-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BDHAp4QQu1vpUVIoTm95Bo8NKyB3R5TMzkbcIe9N+kAf/t1u3q2kBDixVvODtlJy hztQsvAUO5Ujr0+m6P1VBQ== 0001157523-04-010536.txt : 20041110 0001157523-04-010536.hdr.sgml : 20041110 20041109164804 ACCESSION NUMBER: 0001157523-04-010536 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041109 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041109 DATE AS OF CHANGE: 20041109 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: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08430 FILM NUMBER: 041130205 BUSINESS ADDRESS: STREET 1: 1450 POYDRAS ST CITY: NEW ORLEANS STATE: LA ZIP: 70112 BUSINESS PHONE: 5045875400 MAIL ADDRESS: STREET 1: 1450 POYDRAS ST CITY: NEW ORLEANS STATE: LA ZIP: 70161 8-K 1 a4762412.txt MCDERMOTT 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 (Date of earliest event reported): November 9, 2004 McDERMOTT INTERNATIONAL, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) REPUBLIC OF PANAMA 001-08430 72-0593134 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) 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 -------------- _________________________________________ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) _________________________________________ Item 2.02 Results of Operations and Financial Condition. On November 9, 2004, McDermott International, Inc. issued a press release announcing financial results for the third quarter ended September 30, 2004. A copy of the press release is attached as Exhibit 99.1, and the information contained in Exhibit 99.1 is incorporated by reference. The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. Item 9.01 Financial Statements and Exhibits. (c) Exhibits 99.1 Press Release Dated November 9, 2004. 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/Keith G. Robinson -------------------------------------- Keith G. Robinson Corporate Controller November 9, 2004 2 EX-99.1 2 a4762412ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 McDermott Reports Third Quarter 2004 Results; Net Income of $18.3 million, $0.27 per diluted share, includes B&W settlement revaluation expense of $1.1 million after tax Business Editors/Energy Editors NEW ORLEANS--(BUSINESS WIRE)--Nov. 9, 2004--McDermott International, Inc. (NYSE:MDR) ("McDermott" or the "Company") today reported net income of $18.3 million, or $0.27 per diluted share, for the 2004 third quarter, compared to net income from continuing operations of $10.1 million, or $0.15 per diluted share, for the corresponding period in 2003. Net income for the third quarter of 2003 was $11.8 million, or $0.18 per diluted share, which included income from discontinued operations of $1.7 million from Menck GmbH. Weighted average common shares outstanding on a fully diluted basis were approximately 68.4 million and 66.5 million for Sept. 30, 2004 and Sept. 30, 2003, respectively. Revenues in the third quarter of 2004 were $450.2 million, compared to $645.3 million in the corresponding period in 2003. The change in revenues is primarily due to the completion of several large EPIC projects at J. Ray McDermott, S.A. and its subsidiaries ("J. Ray") and, secondarily, from reduced billings at BWX Technologies Inc. ("BWXT") as a result of improved efficiencies. Third quarter 2004 operating income was $39.8 million, which included $14.1 million of corporate qualified pension expense, compared to the third quarter 2003 operating income and corporate qualified pension expense of $8.4 million and $20.7 million, respectively. "I am pleased with this quarter for multiple reasons," said Bruce W. Wilkinson, chairman of the board and chief executive officer of McDermott. "Both of McDermott's consolidated operating segments were profitable again this quarter, as well as on a year-to-date basis. In addition, J. Ray booked over $665 million of work, which increased its backlog compared to June 30, 2004 and is essentially equal to year-end 2003 levels. The Company's liquidity position, and specifically J. Ray's, improved during the quarter. The projects which had troubled J. Ray for the last several years are all now delivered to their customers. And, BWXT continues to produce strong results while driving cost savings and efficiencies for its customers. While opportunities remain for continued improvement, I