-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, q2XycFgqmLlsQ9OHRNs5mNkTm1JE6lEN7eNe5iEWngsJ70WUwA81r7yZ4nXaWG8O Ky9GCSVGELAMHipSmr2CsQ== 0000950134-95-001488.txt : 199506290000950134-95-001488.hdr.sgml : 19950629 ACCESSION NUMBER: 0000950134-95-001488 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950628 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCDERMOTT INTERNATIONAL INC CENTRAL INDEX KEY: 0000708819 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED PLATE WORK (BOILER SHOPS) [3443] IRS NUMBER: 720593134 STATE OF INCORPORATION: R1 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08430 FILM NUMBER: 95550318 BUSINESS ADDRESS: STREET 1: 1010 COMMON ST CITY: NEW ORLEANS STATE: LA ZIP: 70112 BUSINESS PHONE: 5045875400 MAIL ADDRESS: STREET 1: P O BOX 61961 CITY: NEW ORLEANS STATE: LA ZIP: 70161 10-K/A 1 AMENDMENT NO. 1 TO FORM 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 F O R M 10 - K/A-1 /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended March 31, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the transition period from to --------------------- -------------------- Commission File Number 1-8430 McDERMOTT INTERNATIONAL, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) REPUBLIC OF PANAMA 72-0593134 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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 Securities Registered Pursuant to Section 12(b) of the Act:
Name of each Exchange Title of each class on which registered ------------------- ------------------- Common Stock, $1.00 par value New York Stock Exchange Rights to Purchase Common Stock New York Stock Exchange (Currently Traded with Common Stock)
Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES /X/ NO / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ The aggregate market value of voting stock held by non-affiliates of the registrant was $1,444,216,074 as of April 26, 1995. The number of shares outstanding of the Company's Common Stock at April 26, 1995 was 54,063,698. DOCUMENTS INCORPORATED BY REFERENCE The Proxy Statement for the 1995 Annual Meeting of Shareholders is incorporated by reference into Part III of this report. 2 McDERMOTT INTERNATIONAL, INC. INDEX
Page ---- Signature 3 Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 4
3. EXHIBIT INDEX
Exhibit Number Description ------ ----------- 23 Consent of Independent Auditors (1) KPMG Accountants N.V. (2) Ernst & Young LLP 99 McDermott-ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture Combined Financial Statements for the Years Ended March 31, 1995, 1994 and 1993
-2- 3 SIGNATURE OF THE REGISTRANT Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. McDERMOTT INTERNATONAL, INC. (REGISTRANT) By: s/Daniel R. Gaubert Daniel R. Gaubert Vice President, Finance and Controller June 28, 1995 -3- 4 INDEX TO EXHIBITS
Exhibit Number Description ------- ----------- 23 Consent of Independent Auditors (1) KPMG Accountants N.V. (2) Ernst & Young LLP 99 McDermott-ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture Combined Financial Statements for the Years Ended March 31, 1995, 1994 and 1993
-4- EX-23.(1) 2 CONSENT OF KPMG ACCOUNTANTS N.V. 1 EXHIBIT 23(1) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements on Forms S-8 (No. 2-83692, No. 33-16680, No. 33-51892, No. 33-51894, No. 33-63832, No. 33-55341 and No. 33-60499) of McDermott International, Inc. and the Registration Statement on Form S-3 (No. 33-54940) of McDermott Incorporated and in the related prospectuses of our report dated April 28, 1995 with respect to the combined financial statements of McDermott-ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture included in this Annual Report (Form 10K/A No. 1) for the fiscal year ended March 31, 1995. The Hague, June 26, 1995 KPMG Accountants N.V. EX-23.(2) 3 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23(2) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 2-83692, No. 33-16680, No. 33-51892, No. 33-51894, No. 33-63832, No. 33-55341 and No. 33-60499) of McDermott International, Inc. and the Registration Statement (Form S-3 No. 33-54940) of McDermott Incorporated and in the related Prospectuses of our report dated April 28, 1995 with respect to the combined financial statements of McDermott - ETPM West, Inc. (not presented seperately herein) included in this Annual Report (Form 10-K/A-1) for the year ended March 31, 1995. ERNST & YOUNG LLP New Orleans, Louisiana June 23, 1995 EX-99 4 COMBINED FINANCIAL STATEMENTS 1 EXHIBIT 99 McDermott-ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture Combined Financial Statements for the Years Ended March 31, 1995, 1994 and 1993 2 CONTENTS Auditors' Report 2 Combined Balance Sheet, March 31, 1995 and 1994 4 Combined Statements of Income for the Three Years ended March 31, 1995 6 Combined Statements of Owners' Equity for the Three Years ended March 31, 1995 7 Combined Statements of Cash Flows for the Three Years ended March 31, 1995 8 Notes to the Combined Financial Statements 9
