EX-99 3 a4592768ex99.txt PRESS RELEASE Exhibit 99 McDermott reports Fourth Quarter 2003 Loss from Continuing Operations of $81.4 million, $1.26 per diluted share NEW ORLEANS, La.--(BUSINESS WIRE)--March 11, 2004-- Includes B&W Settlement Revaluation Expense of $9.7 Million After-Tax and $64.7 Million in Losses from Three J. Ray Projects Expected to Be Completed in 2004 McDermott International, Inc. (NYSE:MDR) ("McDermott" or the "Company") today reported a loss from continuing operations of $81.4 million, or $1.26 per diluted share, for the fourth quarter of 2003, compared to a loss from continuing operations of $185.6 million, or $2.96 per diluted share, for the corresponding period in 2002. Including a loss of $1.3 million from discontinued operations, net loss for the 2003 fourth quarter was $82.7 million, or $1.28 per diluted share. Net loss for the fourth quarter of 2002 was $184.5 million, or $2.94 per diluted share, which included income from discontinued operations of $1.1 million. Weighted average common shares outstanding on a fully diluted basis were 64.6 million and 62.7 million for December 31, 2003 and December 31, 2002, respectively. Revenues in the fourth quarter of 2003 increased 31.5 percent, to $581.8 million, compared to the corresponding period in 2002. The growth in revenues is due to increased activity among J. Ray McDermott, S.A. and its subsidiaries ("J. Ray"), which comprise McDermott's Marine Construction Services segment, partially offset by lower revenues at BWX Technologies, Inc. ("BWXT"), the principle subsidiary in McDermott's Government Operations segment. The fourth quarter 2003 operating loss was $61.1 million, which included $64.7 million of losses on three J. Ray projects, including a $10.9 million increase in the estimated costs necessary to complete the Front Runner EPIC spar, a $24.6 million increase in the expected loss associated with the Carina Aries project in Argentina, and a $29.2 million loss on the Belanak FPSO project at J. Ray's Batam Island facility. Also included in the operating loss was an increase in an insurance charge to J. Ray of $5.4 million, and $18.9 million of corporate, non-cash qualified pension plan expense. Partially offsetting these items was a $4.5 million benefit at BWXT associated with a reimbursable corporate expense. As indicated in its March 1, 2004 press release, the Company is seeking to recover up to $25 million of the losses J. Ray recorded during 2003 through change orders, negotiated settlements or legal proceedings. The 2002 fourth quarter operating loss of $70.5 million included an increase of $47.2 million in expenses related to J. Ray's three EPIC spar contracts. "The fourth quarter 2003 was a step backwards in the turnaround process at J. Ray due to additional charges on the three projects, but I continue to believe that we will be successful in our efforts, particularly as we see the end in sight to these troubled projects," said Bruce W. Wilkinson, chairman of the board and chief executive officer of McDermott. "We have now substantially completed two of the EPIC spar projects that have plagued J. Ray, and these three remaining projects that are in loss positions will be behind us during 2004." The Company's other expense for the fourth quarter of 2003 was $15.8 million, compared to $91.0 million in the fourth quarter of 2002. The year-over-year improvement is primarily due to the $86.4 million establishment of the estimated costs related to The Babcock & Wilcox Company ("B&W") Chapter 11 settlement in the 2002 fourth quarter, compared to the $8.9 million revaluation of that expense in the 2003 fourth quarter. This revaluation will continue to fluctuate on a quarterly basis and is largely dependent on the quarterly price movement in McDermott's stock price. RESULTS OF OPERATIONS 2003 Fourth Quarter Compared to 2002 Fourth Quarter Marine Construction Services Segment Revenues from the Marine Construction Services segment increased 54 percent to $428.6 million in the 2003 fourth quarter. The revenue growth resulted from increased activity on fabrication and marine installation projects in all geographic areas where J. Ray operates, other than the Gulf of Mexico. Segment loss for the 2003 fourth quarter was $61.3 million compared to a segment loss in the fourth quarter 2002 of $81.9 million. Major projects contributing to the 2003 fourth quarter loss were the $64.7 million of aggregate charges on the projects referred to above (Carina Aries, Front Runner and Belanak), partially offset by $2.8 million of gains on sales of assets. Selling, general and administrative expenses were $17.4 million, $1.5 million lower in the 2003 fourth quarter compared to the 2002 fourth quarter. At December 31, 2003, J. Ray's backlog of $1.4 billion included $78.5 million related to uncompleted work on the Front Runner