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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____ TO ____
Rowan Companies, Inc.
Incorporated in Delaware Commission File I. R. S. Employer
Number 1-5491 Identification:
75-0759420
2800 Post Oak Boulevard
Suite 5450
Houston, Texas 77056-6127
Registrant's telephone number, including area code: (713) 621-7800
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------------------- -----------------------------------
Common Stock, $.125 Par Value New York Stock Exchange
Pacific Exchange - Stock & Options
Preferred Stock Purchase Rights New York Stock Exchange
Pacific Exchange - Stock & Options
Securities registered pursuant to Section 12(g) of the Act: NONE
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 ___ .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes _X_ No ___ .
The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $2 billion as of June 28, 2002, based upon the
closing price of the registrant's Common Stock on the New York Stock Exchange
Composite Tape on such date of $21.45 per share.
The number of shares of Common Stock, $.125 par value, outstanding at
February 28, 2003 was 93,617,175.
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K
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Annual Report to Stockholders for
fiscal year ended December 31, 2002 Parts I, II and IV
Proxy Statement for the 2003 Annual
Meeting of Stockholders Part III
TABLE OF CONTENTS
PART I Page
Item 1. Business .................................................... 1
Drilling Operations................................................. 1
Offshore Operations ............................................. 1
Onshore Operations .............................................. 3
Contracts ....................................................... 3
Competition ..................................................... 4
Regulations and Hazards ......................................... 5
Manufacturing Operations............................................ 6
Raw Materials.................................................... 7
Competition...................................................... 8
Regulations and Hazards.......................................... 8
Aviation Operations ................................................ 9
Contracts ....................................................... 10
Competition ..................................................... 11
Regulations and Hazards ......................................... 11
Employees .......................................................... 11
Risk Factors ....................................................... 11
Item 2. Properties .................................................. 14
Drilling Rigs ...................................................... 14
Manufacturing Facilities............................................ 16
Aircraft ........................................................... 17
Item 3. Legal Proceedings ........................................... 18
Item 4. Submission of Matters to a Vote of Security Holders ......... 18
Additional Item. Executive Officers of the Registrant ................ 18
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters ....................................... 19
Item 6. Selected Financial Data ..................................... 20
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 20
Item 7A. Quantitative and Qualitative Disclosures about Market Risks.. 20
Item 8. Financial Statements and Supplementary Data ................. 20
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure ....................... 20
PART III
Item 10. Directors and Executive Officers of the Registrant .......... 20
Item 11. Executive Compensation ...................................... 21
Item 12. Security Ownership of Certain Beneficial Owners
and Management ............................................ 21
Item 13. Certain Relationships and Related Transactions .............. 21
Item 14. Controls and Procedures ..................................... 21
PART IV
Item 15. Exhibits, Financial Statement Schedules and
Reports on Form 8-K ....................................... 22
PART I
ITEM 1. BUSINESS
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Rowan Companies, Inc. (hereinafter referred to as "Rowan" or "the Company") is
a major provider of international and domestic contract drilling and aviation
services. Rowan also operates a mini-steel mill, a manufacturing facility that
produces heavy equipment for the mining, timber and transportation industries
and a drilling products group that has designed or built about one-third of all
mobile offshore jack-up drilling rigs. Rowan was organized in 1947 as a
Delaware corporation and a successor to a contract drilling business conducted
since 1923 under the name Rowan Drilling Company, Inc.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange Act are made available free of charge
on our internet website at http://www.rowancompanies.com as soon as reasonably
practicable after we electronically file such material with, or furnish it to,
the Securities and Exchange Commission.
Information regarding each of Rowan's industry segments, including revenues,
operating profit (loss), assets and foreign-source revenues for 2002, 2001 and
2000 is incorporated herein by reference from Footnote 10 of the Notes to
Consolidated Financial Statements on pages 36 and 37 of Rowan's 2002 Annual
Report to Stockholders ("Annual Report"), incorporated portions of which are
filed as Exhibit 13 hereto.
During 2002, 13% of Rowan's consolidated revenues were derived from El Paso
Corporation, primarily from drilling services. In 2001, 14% of Rowan's
consolidated revenues were derived from Anadarko Petroleum Corporation,
primarily from drilling services. In 2000, 11% of Rowan's consolidated revenues
were derived from The Coastal Corporation, primarily from drilling services.
DRILLING OPERATIONS
Rowan provides contract drilling services utilizing a fleet of 22
self-elevating mobile offshore drilling platforms ("jack-up rigs"), one mobile
offshore floating platform ("semi-submersible rig") and 18 land drilling rigs.
Rowan's drilling operations are conducted primarily in the Gulf of Mexico, the
North Sea, offshore eastern Canada and in Texas and Louisiana. In 2002,
drilling operations incurred an operating loss (loss from operations before
deducting general and administrative expenses) of $2.4 million.
Offshore Operations
- -------------------
Since 1970, Rowan's drilling operations have featured jack-up rigs performing
both exploratory and development drilling and, in certain areas, well workover
operations. Rowan operates larger, deep-water type jack-up rigs capable of
drilling to depths of 20,000 to 30,000 feet in maximum water depths ranging
from 250 to 490 feet, depending on the size of the rig and its location.
Rowan's jack-up rigs are designed with a floating hull with three independently
elevating legs, drilling equipment, supplies, crew quarters, loading and
unloading facilities, a helicopter landing deck and other related equipment.
Drilling equipment includes engines, drawworks or hoist, derrick, pumps to
circulate the drilling fluid, drill pipe and drilling bits. Rowan's rigs are
equipped with propulsion thrusters to assist in towing. At the drilling site,
the legs are lowered until they penetrate the ocean floor and the hull is
jacked-up on the legs to the desired elevation above the water. The hull then
serves as a drilling platform until the well is completed, at which time the
hull is lowered into the water, the legs are elevated and the rig is towed to
the next drilling site.
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Rowan's cantilever jack-ups can extend a portion of the sub-structure
containing the drawworks, derrick and related equipment over fixed production
platforms so that development or workover operations on the platforms can be
carried out with a minimum of interruption to production. In 1989, Rowan
acquired and developed a "skid base" technology, whereby the rig floor drilling
equipment on a conventional jack-up rig can be "skidded" out over the top of a
fixed platform. Thus, conventional jack-up rigs can be used on certain drilling
assignments that previously required a cantilever jack-up or platform rig.
At March 27, 2003, Rowan's offshore drilling fleet included the following:
o 15 cantilever jack-up rigs, featuring three harsh environment
"Gorilla class" rigs and three enhanced "Super Gorilla class" rigs
o seven conventional jack-up rigs, including five rigs with skid base
capability
o one semi-submersible rig
The fleet declined to 23 units following the loss in October 2002 of the
Rowan-Houston during Hurricane Lili. The Company operates two of the cantilever
jack-up rigs under operating leases expiring in 2008.
Rowan's Gorilla class rigs, Gorillas II, III and IV, are a heavier-duty class
of jack-up rig, intended to drill up to 30,000 feet in water depths up to 328
feet in extreme hostile environments (winds up to 100 miles per hour and seas
up to 90 feet) such as in the North Sea and offshore eastern Canada.
During the fourth quarter of 1998, Rowan completed construction of its first
Super Gorilla class rig, Rowan Gorilla V. Construction of Rowan Gorilla VI was
completed during June 2000, and Rowan Gorilla VII was delivered during December
2001. Gorillas V, VI and VII are enhanced versions of Rowan's Gorilla class
rigs, featuring a combination drilling and production capability. They can
operate year-round in 400 feet of water south of the 61st parallel in the North
Sea, within the worst-case combination of 100-year storm criteria for waves,
wave periods, winds and currents. Rowan financed $153.1 million of the cost of
Gorilla V, $171.0 million of the cost of Gorilla VI and $185.4 million of the
cost of Gorilla VII through bank loans guaranteed by the U.S. Department of
Transportation's Maritime Administration under its Title XI Program.
To date, Rowan has assembled a significant portion of the Bob Palmer (formerly
Gorilla VIII), an enhanced version of the Super Gorilla class jack-up
designated as Super Gorilla XL. The Bob Palmer will be outfitted with 708 feet
of leg, 134 feet more than Gorillas V, VI or VII, and have 30% larger spud
cans, enabling operation in the Gulf of Mexico in water depths up to 550 feet.
The Bob Palmer will also be able to operate in water depths up to 400 feet in
the hostile environments offshore eastern Canada and in the North Sea. The Bob
Palmer is being constructed at Vicksburg, Mississippi with delivery expected
during the third quarter of 2003. Rowan obtained Title XI bank financing for up
to $187.3 million of the cost of the Bob Palmer in May 2001, under terms and
conditions similar to those in effect for Gorilla VII.
In July 2001, Rowan's Board of Directors approved the development, design and
construction of a new class of jack-up rig, specifically targeted for deep
drilling in water depths up to 250 feet on the outer continental shelf in the
Gulf of Mexico. The Tarzan class rig will offer drilling capabilities similar
to our Gorilla class jack-ups, enabling more efficient drilling beyond 15,000
feet, but with reduced environmental criteria (wind, wave and current) and at
about one-third of the construction cost. The first of as many as four new
Tarzan rigs, named the Scooter Yeargain, is under construction at Vicksburg,
Mississippi, with delivery expected during mid-year 2004. Rowan recently
received a commitment for Title XI bank financing for up to 87.5% of the cost
of the first two Tarzan rigs, under terms and conditions similar to those in
effect for the Bob Palmer, and intends to apply for Title XI financing for
Tarzans III and IV.
This fleet expansion program began in 1995 and represents Rowan's first new
construction since the mid-1980s. Since that time, Rowan's capital expenditures
have been primarily for enhancements to existing drilling rigs and
manufacturing
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facilities and for the purchase of aircraft. Of Rowan's 16 remaining jack-up
rigs, six cantilever rigs and one conventional rig have been modified to
provide a degree of hostile environment operating capability, and seven
cantilever rigs and three conventional rigs are equipped to operate in water
depths up to 350 feet.
Rowan takes advantage of lulls in drilling activity to perform needed
maintenance and make certain enhancements to its drilling fleet. During 1998
and 1999, the Company completed the following enhancements: upgrading solids
control mud systems on all nine of the Company's class 116-C jack-up rigs;
adding one to two engines to six of the class 116-C rigs, each such rig now
being equipped with six engines; installing new generation top-drives on four
of the class 116-C rigs and one of the Gorilla class rigs; upgrading the
electrical systems on one of the class 84 rigs; adding leg length to three of
the class 116-C rigs and reconditioning the subsea equipment on the
semi-submersible rig.
For a further discussion of Rowan's availability of funds in 2003 to sustain
operations, debt service and planned capital expenditures, including those
related to construction of the Bob Palmer and the Scooter Yeargain, see
"Liquidity and Capital Resources" under "Management's Discussion and Analysis
of Financial Condition and Results of Operations" on pages 19 through 21 of the
Annual Report, which information is incorporated herein by reference. Also, see
ITEM 2. PROPERTIES beginning on page 14 of this Form 10-K for additional
information with respect to the capabilities and operating status of the
Company's rigs.
Rowan's semi-submersible rig is utilized principally for offshore exploratory
drilling from a floating position and is capable of drilling to a depth of
25,000 feet in water depths up to 1,200 feet. A semi-submersible drilling rig
consists of a drilling platform raised above multiple hulls by columns. The
hulls are flooded and submerged beneath the water surface, in which position
the rig is anchored during drilling operations. The drilling platform contains
the same type of equipment found on a jack-up rig. After completion of the
well, the submerged hull is deballasted to reduce vessel draft and facilitate
towing to another drilling location.
Rowan operates six anchor-handling, towing and supply (AHTS) boats obtained
under five-year lease agreements that expire in 2004 and 2005 and contain
purchase options. The boats are fully crewed by the lessor, but managed by
Rowan to provide towing and supply services to our drilling operations. Rowan
also directly markets the boats to third parties, with emphasis on their
anchor-handling capabilities for deepwater semi-submersibles.
Onshore Operations
- ------------------
Rowan has drilling equipment, personnel and camps available on a contract basis
for exploration and development of onshore areas. Rowan currently owns 18
deep-well land rigs located as follows: nine in Texas and nine in Louisiana.
The fleet features four newly constructed rigs and seven rigs that have been
substantially rebuilt over the past three years, including four rigs relocated
from Alaska during the period.
