Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

RESULTS OF OPERATIONS

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

Rowan generated net income of $333.3 million in the first nine months of 2008 compared to $345.3 million in the same period of 2007. This 3% reduction in profitability was largely due to increased costs and expenses and decreased asset sales, the effects of which were somewhat offset by higher average drilling day rates and manufacturing sales between periods.

A comparison of the revenues and income from Drilling, Manufacturing and Consolidated operations for the first nine months of 2008 and 2007, respectively, is reflected below (dollars in millions):