1 3 Auditors' Report To the Board of Directors of J. Ray McDermott, S.A. We have audited the accompanying combined balance sheet of the McDermott-ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture as of March 31, 1995 and 1994 and the related combined statements of income, owners' equity and cash flows for each of the three years in the period ended March 31, 1995. These combined financial statements are the responsibility of the Joint Ventures' management. Our responsibility is to express an opinion on these combined financial statements based on our audits. We did not audit the combined financial statements of McDermott-ETPM West, Inc., which reflect total assets constituting 37% in 1995 and 39% in 1994 and total revenues constituting 49%, 43% and 49% in 1995, 1994 and 1993 of the related combined totals. Those statements were audited by other auditors, whose report has been furnished to us, and our opninion as it relates to the amounts included for McDermott-ETPM West, Inc., is based solely on the report of other auditors. We conducted our audits in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the combined financial statements, referred to above, present fairly, in all material respects, the combined financial position of McDermott-ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture at March 31, 1995 and 1994 and the combined results of their operations and cash flows for each of the three years in the period ended March 31, 1995, in conformity with generally accepted accounting principles in the United States of America. The Hague, April 28, 1995 KPMG Accountants N.V. 2 4 REPORT OF INDEPENDENT AUDITORS The Board of Directors J. Ray McDermott, S.A. We have audited the combined balance sheet of McDermott - ETPM West, Inc. as of March 31, 1995 and 1994, and the related combined statements of income, common stock and other equity, and cash flows for each of the three years in the period ended March 31, 1995 (not presented separately herein). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of McDermott - ETPM West, Inc. at March 31, 1995 and 1994, and the combined results of its operations and its cash flows for each of the three years in the period ended March 31, 1995, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP New Orleans, Louisiana April 28, 1995 3 5 McDermott - ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture Combined Balance Sheet as of March 31, 1995 and 1994
- ----------------------------------------------------------------------------------------------------------------- Assets 1995 1994 - ----------------------------------------------------------------------------------------------------------------- (In thousands of U.S. Dollars) Current assets: Cash and cash equivalents $ 232,244 $ 242,474 Accounts receivable - trade 52,563 46,827 Accounts receivable - related parties 20,841 47,572 Accounts receivable - other 5,596 3,355 Contracts in progress 3,658 21,089 Other current assets 10,507 9,992 - ----------------------------------------------------------------------------------------------------------------- Total current assets 325,409 371,309 - ----------------------------------------------------------------------------------------------------------------- Fixed assets at cost 178,698 149,445 Less accumulated depreciation (107,821) (71,032) - ----------------------------------------------------------------------------------------------------------------- Net fixed assets 70,877 78,413 - ----------------------------------------------------------------------------------------------------------------- Other assets 130 109 - ----------------------------------------------------------------------------------------------------------------- TOTAL $ 396,416 $ 449,831 =================================================================================================================
The accompanying notes are an integral part of these financial statements. 4 6
- ----------------------------------------------------------------------------------------------------------------- Liabilities and Owners' Equity 1995 1994 - ----------------------------------------------------------------------------------------------------------------- (In thousands of U.S. Dollars) Current liabilities: Notes payable and current maturities of long-term debt $ 18,110 $ 27,747 Accounts payable 46,222 81,074 Accounts payable - related parties 35,663 15,953 Advance billings on contracts 65,456 58,306 Accrued drydocking and refurbishment costs 35,872 25,298 Income taxes payable 9,392 4,047 Accrued liabilities - other 28,123 42,525 - ----------------------------------------------------------------------------------------------------------------- Total current liabilities 238,838 254,950 - ----------------------------------------------------------------------------------------------------------------- Other liabilities 7,671 8,362 - ----------------------------------------------------------------------------------------------------------------- Pension liability 1,958 1,843 - ----------------------------------------------------------------------------------------------------------------- Long-term debt 28,441 31,887 - ----------------------------------------------------------------------------------------------------------------- Owners' equity: Common stock and capital contributions 53,888 53,883 Retained earnings 69,096 128,098 Currency translation adjustments (3,476) (29,192) - ----------------------------------------------------------------------------------------------------------------- Total owners' equity 119,508 152,789 - ----------------------------------------------------------------------------------------------------------------- TOTAL $ 396,416 $ 449,831 =================================================================================================================
