of Incorporation or
these Bylaws, they may exercise all the powers of the Corporation. Directors
need not be stockholders or residents of Delaware.
The Board of Directors shall consist of not less than one nor more than
thirty directors, as so determined from time to time by resolution of the Board
of Directors. If the Board of Directors makes no such determination, the number
of directors shall be the number set forth in the Certificate of Incorporation.
Within the above limits, the number of directors may be increased or decreased
(provided such decrease does not shorten the term of any incumbent director)
from time to time by resolution of the Board of Directors.
Nominations of candidates for election as directors of the Corporation
at any meeting of stockholders of the Corporation may be made by the Chairman of
the Board of Directors, the President or by any stockholder entitled to vote at
such meeting who complies with the provisions of this paragraph. Not less than
60 days prior to the date of the anniversary of the annual meeting held in the
prior year, in the case of an annual meeting, or, in the case of a special
meeting called by the Chairman of the Board, the President, the Board of
Directors or the Executive Committee for the purpose of electing directors, not
more than 10 days following the earlier of the date of notice of such special
meeting or the date on which a public announcement of such meeting is made, any
stockholder who intends to make a nomination at the meeting shall deliver
written notice to the Secretary of the Corporation setting forth (i) the name
and address of the stockholder who intends to make the nomination and of the
person or persons to be nominated; (ii) a representation that the stockholder
(A) is a holder of record of stock of the Corporation specified in such notice,
(B) is or will be entitled to vote at such meeting, and (C) intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice; and (iii) such other information concerning each such nominee as
would be required under the rules of the Securities and Exchange Commission in a
proxy statement soliciting proxies for the election of such nominee and in a
Schedule 14B (or other comparable required filing then in effect) under the
Securities Exchange Act of 1934. In the event that a person is validly
designated as a proposed nominee in accordance with this paragraph (including a
bona fide statement that the nominee is willing to be nominated) and shall
thereafter become unable or unwilling to stand for election to the Board of
Directors, the stockholder who made such designation may designate promptly in
the manner set forth above a substitute proposed nominee, notwithstanding the
minimum time period set forth in this paragraph. No person may be elected as a
director at a meeting of stockholders unless nominated in accordance with this
paragraph, and any purported nomination or purported election not made in
accordance with the procedures as set forth in this paragraph shall be void. In
addition to any other requirements relating to amendments to these Bylaws, no
proposal by any stockholder to repeal or amend this paragraph shall be brought
before any meeting of the stockholders of the Corporation unless written notice
is given of (i) such proposed repeal or the substance of such proposed
amendment; (ii) the name and address of the stockholder who intends to propose
such repeal or amendment, and (iii) a representation that the stockholder is a
holder of record of stock of the Corporation specified in such notice, is or
will be entitled to vote at such meeting and intends to appear in person or by
proxy at such meeting to make the proposal. Such notice shall be given in the
manner and at the time specified above in this paragraph. Any proposal to repeal
or amend or any such purported
-7-
<PAGE> 8
repeal or purported amendment of this paragraph not made or adopted in
accordance with the procedures set forth in this paragraph shall be void.
Section 2. Classes of Directors and Term of Office. As provided in the
Certificate of Incorporation, the Board of Directors shall be and is divided
into three classes, Class I, Class II and Class III, which shall be as nearly
equal in number as possible. Each director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
class of directors of which he is a member was elected. Effective as of July 14,
1998, Class I and Class III shall have four directors each and Class II shall
have three directors. Each director shall serve until his successor is elected
and qualified or until death, retirement, resignation or removal for cause.
Section 3. Newly Created Directorships. In the event of any increase or
decrease in the authorized number of directors, (i) each director then serving
as such shall nevertheless continue as a director of the class of which he is a
member until the expiration of his current term, or his prior death, retirement,
resignation, or removal for cause, and (ii) the newly created or eliminated
directorships resulting from such increase or decrease shall be apportioned by
the Board of Directors among the three classes of directors so as to maintain
such classes as nearly equal as possible.