appreciate the results delivered by our team over the last six months." RESULTS OF OPERATIONS 2004 Third Quarter Compared to 2003 Third Quarter Marine Construction Services Segment ("J. Ray") Revenues in the Marine Construction Services segment were $325.6 million in the 2004 third quarter, compared to $512.3 million from a year ago. The year-over-year reduction in revenues resulted primarily from the completion of several large EPIC projects and decreased fabrication activity on projects in the Asia Pacific region and in Louisiana, partially offset by increased activity in Azerbaijan. Segment income for the 2004 third quarter was $28.6 million, compared to $11.9 million in the third quarter of 2003. Major projects contributing operating income to the 2004 third quarter were the fabrication projects for BP in Morgan City, La., the projects in Azerbaijan for AIOC, and work in the Middle East for Ras Laffan. In addition, J. Ray recognized approximately $20.7 million in aggregate operating income in the third quarter 2004 from various items, primarily gains on sales of assets. J. Ray's third quarter 2003 operating results included a $19.9 million loss related to an increase in the expected losses on its spar projects. Selling, general and administrative expenses were $24.7 million in the 2004 third quarter, compared to $17.7 million in the 2003 third quarter, due to higher marketing and compliance expenses. At Sept. 30, 2004, J. Ray's backlog was $1.4 billion, which reflects approximately $575 million of new awards and $90 million of change orders received during the quarter. J. Ray's backlog was $1.4 billion and $1.5 billion at Dec. 31, 2003 and Sept. 30, 2003, respectively. Government Operations Segment ("BWXT") Revenues in the Government Operations segment decreased $8.4 million, to $124.6 million in the 2004 third quarter from $133.0 million in the third quarter of 2003. The decrease was primarily due to cost savings and efficiencies obtained in the manufacture of nuclear components for certain U.S. government programs, which reduced billings. Segment income increased $7.3 million, to $28.7 million, compared to the 2003 third quarter, primarily due to increased margins from the manufacture of nuclear components as a result of cost savings, increased equity income from investees and approximately $3.8 million of benefit from pension funding reimbursement. At Sept. 30, 2004, BWXT's backlog was $1.5 billion, compared to backlog of $1.8 billion and $1.4 billion at Dec. 31, 2003 and Sept. 30, 2003, respectively. Corporate Unallocated corporate expenses were $17.6 million in the 2004 third quarter, a decrease of $7.4 million compared to the 2003 third quarter. Unallocated corporate expense in the third quarter of 2004 and 2003 included $14.1 million and $20.7 million, respectively, of qualified corporate pension expense. Other Income and Expense The Company's other expense for the third quarter of 2004 was $9.1 million, compared to other income of $6.9 million in the third quarter of 2003. The $16.0 million year-over-year change is due primarily to a $4.5 million increase in net interest expense and a $10.0 million variance, pretax, in the quarterly adjustment related to increasing the estimated costs of The Babcock & Wilcox Company ("B&W") Chapter 11 settlement. Net interest expense was $7.6 million in the 2004 third quarter compared to $3.1 million in the 2003 third quarter, due to the issuance of J. Ray's 11 percent senior secured notes in December 2003. During the 2004 third 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 $130.3 million, resulting in the recognition of other pretax expense of $0.3 million ($1.1 million after tax). The increase in the third quarter 2004 estimated settlement cost is due primarily to an increase in the closing price of McDermott's common stock from $10.16 per share at June 30, 2004 to $11.80 per share at Sept. 30, 2004. As discussed in the Company's annual report on Form 10-K for the year ended Dec. 