The drilling equipment comprising an onshore rig consists basically of engines,
drawworks or hoist, derrick, pumps to circulate the drilling fluid, drill pipe
and drilling bits. The type of rig required by a customer depends upon the
anticipated well depth, terrain and conditions in the drilling area.
Contracts
- ---------
Rowan's drilling contracts generally provide for compensation on a day rate
basis, whereby the Company earns a fixed amount per day, and are usually
obtained either through competitive bidding or individual negotiations. A
number of factors affect a drilling contractor's ability, both onshore and
offshore, to obtain contracts at a profitable rate within an area. Such factors
include the location and availability of equipment, its suitability for the
project, the
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comparative cost of the equipment, the competence of personnel and
the reputation of the contractor. Profitability may also be dependent upon
receiving adequate compensation for the cost of moving equipment to drilling
locations.
When weak market conditions characterized by declining drilling day rates
prevail, Rowan generally accepts lower rate contracts in an attempt to maintain
its competitive position and to offset the substantial costs of maintaining and
reactivating stacked rigs. When drilling markets are strong and increasing
rates prevail, Rowan generally pursues short rather than long-term contracts
for its rigs to maximize its ability to obtain rate increases and pass through
any cost increases to customers.
Rowan's drilling contracts are either "well-to-well", "multiple well" or for a
fixed term generally ranging from one to twelve months. Well-to-well contracts
are cancelable by either party upon completion of drilling at any one site, and
fixed-term contracts usually provide for termination by either party if
drilling operations are suspended for extended periods by events of force
majeure. While most fixed-term contracts are for relatively short periods, some
fixed-term and well-to-well contracts continue for a longer period than the
original term or for a specific series of wells. Many offshore contracts
contain renewal or extension provisions exercisable at the option of the
customer at prices agreeable to the Company and most require additional
payments for mobilization and demobilization costs. Rowan's contracts for work
in foreign countries generally provide for payment in United States dollars
except for minimal amounts required to meet local expenses, such as payroll.
Rowan believes that the contract status of its onshore and offshore rigs is
more informative than backlog calculations, and that backlog information is
neither calculable nor meaningful given the cancellation options contained in,
and the short duration of, fixed-term contracts and the indeterminable duration
of well-to-well and multiple well contracts. See ITEM 2. PROPERTIES beginning
on page 14 of this Form 10-K for the contract status of the Company's rigs as
of March 27, 2003.
Competition
- -----------
The contract drilling industry is highly competitive and involves many factors,
including price, equipment capability, operating and safety performance and
reputation. Rowan believes that it competes favorably with respect to all of
these factors.
Rowan competes with more than 20 offshore drilling contractors with more than
500 available mobile rigs and approximately 20 domestic drilling contractors
with more than 200 available deep-well land rigs. Based upon the number of rigs
as tabulated by ODS-Petrodata, Rowan is the seventh largest offshore drilling
contractor in the world and the sixth largest jack-up rig operator. Some of the
Company's competitors have greater financial and other resources and may be
more able to make technological improvements to existing equipment or replace
equipment that becomes obsolete.
Technological advances can create competitive advantages and eventually cause
less capable equipment to be less suitable for certain drilling operations. As
a result, during the 1980-1986 period, Rowan carried out a drilling rig
expansion program, culminating with the development of a heavier jack-up rig
class known as the Gorilla rig. Since that time, Rowan has employed a drilling
rig modification and enhancement program designed to provide a fleet of jack-up
rigs reflecting the latest technological advancements. In 1995, Rowan began a
drilling rig expansion program featuring the development of enhanced versions
of the Gorilla class rig and, beginning in 2001, the Tarzan class rig.
The offshore markets in which the Company competes are characterized by their
economic viability and political stability. At March 27, 2003, Rowan had 20
jack-ups and its semi-submersible located in the Gulf of Mexico, one jack-up
located offshore eastern Canada and one jack-up located in the North Sea. Based
upon the number of rigs as tabulated by ODS-Petrodata, Rowan is the fourth
largest offshore drilling contractor in the Gulf of Mexico and the third
largest
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jack-up rig operator in the area. Relocation of equipment from one
geographic location to another is dependent upon changing market dynamics, with
moves occurring only when the likelihood of higher returns makes such action
economical. During 1999 and 2000, the Company relocated its six rigs from the
North Sea to the Gulf of Mexico (five rigs) and offshore eastern Canada (one
rig) and two rigs from offshore eastern Canada to the Gulf of Mexico to pursue
more favorable market conditions. Gorilla VII was relocated from the Gulf of
Mexico to the North Sea in January 2002.
Rowan markets its drilling services by directly contacting present and
potential customers, including large international energy companies, many
smaller energy companies and foreign government-owned or controlled energy
companies. Since 1992, with the many restructurings, downsizings and, more
recently, mergers by major energy companies, followed by significant reductions
in their domestic budgets, the Company has increased its marketing emphasis on
independent operators.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 16 through 21 of Rowan's 2002 Annual Report, the
information under which caption is incorporated herein by reference, for a
discussion of current industry conditions and their impact on operations.
Regulations and Hazards
- -----------------------
Rowan's drilling operations are subject to many hazards, including blowouts and
well fires, which could cause personal injury, suspend drilling operations,
seriously damage or destroy the equipment involved and cause substantial damage
to producing formations and the surrounding areas. Offshore drilling operations
are also subject to marine hazards, either while on site or under tow, such as
vessel capsizing, collision or grounding. Raising and lowering the legs of
jack-up rigs into the ocean bottom and ballasting semi-submersible units
require skillful handling to avoid capsizing or other serious damage. Drilling
into high-pressure formations is a complex process and problems can frequently
occur.
Rowan believes that it is adequately insured for physical damage to its rigs,
and for marine liabilities, worker's compensation, maritime employers
liability, automobile liability and for various other types of exposures
customarily encountered in the Company's operations. Certain of Rowan's
liability insurance policies specifically exclude coverage for fines, penalties
and punitive or exemplary damages. Rowan anticipates that its present insurance
coverage will be maintained, but no assurance can be given that insurance
coverage will continue to be available at rates considered reasonable, that
self-insured amounts or deductibles will not increase or that certain types of
coverage will be available at any cost.
Foreign operations are often subject to political, economic and other
uncertainties not encountered in domestic operations, such as arbitrary
taxation policies, onerous customs restrictions, unstable currencies and the
risk of asset expropriation due to foreign sovereignty over operating areas. As
noted previously, Rowan attempts to minimize the risk of currency rate
fluctuations by generally contracting for payment in United States dollars.
Many aspects of Rowan's operations are subject to government regulation, as in
the areas of equipping and operating vessels, drilling practices and methods
and taxation. In addition, various countries (including the United States) have
regulations relating to environmental protection and pollution control. Recent
events have also increased the sensitivity of the oil and gas industry to
environmental matters. Rowan could become liable for damages resulting from
pollution of offshore waters and, under United States regulations, must
establish financial responsibility. Generally, Rowan is substantially
indemnified under its drilling contracts for pollution damages, except in
certain cases of pollution emanating above the surface of land or water from
spills of pollutants, or in the case of pollutants emanating from the Company's
drilling rigs, but no assurance can be given regarding the enforceability of
such indemnification provisions.
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Rowan believes that it complies in all material respects with legislation and
regulations affecting the drilling of oil and gas wells and the discharge of
wastes. To date, the Company has made significant modifications to its Gulf of
Mexico rigs to reduce waste and rain water discharge and believes that it could
operate those rigs at "zero discharge" without material additional
expenditures. Otherwise, regulatory compliance has not materially affected the
capital expenditures, earnings or competitive position of the Company to date,
although such measures do increase drilling costs and may reduce drilling
activity. Further regulations may reasonably be anticipated, but any effects
thereof on Rowan's drilling operations cannot be accurately predicted.
Rowan is subject to the requirements of the Federal Occupational Safety and
Health Act ("OSHA") and comparable state statutes. OSHA's hazard communication
standard, the Environmental Protection Agency's "community right-to-know"
regulations and comparable state statutes require Rowan to organize and report
certain information about the hazardous materials used in its operations to
employees, state and local government authorities and local citizens.
Since the exploration activities of Rowan's present and potential customers are
directly impacted by state, federal and foreign regulations associated with the
production and transportation of oil and gas, the demand for Rowan's drilling
services is also affected.
MANUFACTURING OPERATIONS
In 1994, LeTourneau, Inc. ("LeTourneau"), a wholly owned subsidiary of the
Company, acquired the net assets of Marathon LeTourneau Company, headquartered
in Longview, Texas. LeTourneau operates a mini-steel mill that recycles scrap
and produces steel plate; a manufacturing facility that produces heavy
equipment such as front-end loaders with up to an 80-ton capacity; and a
drilling products group that has designed or built about one-third of all
mobile offshore jack-up drilling rigs, including all 22 operated by Rowan. In
2002, the manufacturing division generated an operating profit of $0.8 million.
External manufacturing backlog for all product lines was approximately $24
million at February 28, 2003, all of which is expected to be realized in 2003,
compared with $29 million at February 28, 2002, all of which was realized
during 2002.
The mining equipment product line features front-end loaders with bucket
capacities of 17, 22, 28, 33 and 53 cubic yards. LeTourneau's loaders are
generally used in coal, gold, copper, diamond and iron ore mines and utilize
LeTourneau's diesel electric-drive system with solid-state controls. This
system allows large, mobile equipment to stop, start and reverse without gear
shifting and high maintenance braking. LeTourneau loaders can load rear-dump
trucks in the 85-ton to 400-ton range. LeTourneau's mining equipment and parts
are distributed through a worldwide network of independent distributors and its
own distribution network serving the western United States and Australia.
The timber equipment product line features diesel electric powered log stackers
with either two or four wheel drive configurations and load capacities ranging
from 35 to 65 tons. LeTourneau is one of two manufacturers that sell
electrically powered jib cranes rated from 25,000 to 52,000 lbs. at a reach of
100 to 150 feet and with a 360-degree rotation. LeTourneau's timber equipment
is marketed primarily in North America through independent dealers and its own
dealer in the northwestern United States.
LeTourneau's transportation equipment line produces several different types of
material handling equipment, such as 50-ton capacity, diesel electric, gantry
cranes used for lifting, transporting and stacking large shipping containers
and trailers at ports and rail yards. Gantry cranes can span up to seven
container rows plus a truck aisle and stack 9 1/2-feet tall containers up to
five high. Gantry cranes equipped with a spreader can lift containers from the
top and have retractable arms for loading and unloading piggyback trailers.
LeTourneau's transportation equipment is marketed primarily in North America
through independent dealers and its own dealer in the northwestern United
States.
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LeTourneau also sells parts and components to repair and maintain mining,
timber and transportation equipment. Equipment parts are marketed through two
independent dealers and its own dealer in the United States with 16
parts-stocking locations, one dealer in Canada with 21 parts-stocking
locations, and 30 independent international dealers and its own Australian
dealer with 45 parts-stocking locations.
LeTourneau's Longview, Texas mini-steel mill produces carbon, alloy and
specialty steel plate products. LeTourneau concentrates on "niche" markets that
require alloy, specialty steel grades, or "exotic" versions of carbon steel
products, including mold steels, tool steels, aircraft quality steels, 400
series stainless steel and hydrogen-induced, crack-resistant steels. External
steel sales, which are garnered through a direct sales force, consist primarily
of steel plate, but also include forging ingots and value-added fabrication of
steel products. Steel products are generally sold to steel service centers,
fabricators, manufacturers and forge shops. The market for carbon steel plate
products and fabricated products is regional and encompasses Texas, Oklahoma,
Louisiana, Mississippi and Arkansas. LeTourneau ships alloy and specialty
grades of plate products nationally and exports quantities to Mexico and
Canada. The forging ingot market is concentrated in the Gulf Coast region of
Texas. Carbon and alloy plate products are also used internally in the
production of heavy equipment and parts.
LeTourneau's Vicksburg, Mississippi shipyard was reactivated during 1995-1996
following Rowan's announcement of the planned construction of Rowan Gorilla V
and is dedicated to providing equipment, spare parts and engineering support to
the offshore drilling industry. The yard currently employs about 775 people,
most of whom have been hired since 1995. Some rig component manufacturing and
rig repair services, as well as design engineering, continue to be performed at
the Longview, Texas facility.