Section 4. Vacancies. Should a vacancy occur or be created, whether
arising through death, resignation or removal of a director for cause, or
through an increase in the number of directors of any class, such vacancy shall
be filled by a majority vote of the remaining directors of the class in which
such vacancy occurs, or by the sole remaining director of that class if only one
such director remains, or by the majority vote of the remaining directors of the
other two classes if there be no remaining member of the class in which the
vacancy occurs. A director so elected to fill a vacancy shall serve for the
remainder of the then present term of office of the class to which he was
elected.
Section 5. Compensation. The Board of Directors shall have the
authority to fix the compensation of directors.
Article IV
Meetings of the Board of Directors
Section 1. Meetings of Directors. The directors may hold their meetings
and may have an office and keep the books of the corporation, except as
otherwise provided by the Certificate of Incorporation or Bylaws, in such place
or places in the State of Delaware, or outside the State of Delaware, as the
Board of Directors may from time to time determine.
Section 2. First Meeting. Each newly elected Board of Directors may
hold its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as the
annual meeting of the stockholders, and no notice of such meeting shall be
necessary.
Section 3. Election of Officers. At the first meeting of the Board of
Directors in each year at which a quorum shall be present, held next after the
annual meeting of stockholders, the Board of Directors shall proceed to the
election of the officers of the Corporation.
-8-
<PAGE> 9
Section 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as shall be designated from time to time
by resolution of the Board of Directors. Notice of such regular meetings shall
not be required.
Section 5. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board, the President, or by
a majority of the directors in office at the time. Each such special meeting
shall be held at such time and place as shall be designated by the officer or
directors calling such meeting.
Section 6. Notice. The Secretary shall give notice of each special
meeting in person, or by mail or telegraph to each director at least twenty-four
(24) hours before the time of such meeting. The attendance of a director at any
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened. Notice may also be waived in writing as provided in Article
IX, Section 3 of these Bylaws. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in any written waiver of notice of such meeting.
Section 7. Quorum. Unless the Certificate of Incorporation or these
Bylaws otherwise require, a majority of the total number of directors then in
office shall constitute a quorum for the transaction of business, but if at any
meeting of the Board of Directors there is less than a quorum present, a
majority of those present or any director solely present may adjourn the meeting
from time to time without further notice. The act of a majority of the directors
present at a meeting at which a quorum is in attendance shall be the act of the
Board of Directors, unless the act of a greater number is required by the
Certificate of Incorporation or by these Bylaws.
Section 8. Order of Business. At meetings of the Board of Directors,
business shall be transacted in such order as from time to time the Board of
Directors may determine and the Chairman of the Board shall preside. In the
absence of the Chairman of the Board, the President shall preside, and in the
absence of the President a chairman shall be chosen by the Board of Directors
from among the directors present. The Secretary of the Corporation shall act as
secretary of the meetings of the Board of Directors, but in the absence of the
Secretary, the presiding officer may appoint any person to act as secretary of
the meeting.
Section 9. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 10. Action Without a Meeting or Telephone Conference Meeting.