spar, $38.7 million on the Belanak project and $56.4 million related to the Carina Aries project. J. Ray's backlog was $1.5 billion and $2.1 billion at September 30, 2003 and December 31, 2002, respectively. Government Operations Segment Revenues from the Government Operations segment decreased $11.4 million to $153.3 million in the 2003 fourth quarter primarily due to lower revenues from a management and operations contract in Ohio, partially offset by higher volumes from the manufacture of nuclear components for certain U.S. government programs. Segment income increased 45 percent to $21.1 million in the 2003 fourth quarter, primarily due to the following: -- higher volumes and margins from the manufacture of nuclear components for certain U.S. government programs; -- the reimbursement of $4.5 million of a corporate expense; -- better margins from the commercial nuclear environmental services; and -- reduced spending on fuel cell research and development projects, and lower other G&A expenses. These items were partially offset by lower volumes from other commercial work. At December 31, 2003, BWXT's backlog was $1.8 billion, compared to backlog of $1.4 billion and $1.7 billion at September 30, 2003 and December 31, 2002, respectively. Corporate Corporate expenses were $21.0 million in the 2003 fourth quarter, an increase of $17.6 million over the 2002 fourth quarter, primarily due to an increase of $17.3 million in non-cash qualified pension plan expense as a result of year-end 2002 changes in the discount rate and plan asset performance. Other Income and Expense Net interest expense was $6.7 million in the 2003 fourth quarter compared to $0.9 million in the 2002 fourth quarter, due to higher interest rates associated with the Company's borrowings, and lower interest income due to a decrease in the amount of, and average interest rates earned on, investments. During the 2003 fourth quarter, revaluation of certain components of the estimated settlement cost related to the Chapter 11 proceedings involving B&W resulted in an increase in the estimated cost of the settlement to $127.9 million, resulting in the recognition of other expense of $8.9 million ($9.7 million after tax). The consideration to be provided in the proposed settlement includes, among other things, McDermott common stock, a related share price guaranty obligation and a promissory note. The increase in the fourth quarter 2003 estimated settlement cost is due primarily to an increase in the price of McDermott's common stock from $5.71 per share at September 30, 2003 to $11.95 per share at December 31, 2003. The Company is required to revalue certain components of the estimated settlement cost quarterly and at the time the securities are issued, assuming the settlement is finalized. Assuming issuance of the debt and equity securities, the Company will record such amounts as either liabilities or stockholders' equity based on the nature of the individual securities. Thereafter, only the three-year share price guaranty will be required to be revalued on an ongoing quarterly basis. The Company reported other expense of $0.2 million in the 2003 fourth quarter, compared to $3.7 million in the 2002 fourth quarter, due to minority interest income associated with a J. Ray joint venture, partially offset by an increase in foreign currency transaction losses. Provision for income taxes during the fourth quarter of 2003 was $4.5 million, compared to $24.1 million during the fourth quarter of 2002. The $19.6 million variance was due to the fourth quarter 2002 increase in provision for income taxes associated with the B&W Chapter 11 settlement. DISCONTINUED OPERATIONS In August 2003, the Company completed the sale of Menck GmbH ("Menck"), formerly a component of the Marine Construction Services segment. Accordingly, the Company has reported the results of operations for Menck as discontinued operations. In the fourth quarter 2003, the Company recorded a loss of $1.3 million associated with the resolution of open issues related to the sale of Menck. Hudson Products Corporation ("HPC") was sold in July 2002. Accordingly, the Company has reported the results of operations for HPC as discontinued operations during the year 2002. THE BABCOCK & WILCOX COMPANY The Company wrote off its remaining investment in B&W of $224.7 million during the second quarter of 2002 and has not consolidated B&W with McDermott's financial results since B&W's Chapter 11 bankruptcy filing in February 2000. B&W's revenues decreased $40.0 million, compared to the fourth quarter of 2002, to $356.3 million in the fourth quarter of 2003. B&W's net income for the 2003 fourth quarter was $24.1 million, an increase of $274.9 million versus the corresponding period in 2002, due to a $286.5 million expense in the fourth quarter 2002 related to an increase in B&W's