5 7 McDermott - ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture Combined Statement of Income for the Three Years ended March 31, 1995
- ----------------------------------------------------------------------------------------------------------------- 1995 1994 1993 - ----------------------------------------------------------------------------------------------------------------- (In thousands of U.S. Dollars) Revenues $ 704,316 $ 890,866 $ 1,082,992 - ----------------------------------------------------------------------------------------------------------------- Costs and expenses: Costs of operations (before depreciation) 538,973 617,764 790,809 Depreciation 27,849 30,879 43,001 Selling, general and administrative expenses 65,123 66,447 69,404 - ----------------------------------------------------------------------------------------------------------------- 631,945 715,090 903,214 - ----------------------------------------------------------------------------------------------------------------- Operating income 72,371 175,776 179,778 - ----------------------------------------------------------------------------------------------------------------- Other income (expenses): Interest income 13,305 12,886 10,209 Interest expense (2,866) (3,865) (13,614) Foreign currency transaction gains (losses) (2,537) 1,507 15,486 - ----------------------------------------------------------------------------------------------------------------- 7,902 10,528 12,081 - ----------------------------------------------------------------------------------------------------------------- Income before provision for income taxes 80,273 186,304 191,859 Provision for income taxes (7,226) (6,284) (3,003) - ----------------------------------------------------------------------------------------------------------------- Net Income $ 73,047 $ 180,020 $ 188,856 =================================================================================================================
The accompanying notes are an integral part of these financial statements. 6 8 McDermott - ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture Combined Statement of Owners' Equity for the Three Years ended March 31, 1995
- ----------------------------------------------------------------------------------------------------------------- Common Stock and Currency Capital Retained Translation Contributions Earnings Adjustments Total - ----------------------------------------------------------------------------------------------------------------- (In thousands of U.S. Dollars) Balance April 1, 1992 $ 164,636 $ (186,988) $ 3,610 $ (18,742) - ----------------------------------------------------------------------------------------------------------------- Net Income 188,856 188,856 Repayment of capital (26,882) (26,882) Currency translation adjustments (20,964) (20,964) - ----------------------------------------------------------------------------------------------------------------- Balance March 31, 1993 137,754 1,868 (17,354) 122,268 - ----------------------------------------------------------------------------------------------------------------- Net Income 180,020 180,020 Repayment of capital (83,871) (83,871) Distribution of profits (53,790) (53,790) Currency translation adjustments (11,838) (11,838) - ----------------------------------------------------------------------------------------------------------------- Balance March 31, 1994 53,883 128,098 (29,192) 152,789 - ----------------------------------------------------------------------------------------------------------------- Net Income 73,047 73,047 Contribution of capital 5 5 Distribution of profits (132,049) (132,049) Currency translation adjustments 25,716 25,716 - ----------------------------------------------------------------------------------------------------------------- Balance March 31, 1995 $ 53,888 $ 69,096 $ (3,476) $ 119,508 =================================================================================================================
The accompanying notes are an integral part of these financial statements. 7 9 McDermott - ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture Combined Statement of Cash Flows for the Three Years ended March 31, 1995 Increase (decrease) in cash and cash equivalents