Any action permitted or required by law, the Certificate of Incorporation or
these Bylaws, to be taken at a meeting of the Board of Directors (or any
committee designated by the Board of Directors) may be taken without a meeting
if a consent in writing, setting forth the action to be taken is signed by all
the members of the Board of Directors or committee, as the case may be. Such
consent shall have the same force and effect as a unanimous vote at a meeting,
and may be stated as such in any document or instrument filed with the Secretary
of State. Subject to the
-9-
<PAGE> 10
requirement for notice of meetings, members of the Board of Directors (or
members of any committee designated by the Board of Directors), may participate
in and hold a meeting of such Board of Directors or committee, as the case may
be, by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
Article V
Committees
Section 1. Executive Committee and Other Committees. The Board of
Directors, by resolution adopted by a majority of the whole Board of Directors,
may designate from among its members an Executive Committee and one or more
other committees, each of which, to the extent provided in such resolution,
shall have and may exercise all of the authority of the Board of Directors in
the management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority of the Board of
Directors in reference to amending the Certificate of Incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
pursuant to Article Fourth of the Restated Certificate of Incorporation of the
Corporation, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series), adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending,
altering or repealing the bylaws of the Corporation or adopting new bylaws for
the Corporation, filling vacancies in the Board of Directors or any such
committee, electing or removing officers or members of any such committee,
fixing the compensation of any member of such committee or altering or repealing
any resolution of the Board of Directors which by its terms provided that it
shall not be so amendable or repealable and, unless such resolution expressly so
provides, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of shares of the Corporation or to adopt a
certificate of ownership and merger pursuant to Section 253 of the Delaware
General Corporation Law. The designation of such committee and the delegation
thereto of authority shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed by law.
All action by any committee shall be reported to the Board of Directors
at its meeting next succeeding such action, and shall be subject to revision or
alteration by the Board of Directors; provided that no rights of third parties
shall be affected by any such revision or alteration.
Section 2. Procedure; Meetings; Quorum. The Board of Directors shall
designate the Chairman and Secretary of each committee appointed by the Board of
Directors. Each such committee shall fix its own rules or procedure, and shall
meet at such times and at such place
-10-
<PAGE> 11
or places as may be provided by such rules, or by resolution of the Executive
Committee or of the Board of Directors. A majority of all the then members of a
committee shall be necessary to constitute a quorum and the affirmative vote of
a majority of the members present shall be necessary for the adoption by it of
any resolution. The Board of Directors shall have power at any time to change
the number, subject as aforesaid, and members of any such committee, to fill
vacancies, and to discharge any such committee.
Article VI
Officers
Section 1. Number, Titles and Term of Office. The officers of the
Corporation shall be a Chairman of the Board, a President, one or more Vice
Presidents, a Secretary, a Treasurer, and such other officers as the Board of
Directors may from time to time elect or appoint. Each officer shall hold office
until his successor shall have been duly elected and qualified or until his
death or until he shall resign or shall have been removed in the manner
hereinafter provided. Any two offices may be held by the same person. None of
the officers need be a director, except that the Chairman of the Board and the
President shall be directors.
Section 2. Salaries. The salaries or other compensation of the officers
shall be fixed from time to time by the Board of Directors, and no officer shall
be prevented from receiving such salary or other compensation by reason of the
fact that he is also a director of the Corporation.
Section 3. Removal of Officers. Any officer or agent elected or
appointed by the Board of Directors may be removed, either with or without
cause, by the Board of Directors whenever in its judgment the best interests of
the Corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
Section 4. The Chairman of the Board. The Chairman of the Board shall
preside at all meetings of stockholders and directors and shall have such other
powers and duties as from time to time may be assigned to him by the Board of
Directors.
Section 5. Powers and Duties of the President. The President shall be
the chief executive and administrative officer of the Corporation and, subject
to the Board of Directors, he shall be in charge of, and manage the properties
and operations of the Corporation in the ordinary course of its business with
all such powers with respect to such properties and operations as may be
reasonably incident to such responsibilities; in the absence of the Chairman of
the Board, he shall preside at all meetings of stockholders and directors; he
may agree upon and execute all division and transfer orders, bonds, agreements,
contracts and other obligations in the name of the Corporation; and he shall
have such other powers and duties as designated in these Bylaws and as from time
to time may be assigned to him by the Board of Directors.
Section 6. Vice Presidents. Each Vice President shall have such powers
and duties as may be assigned to him by the Board of Directors and shall
exercise the powers of Chairman of the Board or President during their absence,
refusal or inability to act. Any action taken by a Vice President in the
performance of the duties of the Chairman of the Board or the President shall be
conclusive evidence of the absence, refusal or inability of the Chairman of the
Board or the President to act at the time such action was taken.
