This summary is based on the fourth quarter fiscal 2005 earnings call conducted by Rowan Companies Inc. (RDC: chart) on March 1, 2006.

Key Investors Issues

- The quarterly revenues increased by 66% to $317 million from a year ago quarter.
- For the quarter, income from continuing operations rose 324% to $69 million or 63 cents per share from a year ago.
- Operating cash flows increased by 133% to $196 million compared to prior year quarter.
- Annual revenues increased by $389 million or 57% to a record $1.1 billion.

Fourth quarter Financial Highlights

- For the quarter, the revenues increased by 66% to $317 million compared to prior year quarter and were up by $33 million or 12% sequentially.
- Income from continuing operations increased by 324% to $69 million or 63 cents per share compared to $16 million or 15 cents per share in the year ago quarter. However, sequentially, income from continuing operations dropped by about $5 million or 4 cents per share. Deferral of Saudi contract fees reduced current period earnings by about 4 cents per share.

- Net gains from insurance proceeds and asset sales contributed 14 cents per share to current period after-tax earnings while the deferral of the Saudi contract fees reduced current period revenues by about $7 million and reduced current period earnings by about 4 cents per share.
- During the quarter, operating cash flows increased year over year by 133% to $196 million.
- For the quarter, the capital expenditure was $86 million.

- Despite the Saudi deferral and the loss of rigs from hurricanes, drilling revenues increased by $89 million or 71% from a year ago primarily due to higher day rates and the addition of Bob Keller to the fleet. However, sequentially drilling revenues decreased by $2 million or 1% primarily due to the Saudi deferral.
- Manufacturing revenues increased year on year by $38 million or 58% due to improved contributions from marine equipment and drilling products group.
- Marine group revenues increased by 364% compared to prior year quarter and included $33 million related to the company’s external rig and kit construction projects.
- Equipment group revenues increased about 28% from a year ago and included shipments of 10 mining loaders and log stackers during the quarter.
- Drilling products group revenues increased year over year by 112% and included shipments of 20 mud pumps.

Selling, general, and administrative costs increased by $6 million or 46% primarily due to incremental professional services, incentive compensation and manufacturing selling costs. SG&A expenses decreased slightly compared to the third quarter of 2005.

Drilling expenses increased by $32 million or 43% primarily due to the effects of
- Higher towing costs
- Higher rig maintenance
- Wage increases
- The start up of the Bob Keller in September of 2005
- The reactivation of two land rigs during the year
- And higher incentive compensation and retirement plan costs.

- During the quarter, Rowan''s offshore rig utilization decreased to 93% from 99% in the prior year period, as three rigs entered the shipyard in December in preparation for their relocation to Saudi Arabia.
- The company''s average Gulf of Mexico day rate was a record $92,100, up $17,700 or 24% sequentially and up $41,400 or 82% from the prior year quarter.

- Rowan''s land rig utilization was 89% during the quarter, up from 83% in the comparable 2004 period.
- The company''s average land rig day rate was $21,100, up 12% from the third quarter of 2005 and up 53% from a year ago quarter.

During Hurricanes Katrina and Rita, Rowan lost four jack-up rigs and had one jack-up severely damaged. During the quarter, the company recognized the excess of insurance proceeds received over the carrying value of the lost equipment of approximately $23 million.
Rowan experienced 71 fewer rig operating days in December as a result of shipyard modifications made to three rigs contracted to Saudi Aramco prior to their January 2006 departure for Saudi Arabia. Rowan will receive $44.7 million in fees for shipyard time, modifications and mobilization of the three rigs. Such fees will be recognized as revenues over the three-year contract period, beginning when the rigs commence drilling operations in March or April 2006.

Fiscal 2005 Financial Highlights

- Revenues increased by $389 million or 57% to a record $1.1 billion.
- Income from continuing operations was $217.8 million or $1.97 per share, an improvement of $190 million or $1.71 per share.
- Net income was $229.8 million or $2.08 per share in 2005 compared to a net loss of $1.3 million, or 1 cent per share in 2004.
- Operating cash flows increased by 185% to $333 million.
- Drilling revenues increased by $303 million or 64% primarily due to higher day rates.

- While the offshore rigs utilization were 96%, the company’s 16 actively marketed land rigs were 98% utilized.
- The average Gulf of Mexico day rates increased by $25,900 a day or 57% and overall offshore day rates increased by $29,200 a day or 60%. The land rates increased by $6,200 or 51% compared to prior year.

- Manufacturing revenues increased by $86 million or 41% compared to 2004 due to improved contributions from marine equipment and drilling products group.
- Marine group revenues increased year over year by 91% and included $36 million related to the company’s external rig and kit construction projects.
- Equipment group revenues increased by 37% versus 2004 and included shipment of 34 mining loaders and log stackers during this period.
- Drilling products group revenues increased by 118% as against the prior year and included shipment of 39 mud pumps during this period.

- The annual general and administrative expenses increased by $24 million or 60% primarily due to incremental professional fees and services, incentive compensation and manufacturing selling costs. Drilling expenses increased by $68 million or 21% from 2004.
- Depreciation expense increased by $3 million or 3% due to start-up of Scooter Yeargain in May of 2004 and the Bob Keller in September of 2005.

- The capital expenditure for the year was $209 million.
- The company’s long-term debt is 25% of total capitalization and is declining.
- The average interest rate on outstanding debt was 4.6%

Outlook for Drilling Division

- By mid to late 2006, the forecasted worldwide jack-up supply deficit could total between 30 to 40 jack-ups. The continued increase in the worldwide jack-up day rates will result in global supply deficit, accelerated attrition levels due to hurricane damage in the Gulf of Mexico, and global competition for jack-ups resulting in 3 to 5 year contracts.

- The deep shelf and ultra-deep shelf drilling continues to remain strong, increasing demand of premium jack-ups in the US Gulf of Mexico.
- The E&P capital projected budgets for 2006 are more aggressive than they were in 2005.
- Natural gas and oil prices are forecasted to remain strong through 2006
- In 2006, Rowan believes that the day rates will further up with potential in the region as US Gulf of Mexico continues to compete with the worldwide market for jack-ups.