As noted previously, the drilling products group completed Rowan Gorilla V in
late 1998 and Rowan Gorilla VI in June 2000, delivered Rowan Gorilla VII during
December 2001 and is currently constructing for the Company a Super Gorilla XL
class jack-up rig and the first of as many as four Tarzan class jack-up rigs.
The drilling products group also completed two Super 116-C class jack-up rig
kits for others in 1998.
LeTourneau engages in a limited amount of research and product development,
primarily to increase the capacity of and provide innovative improvements to
its product lines. The Company evaluates on an ongoing basis the manufacturing
product and service lines with the intention of making enhancements.
During January 2000, LeTourneau completed the purchase of The Ellis Williams
Company, Inc. and EWCO, Inc. dba Traitex Machine Co., which collectively design
and manufacture mud pumps in a wide range of sizes for a variety of
applications. The purchase price was approximately $10 million, with $7 million
in cash and the balance in promissory notes due over a three-year period. The
notes were repaid in full during 2001.
During January 2002, the Company completed the purchase of certain assets of
Oilfield-Electric-Marine, Inc. and Industrial Logic Systems, Inc. (OEM),
issuing from treasury 439,560 shares of Rowan common stock valued at
approximately $8 million. OEM manufactures variable speed AC motors and
variable frequency drive systems, DC motors and drive systems, and consoles for
marine boats and lay barges, the oil and gas drilling industry, and the mining
and dredging industries. Additionally, OEM manufactures medium voltage
switchgear from 5KV through 38KV for the industrial and petrochemical markets.
Raw Materials
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The principal raw material utilized in LeTourneau's manufacturing operations is
steel plate, much of which is supplied by LeTourneau's mini-steel mill. Other
required materials are generally available in sufficient quantities to meet its
manufacturing needs through purchases in the open market. LeTourneau does not
believe that it is dependent on any single supplier.
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Competition
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LeTourneau's mining equipment competes worldwide with several competitors.
LeTourneau's loader product line has only two direct competitors; however, the
larger loader models compete with other types of loading equipment, primarily
electric and hydraulic mining shovels. Based upon internal marketing studies,
LeTourneau's share of the small-loader market (1,000 horsepower and below) has
decreased to less than 1% in recent years due to the availability of smaller
(and cheaper) alternatives. In the large-loader market (above 1,000
horsepower), LeTourneau has achieved about a 50% share of both domestic and
export sales.
The market for LeTourneau's timber equipment is also characterized by vigorous
competition. Though LeTourneau's jib crane is unique, it does encounter
competition from other equipment manufacturers that offer alternative methods
for meeting customer requirements. The number of major competitors by type of
equipment is as follows: log stackers - four and jib cranes - three.
LeTourneau's estimated share of the domestic log-stacker market is around 20%
and its estimated share of the Canadian market is around 15%.
LeTourneau's mini-steel mill encounters competition from a total of six major
competitors, with the breakdown by product line being as follows: plate
products - four and fabricated products - two. LeTourneau's share of the
overall steel market is negligible. The internal requirements of the equipment
and drilling products groups provide a base load for the steel mill, and
LeTourneau uses a small, direct sales force to sell specialized alloy, carbon
and tool steel products to steel service centers, fabricators, manufacturers
and brokers.
The competition LeTourneau encounters in the parts business is fragmented with
only three other companies being considered to be direct competitors. Vendors
supplying parts directly to end users and well-fitters who obtain and copy
parts for cheaper and lower quality substitutes provide more intense
competition than LeTourneau's direct competitors.
LeTourneau markets and sells its equipment and support parts primarily through
an established international dealer association. LeTourneau dealers are
predominantly independent business organizations and all have established
dealer agreements with LeTourneau. The dealers are responsible for selling
equipment on behalf of LeTourneau to end users and providing the necessary
follow-up service and parts supply directly to those end users.
To be competitive in the mining and timber equipment markets, LeTourneau offers
warranties at the time of purchase and parts guarantees. The warranties extend
for stipulated periods of ownership or hours of usage, whichever occurs first.
Parts consumption guaranties and maintenance and repair contracts are made on
the same basis. LeTourneau's parts-return policy provides that returned parts
must be in new, usable condition, in current production and readily resalable.
Since 1955, when the first LeTourneau unit was delivered, LeTourneau has been
recognized as a leading designer and builder of "jack-up" drilling rigs.
Currently, there are eight jack-ups under construction worldwide, two of which
are LeTourneau rigs. At present, LeTourneau has a limited number of competitors
in the rig construction and support industry. However, there are numerous
shipyard facilities with the capability for jack-up construction.
LeTourneau's two principal competitors in the mud pump business have a combined
market share approaching 90%.
Historically, LeTourneau's customer base has been diverse, such that none of
its product lines have been dependent upon any one customer or small group of
customers.
Regulations and Hazards
- -----------------------
LeTourneau's manufacturing operations and facilities are subject to regulation
by a variety of local, state and federal agencies which regulate safety and the
discharge of materials into the environment, including the Environmental
8
Protection Agency (EPA), the Texas Commission on Environmental Quality (TCEQ)
and the Mississippi Department of Environmental Quality. LeTourneau's
manufacturing facilities are also subject to the requirements of OSHA and
comparable state statutes.
Hazardous materials are generated at LeTourneau's Longview, Texas plant in
association with the steel making process. Industrial wastewater generated at
the mini-steel mill facility for cooling purposes is recirculated and quality
tests are conducted regularly. The facility has permits for wastewater
discharges, solid waste disposal and air emissions. Waste products considered
hazardous by the EPA are disposed of by shipment to an EPA or state approved
waste disposal facility.
LeTourneau jack-up designs are subject to regulatory approval by various
agencies, depending upon the geographic areas where the rig will be qualified
for drilling. The rules vary by location and are subject to frequent change,
and primarily relate to safety and environmental issues, in addition to those
which classify the jack-up as a vessel.
LeTourneau may be liable for damages resulting from pollution of air, land and
inland waters associated with its manufacturing operations. LeTourneau believes
that compliance with environmental protection laws and regulations will have no
material effect on its capital expenditures, earnings or competitive position
during 2003. Further regulations may reasonably be anticipated, but any effects
thereof on the Company's manufacturing operations cannot be accurately
predicted.
As a manufacturing company, LeTourneau may be responsible for certain risks
associated with the use of its products. These risks include product liability
claims for personal injury and/or death, property damage, loss of product use,
business interruption and necessary legal expenses to defend LeTourneau against
such claims. LeTourneau carries insurance that it believes adequately covers
such risks. LeTourneau did not assume certain liabilities of Marathon
LeTourneau Company, such as product liability and tort claims, associated with
all products manufactured, produced, marketed or distributed prior to the date
of the acquisition.
LeTourneau anticipates incurring expenses associated with the warranty of its
products. In the equipment business, dealers of LeTourneau's products perform
the warranty work while in the rig construction business, LeTourneau generally
performs warranty work directly.
AVIATION OPERATIONS
Rowan's wholly-owned subsidiary, Era Aviation, Inc. ("Era"), provides contract
and charter helicopter and fixed-wing aviation services principally in Alaska,
the coastal areas of Louisiana and Texas, and the western United States, with
its fleet consisting on March 27, 2003 of 88 helicopters and 19 fixed-wing
aircraft. In 2002, the aviation division generated an operating profit of $13.8
million.
Era's helicopter services in recent years have featured flightseeing, forest
fire control and support for oil and gas related operations from its primary
bases in Alaska, Louisiana and Nevada. Services provided offshore Louisiana and
Texas are primarily oil and gas-related while the majority of helicopter
services in the western United States are provided to governmental agencies in
support of forest fire control, construction and other utility work.
Based on the number of helicopters operating, Era is the largest helicopter
operator in Alaska. It provides charter services from bases at Anchorage,
Deadhorse (on the North Slope), Juneau, Kenai and Valdez. Era's charter and
contract services are provided throughout Alaska with particular emphasis in
the oil, mining and high-density tourist regions within the state. During 2002,
the Alaska helicopter operations contributed approximately 25% of the Company's
aviation revenues.
9
Helicopters are usually operated on a seasonal basis in Alaska because of the
prevalent climatic conditions. The peak utilization period in Alaska is May
through September, with the winter months comprising the least active period.
The seasonal nature of the Alaska business has been offset in prior years by
establishing a helicopter operation in the Gulf of Mexico area and by moving
helicopters on a limited basis to the west and northwest regions of the United
States and various overseas locations.
Since 1983, Era has operated a scheduled regional airline service in Alaska
encompassing the transportation of passengers, mail and cargo. Era currently
serves Valdez, Kenai, Homer, Kodiak and Cordova. In addition, it services 17
remote villages from its hub in Bethel, Alaska. Era operates under a code
sharing agreement with Alaska Airlines, which is the largest carrier of
passengers from the contiguous United States to Alaska. Era's regional airline
is the largest airline operation of that type within the state of Alaska and is
the third largest carrier of passengers into and out of the Ted Stevens
Anchorage International Airport, including the large jet carriers. During 2002,
the commuter airline contributed approximately 25% of the Company's aviation
revenues.
Since 1979, Era has been providing charter and contract helicopter services in
the Gulf of Mexico area, primarily to the offshore oil and gas industry.
Operations are conducted from the division office in Lake Charles, Louisiana
and from bases in the Louisiana cities of Morgan City, Cameron, New Iberia,
Intracoastal City, Venice, Fourchon, Houma, Schriever and Johnson Bayou and the
Texas cities of Houston, Corpus Christi, Bay City and Sabine Pass. Based on the
number of helicopters operating, Era is the third largest helicopter operator
in the Gulf of Mexico. During 2002, the Gulf of Mexico helicopter operations
contributed approximately 42% of the Company's aviation revenues.
Since 1987, Era has manufactured and marketed, from its Gulf Coast Division
facility at Lake Charles, Louisiana, a composite external auxiliary fuel tank
for use on several helicopters, including the Bell 205, 212 and 412, the
military "Huey" and the Eurocopter BK-117. The tank system provides enhanced
flight range with nominal drag while increasing the passenger capacity. Sales
to date have been to both civilian and military customers, including emergency
float systems for US Army UH-1 Helicopters. Other aircraft accessories are also
manufactured at the facility.
During 2001, the Company committed to purchase three Sikorsky S-92 helicopters
for the Gulf of Mexico deepwater drilling market, subject to obtaining
long-term operating contracts. The S-92 design features a 19-passenger capacity
and a range of 475 nautical miles. Rowan currently expects the helicopters to
be delivered in the first half of 2004 and that their total cost will approach
$50 million.
Contracts
- ---------
Era's flight services generally are provided through master service agreements,
term contracts or day-to-day charter arrangements. Master service agreements
require incremental payments based on usage, usually have fixed terms ranging
from one month to one year and generally are cancelable upon notice by either
party in 30 days or less. Term contracts generally are noncancelable and
require payments, depending upon their duration, as follows: up to one month -
either incremental payments based on usage or incremental payments plus a base
daily rental; and one month to one year - incremental payments based on usage
plus a base monthly rental. Day-to-day charters have the same compensation
arrangements as up to one-month term contracts. Because master service
agreements and day-to-day charters are Era's most prevalent contracts, the
Company believes that the contract status of its aircraft as discussed in the
following paragraph is more informative than backlog information, which it
believes is neither calculable nor meaningful.
Era aircraft at March 27, 2003 consisted of 88 helicopters (including 42 based
in Alaska and 46 in the Gulf of Mexico area) and 19 fixed-wing aircraft (based
in Alaska). The fleet contract status at that date included 21 term contracts.
The
10
remaining aircraft were either being operated under day-to-day charters or
one or more of 80 master service agreements, or were available for operation
under day-to-day charter or other contract arrangements.
Competition
- -----------
Approximately five other operators compete directly with Era in Alaska on a
contract or charter basis. Era competes over its scheduled airline routes with
up to three other carriers. In the Gulf of Mexico area, Era competes directly
with six other operators and ranks third in the number of helicopters operating
with approximately 8% of the market. A number of other helicopter operators
compete with Era in the west and northwest regions of the United States and in
overseas locations. Services under term contracts are usually obtained through
a successful bid process whereas shorter-term charters and scheduled airline
services typically involve published rates. The Company believes that
performance and safety are the key competitive factors in Era's aviation
markets.