-11-
<PAGE> 12
Section 7. Treasurer. The Treasurer shall have custody of all the funds
and securities of the Corporation which come into his hands. When necessary or
proper, he may endorse, on behalf of the Corporation, for collection, checks,
notes and other obligations and shall deposit the same to the credit of the
Corporation in such bank or banks or depositaries as shall be designated by, and
in the manner prescribed by, the Board of Directors; he may sign all receipts
and vouchers for payments made to the Corporation, either alone or jointly with
such other officer as is designated by the Board of Directors; he shall disburse
the funds of the Corporation as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements. Whenever required by the Board of
Directors, he shall render a statement of his cash account; he shall enter or
cause to be entered regularly in the books of the Corporation to be kept by him
for that purpose full and accurate accounts of all monies received and paid out
on account of the Corporation; and he shall perform all acts incident to the
position of Treasurer subject to the control of the Board of Directors; he
shall, if required by the Board of Directors, give such bond for the faithful
discharge of his duties in such form as the Board of Directors may require.
Section 8. Assistant Treasurer. Each Assistant Treasurer shall have the
usual powers and duties pertaining to his office, together with such other
powers and duties as may be assigned to him by the Board of Directors. The
Assistant Treasurer shall exercise the powers of the Treasurer during the
officer's absence, refusal or inability to act.
Section 9. Secretary. The Secretary shall keep the minutes of all
meetings of the Board of Directors and the minutes of all meetings of the
stockholders, in books provided for that purpose; he shall attend to the giving
and serving of all notices; he may sign with the Chairman of the Board or the
President in the name of the Corporation all contracts of the Corporation and
affix the seal of the Corporation thereto; he may affix and attest the seal of
the Corporation to such instruments and documents as may be properly executed by
the Corporation; and he shall have charge of the certificate books, transfer
books and stock ledgers, and such other books and papers as the Board of
Directors may direct, all of which shall at all reasonable times be open to the
inspection of any director upon application at the office of the Corporation
during ordinary business hours, and he shall in general perform all duties
incident to the office of Secretary subject to the control of the Board of
Directors.
Section 10. Assistant Secretaries. Each Assistant Secretary shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as may be assigned to him by the Board of Directors or the
Secretary. The Assistant Secretaries shall exercise the powers of the Secretary
during the officer's absence, refusal or inability to act.
Article VII
Indemnification of Directors,
Officers, Employees and Agents
Section 1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is the legal
representative, is or was or has agreed to become a director or officer of the
Corporation or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director or officer or in any
-12-
<PAGE> 13
other capacity while serving or having agreed to serve as a director or officer,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended, (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment) against all expense, liability and loss (including without
limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue as
to a person who has ceased to serve in the capacity which initially entitled
such person to indemnity hereunder and shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Article VII shall be a contract
right and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that, if the Delaware General Corporation Law requires, the
payment of such expenses incurred by a current, former or proposed director or
officer in his or her capacity as a director or officer or proposed director or
officer (and not in any other capacity in which service was or is or has been
agreed to be rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such indemnified person, to repay all
amounts so advanced if it shall ultimately be determined that such indemnified
person is not entitled to be indemnified under this Section or otherwise.
Section 2. Indemnification of Employees and Agents. The Corporation
may, by action of its Board of Directors, provide indemnification to employees
and agents of the Corporation, individually or as a group, with the same scope
and effect as the indemnification of directors and officers provided for in this
Article.
Section 3. Right of Claimant to Bring Suit. If a written claim received
by the Corporation from or on behalf of an indemnified party under this Article
VII is not paid in full by the Corporation within ninety days after such
receipt, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
-13-
<PAGE> 14
Section 4. Nonexclusivity of Rights. The right to indemnification and
the advancement and payment of expenses conferred in this Article VII shall not
be exclusive of any other right which any person may have or hereafter acquire
under any law (common or statutory), provision of the Certificate of
Incorporation of the Corporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any person who is or was serving as a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
Section 6. Savings Clause. If this Article VII or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify and hold harmless each director and
officer of the Corporation, as to costs, charges and expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative to the full extent permitted by any applicable portion of this
Article VII that shall not have been invalidated and to the fullest extent
permitted by applicable law.
