8-K 1 d92092e8-k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: October 29, 2001 McDERMOTT INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) REPUBLIC OF PANAMA 1-8430 72-0593134 (State or other jurisdiction (Commission) (IRS Employer of incorporation File No.) Identification No.)
1450 Poydras Street, New Orleans, Louisiana 70112-6050 (Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (504) 587-5400 Item 2. DISPOSITION OF ASSETS On October 29, 2001, we sold McDermott Engineers & Constructors (Canada) Ltd. ("MECL") to Jacobs Canada Inc., a Canadian wholly-owned subsidiary of Jacobs Engineering Group, Inc., a Delaware corporation ("Jacobs"). Under the terms of the sale, we received approximately $47,500,000 cash, subject to certain adjustments and retained certain liabilities of MECL and certain of its subsidiaries as outlined in the acquisition agreement. We agreed on the consideration, as well as the other terms of the transaction, after arms'-length negotiation with Jacobs. We will use the cash proceeds to pay down debt and for other general corporate purposes. The liabilities we retained relate to prior operations of MECL, and certain of its subsidiaries, and are not debt obligations. We do not consider the retained liabilities to be significant. MECL and its subsidiaries provide engineering, construction and maintenance services to various industries including upstream oil & gas, petroleum refining, petrochemicals, and chemicals. MECL is headquartered in Calgary, Alberta, and has operations in Canada and the United Kingdom. 2 Item 7. PRO FORMA FINANCIAL INFORMATION AND EXHIBITS The following pro forma financial information and exhibits are filed as a part of this report. (b) Pro forma financial information required pursuant to Article 11 of Regulation S-X:
Item Page ---- ---- McDermott International Inc. Pro Forma Condensed Consolidated Financial Statements (Unaudited): Pro Forma Condensed Consolidated Balance Sheet - September 30, 2001 4 Pro Forma Condensed Consolidated Statement of Loss - Year Ended December 31, 2000 5 Pro Forma Condensed Consolidated Statement of Income - Nine Months ended September 30, 2001 6 Notes to the Pro Forma Condensed Consolidated Financial Statements 7
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2001 gives effect to the sale of MECL as if it had occurred on September 30, 2001. The Unaudited Pro Forma Condensed Consolidated Statements of Income (Loss) for the year ended December 31, 2000 and the nine month period ended September 30, 2001 give effect to the sale as if it had occurred on January 1 of each period presented. The pro forma financial information is based on our previously reported historical financial statements using the assumptions and adjustments in the accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements. We have not yet finalized all aspects of this sale, including certain adjustments to the transaction consideration. The pro forma condensed consolidated financial statements should be read in conjunction with our historical consolidated financial statements and notes thereto contained in our annual report on Form 10-K for the fiscal year ended December 31, 2000 and our quarterly report on Form 10-Q for the quarter ended September 30, 2001. 3 McDERMOTT INTERNATIONAL INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2001
Pro Forma ASSETS Historical Adjustments (1) Pro Forma ------ ---------- --------------- --------- (In thousands) Current Assets: Cash and cash equivalents $ 90,643 $ 47,500(2) $ 138,143 Accounts and notes receivable 356,032 (42,780) 313,252 Contracts in progress 106,987 (14,388) 92,599 Other current assets 92,435 (5,001) 87,434 ---------- -------- ---------- Total Current Assets 646,097 (14,669) 631,428 ---------- -------- ---------- Property, Plant and Equipment, at Cost 1,255,015 (4,811) 1,250,204 Less accumulated depreciation 893,455 (2,620) 890,835 ---------- -------- ---------- Net Property, Plant and Equipment 361,560 (2,191) 359,369 ---------- -------- ---------- Investments 330,800 (67) 330,733 ---------- -------- ---------- Investment in B&W 186,966 -- 186,966 ---------- -------- ---------- Excess of Cost Over Fair Value of Net Assets of Purchased Businesses 336,061 (524) 335,537 ---------- -------- ---------- Prepaid Pension Costs 152,205 -- 152,205 ---------- -------- ---------- Other Assets 88,477 (1,143) 87,334 ---------- -------- ---------- TOTAL $2,102,166 $(18,594) $2,083,572 ========== ======== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes and accounts payable and current maturities of long term debt $ 435,510 $(16,364) $ 419,146 Advance billings on contracts 125,540 (13,179) 112,361 Accrued employee benefits 65,330 (4,096) 61,234 Other current liabilities 308,133 (8,381)(3) 299,752 ---------- -------- ---------- Total Current Liabilities 934,513 (42,020) 892,493 ---------- -------- ---------- Long-term Debt 96,589 -- 96,589 ---------- -------- ---------- Other Liabilities 262,205 (66) 262,139 ---------- -------- ---------- Stockholders' Equity: Common stock 63,396 -- 63,396 Other stockholders' equity 745,463 23,492(2) 768,955 ---------- -------- ---------- Total Stockholders' Equity 808,859 23,492 832,351 ---------- -------- ---------- TOTAL $2,102,166 $(18,594) $2,083,572 ========== ======== ==========