Regulations and Hazards
- -----------------------
The operation of a scheduled airline in the United States requires a
certificate under the Federal Aviation Act of 1958, as presently administered
by the Department of Transportation. The granting of a certificate is
conditioned upon a demonstration of financial ability and operational
expertise. A similar certificate authorizing the right to operate a charter
service is not presently required by any jurisdiction in Era's operating areas.
Operation of helicopters and fixed-wing aircraft, particularly under weather
conditions prevailing in Alaska, is considered potentially hazardous, although
Era conducts rigorous training and safety programs to minimize these hazards.
Era believes that it is adequately protected by public liability and property
damage insurance, including hull insurance against loss of equipment, but
carries no insurance against loss of earnings.
EMPLOYEES
Rowan had 5,237 employees at February 28, 2003 and 5,227, 4,943 and 4,917
employees at December 31, 2002, 2001 and 2000, respectively. Some of the
employees included in these numbers are not United States citizens. None of the
Company's employees are covered by collective bargaining agreements with labor
unions. Rowan considers relations with its employees to be satisfactory.
RISK FACTORS
You should consider carefully the following risk factors, in addition to the
other information contained and incorporated by reference in this Form 10-K,
before deciding to invest in our common stock.
Volatile oil and natural gas prices greatly impact demand for our offshore
- --------------------------------------------------------------------------
drilling and related services.
- ------------------------------
The success of our offshore drilling, manufacturing and aviation operations
depends upon the condition of the oil and gas industry, particularly the level
of offshore drilling activity. Demand for our offshore drilling and related
services is vulnerable to periodic declines in drilling activity typically
associated with depressed oil and natural gas prices. Oil and natural gas
prices have historically been volatile, and the offshore drilling market was
generally depressed from the early 1980s until the mid-1990s.
While the drilling industry benefited from increasing oil and natural gas prices
during most of the 1999-2000 period, it has never fully recovered from the
dramatic decline in prices during 1998 and the ensuing reduction in drilling
activity and day rates. Oil and natural gas prices increased steadily during
2000, but declined just as swiftly in 2001. Our drilling operations improved
over much of
11
the 2000-2001 period, but deteriorated rapidly over the last half of 2001.
During 2002, oil and natural gas prices virtually doubled and are now near
record levels, though, as a result of this extreme price volatility in recent
years and the economic effects of 9/11, our drilling operations in 2002 never
attained peak 2000-2001 levels. In recent months, our rig utilization and
average day rates have declined and our drilling operations have been adversely
impacted.
Demand for drilling services also depends on additional factors that are beyond
our control, including:
o fluctuations in the worldwide demand for oil and natural gas;
o the willingness and ability of the Organization of Petroleum
Exporting Countries, or OPEC, to limit production levels and
influence prices;
o political and military conflicts in oil-producing areas and the
effects of terrorism; and
o the level of production in non-OPEC countries.
Our drilling and aviation operations will be adversely affected by future
declines in oil and natural gas prices, but we cannot predict the extent of
that effect. We also cannot assure you that a reduction in offshore drilling
activity will not occur for other reasons.
We have incurred losses recently and over prolonged periods in the past, a
- --------------------------------------------------------------------------
circumstance that could occur again in the future.
- --------------------------------------------------
In 2002, we experienced a 16% decline in revenues and incurred a net loss from
operations of $12.9 million. Our 2002 revenues and earnings were negatively
affected by lower rig day rates due to the rapid decline in oil and natural gas
prices in 2001 as discussed above. We anticipate an operating loss during the
first quarter of 2003.
Our markets remain highly competitive, which may cause us difficulty in
- -----------------------------------------------------------------------
differentiating our products and services and maintaining satisfactory price
- ----------------------------------------------------------------------------
levels.
- -------
The drilling, manufacturing and aviation markets are highly competitive, and no
single competitor is dominant. In the drilling market, a general oversupply of
rigs has lasted for well over a decade, and we believe that competition for
drilling contracts will continue to be intense for the foreseeable future. The
aviation and manufacturing markets are also characterized by vigorous
competition among several competitors. Some of our competitors possess greater
financial resources than we do.
Our fleet expansion program may encounter liquidity problems.
- -------------------------------------------------------------
If we continue to experience present operating conditions for a prolonged
period, our results of operations and working capital may not be adequate to
finance our planned construction and outside financing may not be available. We
would be forced to suspend our construction program.
We have in progress an offshore fleet expansion program under which we
currently plan to spend more than $400 million over the 2003-2005 period
towards the completion of the Bob Palmer and for the construction of as many as
four Tarzan class jack-up rigs, of which only about $220 million is financed at
this time. In addition, we expect to spend another $50-75 million annually over
this period for upgrades to existing equipment and facilities and additional
land rigs and aircraft. We currently have no other available lines of credit.
Thus, much of our planned capital expenditures over the 2003-2005 period will
need to be financed from working capital or results of operations. If we should
need additional financing and are unable to obtain it at commercially favorable
rates, we could experience liquidity problems.
12
Our results of operations will be adversely affected if we are unable to secure
- -------------------------------------------------------------------------------
contracts for the Bob Palmer and the Scooter Yeargain.
- ------------------------------------------------------
The addition to our available drilling fleet of the Bob Palmer in late 2003 and
the Scooter Yeargain in mid-2004 will, in each case, significantly increase our
daily operating costs. Neither rig has been contracted at this time, and day
rates for comparable rigs have, at many times over the past several years, only
slightly exceeded the expected daily operating costs of the Bob Palmer and the
Scooter Yeargain. We may be unable to secure economical drilling contracts for
the rigs, in which case their delivery will negatively impact our operating
results.
We are subject to operating risks such as blowouts and well fires that could
- ----------------------------------------------------------------------------
result in environmental damage, property loss, personal injury and death.
- -------------------------------------------------------------------------
Our drilling operations are subject to many hazards that could increase the
likelihood of accidents. Accidents can result in:
o costly delays or cancellations of drilling operations;
o serious damage to or destruction of equipment;
o personal injury or death;
o significant impairment of producing wells, leased properties or
underground geological formations; and
o major environmental damage.
Our offshore drilling operations are also subject to marine hazards, either at
offshore sites or while drilling equipment is under tow, such as vessel
capsizings, collisions or groundings. In addition, raising and lowering jack-up
rigs, an offshore drilling platform whose three legs independently penetrate
the ocean floor, flooding semi-submersible ballast tanks to help fix the
floating drilling unit over well site and drilling into high-pressure
formations are complex, hazardous activities and we frequently encounter
problems.
Our manufacturing and aviation operations also present serious risks. Our
manufacturing processes could pollute the air, land and inland waters, and the
products we manufacture could be implicated in lawsuits alleging environmental
harm, property loss, personal injury and death. Operating helicopters and
fixed-wing aircraft is similarly hazardous, particularly in Alaska where
weather conditions can be severe.
We have had accidents in the past demonstrating some of the hazards described
above, including high pressure drilling accidents resulting in lost or damaged
drilling formations, towing accidents resulting in lost drilling equipment and
flying accidents resulting in lost aircraft and deaths. Because of the ongoing
hazards associated with our operations:
o we may experience a higher number of accidents in the future than
expected;
o our insurance coverage may prove inadequate to cover losses that are
greater than anticipated;
o our insurance deductibles may increase; or
o our insurance premiums may increase to the point where maintaining
our current level of coverage is prohibitively expensive.
Any similar events could yield future operating losses and have a significant
adverse impact on our business.
13
Government regulations and environmental risks, which reduce our business
- -------------------------------------------------------------------------
opportunities and increase our operating costs, might worsen in the future.
- ---------------------------------------------------------------------------
Government regulations dictate design and operating criteria for drilling
vessels and aircraft, determine taxation levels to which we (and our customers)
are subject, control and often limit access to potential markets and impose
extensive requirements concerning employee safety, environmental protection and
pollution control. Environmental regulations, in particular, prohibit access to
some markets and make others less economical, increase equipment and personnel
costs and often impose liability without regard to negligence or fault. In
addition, governmental regulations may discourage our customers' activities,
reducing demand for our products and services. We may be liable for damages
resulting from pollution of offshore waters and, under United States
regulations, must establish financial responsibility in order to drill
offshore.
Anti-takeover provisions in our Certificate of Incorporation, bylaws and rights
- -------------------------------------------------------------------------------
plan could make it difficult for holders of our common stock to receive a
- -------------------------------------------------------------------------
premium for their shares upon a change of control.
- --------------------------------------------------
Holders of the common stock of acquisition targets typically receive a premium
for their shares upon a change of control. Delaware law and the following
provisions, among others, of our Certificate of Incorporation, bylaws and
rights plan could have the effect of delaying or preventing a change of control
and could prevent holders of our common stock from receiving such a premium:
o The affirmative vote of 80% of the outstanding shares of our capital
stock is required to approve business combinations that have not been
approved by our board of directors. We are also subject to a
provision of Delaware corporate law that prohibits us from engaging
in a business combination with any interested stockholder for three
years from the date that person became an interested stockholder
unless specified conditions are met.
o Special meetings of stockholders may not be called by anyone other
than our chairman of the board, president, board of directors or the
executive committee thereof.
o Our board of directors is divided into three classes whose terms end
in successive years, so that less than a majority of our board comes
up for election at any annual meeting.
o Our board of directors has the authority to issue up to 5,000,000
shares of preferred stock and to determine the voting rights and
other privileges of these shares without any vote or action by our
stockholders.
o We have issued "poison pill" rights to purchase junior preferred
stock under our rights plan, whereby the ownership of Rowan shares by
a potential acquirer can be significantly diluted by the sale at a
significant discount of additional Rowan shares to all other
stockholders, which could discourage unsolicited acquisition
proposals.
ITEM 2. PROPERTIES
- -------------------
Rowan leases as its corporate headquarters 59,600 square feet of space in an
office tower located at 2800 Post Oak Boulevard in Houston, Texas.
DRILLING RIGS
On the following two pages are summaries of the principal drilling equipment
owned or operated by Rowan and in service at March 27, 2003. See "Liquidity and
Capital Resources" under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 19 through 21 in the Annual
Report, which pages are incorporated herein by reference.
14
OFFSHORE RIGS
Depth (feet) (b) Contract Status
---------------- Year in -----------------------------------------------
Name Class (a) Water Drilling Service Location Customer Type (h) Duration (i)
- -------------------------- --------- ----- --------- ------- -------------- -------------- -------------- --------------
CANTILEVER JACK-UP RIGS:
Scooter Yeargain (j) 225-C 250 30,000 2004
Bob Palmer (j) 224-C 550 30,000 2003
Rowan Gorilla VII (c)(e) 219-C 400 30,000 2002 North Sea Tuscan Energy term June 2003 to
December 2004
Rowan Gorilla VI (c)(e) 219-C 490 30,000 2000 Gulf of Mexico Anadarko well-to-well May 2003
Rowan Gorilla V (c)(e) 219-C 400 30,000 1998 Eastern Canada not committed
Rowan Gorilla IV (c)(d) 200-C 450 30,000 1986 Gulf of Mexico Anadarko well-to-well May 2003
Rowan Gorilla III (c)(d) 200-C 450 30,000 1984 Gulf of Mexico El Paso well-to-well June 2003
Rowan Gorilla II (c)(d) 200-C 450 30,000 1984 Gulf of Mexico W&T Offshore multiple well May 2003
El Paso well-to-well July 2003
Rowan-California (c) 116-C 300 30,000 1983 Gulf of Mexico Magnum-Hunter well-to-well June 2003
Rowan-Halifax (c)(g) 116-C 350 30,000 1982 Gulf of Mexico Devon well-to-well April 2003
Cecil Provine (c)(g) 116-C 300 30,000 1982 Gulf of Mexico Remington well-to-well May 2003
Gilbert Rowe (c)(d) 116-C 350 30,000 1981 Gulf of Mexico El Paso well-to-well April 2003
Arch Rowan (c)(d) 116-C 350 30,000 1981 Gulf of Mexico El Paso well-to-well May 2003
Charles Rowan (c)(d) 116-C 350 30,000 1981 Gulf of Mexico Dominion well-to-well May 2003
Rowan-Paris (c)(d) 116-C 350 30,000 1980 Gulf of Mexico Pioneer well-to-well July 2003
Rowan-Middletown (c)(d) 116-C 350 30,000 1980 Gulf of Mexico El Paso well-to-well May 2003
Rowan-Fort Worth (c)(d) 116-C 350 30,000 1978 Gulf of Mexico El Paso well-to-well May 2003
CONVENTIONAL JACK-UP RIGS:
Rowan-Odessa (c)(f) 116 350 30,000 1977 Gulf of Mexico ADTI/Newfield well-to-well May 2003
Rowan-Juneau (c)(f) 116 300 30,000 1977 Gulf of Mexico ADTI/Newfield well-to-well April 2003
Rowan-Alaska (c)(f) 84 350 30,000 1975 Gulf of Mexico Anadarko well-to-well June 2003
Rowan-Louisiana (c)(f) 84 350 30,000 1975 Gulf of Mexico Walter well-to-well April 2003
Rowan-Texas (c) 52 250 20,000 1973 Gulf of Mexico ADTI/Remington well-to-well May 2003
Rowan-Anchorage (c) 52 250 20,000 1972 Gulf of Mexico Anadarko well-to-well April 2003
Rowan-New Orleans (c)(f) 52 250 20,000 1971 Gulf of Mexico Anadarko multiple well May 2003
SEMI-SUBMERSIBLE RIG:
Rowan-Midland (c) 1,200 25,000 1976 Gulf of Mexico not committed
- -------------------------------------------------------------------------------
(a) Indicated class is a number assigned by LeTourneau, Inc. to jack-ups of
its design and construction. Class 200-C is a Gorilla class unit designed
for extreme hostile environment capability. Class 219-C is a Super Gorilla
class unit, an enhanced version of the Gorilla class. Class 224-C is a
Super Gorilla XL class unit, which has been tailored for the Gulf of
Mexico. Class 225-C is a Tarzan class unit.