expected asbestos liability. LIQUIDITY On a consolidated basis, the Company incurred negative cash flows for the fourth quarter and full-year 2003. J. Ray expects to incur negative cash flows from operations during three of four quarters in 2004, due to the cash outflow on the three spar projects, the Carina Aries project and the Belanak project, for which substantial income statement expenses have already been recorded. The Company expects negative cash flows on a consolidated basis for two of the four quarters in 2004, reflecting J. Ray's negative cash flows. Completion of these projects has and will continue to put a strain on J. Ray's current liquidity. J. Ray intends to fund its negative cash flow in 2004 with cash on hand, including cash expected to be made available when it obtains a new letter-of-credit facility, as well as through sales of non-strategic assets. In December 2003, J. Ray issued $200 million of 11 percent, senior secured notes due 2013. In addition, J. Ray is currently negotiating a $75 million secured letter-of-credit facility which is expected to be completed in the first half of 2004. Completion of this facility would enable J. Ray to replace most of the approximately $80 million of existing letters of credit which are currently cash collateralized. Also in December, BWXT completed a $135 million, three-year working capital facility with a syndicate of banks. J. Ray's ability to obtain a new letter-of-credit facility will depend on numerous factors, including market conditions, J. Ray's performance and the negotiation of acceptable terms and conditions. In addition, J. Ray's ability to use the proceeds from sales of assets to fund its working capital requirements is limited under the terms of the indenture governing its senior secured notes. If J. Ray is unable to obtain a new letter of credit facility or a sufficient amount of available proceeds from sales of non-strategic assets, J. Ray's ability to pursue additional projects, which often require letters of credit, and its liquidity will be adversely impacted. These factors continue to cause substantial doubt about J. Ray's ability to continue as a going concern. OTHER INFORMATION About the Company McDermott International, Inc. is a leading worldwide energy services company. The Company's subsidiaries provide engineering, fabrication, installation, procurement, research, manufacturing, environmental systems, project management and facility management services to a variety of customers in the energy and power industries, including the U.S. Department of Energy. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott International, Inc. cautions that statements in this press release, which are forward-looking and provide other than historical information, involve risks and uncertainties that may impact the Company's actual results of operations. These forward-looking statements include our expectations regarding completion of the three remaining contracts in loss positions, the backlog of our Marine Construction Services and Government Operations segments, statements relating to the proposed settlement of the B&W Chapter 11 proceedings, and statements relating to our liquidity and J. Ray's financing plans. Although we believe that the expectations reflected in those forward-looking statements are reasonable, we can give no assurance that those expectations will prove to have been correct. Those statements are made by using various underlying assumptions and are subject to numerous uncertainties and risks. If one or more of these risks materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected. For a more complete discussion of these risk factors, please see McDermott's annual report for the year ended December 31, 2002 and its 2003 quarterly reports filed with the Securities and Exchange Commission. Conference Call to Discuss 2003 Fourth Quarter Earnings Release Date: Friday, March 12, 2004 at 10:00 a.m. EDT (9:00 a.m. CDT) Live Webcast: Investor Relations section of website at www.mcdermott.com Replay: Available for two weeks in the investor relations section of www.mcdermott.com McDERMOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF LOSS Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 --------- ---------- ----------- ----------- (Unaudited) (In thousands, except per share amounts) Revenues $581,818 $ 442,398 $2,335,364 $1,733,821 ---------------------------------------------------------------------- Costs and Expenses: Cost of operations 608,404 477,503 2,252,842 1,734,580 Loss on write-off of investment in The Babcock & Wilcox Company - - - 224,664 Impairment of JRM goodwill - - 313,008 (Gains) losses on Asset Disposals and Impairments - net (2,765) 8,062 (6,171) 7,855 Selling, general and administrative expenses 46,071 40,649 169,764 157,845 ---------------------------------------------------------------------- 