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. THE BABCOCK & WILCOX COMPANY ("B&W") 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 were $279.0 million in the third quarter of 2004, a decrease of $39.5 million compared to the third quarter of 2003. B&W's net income for the 2004 third quarter was $11.3 million compared to $15.4 million in the corresponding period in 2003. LIQUIDITY The Company, on a consolidated basis, and J. Ray, on a stand-alone basis, both significantly increased the balances of unrestricted cash and cash equivalents in the 2004 third quarter. At Sept. 30, 2004, J. Ray's unrestricted cash balance was $141.2 million, an approximate $48 million improvement compared to June 30, 2004. As disclosed in our annual report on Form 10-K for the year ended Dec. 31, 2003, there was substantial doubt about J. Ray's ability to continue as a going concern, as of that date. Since Dec. 31, 2003, however, J. Ray has implemented a substantial portion of its plan to address the liquidity issues, including achievement of the following items since year-end through the date of this report: -- Completed the sale of the DB60, for cash proceeds of approximately $44 million, however, these proceeds are currently restricted to fund J. Ray's capital expenditures through July 2005; -- Sold the Oceanic 93 for cash proceeds of approximately $18.7 million. In accordance with the indenture governing J. Ray's senior secured notes, J. Ray offered to purchase a portion of the notes with these funds. No notes, however, were tendered and accordingly, the proceeds became available for J. Ray's general corporate purposes; -- Achieved substantial completion of its spar projects, Carina Aries project and the Belanak FPSO, which together were responsible for significant losses in prior quarters and resulted in strains on J. Ray's liquidity; -- Obtained the completion certificate on the Front Runner Spar, which allowed $22 million of previously restricted cash to become unrestricted; -- Completed a new $25 million letter-of-credit facility which released previously restricted cash that secured letters-of-credit; -- Entered into a $25 million uncommitted credit facility with McDermott. This facility has not been utilized or needed to date; and, -- Implemented cost reductions and downsizing at certain of its facilities. As a result of the successful completion of the aforementioned items and J. Ray's plans to increase backlog, reduce future costs where appropriate and continue to improve contract execution controls, J. Ray now believes it will fulfill its liquidity requirements throughout the 2005 forecast period, utilizing its current financing structure. Although J. Ray has improved its liquidity, various factors could have a negative impact on future cash flows, including the inability to execute its plans, and credit risks at one of J. Ray's Mexican joint ventures. On Nov. 3, 2004, J. Ray's available unrestricted cash was approximately $124 million. 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 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 statements relating to the proposed settlement of the B&W Chapter 11 proceedings, statements relating to J. Ray's liquidity and J. Ray's plans relating to backlog, costs and contract execution controls. 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, including, but not limited to, risks that the B&W Chapter 11 settlement may not be finalized on the terms we have described, changes to J. Ray's liquidity requirements, credit risks and J. Ray's ability to procure favorable contracts. 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 and other risk factors, please see McDermott's annual report for the year ended Dec. 31, 2003 and its 2004 quarterly reports filed with the Securities and Exchange Commission. Conference Call to Discuss 2004 Third Quarter Earnings Release ============================================================== Date: Wednesday, Nov. 10, 2004, at 10:00 a.m. EST (9:00 a.m. CST) Live Webcast: Investor Relations section of Web site at www.mcdermott.com Replay: Available for two weeks in the investor relations section of www.mcdermott.com McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 ---- ---- ---- ---- (Unaudited) (In thousands, except per share amounts) Revenues $450,187 $645,334 $1,449,338 $1,753,546 - ---------------------------------------------------------------------- Costs and Expenses: Cost of operations 384,710 600,353 1,277,082 1,644,438 Gains on asset disposals and impairments-net (15,844) (1,317) (18,797) (3,406) Selling, general and administrative expenses 49,659 44,369 141,730 123,693 - ---------------------------------------------------------------------- 418,525 643,405 1,400,015 1,764,725 - ---------------------------------------------------------------------- Equity in Income of Investees 8,113 6,457 24,053 19,582 - ---------------------------------------------------------------------- Operating Income 39,775 8,386 73,376 8,403 - ---------------------------------------------------------------------- Other Income (Expense): Interest income 1,522 709 3,342 2,598 Interest expense (9,091) (3,801) (25,775) (11,631) (Increase) decrease in estimated cost of The Babcock & Wilcox Company bankruptcy settlement (284) 9,682 (2,256) (5,642) Other-net (1,217) 299 898 2,286 - ---------------------------------------------------------------------- (9,070) 6,889 (23,791) (12,389) - ---------------------------------------------------------------------- Income (Loss) from Continuing Operations before Provision for Income Taxes and Cumulative Effect of Accounting Change 30,705 15,275 49,585 (3,986) Provision for Income Taxes 12,450 5,140 30,412 16,801 - ---------------------------------------------------------------------- Income (Loss) from Continuing Operations before Cumulative Effect of Accounting Change 18,255 10,135 19,173 (20,787) Income from Discontinued Operations - 1,649 - 4,555 - ---------------------------------------------------------------------- Income (Loss) before Cumulative Effect of Accounting Change 18,255 11,784 19,173 (16,232) Cumulative Effect of Accounting Change - - - 3,710 - ---------------------------------------------------------------------- Net Income (Loss) $18,255 $11,784 $19,173 $(12,522) - ---------------------------------------------------------------------- Earnings (Loss) per Common Share: Basic: Income (Loss) from Continuing Operations before Cumulative Effect of Accounting Change $0.28 $0.16 $0.29 $(0.33) Income from Discontinued Operations $- $0.03 $- $0.07 Cumulative Effect of Accounting Change $- $- $- $0.06 Net Income (Loss) $0.28 $0.18 $0.29 $(0.20) Diluted: Income (Loss) from Continuing Operations before Cumulative Effect of Accounting Change $0.27 $0.15 $0.28 $(0.33) Income from Discontinued Operations $- $0.02 $- $0.07 Cumulative Effect of Accounting Change $- $- $- $0.06 Net Income (Loss) $0.27 $0.18 $0.28 $(0.20) - ---------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 ---- ---- ---- ---- (Unaudited) Weighted Average Common Shares Basic 65,854,008 64,364,565 65,550,353 63,943,128 Diluted 68,437,520 66,453,093 67,829,638 63,943,128 - ---------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. SELECTED SEGMENT INFORMATION Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 ---- ---- ---- ---- (Unaudited) (In thousands) REVENUES Marine Construction Services $325,604 $512,347 $1,050,746 $1,375,359 Government Operations 124,586 133,031 398,605 378,262 Power Generation Systems - - - - Adjustments and Eliminations (3) (44) (13) (75) -------------------------------------------------------------------- TOTAL $450,187 $645,334 $1,449,338 $1,753,546 -------------------------------------------------------------------- SEGMENT INCOME (LOSS) Marine Construction Services $28,618 $11,926 $47,129 $15,404 Government Operations 28,723 21,398 80,340 65,509 Power Generation Systems 40 87 1,811 117 -------------------------------------------------------------------- 57,381 33,411 129,280 81,030 Corporate (17,606) (25,025) (55,904) (72,627) -------------------------------------------------------------------- TOTAL $39,775 $8,386 $73,376 $8,403 -------------------------------------------------------------------- EQUITY IN INCOME (LOSS) FROM INVESTEES (1) Marine Construction Services $67 $144 $1,976 $(433) Government Operations 7,785 6,038 21,212 19,332 Power Generation Systems 261 275 865 683 -------------------------------------------------------------------- TOTAL $8,113 $6,457 $24,053 $19,582 -------------------------------------------------------------------- DEPRECIATION & AMORTIZATION EXPENSE (1) Marine Construction Services $5,353 $7,648 $17,100 $20,830 Government Operations 3,086 3,120 9,122 9,452 Power Generation Systems - 3 - 10 Corporate 1,156 632 2,799 2,289 -------------------------------------------------------------------- TOTAL $9,595 $11,403 $29,021 $32,581 -------------------------------------------------------------------- CAPITAL