(b) Indicates rated water depth in current location and rated drilling depth
(c) Unit equipped with a top-drive drilling system
(d) Unit equipped with three mud pumps
(e) Unit equipped with four mud pumps
(f) Unit equipped with a skid base unit - refer to page 2 of this Form 10-K
for a discussion of "skid base" technology
(g) Unit sold and leased back under agreement expiring in 2008
(h) Refer to "Contracts" on pages 3 and 4 of this Form 10-K for a discussion
of types of drilling contracts.
(i) Indicates estimated completion date of work to be performed
(j) Indicates units currently under construction with anticipated year of
completion
15
ONSHORE RIGS (a)
Maximum Contract Status
Drilling -----------------------------------------------------
Name Type Depth (feet) Location Customer Type (c) Duration (d)
- ---------- -------------------- ------------ ----------- ---------------------- -------------- ------------
Rig 7 Mechanical 18,000 Texas not committed
Rig 9 Diesel electric 25,000 Louisiana Anadarko well-to-well May 2003
Rig 12 Mechanical 18,000 Texas not committed
Rig 14 Mechanical 35,000 Texas not committed
Rig 15 (b) AC electric 35,000 Texas Blue Star multiple well July 2003
Rig 18 (b) SCR diesel electric 35,000 Louisiana Chesapeake well-to-well April 2003
Rig 26 (b) SCR diesel electric 25,000 Louisiana Pogo Producing well-to-well May 2003
Rig 29 Mechanical 18,000 Texas Brigham well-to-well April 2003
Rig 30 (b) Mechanical 25,000 Texas not committed
Rig 31 (b) SCR diesel electric 35,000 Louisiana Newfield well-to-well June 2003
Rig 33 SCR diesel electric 18,000 Louisiana Noble Energy well-to-well May 2003
Rig 34 (b) SCR diesel electric 25,000 Texas Anadarko well-to-well May 2003
Rig 35 SCR diesel electric 18,000 Louisiana Anadarko well-to-well May 2003
Rig 41 (b) SCR diesel electric 25,000 Louisiana Petro Hunt single well May 2003
Rig 51 (b) SCR diesel electric 25,000 Louisiana Dominion well-to-well May 2003
Rig 52 (b) SCR diesel electric 25,000 Louisiana not committed
Rig 53 (b) SCR diesel electric 25,000 Texas El Paso well-to-well May 2003
Rig 54 (b) SCR diesel electric 25,000 Texas PPI Technology Services well-to-well April 2003
- -------------------------------------------------------------------------------
(a) Most of the rigs were constructed at various dates between 1960 and 1982,
utilizing new as well as used equipment, and have since been substantially
rebuilt. Rigs 51, 52 and 53 were completed during 2001 and Rig 54 in 2002.
(b) Unit equipped with a top-drive drilling system
(c) Refer to "Contracts" on pages 3 and 4 of this Form 10-K for a discussion
of types of drilling contracts.
(d) Indicates estimated completion date of work to be performed
Rowan's drilling division leases and, in some cases, owns various operating and
administrative facilities generally consisting of office, maintenance and
storage space in the states of Alaska, Texas and Louisiana and in the countries
of Canada and England. During 2001, we completed an operating and
administrative facility with 19,000 square feet near Aberdeen, Scotland.
MANUFACTURING FACILITIES
LeTourneau's principal manufacturing facility and headquarters are located in
Longview, Texas on approximately 2,400 acres with approximately 1.2 million
square feet of covered working area. The facility contains:
o a mini-steel mill with 330,000 square feet of covered working area;
the mill has two 25-ton electric arc furnaces capable of producing
120,000 tons per year;
o a fabrication shop with 300,000 square feet of covered working area;
the shop has a 3,000 ton vertical bender for making roll-ups or
flattening materials down to 2 1/2 inches thick by 11 feet wide;
o a machine shop with 140,000 square feet of covered working area;
o an assembly shop with 124,000 square feet of covered working area.
The drilling products group's rig construction facility is located in
Vicksburg, Mississippi on 1,850 acres of land and has approximately 560,000
square feet of covered work area. The group's rig service and repair operation
is carried out primarily at the Company's Sabine Pass, Texas facility.
16
LeTourneau's mud pumps are machined, fabricated, assembled and tested at a
facility in Houston, Texas, having approximately 140,000 square feet of covered
work area and 16,000 square feet of office space. LeTourneau mud pumps are also
machined at its Longview, Texas facility.
LeTourneau's distributor of forest products in the northwestern United States
is located on a six-acre site in Troutdale, Oregon with approximately 22,000
square feet of building space.
LeTourneau's distributor of mining equipment products in the western United
States is located in a leased facility in Tucson, Arizona having approximately
20,000 square feet. Its distributor of mining equipment products in Australia
is located in a leased facility in Murarrie, Queensland having approximately
29,500 square feet.
The Company currently leases office and warehouse space for its electrical
components, service and supply business conducted by OEM, but expects to
relocate such operations in 2003 to a newly-constructed facility in Houston,
Texas, having approximately 187,000 square feet of covered work area and 17,000
square feet of office space.
AIRCRAFT
At March 27, 2003, Era operated a fleet of 88 helicopters and 19 fixed-wing
aircraft, consisting of the following:
o 63 twin-engine turbine aircraft, including:
o 3 Sikorsky S-61Ns (26 passengers)
o 2 Eurocopter AS-332L Super Pumas (19 passengers)
o 16 Bell 212s (14 passengers)
o 10 Bell 412s (14 passengers)
o 6 Sikorsky S-76A+s (13 passengers)
o 26 Eurocopter BO-105CBSs (5 passengers)
o 25 single-engine turbine aircraft -
o 25 Eurocopter AS350B-2 AStars (6 passengers)
o 19 fixed-wing aircraft, including:
o 5 Convair 580s (50 passengers)
o 9 DeHavilland Twin Otters (9-19 passengers)
o 3 DeHavilland Dash 8s (37 passengers)
o 2 Douglas DC-3s (28 passengers).
Era's principal aircraft bases in Alaska, all located on leased property, are a
fixed-wing air service center (57,000 square feet of hangar, repair and office
facilities) at Anchorage International Airport, with two adjacent hangars
housing its helicopter operations and training and accounting operations
totaling approximately 45,000 square feet. Era also maintains similar, smaller
helicopter facilities in Alaska at Deadhorse, Juneau, Valdez and Yakutat.
Era's principal base for its Gulf of Mexico operations is located on leased
property at Lake Charles Regional Airport. The facility has 66,000 square feet
of space, including helicopter hangars, a repair facility, a training facility
and an operations and administrative building. Era also operates a helicopter
base (20,700 square feet of hangar, repair and office facilities) located on
leased property at the Terrebonne Airport in Houma, Louisiana, a helicopter
base (5,700 square feet of hangar, repair and office facilities) located on
leased property in New Iberia, Louisiana, a helicopter base (12,500 square feet
of hangar, repair, waiting room and office facilities) located on 47 acres of
leased property in Fourchon, Louisiana and a helicopter base (3,600 square feet
of office and waiting room facilities) located on 14 acres of owned or leased
property in Venice, Louisiana.
17
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
Incorporated herein by reference to the Annual Report is the eighth paragraph
appearing on page 20 within "Management's Discussion and Analysis of Financial
Condition and Results of Operations", which provides information pertinent to
the Company's Gorilla V contract dispute that was settled in March 2002.
Rowan is involved in various other legal proceedings incidental to its
businesses and is vigorously defending its position in all such matters. Rowan
believes that there are no known contingencies, claims or lawsuits that will
have a material adverse effect on its financial position, results of operations
or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
There were no matters submitted to a vote of Rowan common stockholders during
the fourth quarter of the fiscal year ended December 31, 2002.
ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------
The names, positions, years of credited service and ages of the officers of the
Company as of March 27, 2003 are listed below. Officers are normally appointed
annually by the Board of Directors at the bylaws-prescribed meeting held in the
spring and serve at the discretion of the Board of Directors. There are no
family relationships among these officers, nor any arrangements or
understandings between any officer and any other person pursuant to which the
officer was selected.
Years of
Credited
Name Position Service Age
------------------- ---------------------------------------- -------- ---
EXECUTIVE OFFICERS:
C. R. Palmer Chairman of the Board and 43 68
Chief Executive Officer
D. F. McNease President, Chief Operating Officer 28 51
and Director
R. G. Croyle Vice Chairman of the Board and 29 60
Chief Administrative officer
E. E. Thiele Senior Vice President, Finance, 33 63
Administration and Treasurer
Paul L. Kelly Senior Vice President, Special Projects 20 63
Mark A. Keller Senior Vice President, Marketing - 10 50
North American Drilling
D. C. Eckermann (1) Vice President, Manufacturing 16 55
C. W. Johnson (2) Vice President, Aviation 25 59
John L. Buvens Vice President, Legal 22 47
Bill S. Person Vice President, Industrial Relations 35 55
William C. Provine Vice President, Investor Relations 16 56
OTHER OFFICERS:
William H. Wells Controller 9 40
Mark H. Hay Secretary and Assistant Treasurer 23 58
P. G. Wheeler Assistant Treasurer and 28 55
Corporate Tax Director
Lynda A. Aycock Assistant Treasurer and 31 56
Assistant Secretary
(1) Also serves as President and Chief Executive Officer of LeTourneau, Inc.,
a Rowan subsidiary.
(2) Also serves as President and Chief Operating Officer of Era Aviation,
Inc., a Rowan subsidiary.
Each of the officers listed above continuously served in the position shown
above for more than the past five years except as noted in the following
paragraphs.
18
Since August 2002, Mr. Palmer's principal occupation has been in
the position set forth. For more than five years prior to that time, Mr. Palmer
served as Chairman of the Board, President and Chief Executive Officer of the
Company.
Since August 2002, Mr. McNease's principal occupation has been in the position
set forth. From April 1999 to August 2002, Mr. McNease served as Executive Vice
President of the Company and President of its drilling subsidiaries. For more
than five years prior to that time, Mr. McNease served as Senior Vice
President, Drilling. Mr. McNease was first elected to the Board of Directors in
April 1998.
Since August 2002, Mr. Croyle's principal occupation has been in the position
set forth. For more than five years prior to that time, Mr. Croyle served as
Executive Vice President of the Company. Mr. Croyle was first elected to the
Board of Directors in April 1998.
Since April 2000, Mr. Keller's principal occupation has been in the position
set forth. For more than five years prior to that time, Mr. Keller served as
Vice President, Marketing - North American Drilling.