651,710 526,214 2,416,435 2,437,952 ---------------------------------------------------------------------- Equity in Income of Investees 8,800 13,271 28,382 27,692 ---------------------------------------------------------------------- Operating Loss (61,092) (70,545) (52,689) (676,439) ---------------------------------------------------------------------- Other Income (Expense): Interest income 632 1,676 3,230 8,553 Interest expense (7,362) (2,607) (18,993) (15,123) Increase in estimated cost of The Babcock & Wilcox Company bankruptcy settlement (8,897) (86,377) (14,539) (86,377) Other-net (163) (3,668) 2,123 (4,174) ---------------------------------------------------------------------- (15,790) (90,976) (28,179) (97,121) ---------------------------------------------------------------------- Loss from Continuing Operations before Provision for Income Taxes and Cumulative Effect of Accounting Change (76,882) (161,521) (80,868) (773,560) Provision for Income Taxes 4,489 24,082 21,290 14,406 ---------------------------------------------------------------------- Loss from Continuing Operations before Cumulative Effect of Accounting Change (81,371) (185,603) (102,158) (787,966) ---------------------------------------------------------------------- Income (Loss) from Discontinued Operations (1,336) 1,074 3,219 11,572 Loss before Cumulative Effect of Accounting Change (82,707) (184,529) (98,939) (776,394) Cumulative Effect of Accounting Change - - 3,710 - ---------------------------------------------------------------------- Net Loss $(82,707) $(184,529) $ (95,229) $ (776,394) ====================================================================== Loss per Common Share: Basic: Loss from Continuing Operations before Cumulative Effect of Accounting Change $ (1.26) $ (2.96) $ (1.59) $ (12.74) Income (Loss) from Discontinued Operations $ (0.02) $ 0.02 $ 0.05 $ 0.19 Cumulative Effect of Accounting Change $ 0.00 $ 0.00 $ 0.05 $ 0.00 Net Loss $ (1.28) $ (2.94) $ (1.49) $ (12.55) Diluted: Loss from Continuing Operations before Cumulative Effect of Accounting Change $ (1.26) $ (2.96) $ (1.59) $ (12.74) Income (Loss) from Discontinued Operations $ (0.02) $ 0.02 $ 0.05 $ 0.19 McDERMOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF LOSS (cont'd) Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 ------------ ----------- ------------ ------------ (Unaudited) (In thousands, except per share amounts) Diluted: (cont'd) Cumulative Effect of Accounting Change $ 0.00 $ 0.00 $ 0.05 $ 0.00 Net Loss $ (1.28) $ (2.94) $ (1.49) $ (12.55) ====================================================================== Weighted Average Shares Basic 64,603,716 62,682,376 64,108,274 61,860,585 Diluted 64,603,716 62,682,376 64,108,274 61,860,585 ====================================================================== McDERMOTT INTERNATIONAL, INC. SELECTED SEGMENT INFORMATION Three Months Ended Twelve Months Ended December 31, December 31, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- (Unaudited) (In thousands) REVENUES: Marine Construction Services $ 428,565 $ 277,744 $1,803,924 $1,133,181 Government Operations 153,260 164,666 531,522 553,827 Power Generation Systems - - - 46,881 Adjustments and Eliminations (7) (12) (82) (68) ---------------------------------------------------------------------- TOTAL $ 581,818 $ 442,398 $2,335,364 $1,733,821 ====================================================================== SEGMENT INCOME (LOSS): Marine Construction Services $ (61,286) $ (81,926) $ (45,882) $ (480,939) Government Operations 21,147 14,547 86,656 59,333 Power Generation Systems 10 159 127 (5,089) ---------------------------------------------------------------------- (40,129) (67,220) 40,901 (426,695) Write-off of investment in B&W - - - (224,664) Other unallocated - - - (1,452) Corporate (20,963) (3,325) (93,590) (23,628) ---------------------------------------------------------------------- OPERATING LOSS $ (61,092) $ (70,545) $ (52,689) $ (676,439) ====================================================================== EQUITY IN INCOME (LOSS) OF INVESTEES: Marine Construction Services $ (101) $ 4,065 $ (534) $ 5,311 Government Operations 8,686 8,819 28,018 24,645 Power Generation Systems 215 387 898 (2,264) ---------------------------------------------------------------------- TOTAL $ 8,800 $ 13,271 $ 28,382 $ 27,692 ====================================================================== DEPRECIATION & AMORTIZATION: Marine Construction Services $ 7,423 $ 5,951 $ 28,253 $ 24,793 Government Operations 3,722 3,249 13,174 11,388 Power Generation Systems 1 7 11 550 Corporate 777 1,179 3,066 3,889 ---------------------------------------------------------------------- TOTAL $ 11,923 $ 10,386 $ 44,504 $ 40,620 ====================================================================== CAPITAL