EXPENDITURES Marine Construction Services $3,875 $2,461 $7,745 $13,796 Government Operations 5,311 3,828 9,550 11,288 Power Generation Systems - - - - Corporate 281 1,051 283 2,447 -------------------------------------------------------------------- TOTAL $9,467 $7,340 $17,578 $27,531 -------------------------------------------------------------------- BACKLOG Marine Construction Services $1,421,701 $1,483,642 $1,421,701 $1,483,642 Government Operations 1,501,788 1,379,509 1,501,788 1,379,509 -------------------------------------------------------------------- TOTAL $2,923,489 $2,683,151 $2,923,489 $2,683,151 -------------------------------------------------------------------- (1) Included in segment income. McDERMOTT INTERNATIONAL, INC. ITEMS INCLUDED IN CONTINUING OPERATIONS Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 ---- ---- ---- ---- (Unaudited) (In millions) ITEMS INCLUDED IN OPERATING INCOME (LOSS): Marine Construction Services Contract cost adjustments on loss projects $1.5 $(19.9) $29.9 $(19.9) Gain on sale of marine assets 16.4 - 16.4 - Vessel dry-dock accrual reversal, net 5.0 - 1.6 - Carina Aries weather related - - - (41.9) Miscellaneous items, net (2.2) - (9.5) 11.0 ----------------------------------------------------------------- TOTAL $20.7 $(19.9) $38.4 $(50.8) ------------------------------------------------------------------- Government Operations Pension funding reimbursement $3.8 $- $5.0 $- Miscellaneous items - - 3.2 8.7 ----------------------------------------------------------------- TOTAL $3.8 $- $8.2 $8.7 ------------------------------------------------------------------- Corporate Qualified Pension Plan Expense $(14.1) $(20.7) $(45.7) $(56.8) ----------------------------------------------------------------- TOTAL $(14.1) $(20.7) $(45.7) $(56.8) ------------------------------------------------------------------- OTHER ITEMS: Estimated change in B&W bankruptcy settlement $(0.3) $9.7 $(2.3) $(5.6) Tax impact on B&W settlement 0.8 1.5 0.1 2.6 ------------------------------------------------------------------- Net After Tax Effect $(1.1) $8.2 $(2.4) $(8.2) ------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS September 30, December 31, 2004 2003 -------- -------- (Unaudited) (In thousands) Current Assets: Cash and cash equivalents $203,278 $174,790 Restricted cash and cash equivalents 112,478 180,480 Accounts receivable - trade, net 152,815 195,073 Accounts receivable from The Babcock & Wilcox Company 2,091 6,192 Accounts and notes receivable - unconsolidated affiliates 18,362 14,024 Accounts receivable - other 36,105 38,296 Contracts in progress 99,176 69,485 Deferred income taxes 5,777 4,168 Other current assets 16,001 16,019 - ---------------------------------------------------------------------- Total Current Assets 646,083 698,527 - ---------------------------------------------------------------------- Property, Plant and Equipment 1,099,592 1,244,222 Less accumulated depreciation 797,917 880,460 - ---------------------------------------------------------------------- Net Property, Plant and Equipment 301,675 363,762 - ---------------------------------------------------------------------- Restricted cash and cash equivalents 55,673 - - ---------------------------------------------------------------------- Investments 42,364 42,800 - ---------------------------------------------------------------------- Goodwill 12,926 12,926 - ---------------------------------------------------------------------- Prepaid Pension Costs 18,449 18,722 - ---------------------------------------------------------------------- Other Assets 167,640 112,137 - ---------------------------------------------------------------------- TOTAL $1,244,810 $1,248,874 - ---------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' DEFICIT September 30, December 31, 2004 2003 --------- --------- (Unaudited) (In thousands) Current Liabilities: Notes payable and current maturities of long-term debt $11,998 $37,217 Accounts payable 120,679 146,665 Accounts payable to The Babcock & Wilcox Company 39,075 42,137 Accrued employee benefits 76,362 69,923 Accrued liabilities - other 169,657 166,129 Accrued contract costs 36,087 69,928 Advance billings on contracts 203,861 176,105 U.S. and foreign income taxes payable 21,615 14,727 - ---------------------------------------------------------------------- Total Current Liabilities 679,334 722,831 - ---------------------------------------------------------------------- Long-Term Debt 268,054 279,682 - ---------------------------------------------------------------------- Accumulated Postretirement Benefit Obligation 26,413 26,861 - ---------------------------------------------------------------------- Self-Insurance 62,358 60,737 - ---------------------------------------------------------------------- Pension Liability 344,196 311,393 - ---------------------------------------------------------------------- Accrued Cost of The Babcock & Wilcox Company Bankruptcy Settlement 103,172 100,916 - ---------------------------------------------------------------------- Other Liabilities 99,704 109,631 - ---------------------------------------------------------------------- Commitments and Contingencies Stockholders' Deficit: Common stock, par value $1.00 per share, authorized 150,000,000 shares; issued 69,228,033 at September 30, 2004 and 68,129,390 at December 31, 2003 69,228 68,129 Capital in excess of par value 1,114,501 1,105,828 Accumulated deficit (1,103,374) (1,122,547) Treasury stock at cost, 2,364,637 shares at September 30, 2004 and 2,061,407 at December 31, 2003 (65,253) (62,792) Accumulated other comprehensive loss (353,523) (351,795) - ---------------------------------------------------------------------- Total Stockholders' Deficit (338,421) (363,177) - ---------------------------------------------------------------------- TOTAL $1,244,810 $1,248,874 - ---------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 2004 2003 -------- ------- (Unaudited, In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $19,173 $(12,522) - ---------------------------------------------------------------------- Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 29,021 32,581 Income or loss of investees, less dividends (7,702) (2,547) Gain on asset disposals and impairments - net (18,797) (3,406) Benefit from deferred taxes (12,702) (4,518) Increase in estimated cost of The Babcock & Wilcox Company bankruptcy settlement 2,256 5,642 Cumulative effect of accounting change - (3,710) Gain on sale of Menck GmbH - (2,365) Other 3,375 3,773 Changes in assets and liabilities, net of effects of acquisitions and divestitures: Accounts receivable 35,546 (17,148) Net contracts in progress and advance billings (1,903) (74,928) Accounts payable (29,053) 24,180 Accrued and other current liabilities (23,105) (29,490) Income taxes 31,281 (25,435) Other, net (28,055) 44,637 - ---------------------------------------------------------------------- NET CASH USED IN OPERATING ACTIVITIES (665) (65,256) - ---------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: (Increase) decrease in restricted cash and cash equivalents 12,329 (16,228) Purchases of property, plant and equipment (17,578) (27,531) Purchases of available-for-sale securities (66,730) (260,886) Sales of available-for-sale securities 5,565 133,679 Maturities of available-for-sale securities 61,973 256,600 Proceeds from asset disposals 74,206 20,946 Other 1 (403) - ---------------------------------------------------------------------- NET CASH PROVIDED BY INVESTING ACTIVITIES 69,766 106,177 - ---------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Payment of long-term debt $- $(9,500) Decrease in short-term borrowing (36,750) (45,600) Payment of debt issuance costs (3,400) (7,523) Issuance of common stock 484 256 Other (953) 2,317 - ---------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES (40,619) (60,050) - ---------------------------------------------------------------------- EFFECTS OF EXCHANGE RATE CHANGES ON CASH 6 (16) - ---------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 28,488 (19,145) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 174,790 129,517 - ---------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $203,278 $110,372 - ---------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $19,194 $10,501 Income taxes - net $44,765 $17,744 - ---------------------------------------------------------------------- CONTACT: McDermott International, Inc. Investor Relations & Corporate Communications Jay Roueche, 281-870-5462 jroueche@mcdermott.com -----END PRIVACY-ENHANCED MESSAGE-----