Since April 1999, Mr. Eckermann's principal occupation has been in the position
set forth. From September 1996 to April 1999, Mr. Eckermann served as President
and Chief Executive Officer of LeTourneau, Inc., a subsidiary of the Company.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
- -----------------------------------------------------------------------------
The information required hereunder regarding the Common Stock price range and
cash dividend information for 2002 and 2001 and the number of holders of Common
Stock is set forth on page 22 of Rowan's Annual Report under the title "Common
Stock Price Range, Cash Dividends and Stock Splits (Unaudited)", and is
incorporated herein by reference, except for the final two sentences under such
title. Also incorporated herein by reference to the Annual Report is the tenth
paragraph appearing on page 20 within "Management's Discussion and Analysis of
Financial Condition and Results of Operations", which provides information
pertinent to the Company's payment of and ability to pay cash dividends subject
to certain restrictions. Rowan's Common Stock is listed on the New York Stock
Exchange and the Pacific Exchange - Stock & Options.
The following table provides information about our common stock that may be
issued upon the exercise of options and rights or the conversion of debentures
under all of our existing equity compensation plans as of December 31, 2002,
including the Restated 1988 Nonqualified Stock Option Plan, as amended, the
1998 Nonemployee Directors Stock Option Plan and the 1998 Convertible Debenture
Incentive Plan, as amended.
Number of securities Weighted average Number of
to be issued upon exercise exercise price of securities
of outstanding options, outstanding options, available for
Plan Category warrants and rights warrants and rights future issuance
- -------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security holders 7,067,143(a) $ 16.31(a) 3,865,560(b)
- -------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders - - -
- -------------------------------------------------------------------------------------------------------
Total 7,067,143 $ 16.31 3,865,560
=======================================================================================================
19
(a) Includes the following equity compensation plans: the Restated 1988
Nonqualified Stock Option Plan, as amended, had options for 4,639,897
shares of common stock outstanding at December 31, 2002 with a weighted
average exercise price of $16.19 per share; the 1998 Nonemployee Directors
Stock Option Plan had options for 122,000 shares of common stock
outstanding at December 31, 2002 with a weighted average exercise price of
$24.26 per share; and the 1998 Convertible Debenture Incentive Plan, as
amended, had approximately $37.2 million of employee debentures
outstanding at December 31, 2002, convertible into 2,305,246 shares of
common stock at a weighted average conversion price of $16.12 per share
(b) Amount reflects options for 3,790,560 shares of common stock available
for issuance under the Restated 1988 Nonqualified Stock Option Plan, as
amended, and options for 75,000 shares of common stock available for
issuance under the 1998 Nonemployee Directors Stock Option Plan at
December 31, 2002. Amount excludes shares issuable under the 1998
Convertible Debenture Incentive Plan, as amended, which had $5 million
principal amount of debentures issuable under the plan at December 31,
2002.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
The information required hereunder is set forth on pages 14 and 15 of Rowan's
Annual Report under the title "Ten-Year Financial Review" and is incorporated
herein by reference, except for the information for the years 1997, 1996, 1995,
1994 and 1993.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATIONS
- -------------
The information required hereunder is set forth on pages 16 through 21 under
the title "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Rowan's Annual Report and is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
- ---------------------------------------------------------------------
Rowan believes that its exposure to risk of earnings loss due to changes in
market interest rates is not significant. In addition, virtually all of the
Company's transactions are carried out in U. S. dollars, thus Rowan's foreign
currency exposure is not material. Fluctuating commodity prices affect Rowan's
future earnings only to the extent that they influence demand for the Company's
products and services. Rowan does not hold or issue derivative financial
instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
Refer to ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K on pages 22 through 26 of this Form 10-K for a listing of financial
statements of the registrant and its subsidiaries, all of which financial
statements are incorporated by reference under this item.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- -----------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The information in the table spanning pages 2 and 3, in footnotes (1) and (2)
on page 3 and in the paragraph under the caption, "Section 16(a) Beneficial
Ownership Reporting Compliance" on page 17 of the Proxy Statement for Rowan's
2003 Annual Meeting of Stockholders (the "Proxy Statement") is incorporated
herein by reference. There are no family relationships among the directors or
nominees for directors and the executive officers of the Company, nor any
arrangements or understandings between any director or nominee for director and
any other person pursuant to which such director or nominee for director was
20
selected. Except as otherwise indicated, each Rowan director or nominee for
director has been employed or engaged for the past five years in the principal
occupation set forth opposite his name in the information incorporated by
reference. See ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT on page 18
of this Form 10-K for information relating to executive officers.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
The standard arrangement for compensating directors described under the title,
"Director Compensation" on page 4 of the Proxy Statement and the information
appearing under the titles "Summary Compensation Table", "Option Grants in Last
Fiscal Year", "Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values" and "Pension Plans" on pages 11 through 13 of the Proxy
Statement are incorporated herein by reference. In accordance with the
instructions to Item 402 of Regulation S-K, the information contained in the
Proxy Statement under the titles "Compensation Committee Report on Executive
Compensation", "Audit Committee Report" and "Stock Performance Graphs" shall
not be deemed to be filed as part of this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
The information regarding security ownership of management of the Company set
forth under the heading "Director and Officer Stock Ownership" appearing on
page 6 and the information appearing under the title "Security Ownership of
Certain Beneficial Owners" appearing on page 16 of the Proxy Statement is
incorporated herein by reference.
The business address of all directors is the principal executive offices of the
Company as set forth on the cover page of this Form 10-K.
See ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS on page 19 of this Form 10-K for information relating to equity
compensation plans.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Information regarding certain business relationships and transactions between
Rowan and certain directors and executive officers of the Company under the
heading "Certain Transactions" appearing on page 17 of the Proxy Statement is
incorporated herein by reference.
ITEM 14. CONTROLS AND PROCEDURES
- ---------------------------------
Within 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, the Company's Chief Executive Officer, along with the
Company's Chief Financial Officer, concluded that the Company's disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Company (including its consolidated subsidiaries)
required to be included in the Company's periodic Exchange Act reports. There
have been no significant changes in the Company's internal controls or in other
factors which could significantly affect internal controls subsequent to the
date the Company carried out its evaluation.
21
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following financial statements and independent auditors' report,
included in the Annual Report, are incorporated herein by reference:
Page of 2002
Annual Report
-------------
Consolidated Balance Sheet, December 31, 2002 and 2001 ........... 24
Consolidated Statement of Operations for the Years Ended
December 31, 2002, 2001 and 2000 ............................. 25
Consolidated Statement of Comprehensive Income (Loss)
for the Years Ended December 31, 2002, 2001 and 2000 .......... 25
Consolidated Statement of Changes in Stockholders' Equity
for the Years Ended December 31, 2002, 2001 and 2000 .......... 26
Consolidated Statement of Cash Flows for the Years Ended
December 31, 2002, 2001 and 2000 .............................. 27
Notes to Consolidated Financial Statements ....................... 28
Independent Auditors' Report ..................................... 23
Selected Quarterly Financial Data (Unaudited) for the
Quarters Ended March 31, June 30, September 30
and December 31, 2002 and 2001 ................................ 22
2. Financial Statement Schedules
Financial Statement Schedules I, II, III, IV, and V are not included in
this Form 10-K because such schedules are not required, not significant or
because the required information is shown in Notes to the Consolidated
Financial Statements of the Company's Annual Report.
3. Exhibits:
Unless otherwise indicated below as being incorporated by reference to
another filing of the Company with the Securities and Exchange Commission,
each of the following exhibits is filed herewith:
3a Restated Certificate of Incorporation dated February 17, 1984,
incorporated by reference to Exhibit 4.1 to Registration Statement
No. 333-84369 on Form S-8 (File No. 1-5491) and Exhibits 4a, 4b, 4c,
4d, 4e, 4f, 4g, 4h, 4i and 4j below.
3b Bylaws amended as of August 1, 2002, incorporated by reference to
Exhibit 3.1 to Form 10-Q/A for the fiscal quarter ended June 30, 2002
(File No. 1-5491).
4a Certificate of Change of Address of Registered Office and of
Registered Agent dated July 25, 1984, incorporated by reference to
Exhibit 4.4 to Registration Statement No. 333-84369 on Form S-8 (File
No. 1-5491).
4b Certificate of Amendment of Certificate of Incorporation dated April
24, 1987, incorporated by reference to Exhibit 4.5 to Registration
Statement No. 333-84369 on Form S-8 (File No. 1-5491).
4c Certificate of Designation of the Series III Preferred Stock dated
November 30, 1994, incorporated by reference to Exhibit 4.7 to
Registration Statement No. 333-84369 on Form S-8 (File No. 1-5491).
4d Certificate of Designation of the Series A Junior Preferred Stock
dated March 2, 1992, incorporated by reference to Exhibit 4.2 to
Registration Statement on Form 8-A/A filed on February 12, 2002 (File
No. 1-5491).
22
4e Certificate of Designation of (and Certificate of Correction related
thereto) the Series A Preferred Stock dated August 5, 1998 and
January 28, 1999, respectively, incorporated by reference to Exhibit
4.8 to Registration Statement No. 333-84369 on Form S-8 (File No.
1-5491).
4f Certificate of Designation of the Series B Preferred Stock dated June
24, 1999, incorporated by reference to Exhibit 4d to Form 10-K for
the fiscal year ended December 31, 1999 (File No. 1-5491).
4g Certificate of Designation of the Series C Preferred Stock dated
July 28, 2000, incorporated by reference to Exhibit 4.10 to
Registration Statement No. 333-44874 on Form S-8 (File No. 1-5491).
4h Certificate of Designation of the Series D Preferred Stock dated May
22, 2001, incorporated by reference to Exhibit 4.11 to Registration
Statement No. 333-82804 on Form S-3 filed on February 14, 2002 (File
No. 1-5491).
4i Certificate of Designation of the Series E Preferred Stock dated
October 30, 2001, incorporated by reference to Exhibit 4.12 to
Registration Statement No. 333-82804 on Form S-3 filed on February
14, 2002 (File No. 1-5491).
4j Amended and Restated Rights Agreement, dated as of January 24, 2002,
between Rowan and Computershare Trust Co. Inc. as Rights Agent,
incorporated by reference to Exhibit 4.2 to Registration Statement on
Form 8-A/A filed on March 21, 2003 (File No. 1-5491).
4k Specimen Common Stock certificate, incorporated by reference to
Exhibit 4k to Form 10-K for the fiscal year ended December 31, 2001
(File No. 1-5491).
4l Form of Promissory Note dated November 30, 1994 between purchasers of
Series III Floating Rate Subordinated Convertible Debentures due 2004
and Rowan, incorporated by reference to Exhibit 4j to Form 10-K for
the fiscal year ended December 31, 1994 (File No. 1-5491).
4m Form of Promissory Note dated April 24, 1998 between purchasers of
Series A Floating Rate Subordinated Convertible Debentures due 2008
and Rowan, incorporated by reference to Exhibit 4j to Form 10-K for
the fiscal year ended December 31, 1998 (File No. 1-5491).
4n Form of Promissory Note dated April 22, 1999 between purchasers of
Series B Floating Rate Subordinated Convertible Debentures due 2009
and Rowan, incorporated by reference to Exhibit 4j to Form 10-K for
the fiscal year ended December 31, 1999 (File No. 1-5491).
4o Form of Promissory Note date April 27, 2000 between purchasers of
Series C Floating Rate Subordinated Convertible Debentures due 2010
and Rowan, incorporated by reference to Exhibit 4n to Form 10-K for
the fiscal year ended December 31, 2000 (File No. 1-5491).
4p Form of Promissory Note date April 26, 2001 between the purchaser of
Series D Floating Rate Subordinated Convertible Debentures due 2011
and Rowan, incorporated by reference to Exhibit 4p to Form 10-K for
the fiscal year ended December 31, 2001 (File No. 1-5491).
4q Form of Promissory Note date September 20, 2001 between the purchaser
of Series E Floating Rate Subordinated Convertible Debentures due
2011 and Rowan, incorporated by reference to Exhibit 4q to Form 10-K
for the fiscal year ended December 31, 2001 (File No. 1-5491).
10a Restated 1988 Nonqualified Stock Option Plan, incorporated by
reference to Appendix C to the Notice of Annual Meeting and Proxy
Statement dated March 20, 2002 (File No. 1-5491).
23
10b 1998 Nonemployee Director Stock Option Plan, incorporated by
reference to Exhibit 10b of Form 10-Q for the fiscal quarter ended
March 31, 1998 (File No. 1-5491).
10c 1986 Convertible Debenture Incentive Plan, as amended, incorporated
by reference to Exhibit 10h to Form 10-K for the fiscal year ended
December 31, 1996 (File No. 1-5491).
