The registered public accounting firm Deloitte & Touche LLP has completed their audit and has issued an unqualified opinion with respect to Rowan's consolidated financial statements to be included in our 2004 Annual Report to stockholders.
The Company has made several adjustments and reclassifications to the unaudited consolidated financial information that was released on January 19, 2005, which had the following full year effects:
-- Consolidated revenues were reduced by $1.4 million or less than 1%
-- Income from operations was reduced by $1.4 million or 2.4%
-- After-tax income from continuing operations was reduced by $0.8 million or 1 cent per share
-- The after-tax loss from discontinued operations was increased by $8.9 million or 8 cents per share, due to a deferred tax miscalculation which understated the loss on the sale of our aviation operations
-- As a result, net income was reduced by $9.8 million or 9 cents per share
-- Net operating cash flows were reduced $3.4 million or 2.9%
-- Working capital was increased by $4.6 million or less than 1%
-- Total assets were increased by $11.2 million or less than 1%
The Company has determined that the aggregate effects of these adjustments are not material to any previous annual or interim period.
We have completed our assessment of the effectiveness of our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. Based upon our documentation and testing, Rowan did not maintain effective internal control over financial reporting as of December 31, 2004 within the context of the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our assessment identified a pervasive internal control deficiency that represented a material weakness. The control deficiency resulted from the lack of effective detective and monitoring controls within internal control over financial reporting. These conditions were manifested in a number of adjustments to the financial statements for the year ended December 31, 2004 that, although not material in the aggregate, affect various financial statement line items. We are working hard throughout the Rowan organization to remedy all internal control deficiencies relative to COSO and expect to be fully compliant by the end of 2005.
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