- ----------------------------------------------------------------------------------------------------------------- 1995 1994 1993 - ----------------------------------------------------------------------------------------------------------------- (In thousands of U.S. Dollars) Cash flows from operating activities: Net Income $ 73,047 $ 180,020 $ 188,856 - ----------------------------------------------------------------------------------------------------------------- Adjustments to reconcile net income to net cash provided (used in) operating activities: Depreciation 27,849 30,879 43,001 Changes in assets and liabilities: Accounts receivable 24,054 70,416 5,107 Net contracts in progress and advance billings 21,846 (664) 17,451 Accounts payable (18,880) (50,943) 7,517 Other, net (3,518) 17,044 26,399 - ----------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 124,398 246,752 288,331 - ----------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Investment in fixed assets (12,448) (9,499) (21,809) - ----------------------------------------------------------------------------------------------------------------- Total cash used in investing activities (12,448) (9,499) (21,809) - ----------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Capital (repayments) contributions 5 (83,871) (26,882) Distribution of profits to owners (132,049) (53,790) - Repayment of long-term debt (19,244) (34,096) (44,887) Increase of long-term debt - 14,910 28,149 Increase (decrease) in short-term borrowing 183 (5,084) (45,534) - ----------------------------------------------------------------------------------------------------------------- Total cash used in financing activities (151,105) (161,931) (89,154) - ----------------------------------------------------------------------------------------------------------------- Effects of exchange rate changes on cash 28,925 (12,719) (28,899) - ----------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (10,230) 62,603 148,469 - ----------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of year 242,474 179,871 31,402 - ----------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 232,244 $ 242,474 $ 179,871 ================================================================================================================= Supplemental disclosures of cash flow information: Interest paid during the year $ 2,866 $ 6,025 $ 12,917 - -----------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 10 McDermott - ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture Notes to combined financial statements for the three years ended March 31, 1995 1. GENERAL The McDermott-ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture is comprised of the Joint Ventures between J. Ray McDermott, S.A. ("JRM") and ETPM, S.A., respectively 49.9% and 50.1% owners and the Joint Venture between Heerema Offshore Construction Group Inc. ("HOCG") and McDermott International, Inc. ("MII"), 50% owner each. The Joint Ventures provide general marine construction services to the petroleum industry. To this purpose the Joint Ventures charter one semi-submersible lay barge, one combination derrick-pipelaying barge and two semi-submersible derrick barges from JRM, two combination derrick-pipelaying barges from ETPM, S.A. and two semi-submersible derrick barges from HOCG. In addition, the Joint Ventures own a fleet of anchor handling tugs and cargo barges. JRM and ETPM S.A., also provide fabrication facilities located in Warri, Nigeria and Tchengue, Gabon, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of presentation The combined financial statements are presented in U.S. Dollars in accordance with accounting principles generally accepted in the United States of America. These statements combine financial information of McDermott-ETPM West, Inc., a company incorporated in Panama, and its wholly owned subsidiaries and other entities of both JRM and ETPM, S.A. which perform contracts on behalf of McDermott-ETPM West, Inc. and of HOCG - MII Joint Venture. HOCG - MII Joint Venture combines HeereMac v.o.f., a Dutch partnership and its wholly owned subsidiaries and other entities of both HOCG and MII which perform contracts on behalf of HeereMac v.o.f., Panama Offshore Chartering Company Inc. and its wholly owned subsidiaries, all incorporated in Panama and Offshore Marine Chartering N.V., a company incorporated in the Netherlands Antilles. Unless the context otherwise requires, hereinafter "Joint Ventures" will be used to mean the combined enterprises. 2.2 Foreign currency translation Assets and liabilities are translated into U.S. Dollars at current exchange rates and income statement items are translated at average rate for the year. Adjustments resulting from the translation of foreign currency financial statements are recorded in a separate component of equity. Foreign currency transaction adjustments are recorded in income. 