10d 1998 Convertible Debenture Incentive Plan, incorporated by reference
to Appendix B to the Notice of Annual Meeting and Proxy Statement
dated March 20, 2002 (File No. 1-5491).
10e Pension Restoration Plan, incorporated by reference to Exhibit 10h to
Form 10-K for the fiscal year ended December 31, 1992 (File No.
1-5491).
10f Pension Restoration Plan of LeTourneau, Inc., a wholly owned
subsidiary of the Company, incorporated by reference to Exhibit 10j
to Form 10-K for the fiscal year ended December 31, 1994 (File No.
1-5491).
10g Participation Agreement dated December 1, 1984 between Rowan and
Textron Financial Corporation et al. and Bareboat Charter dated
December 1, 1984 between Rowan and Textron Financial Corporation et
al., incorporated by reference to Exhibit 10c to Form 10-K for the
fiscal year ended December 31, 1985 (File No. 1-5491).
10h Participation Agreement dated December 1, 1985 between Rowan and
Eaton Leasing Corporation et. al. and Bareboat Charter dated December
1, 1985 between Rowan and Eaton Leasing Corporation et. al.,
incorporated by reference to Exhibit 10d to Form 10-K for the fiscal
year ended December 31, 1985 (File No.1-5491).
10i Election and acceptance letters with respect to the exercise of the
Fixed Rate Renewal Option set forth in the Bareboat Charter dated
December 1, 1984 between Rowan and Textron Financial Corporation et
al, incorporated by reference to Exhibit 10j to Form 10-K for the
fiscal year ended December 31, 1999 (File No. 1-5491).
10j Election and acceptance letters with respect to the exercise of the
Fixed Rate Renewal Option set forth in the Bareboat Charter dated
December 1, 1985 between Rowan and Eaton Leasing Corporation et. al,
incorporated by reference to Exhibit 10k to Form 10-K for the fiscal
year ended December 31, 1999 (File No. 1-5491).
10k Consulting Agreement as amended as of January 1, 1998 between Rowan
and C. W. Yeargain, incorporated by reference to Exhibit 10k to Form
10-K for the fiscal year ended December 31, 1998 (File No. 1-5491).
10l Consulting Agreement dated January 1, 1990 and Amendment No. 1
thereto dated August 30, 1994, but effective January 1, 1994, between
Rowan Energy Investments Inc., a wholly owned subsidiary of the
Company, and Hans M. Brinkhorst, incorporated by reference to Exhibit
10l to Form 10-K for the fiscal year ended December 31, 1998 (File
No. 1-5491).
10m Commitment to Guarantee Obligations dated December 17, 1996 and First
Preferred Ship Mortgage between Rowan and the Maritime Administration
of the U.S. Department of Transportation, incorporated by reference
to Exhibit 10t to Form 10-K for fiscal year ended December 31, 1996
(File No. 1-5491).
10n Amendment No. 1 dated June 30, 1997 to Commitment to Guarantee
Obligations between Rowan and the Maritime Administration of the U.S.
Department of Transportation, incorporated by reference to Exhibit
10p to 10-K for the fiscal year ended December 31, 1997 (File No.
1-5491).
24
10o Amendment No. 2 dated July 1, 1998 to Commitment to Guarantee
Obligations between Rowan and the Maritime Administration of the U.S.
Department of Transportation, incorporated by reference to Exhibit
10o to Form 10-K for the fiscal year ended December 31, 1998 (File
No. 1-5491).
10p Credit Agreement and Trust Indenture both dated December 17, 1996
between Rowan and Citibank, N.A., incorporated by reference to
Exhibit 10u to Form 10-K for the fiscal year ended December 31, 1996
(File No. 1-5491).
10q Amendment No. 1 to the Credit Agreement and Supplement No. 1 to Trust
Indenture both dated July 1, 1997 between Rowan and Citibank, N.A.,
incorporated by reference to Exhibit 10r to Form 10-K for the fiscal
year ended December 31, 1997 (File No. 1-5491).
10r Supplement No. 2 to Trust Indenture dated July 1, 1998 between Rowan
and Citibank, N.A., incorporated by reference to Exhibit 10r to Form
10-K for the fiscal year ended December 31, 1998 (File No. 1-5491).
10s Commitment to Guarantee Obligations dated September 29, 1998 and
First Preferred Ship Mortgage between Rowan and the Maritime
Administration of the U.S. Department of Transportation, incorporated
by reference to Exhibit 10a to Form 10-Q for fiscal quarter ended
September 30, 1998 (File No. 1-5491).
10t Credit Agreement and Trust Indenture both dated September 30, 1998
between Rowan and Citibank, N.A., incorporated by reference to
Exhibit 10b to Form 10-Q for the fiscal quarter ended September 30,
1998 (File No. 1-5491).
10u Amendment No. 1 dated March 15, 2001 to Commitment to Guarantee
Obligations between Rowan and the Maritime Administration of the U.S.
Department of Transportation, incorporated by reference to Exhibit
10v to Form 10-K for the fiscal year ended December 31, 2000 (File
No. 1-5491).
10v Supplement No. 1 to Trust Indenture dated March 15, 2001 between
Rowan and Citibank, N.A., incorporated by reference to Exhibit 10v to
Form 10-K for the fiscal year ended December 31, 2000 (File No.
1-5491).
10w Commitment to Guarantee Obligations dated October 29, 1999 and First
Preferred Ship Mortgage between Rowan and the Maritime Administration
of the U.S. Department of Transportation, incorporated by reference
to Exhibit 10v to Form 10-K for the fiscal year ended December 31,
1999 (File No. 1-5491).
10x Credit Agreement and Trust Indenture both dated October 29, 1999
between Rowan and Citibank, N.A, incorporated by reference to Exhibit
10w to Form 10-K for the fiscal year ended December 31, 1999 (File
No. 1-5491).
10y Commitment to Guarantee Obligations dated May 23, 2001 and First
Preferred Ship Mortgage between Rowan and the Maritime Administration
of the U.S. Department of Transportation, incorporated by reference
to Exhibit 10y to Form 10-K for the fiscal year ended December 31,
2001 (File No. 1-5491).
10z Credit Agreement and Trust Indenture both dated May 23, 2001 between
Rowan and Citibank, N.A., incorporated by reference to Exhibit 10z to
Form 10-K for the fiscal year ended December 31, 2001 (File No.
1-5491).
11 Computation of Basic and Diluted Income Per Share for the years ended
December 31, 2002, 2001 and 2000 appearing on page 31 in this Form
10-K.
13* Annual Report to Stockholders for fiscal year ended December 31,
2002.
25
21 Subsidiaries of the Registrant as of March 27, 2003.
23 Independent Auditors' Consent.
24 Powers of Attorney pursuant to which names were affixed to this Form
10-K for the fiscal year ended December 31, 2002.
99 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
- -------------------------------------------------------------------------------
* Only portions specifically incorporated herein are deemed to be filed.
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
Compensatory plans in which directors and executive officers of the
Company participate are listed as follows:
o Restated 1988 Nonqualified Stock Option Plan, incorporated by reference to
Appendix C to the Notice of Annual Meeting and Proxy Statement dated March
20, 2002 (File No. 1-5491).
o 1998 Nonemployee Director Stock Option Plan, incorporated by reference to
Exhibit 10b of Form 10-Q for the fiscal quarter ended March 31, 1998 (File
No. 1-5491).
o 1986 Convertible Debenture Incentive Plan, as amended, included as Exhibit
10h of this Form 10-K incorporated by reference to Exhibit 10h to Form
10-K for the fiscal year ended December 31, 1996 (File No. 1-5491).
o 1998 Convertible Debenture Incentive Plan, incorporated by reference to
Appendix B to the Notice of Annual Meeting and Proxy Statement dated March
20, 2002 (File No. 1-5491).
o Pension Restoration Plan, incorporated by reference to Exhibit 10i to Form
10-K for the fiscal year ended December 31, 1992 (File 1-5491).
o Pension Restoration Plan of LeTourneau, Inc., a wholly owned subsidiary of
the Company, incorporated by reference to Exhibit 10j to Form 10-K for the
fiscal year ended December 31, 1994 (File No. 1-5491).
Rowan agrees to furnish to the Commission upon request a copy of all
instruments defining the rights of holders of long-term debt of the
Company and its subsidiaries.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the fourth
quarter of fiscal year 2002.
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows, which undertaking
shall be incorporated by reference into Registrant's Registration
Statements on Form S-8 Nos. 2-58700, as amended by Post-Effective
Amendment No. 4 (filed June 11, 1980), 33-33755, as amended by Amendment
No. 1 (filed March 29, 1990), 33-61444 (filed April 23, 1993), 33-51103
(filed November 18, 1993), 33-51105 (filed November 18, 1993), 33-51109
(filed November 18, 1993), 333-25041 (filed April 11, 1997), 333-25125
(filed April 14, 1997), 333-84369 (filed August 3, 1999), 333-84405 (filed
August 3, 1999) and 333-101914 (filed December 17, 2002):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
26
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the act and will be governed
by the final adjudication of such issue.
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ROWAN COMPANIES, INC.
By: C. R. PALMER
(C. R. Palmer, Chairman
of the Board and Chief
Executive Officer)
Date: March 27, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
------------------ ---------------------------- --------------
C. R. PALMER Chairman of the Board March 27, 2003
(C. R. Palmer) and Chief Executive Officer
E. E. THIELE Principal Financial Officer March 27, 2003
(E. E. Thiele)
WILLIAM H. WELLS Principal Accounting Officer March 27, 2003
(William H. Wells)
*HENRY O. BOSWELL Director March 27, 2003
(Henry O. Boswell)
*HANS M. BRINKHORST Director March 27, 2003
(Hans M. Brinkhorst)
*R. G. CROYLE Vice Chairman of the Board March 27, 2003
(R. G. Croyle)
*WILLIAM T. FOX III Director March 27, 2003
(William T. Fox III)
*FREDERICK R. LAUSEN Director March 27, 2003
(Frederick R. Lausen)
*H. E. LENTZ Director March 27, 2003
(H. E. Lentz)
*D. F. MCNEASE President and Director March 27, 2003
(D. F. McNease)
*LORD MOYNIHAN Director March 27, 2003
(Lord Moynihan)
*BY C. R. PALMER
(C. R. Palmer, Attorney-in-fact)
28
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U. S. C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, C. R. Palmer, Chief Executive Officer of Rowan Companies, Inc., certify that:
1. I have reviewed this annual report on Form 10-K of Rowan Companies, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other information
included in this annual report, fairly present in all material respects,
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based upon
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing
the equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 27, 2003 /s/ C. R. PALMER
------------------------------
C. R. Palmer
Chairman and Chief Executive
Officer
29
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U. S. C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, E. E. Thiele, Chief Financial Officer of Rowan Companies, Inc., certify that:
1. I have reviewed this annual report on Form 10-K of Rowan Companies, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other information
included in this annual report, fairly present in all material respects,
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based upon
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing
the equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 27, 2003 /s/ E. E. THIELE
-----------------------------------
E. E. Thiele
Senior Vice President - Finance,
Administration and Treasurer
(Chief Financial Officer)
30
EXHIBIT INDEX
Page 1 of 6
Footnote Exhibit
Reference Number Exhibit Description
--------- ------- -------------------
(1) 3a Restated Certificate of Incorporation of the
Company, dated February 17, 1984, incorporated by
reference to Exhibit 4.1 to Registration Statement
No. 333-84369 on Form S-8 (File No. 1-5491) and
Exhibits 4a, 4b, 4c, 4d, 4e, 4f, 4g 4h, 4i and 4j.
(1) 3b Bylaws amended as of August 1, 2002, incorporated
by reference to Exhibit 3.1 to the Form 10-Q/A for
the fiscalquarter ended June 30, 2002 (File No.
1-5491).
(1) 4a Certificate of Change of Address of Registered
Office and of Registered Agent dated July 25,
1984, incorporated by reference to Exhibit 4.4 to
Registration Statement No. 333-84369 on Form S-8
(File No. 1-5491).
(1) 4b Certificate of Amendment of Certificate of
Incorporation dated April 24, 1987, incorporated
by reference to Exhibit 4.5 to Registration
Statement No. 333-84369 on Form S-8 (File No.
1-5491).
(1) 4c Certificate of Designation of the Company's Series
III Preferred Stock dated November 30, 1994
incorporated by reference to Exhibit 4.7 to
Registration Statement No. 333-84369 on Form S-8
(File No. 1-5491).