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. 4 McDERMOTT INTERNATIONAL INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF LOSS FOR THE YEAR ENDED DECEMBER 31, 2000
Pro Forma Historical Adjustments (1) Pro Forma ---------- --------------- --------- (In thousands) Revenues $ 1,877,753 $ (425,974) $ 1,451,779 ------------ ------------ ----------- Costs and Expenses: Cost of operations 1,664,481 (402,230) 1,262,251 Selling, general and administrative expenses 205,279 (14,609) 190,670 ------------ ------------ ----------- Total Costs and Expenses 1,869,760 (416,839) 1,452,921 ------------ ------------ ----------- Equity in Loss of Investees (9,741) (50) (9,791) ------------ ------------ ----------- Operating Income Loss (1,748) (9,185) (10,933) ------------ ------------ ----------- Other Income (Expense): Interest income 27,121 (549) 26,572 Interest expense (43,709) -- (43,709) Other-net 8,359 464 8,823 ------------ ------------ ----------- Total Other Expense (8,229) (85) (8,314) ------------ ------------ ----------- Loss Before Provision For Income Taxes (9,977) (9,270) (19,247) ------------ ------------ ----------- Provision for (Benefit from) Income Taxes 12,105 (1,211) 10,894 ------------ ------------ ----------- Net Loss $ (22,082) $ (8,059) $ (30,141) ============ ============ =========== Loss per Common Share: Basic (0.37) (0.50) Diluted (0.37) (0.50) ============ ============ =========== Weighted Average Number of Common And Common Equivalent Shares: Basic 59,769,662 59,769,662 Diluted 59,769,662 59,769,662 ============ ============ ===========
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. 5 McDERMOTT INTERNATIONAL INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
Pro Forma Historical Adjustments (1) Pro Forma ---------- --------------- --------- (In thousands) Revenues $ 1,519,718 $ (452,048) $ 1,067,670 ------------ ------------ ----------- Costs of Expenses: Cost of operations 1,330,324 (432,737) 897,587 Selling, general and administrative expenses 152,791 (12,151) 140,640 ------------ ------------ ----------- Total Costs and Expenses 1,483,115 (444,888) 1,038,227 ------------ ------------ ----------- Equity in Income of Investees 24,124 (42) 24,082 ------------ ------------ ----------- Operating Income 60,727 (7,202) 53,525 ------------ ------------ ----------- Other Income (Expense): Interest income 15,687 (441) 15,246 Interest expense (31,652) -- (31,652) Other - net (829) (29) (858) ------------ ------------ ----------- Total Other Income (Expense) (16,794) (470) (17,264) ------------ ------------ ----------- Income (Loss) Before Provision For Income Taxes 43,933 (7,672) 36,261 Provision for (Benefit from) Income Taxes 21,063 (3,549) 17,514 ------------ ------------ ----------- Net Income (Loss) $ 22,870 $ (4,123) $ 18,747 ============ ============ =========== Earnings per Common Share: Basic 0.38 0.31 Diluted 0.37 0.30 ------------ ------------ ----------- Weighted Average Number of Common And Common Equivalent Shares: Basic 60,499,071 60,499,071 Diluted 62,599,066 62,599,066 ============ ============ ===========
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. 6 McDERMOTT INTERNATIONAL INC. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Balance Sheet Pro Forma Adjustments: (1) Except as noted, this column represents the removal of assets and liabilities of MECL. (2) This adjustment records the approximate sales proceeds, which is subject to certain adjustments outlined in the acquisition agreement, which are not yet finalized. (3) This adjustment reflects the removal of certain liabilities of MECL net of approximately $9,300,000 of costs related to the sale, including income taxes, retained liabilities, professional fees and other costs. Statements of Income Adjustments: (1) This column represents the removal of the results of operations of MECL. Any estimated gain on sale of MECL, and any adjustments of interest income or expense related to use of cash proceeds are not reflected in the unaudited pro forma condensed consolidated statement of income (loss). 7 (c) Exhibits 1. Acquisition agreement dated as of October 29, 2001 among McDermott International, Inc., McDermott Incorporated, Hudson Engineering (Canada) Ltd., Delta Catalytic (Holland) B.V., Jabcobs Engineering Group Inc. and Jacobs Canada Inc. The Exhibits and Schedules to the Acquisition agreement have been omitted from this report but copies will be supplied to the Commission upon request. 8 SIGNATURES Pursuant to the requirements 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. McDERMOTT INTERNATIONAL INC. By: /s/Bruce F. Longaker ---------------------------- Bruce F. Longaker Executive Vice President and Chief Financial Officer November 13, 2001 9 Exhibit Index (c) Exhibits 1. Acquisition agreement dated as of October 29, 2001 among McDermott International, Inc., McDermott Incorporated, Hudson Engineering (Canada) Ltd., Delta Catalytic (Holland) B.V., Jabcobs Engineering Group Inc. and Jacobs Canada Inc. 10