9 11 McDermott - ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture 2.3 Contracts and revenue recognition Revenues on long-term contracts are recognized on a percentage of completion method. Under this method, revenues and costs are recognized based on the percentage that costs to date bear to total estimated costs. Revenues that exceed amounts invoiced to customers under the terms of the contracts are included in Contracts in Progress. Billings that exceed revenues recognized under percentage of completion are included in Advance Billings on Contracts. Most long-term contracts have provisions for progress payments. Contract price and cost estimates are reviewed periodically as the work progresses and adjustments proportionate to the percentage of completion are reflected in income in the period when such estimates are revised. There are no unbilled revenues which will not be billed. Provisions are currently made for all known or anticipated losses. Claims for extra work of changes in scope of work are included in contract revenues when collection is probable. 2.4 Depreciation, Maintenance and Repair and Drydocking Expenses Fixed assets are stated at cost and are depreciated on the straight-line method, using estimated useful lives of three to eight years. Maintenance, repairs and renewals which do not materially prolong the useful life of an asset are expensed as incurred except for drydocking and refurbishment costs for the marine fleet. Drydocking costs are estimated and accrued over the period of time between drydockings and are charged to operations currently. Refurbishment costs for the main work barges are estimated and accrued during working periods and charged to operations currently. 2.5 Cash and cash equivalents Cash equivalents are highly liquid investments, with maturities of three months or less when purchased. The carrying amounts reported in the balance sheet for cash and cash equivalents approximate their fair value. 2.6 Accounts Receivable Accounts receivable are stated at net realizable value after deduction of a provision for uncollectability. 2.7 Derivative financial instruments and credit risk concentration The Joint Ventures enter into forward exchange contracts with international financial institutions primarily relating to identifiable foreign currency exposures with respect to operations. These financial instruments are designed to minimize exposure and reduce risk from exchange rate fluctuations in the regular course of business. Gains and losses on forward exchange contracts which hedge exposure on firm foreign currency commitments are deferred and recognized as adjustments of the bases of those assets. 10 12 McDermott - ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture Gains and losses on forward exchange contracts which hedge foreign currency assets and liabilities are recognized in income as incurred. The Joint Ventures risk in the forward exchange transactions is the cost of replacing at current market rates, these contracts in the events of default by the financial institution. The Joint Ventures believe that risk of such losses is remote. 3. INCOME TAXES The Joint Ventures operate through various entities in various countries under different tax jurisdictions. Substantially all income taxes provided are based on the deemed profits of contracts performed in various taxing jurisdictions. In the countries in which the Joint Ventures' operations are conducted through a registered partnership the respective partners are responsible for taxes based on their proportionate share of contract revenues and costs, therefore no taxes are reflected in these financial statements. Therefore there is no expected relationship between the provision for income taxes and income before provision for income taxes. Panama Offshore Chartering Company Inc. and its subsidiaries as well as McDermott- ETPM West, Inc. and its subsidiaries are not subject to income taxes in the three year period ended March 31, 1995. Offshore Marine Chartering N.V. incurred no income tax in 1995. 4. RELATED PARTY TRANSACTIONS The Joint Ventures have material transactions with JRM, ETPM, S.A., MII and HOCG and their subsidiaries, occurring the normal course of operations. Under the various joint venture agreements, marine equipment and fabrication facilities are chartered into the Joint Ventures by the respective partners. The charter expenses for the years 1995, 1994 and 1993 were US$ 86 million, US$ 88 million and US$ 92 million, respectively. In addition, ETPM, S.A. provides general and administrative services to one of the Joint Ventures. In 1995, 1994 and 1993 the amount of these services were approximately US$ 29 million, US$ 36 million and US$ 44 million, respectively. 5. LONG-TERM DEBT AND SHORT-TERM BORROWINGS
- ----------------------------------------------------------------------------------------------------------------- 1995 1994 - ----------------------------------------------------------------------------------------------------------------- (In thousands of U.S. Dollars) Third Party Loans $ 35,552 $ 49,940 Less: amounts due within one year (7,111) (18,053) - ----------------------------------------------------------------------------------------------------------------- Total long-term debt $ 28,441 $ 31,887 =================================================================================================================