(1) 4d Certificate of Designation of the Company's Series
A Junior Preferred Stock dated March 2, 1992
incorporated by reference to Exhibit 4.2 to
Registration Statement No. 333-84369 on Form 8A/A
filed on February 12, 2002 (File No. 1-5491).
(1) 4e Certificate of Designation of (and Certificate of
Correction related thereto) the Company's Series A
Preferred Stock dated August 5, 1998 and January
28, 1999, respectively, incorporated by reference
to Exhibit 4.8 to Registration Statement No.
333-84369 on Form S-8 (File No. 1-5491).
(1) 4f Certificate of Designation of the Company's Series
B Preferred Stock dated June 24, 1999,
incorporated by reference to Exhibit 4d to Form
10-K for the fiscal year ended December 31, 1999
(File No. 1-5491).
(1) 4g Certificate of Designation of the Series C
Preferred Stock dated July 28, 2000, incorporated
by reference to Exhibit 4.10 to Registration
Statement No. 333-44874 on Form S-8 (File No.
1-5491).
(1) 4h Certificate of Designation of the Series D
Preferred Stock dated May 22, 2001, incorporated
by reference to Exhibit 4.11 to Registration
Statement No. 333-82804 on Form S-3 filed on
February 14, 2002 (File No. 1-5491).
EXHIBIT INDEX
Page 2 of 6
Footnote Exhibit
Reference Number Exhibit Description
--------- ------- -------------------
(1) 4i Certificate of Designation of the Series E
Preferred Stock dated October 30, 2001,
incorporated by reference to Exhibit 4.12 to
Registration Statement No. 333-82804 on Form S-3
filed on February 14, 2002 (File No. 1-5491).
(1) 4j Amended and Restated Rights Agreement, dated
January 24, 2002, between the Company and
Computershare Trust Co. Inc. as Rights Agent
incorporated by reference to Exhibit 4.2 to
Registration Statement on Form 8-A/A filed on
March 21, 2003 (File No. 1-5491).
(1) 4k Specimen Common Stock certificate, incorporated by
reference to Exhibit 4k to Form 10-K for the
fiscal year ended December 31, 2001 (File No.
1-5491).
(1) 4l Form of Promissory Note dated November 30, 1994
between the purchasers of Series III Floating Rate
Subordinated Convertible Debentures due 2004 and
the Company incorporated by reference to Exhibit
4j to Form 10-K for the fiscal year ended December
31, 1994 (File No. 1-5491).
(1) 4m Form of Promissory Note date April 24, 1998
between the purchasers of Series A Floating Rate
Subordinated Convertible Debentures due 2008 and
the Company, incorporated by reference to Exhibit
4h to Form 10-K for the fiscal year ended December
31, 1998 (File No. 1-5491).
(1) 4n Form of Promissory Note date April 22, 1999
between the purchasers of Series B Floating Rate
Subordinated Convertible Debentures due 2009 and
the Company incorporated by reference to Exhibit
4j to Form 10-K for the fiscal year ended December
31, 1999 (File No. 1-5491).
(1) 4o Form of Promissory Note date April 27, 2000
between purchasers of Series C Floating Rate
Subordinated Convertible Debentures due 2010 and
Rowan incorporated by reference to Exhibit 4n to
Form 10-K for the fiscal year ended December 31,
2000 (File No. 1-5491).
(1) 4p Form of Promissory Note date April 26, 2001
between the purchaser of Series D Floating Rate
Subordinated Convertible Debentures due 2011 and
Rowan, incorporated by reference to Exhibit 4p to
Form 10-K for the fiscal year ended December 31,
2001 (File No. 1-5491).
(1) 4q Form of Promissory Note date September 20, 2001
between the purchaser of Series E Floating
Rate Subordinated Convertible Debentures due 2011
and Rowan, incorporated by reference to Exhibit 4q
to Form 10-K for the fiscal year ended December
31, 2001 (File No. 1-5491).
(1) 10a Restated 1988 Nonqualified Stock Option Plan,
incorporated by reference to Appendix C to the
Notice of Annual Meeting and Proxy Statement dated
March 20, 2002 (File No. 1-5491).
EXHIBIT INDEX
Page 3 of 6
Footnote Exhibit
Reference Number Exhibit Description
--------- ------- -------------------
(1) 10b 1998 Nonemployee Director Stock Option Plan of the
Company incorporated by reference to Exhibit 10b
of Form 10-Q for the fiscal quarter ended March
31, 1998 (File No. 1-5491).
(1) 10c 1986 Convertible Debenture Incentive Plan of the
Company as amended incorporated by reference to
Exhibit 10h to Form 10-K for the fiscal year ended
December 31, 1996 (File No. 1-5491).
(1) 10d 1998 Convertible Debenture Incentive Plan,
incorporated by reference to Appendix B to the
Notice of Annual Meeting and Proxy Statement date
March 20, 2002 (File No. 1-5491).
(1) 10e Pension Restoration Plan of the Company
incorporated by reference to Exhibit 10h to Form
10-K for the fiscal year ended December 31, 1992
(File No. 1-5491).
(1) 10f Pension Restoration Plan of LeTourneau, Inc
incorporated by reference to Exhibit 10j to Form
10-K for the fiscal year ended December 31, 1994
(File No. 1-5491).
(1) 10g Participation Agreement dated December 1, 1984
between the Company and Textron Financial
Corporation et al. and Bareboat Charter dated
December 1, 1984 between the Company and Textron
Financial Corporation et al. incorporated by
reference to Exhibit 10c to Form 10-K for the
fiscal year ended December 31, 1985 (File No.
1-5491).
(1) 10h Participation Agreement dated December 1, 1985
between the Company and Eaton Leasing Corporation
et. al. and Bareboat Charter dated December 1,
1985 between the Company and Eaton Leasing
Corporation et. al. incorporated by reference to
Exhibit 10d to Form 10-K for the fiscal year ended
December 31, 1985 (File No.1-5491).
(1) 10i Election and acceptance letters with respect to
the exercise of the Fixed Rate Renewal Option set
forth in the Bareboat Charter dated December 1,
1984 between the Company and Textron Financial
Corporation et. al., incorporated by reference to
Exhibit 10j to Form 10-K for the fiscal year
ended December 31, 1999 (File No. 1-5491).
(1) 10j Election and acceptance letters with respect to
the exercise of the Fixed Rate Renewal Option set
forth in the Bareboat Charter dated December 1,
1985 between the Company and Eaton Leasing
Corporation et. al., incorporated by reference to
Exhibit 10K to Form 10-K for the fiscal year ended
December 31, 1999 (File No. 1-5491).
EXHIBIT INDEX
Page 4 of 6
Footnote Exhibit
Reference Number Exhibit Description
--------- ------- -------------------
(1) 10k Consulting Agreement as amended as of January 1,
1998 between the Company and C. W. Yeargain,
incorporated by reference to Exhibit 10k to Form
10-K for the fiscal year ended December 31, 1998
(File No. 1-5491)
(1) 10l Consulting Agreement dated January 1, 1990 and
Amendment No. 1 thereto dated August 30, 1994, but
effective January 1, 1994, between Rowan Energy
Investments Inc., wholly-owned subsidiary of the
Company, and Hans M. Brinkhorst, incorporated by
reference to Exhibit 101 to Form 10-K for
the fiscal year ended December 31, 1998 (File No.
1-5491).
(1) 10m Commitment to Guarantee Obligations and First
Preferred Ship Mortgage both dated December 17,
1996 between the Company and the Maritime
Administration of the U.S. Department of
Transportation incorporated by reference to
Exhibit 10t to Form 10-K for fiscal year ended
December 31, 1996 (File No. 1-5491).
(1) 10n Amendment No. 1 dated June 30, 1997 to Commitment
to Guarantee Obligations between the Company and
the Maritime Administration of the U.S. Department
of Transportation incorporated by reference to
Exhibit 10p to Form 10-K for the fiscal year ended
December 31, 1997 (File No. 1-5491).
(1) 10o Amendment No. 2 dated July 1, 1998 to Commitment
to Guarantee Obligations between the Company and
the Maritime Administration of the U.S. Department
of Transportation, incorporated by reference to
Exhibit 10o to Form 10-K for the fiscal year ended
December 31, 1998 (File No. 1-5491).
(1) 10p Credit Agreement and Trust Indenture both dated
December 17, 1996 between the Company and
Citibank, N.A. incorporated by reference to
Exhibit 10u to Form 10-K for the fiscal year
ended December 31, 1996 (File No. 1-5491).
(1) 10q Amendment No. 1 to the Credit Agreement and
Supplement No. 1 to Trust Indenture both dated
July 1, 1997 between the Company and Citibank,
N.A. incorporated by reference to Exhibit 10r to
Form 10-K for the fiscal year ended December 31,
1997 (File No. 1-5491).
(1) 10r Supplement No. 2 to Trust Indenture dated July 1,
1998 between the Company and Citibank, N.A,
incorporated by reference to Exhibit 10r to Form
10-K for the fiscal year ended December 31, 1998
(File No. 1-5491).
(1) 10s Commitment to Guarantee Obligations and First
Preferred Ship Mortgage both dated September 29,
1998 between the Company and the Maritime
Administration of the U.S. Department of
Transportation incorporated by reference to
Exhibit 10a to Form 10-Q for fiscal quarter ended
September 30, 1998 (File No. 1-5491).
EXHIBIT INDEX
Page 5 of 6
Footnote Exhibit
Reference Number Exhibit Description
--------- ------- -------------------
(1) 10t Credit Agreement and Trust Indenture both dated
September 30, 1998 between the Company and
Citibank, N.A. incorporated by reference to
Exhibit 10b to Form 10-Q for the fiscal quarter
ended September 30, 1998 (File No. 1-5491).
(1) 10u Amendment No. 1 dated March 15, 2001 to Commitment
to Guarantee Obligations between Rowan and the
Maritime Administration of the U.S. Department of
Transportation incorporated by reference to
Exhibit 10v to Form 10-K for the fiscal year ended
December 31, 2000 (File No. 1-5491).
(1) 10v Supplement No. 1 to Trust Indenture dated March
15, 2001 between Rowan and Citibank, N.A.
incorporated by reference to Exhibit 10w to Form
10-K for the fiscal year ended December 31, 2000
(File No. 1-5491).
(1) 10w Commitment to Guarantee Obligations dated October
29, 1999 and First Preferred Ship Mortgage between
the Company and the Maritime Administration of the
U.S. Department of Transportation, incorporated by
reference to Exhibit 10v to Form 10-K for the
fiscal year ended December 31, 1999 (File No.
1-5491).
(1) 10x Credit Agreement and Trust Indenture both dated
October 29, 1999 between the Company and Citibank,
N.A., incorporated by reference to Exhibit 10w to
Form 10-K for the fiscal year ended December 31,
1999 (File No. 1-5491).
(1) 10y Commitment to Guarantee Obligations dated May 23,
2001 and First Preferred Ship Mortgage between
Rowan and the Maritime Administration of the U.S.
Department of Transportation, incorporated by
reference to Exhibit 10y to Form 10-K for the
fiscal year ended December 31, 2001 (File No.
1-5491).
(1) 10z Credit Agreement and Trust Indenture both dated
May 23, 2001 between Rowan and Citibank, N.A.,
incorporated by reference to Exhibit 10z to Form
10-K for the fiscal year ended December 31, 2001
(File No. 1-5491).
(3) 11 Computation of Basic and Diluted Income (Loss)
Per Share for the years ended December 31, 2002,
2001 and 2000.
(4) 13 Annual Report to Stockholders for fiscal year
ended December 31, 2002.
(2) 21 Subsidiaries of the Registrant as of
March 27, 2003.
(2) 23 Independent Auditors' Consent.
(2) 24 Powers of Attorney pursuant to which names were
affixed to this Form 10-K for the fiscal year
ended December 31, 2002.
EXHIBIT INDEX
Page 6 of 6
Footnote Exhibit
Reference Number Exhibit Description
--------- ------- -------------------
(2) 99 Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
- ----------------------
(1) Incorporated herein by reference to another filing of the Company
with the Securities and Exchange Commission as indicated.
(2) Included herein.
(3) Included in Form 10-K on page 29.
(4) Included herein. See ITEM 1, ITEMS 5-8 and Subpart (a)1. of ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K on
page 21 on Form 10-K for specific portions incorporated herein by
reference.