EXPENDITURES: Marine Construction Services $ 1,724 $ 18,078 $ 15,520 $ 44,541 Government Operations 8,357 8,312 19,645 23,761 Power Generation Systems - 110 - 356 Corporate 485 106 2,932 106 ---------------------------------------------------------------------- TOTAL $ 10,566 $ 26,606 $ 38,097 $ 68,764 ====================================================================== BACKLOG: Marine Construction Services $1,443,615 $2,091,459 $1,443,615 $2,091,459 Government Operations 1,819,027 1,680,559 1,819,027 1,680,559 Power Generation Systems - - - - ---------------------------------------------------------------------- TOTAL $3,262,642 $3,772,018 $3,262,642 $3,772,018 ====================================================================== McDERMOTT INTERNATIONAL, INC. ITEMS INCLUDED IN LOSS FROM CONTINUING OPERATIONS Three Months Twelve Months Ended Ended December 31, December 31, 2003 2002 2003 2002 ------- -------- -------- -------- (Unaudited) (In millions) ITEMS INCLUDED IN OPERATING INCOME (LOSS) BY SEGMENT: Marine Construction Services Losses on Spar projects $ (8.1) $ (47.2) $ (27.9) $(149.2) Impairment of JRM goodwill - - - (313.0) J. Ray insurance charge (5.4) - (5.4) - Losses on Argentina (Carina Aries) project (24.6) (9.6) (66.5) (9.3) Losses on Belanak project (29.2) - (25.3) - ---------------------------------------------------------------------- TOTAL $(67.3) $ (56.8) $(125.1) $(471.5) ====================================================================== Government Operations Reimbursement of Corporate Expense $ 4.5 $ - $ 4.5 $ - Favorable resolution of contract dispute - - 8.7 - ---------------------------------------------------------------------- TOTAL $ 4.5 $ - $ 13.2 $ - ====================================================================== Corporate Write-off of investment in B&W $ - $ - $ - $(224.7) Qualified pension plan (expense) income (18.9) (1.6) (75.7) (11.1) ---------------------------------------------------------------------- TOTAL $(18.9) $ (1.6) $ (75.7) $(235.8) ====================================================================== OTHER ITEMS: Change in estimated cost of B&W bankruptcy settlement before tax $ (8.9) $ (86.4) $ (14.6) $ (86.4) Tax impact on B&W settlement 0.9 23.6 3.4 23.6 ---------------------------------------------------------------------- TOTAL $ (9.8) $(110.0) $ (18.0) $(110.0) ====================================================================== McDERMOTT INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS ASSETS December 31, 2003 2002 ----------- ----------- (In thousands) Current Assets: Cash and cash equivalents $ 174,790 $ 129,517 Restricted cash and cash equivalents (See Note 21) 180,480 44,824 Investments - 108,269 Accounts receivable - trade, net 195,073 177,347 Accounts receivable from The Babcock & Wilcox Company 6,192 12,273 Accounts and notes receivable - unconsolidated affiliates 14,024 17,695 Accounts receivable - other 38,296 63,270 Contracts in progress 69,485 147,336 Deferred income taxes 4,168 3,350 Other current assets 16,019 45,403 ---------------------------------------------------------------------- Total Current Assets 698,527 749,284 ---------------------------------------------------------------------- Property, Plant and Equipment: Land 12,609 12,520 Buildings 137,823 132,538 Machinery and equipment 1,067,665 1,030,764 Property under construction 26,125 62,625 ---------------------------------------------------------------------- 1,244,222 1,238,447 Less accumulated depreciation 880,460 885,051 ---------------------------------------------------------------------- Net Property, Plant and Equipment 363,762 353,396 ---------------------------------------------------------------------- Investments: Government obligations 17,824 48,681 Other investments 24,976 16,277 ---------------------------------------------------------------------- Total Investments 42,800 64,958 ---------------------------------------------------------------------- Goodwill 12,926 12,926 ---------------------------------------------------------------------- Prepaid Pension Costs 18,722 19,311 ---------------------------------------------------------------------- Other Assets 112,137 78,296 ---------------------------------------------------------------------- TOTAL $1,248,874 $1,278,171 ====================================================================== McDERMOTT INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' DEFICIT December 31, 2003 2002 ------------ ------------ (In thousands) Current Liabilities: Notes payable and current maturities of long-term debt $ 37,217 $ 55,577 Accounts payable 146,665 163,811 Accounts payable to The Babcock & Wilcox Company 42,137 32,379 Accrued employee benefits 69,923 60,897 Accrued liabilities - other 166,129 190,843 Accrued contract cost 69,928 53,335 Advance billings on contracts 