These are roll over loans at prevailing market rates maturing 1999. The installments are US$ 7,111 in each of the following four years. 11 13 McDermott - ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture In 1994 an interest-swap agreement was entered into which effectively fixes the interest at 6.7% until maturity. The loans are secured by the right of first and second mortgages on the anchor handling tugs and most of the cargo barges. Short-term borrowings are denominated in foreign currencies and carry interest at prevailing market rates. In general these short-term borrowings mature within a month. 6. PENSION LIABILITY One of the Joint Ventures' entities, HeereMac v.o.f., has pension plans covering the majority of its permanent staff. These plans are fully insured by a third party life insurance company in the Netherlands. Premiums charged by the insurance company and expensed by the Joint Ventures relate to a calendar year and are calculated by determining the actuarial present value of future benefits to be provided based upon current compensation levels. Further, at the time of granting compensation increases, the Joint Ventures accrue as pension provision the increase in its actuarial present value of future benefits. Such amounts will be funded through enhanced future premiums. The discount rate used to calculate the actuarial present value of future benefits was 6% in 1995, 5% in 1994 and 7% in 1993. Pension cost paid by the Joint Ventures amounted to US$ 2.1 million in 1995, US$ 1.8 million in 1994 and US$ 1.6 million in 1993. 7. CONTINGENCIES AND COMMITMENTS The Joint Ventures have the usual liability of a contractor for completion of contracts and the warranty of its work. In relation to this liability, bank guarantees, performance bonds and standby letters of credit are issued in the normal line of business. Bank guarantees outstanding at year end amounted to US$ 115 million. Due to the short term nature of the guarantees, the fair value is considered to be nil. Management is not aware of any material exposure related thereto which has not been provided for in the accompanying statements. Certain marine equipment (primarily anchor handling tugs and cargo barges) have been pledged as collateral to secure certain long-term debt (See note 5). The Joint Ventures are defendant in various legal proceedings. Management believes that the outcome of these proceedings will not have a material adverse effect on the combined financial position of the Joint Ventures. 12 14 McDermott - ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International, Inc. Joint Venture 8. FIXED ASSETS
- ----------------------------------------------------------------------------------------------------------------- 1995 1994 - ----------------------------------------------------------------------------------------------------------------- (In thousands of U.S. Dollars) At cost: Machinery and equipment $ 141,736 $ 112,866 Cargo barges 30,856 30,856 Onshore office equipment 6,106 5,723 - ----------------------------------------------------------------------------------------------------------------- 178,698 149,445 Less accumulated depreciation (107,821) (71,032) - ----------------------------------------------------------------------------------------------------------------- Net fixed assets $ 70,877 $ 78,413 =================================================================================================================
9. FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATION The Joint Ventures' entities HeereMac v.o.f. and McDermott - ETPM West, Inc., had forward exchange contracts at the 1995 and 1994 year end to sell US$ 47.5 million and US$ 35 million, respectively, for Dutch Guilders, to purchase US$ 18 million and US$ 32 million respectively, in foreign currency (primarily Dutch Guilders) with French Francs and to sell US$ 23 million and US$ 106 million, respectively, in foreign currencies (primarily U.S. Dollars, British Pounds, and Dutch Guilders) for French Francs. The 1995 year end forward exchange contracts have varying maturities, all of which occur before the end of next fiscal year. The fair values of forward exchange contracts are estimated by obtaining quotes from brokers. At year end, the net fair value of the contracts approximates the notional amounts. Financial instruments which potentially subject the Joint Ventures to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. The Joint Ventures have not experienced any significant losses related to any of the short-term instruments it has used for excess cash balances, nor from receivables for individual customers or groups of customers. The Joint Ventures' customers are primarily in the petroleum industry. This customer base is diversified between both public and private industry customers, in numerous countries. The management of the Joint Ventures believes this diversification minimizes any potential credit risk. Receivables are generally not collateralized. 10. SUBSEQUENT EVENT Subsequent to the year end, five launch barges and one derrick barge were contributed to the HOCG - MII Joint Venture. This Joint Venture also purchased one derrick barge from related parties for US$ 9 million. 13 -----END PRIVACY-ENHANCED MESSAGE-----