UPDATE: Rowan Cos. Net Income Down 32% On One-Time Charges

By Steve Gelsi

NEW YORK (Dow Jones) -- Rowan Companies Inc. said Thursday fourth-quarter net income fell 32% on more than $100 million of one-time impairment charges, while the company's oil drilling business hammered out a slight rise.

Rowan Cos. (RDC) said earnings for the three months ended Dec. 31 dropped to $94.3 million, or 83 cents a share, from $138.5 million, or $1.23 a share, in the year-ago period.

Excluding one-time items, earnings in the latest period totaled $1.28 a share.

The Houston oil drilling and equipment manufacturing firm said revenue fell to $613 million from $623.6 million.

Wall Street analysts expected earnings of $1.09 a share on revenue of $615.6 million, according to a survey by FactSet Research.

Fourth-quarter results included $111.2 million, or 68 cents a share, of impairment charges and other expenses, partially offset by $39.5 million or 23 cents a share, of gains on asset disposals.

The charges and other expenses included a $62 million reserve against excess manufacturing inventories, $14 million to write off goodwill, a $12 million charge against a cancelled rig construction project, $13 million related to the aborted sale of manufacturing operations and $10 million of severance costs.

The gains resulted primarily from Hurricane Ike insurance recoveries.

Rowan's drilling operations generated revenue of $386.7 million in the fourth quarter, up by 8% over the third quarter and by 4% over the prior-year quarter, due primarily to higher average offshore utilization and day rates, the company said.

Looking ahead, Rowan Cos. said it's maintaining a "strong financial position," with 67% of its total offshore rig days currently committed in 2009.

"We are very pleased with the strong performance of both our drilling and manufacturing operations in the fourth quarter of 2008, resulting in total year profitability that was the second highest in the company's history," said CEO Matt Ralls. "However, ongoing reductions by our customers in their spending plans for 2009 will put downward pressure on day rates until prices for oil and natural gas improve and credit markets begin to function more normally."

Rowan said it remains confident it will achieve above market day rates and utilization for its equipment in all market conditions.