176,105 329,031 U.S. and foreign income taxes payable 14,727 31,176 ---------------------------------------------------------------------- Total Current Liabilities 722,831 917,049 ---------------------------------------------------------------------- Long-Term Debt 279,682 86,104 ---------------------------------------------------------------------- Accumulated Postretirement Benefit Obligation 26,861 26,898 ---------------------------------------------------------------------- Self-Insurance 60,737 71,918 ---------------------------------------------------------------------- Pension Liability 311,393 392,072 ---------------------------------------------------------------------- Accrued Cost of The Babcock & Wilcox Company Bankruptcy Settlement 100,916 86,377 ---------------------------------------------------------------------- Other Liabilities 109,631 114,510 ---------------------------------------------------------------------- Commitments and Contingencies. (Note 10) Stockholders' Deficit: Common stock, par value $1.00 per share, authorized 150,000,000 shares; issued 68,129,390 and 66,351,478 shares at December 31, 2003 and 2002, respectively 68,129 66,351 Capital in excess of par value 1,105,828 1,093,428 Accumulated deficit (1,122,547) (1,027,318) Treasury stock at cost, 2,061,407 shares at December 31, 2003 and 2002 (62,792) (62,792) Accumulated other comprehensive loss (351,795) (486,426) ---------------------------------------------------------------------- Total Stockholders' Deficit (363,177) (416,757) ---------------------------------------------------------------------- TOTAL $ 1,248,874 $ 1,278,171 ====================================================================== McDERMOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2003 2002 2001 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (95,229) $ (776,394) $ (20,022) Depreciation and amortization 44,504 40,620 62,264 Income or loss of investees, less dividends 5,477 7,156 2,616 Loss (gain) on asset disposals and impairments - net (6,171) 7,856 3,733 Provision for (benefit from) deferred taxes (13,221) 38,041 9,269 Gain on sale of businesses (1,029) (15,044) (27,996) Impairment of J. Ray McDermott, S.A. goodwill - 313,008 - Loss on write-off of investment in The Babcock & Wilcox Company - 224,664 - Estimated loss on The Babcock & Wilcox bankruptcy settlement 14,539 86,377 - Cumulative effect of accounting change (3,710) - - Other 4,638 11,568 277 Changes in assets and liabilities, net of effects from acquisitions and divestitures: Accounts receivable 18,770 (62,860) (29,231) Accounts payable (14,682) 51,654 28,911 Net contracts in progress and advance billings (74,926) 106,176 81,851 Income taxes (16,488) (91,387) 94,985 Accrued liabilities (2,632) 20,445 (32,615) Pension liability 53,819 20,490 (11,388) Other, net (11,205) 7,824 13,957 ---------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (97,546) (9,806) 176,611 ---------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: (Increase) decrease in restricted cash and cash equivalents (135,656) (8,090) (30,491) Acquisitions - - (644) Purchases of property, plant and equipment (36,057) (64,852) (45,008) Purchases of available-for-sale securities (285,896) (1,361,752) (1,360,280) Maturities of available-for-sale securities 281,684 744,538 161,901 Sales of available-for-sale securities 135,472 775,441 1,229,087 Proceeds from asset disposals 24,097 41,095 53,056 Investments in equity investees - - (800) Other (405) 49 4,872 ---------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (16,761) 126,429 11,693 ---------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt 194,129 - - Payment of long-term debt (9,500) (208,416) (15,110) Payment of debt issuance costs (18,577) - - Increase (decrease) in short-term borrowing (8,850) 60,056 (96,062) Issuance of common stock - 1,394 1,000 Other 2,376 (334) 4,500 ---------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 159,578 (147,300) (105,672) ---------------------------------------------------------------------- EFFECTS OF EXCHANGE RATE CHANGES ON CASH 2 119 (35) McDERMOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2003 2002 2001 --------- --------- --------- (In thousands) ---------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 45,273 (30,558) 82,597 ---------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 129,517 160,075 77,478 ---------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $174,790 $129,517 $160,075 ====================================================================== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $ 17,693 $ 20,518 $ 38,166 Income taxes (net of refunds) $ 35,797 $119,962 $ (2,057) ====================================================================== CONTACT: McDermott International, Inc. Jay Roueche, 281-870-5462 jroueche@mcdermott.com