Section 7. Definitions. For purposes of this Article, reference to the
"Corporation" shall include, in addition to the Corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger prior to (or, in the case of an entity specifically
designated in a resolution of the Board of Directors, after) the adoption hereof
and which, if its separate existence had continued, would have had the power and
authority to indemnify its directors, officers and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
Article VIII
Capital Stock
Section 1. Certificates of Stock. The certificates for shares of the
capital stock of the Corporation shall be in such form, not inconsistent with
statutory provisions and the Certificate of Incorporation, as shall be approved
by the Board of Directors. The Chairman of the Board, President or a Vice
President shall cause to be issued to each stockholder one or more certificates
under the seal of the Corporation and signed by the Chairman of the Board,
President or Vice President and the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer certifying the number of shares (and, if the
stock of the Corporation shall be divided into classes or series, the class and
series of such shares) owned by such stockholder in the Corporation; provided,
however, that any or all of the signatures on the certificate may be facsimile.
The stock record books and the blank stock certificate books shall be kept by
the Secretary, or at the office of such transfer agent or transfer agents as the
Board of Directors or the Executive Committee may from time to time by
resolution determine. In case any officer, transfer agent or registrar who shall
have signed or whose facsimile signature or signatures
-14-
<PAGE> 15
shall have been used on, any such certificate or certificates shall cease to be
such officer, transfer agent or registrar, whether because of death, resignation
or otherwise, before such certificate or certificates shall have been issued by
the Corporation, such certificate or certificates may nevertheless be issued and
delivered by the Corporation as though the officer, transfer agent or registrar
who signed such certificate or certificates or whose facsimile signature or
signatures shall have been used thereon had not ceased to be such officer,
transfer agent or registrar.
Section 2. Transfer of Shares. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 3. Ownership of Shares. The Corporation shall be entitled to
treat the holder of record of any share or shares as the holder in fact thereof
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by the laws of the State of Delaware.
Section 4. Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of stockholders for any other proper purpose, the Board
of Directors of the Corporation may fix, in advance, a date as record date for
any such determination of stockholders, such date in any case not to be more
than sixty (60) days (unless a shorter period is provided for in the Certificate
of Incorporation) and, in case of a meeting of stockholders, not less than ten
(10) days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If no record date is fixed for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders or either (a) to notice of or to vote at a meeting of stockholders
or (b) to receive payment of a dividend, the close of business on the day next
preceding the date on which the notice of the meeting is mailed or on the date
on which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
stockholders.
Section 5. Regulations Regarding Certificates. The Board of Directors
shall have the power and authority to make all such rules and regulations as
they may deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
Section 6. Dividends. The Board of Directors may, from time to time,
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the Certificate of
Incorporation.
Section 7. Lost or Destroyed Certificates. The Board of Directors or
the Executive Committee may determine the conditions upon which a new
certificate of stock may be issued in place of a certificate which is alleged to
have been lost or destroyed; and may, in their discretion, require the owner of
such certificate or his legal representative to give bond, with sufficient
surety, to indemnify the Corporation and each transfer agent against any and all
losses or claims which may arise by reason of the issue of a new certificate in
the place of the one so lost or destroyed.
-15-
<PAGE> 16
Article IX
Miscellaneous Provisions
Section 1. Fiscal Year. The fiscal year of the Corporation shall be the
calendar year or such other period as shall be established by the Board of
Directors from time to time.
Section 2. Seal. The seal of the Corporation shall be such as from time
to time may be approved by the Board of Directors.
Section 3. Notice and Waiver of Notice. Whenever any notice whatever is
required to be given under the provisions of these Bylaws, said notice shall be
deemed to be sufficient if given by depositing the same in a post office box in
a sealed postpaid wrapper addressed to the person entitled thereto at his post
office address, as it appears on the books of the Corporation, and such notice
shall be deemed to have been given on the day of such mailing. A waiver of
notice, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto.
Section 4. Resignations. Any director or officer may resign at any
time. Such resignations shall be made in writing and shall take effect at the
time specified therein, or, if no time be specified, at the time of its receipt
by the Chairman of the Board, the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
Article X
Amendments
As provided in the Certificate of Incorporation of the Corporation, the
Board of Directors shall have the power to make, adopt, alter, amend and repeal
from time to time bylaws of the Corporation, subject to the right of the
stockholders entitled to vote with respect thereto to adopt, alter, amend and
repeal such bylaws as adopted, altered or amended by the Board of Directors;
provided, however, that bylaws shall not be adopted, altered, amended or
repealed by the stockholders of the Corporation except by the vote of the
holders of not less than eighty percent (80%) of the outstanding shares of
capital stock of the Corporation normally entitled to vote in the election of
directors.
Amendment No. 1 herein: Article III Section 2. Classes of Directors and
Term of Office, October 26, 1984.
Amendment No. 2 herein: Article II Section 4. Annual Meetings; Election
of Directors, July 26, 1985.
Amendment No. 3 herein: Article V Section 1. Executive Committee and
Other Committees, June 30, 1986.
Amendment No. 4 herein: Article VII (in entirety) Indemnification of
Directors, Officers, Employees and Agents, April 23, 1987.
-16-
<PAGE> 17
Amendment No. 5 herein: Article III Section 2. Classes of Directors and
Term of Office, October 23, 1987.
Amendment No. 6 herein: Article III Section 2. Classes of Directors and
Term of Office, April 28, 1989.
Amendment No. 7 herein: Article III Section 2. Classes of Directors and
Term of Office, January 25, 1990.
Amendment No. 8 herein: Article II Section 5. Special Meetings,
February 25, 1992.
Amendment No. 9 herein: Article III Section 2. Classes of Directors and
Term of Office, April 24, 1992.
Amendment No. 10 herein: Article II Section 3. Quorum and Section 6.
Voting; Elections; Inspectors; Votes by Ballot, December 21, 1992.
Amendment No. 11 herein: Article III Section 2. Classes of Directors
and Term of Office, April 23, 1993.
Amendment No. 12 herein: Article III Section 2. Classes of Directors
and Term of Office, April 26, 1996.
Amendment No. 13 herein: Article III Section 1. Number, Qualifications
and Nominations, September 1, 1996.
Amendment No. 14 herein: Article III Section 2. Classes of Directors
and Term of Office, April 25, 1997.
Amendment No. 15 herein: Article III Section 2. Classes of Directors
and Term of Office, January 22, 1998.
Amendment No. 16 herein: Article III Section 2. Classes of Directors
and Term of Office, July 14, 1998.
-17-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF ROWAN COMPANIES, INC. FOR THE SIX MONTHS
ENDED JUNE 30, 1998 INCLUDED IN ITS FORM 10-Q FOR THE QUARTERLY PERIOD THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 140,177
<SECURITIES> 0
<RECEIVABLES> 138,805
<ALLOWANCES> 0
<INVENTORY> 119,409
<CURRENT-ASSETS> 431,966
<PP&E> 1,637,824
<DEPRECIATION> 864,706
<TOTAL-ASSETS> 1,211,392
<CURRENT-LIABILITIES> 93,932
<BONDS> 254,218
0
0
<COMMON> 11,078
<OTHER-SE> 725,993
<TOTAL-LIABILITY-AND-EQUITY> 1,211,392
<SALES> 79,248
<TOTAL-REVENUES> 388,154
<CGS> 56,802
<TOTAL-COSTS> 257,402
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 154
<INCOME-PRETAX> 134,074
<INCOME-TAX> 46,926
<INCOME-CONTINUING> 87,148
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,148
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 0.98
</TABLE>
