-----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, IKOd3SVQqvKGcb1lq1fI13ibCTBRiSUMZ2Od2ZHmOg6bnKVTCxBBlIVICCv325ID IijSto30xrHS3F41d2M6Lg== 0001157523-05-004507.txt : 20050509 0001157523-05-004507.hdr.sgml : 20050509 20050509171557 ACCESSION NUMBER: 0001157523-05-004507 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050509 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050509 DATE AS OF CHANGE: 20050509 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: 05812756 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 a4884168.txt MCDERMOTT INTERNATIONAL, INC. 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): May 9, 2005 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 May 9, 2005, McDermott International, Inc. issued a press release announcing financial results for the first quarter ended March 31, 2005. 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, (the "Exchange Act"), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Item 9.01 Financial Statements and Exhibits. (c) Exhibits 99.1 Press Release Dated May 9, 2005. 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 May 9, 2005 2 EX-99.1 2 a4884168ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 McDermott Reports First Quarter 2005 Results; Net Income of $22.4 Million, $0.32 Per Diluted Share, Includes B&W Settlement Revaluation Income of $0.6 Million after Tax NEW ORLEANS--(BUSINESS WIRE)--May 9, 2005--McDermott International, Inc. (NYSE:MDR) ("McDermott" or the "Company") today reported net income of $22.4 million, or $0.32 per diluted share, for the 2005 first quarter, compared to a net loss of $10.9 million, or $0.17 per diluted share, for the corresponding period in 2004. Weighted average common shares outstanding on a fully diluted basis were approximately 70.8 million and 65.3 million for March 31, 2005 and March 31, 2004, respectively. Revenues in the first quarter of 2005 were $439.1 million, compared to $499.3 million in the corresponding period in 2004. Operating income was $40.7 million in the 2005 first quarter, compared to an operating loss of $2.1 million in the 2004 first quarter. Included in the first quarter 2005 operating income was approximately $2.5 million of corporate qualified pension expense, compared to $15.3 million in the first quarter 2004. The year-over-year reduction in corporate qualified pension expense reflects the previously announced spin-off of The Babcock & Wilcox Company's ("B&W") pension plan and related expense which was completed on January 31, 2005. In addition, beginning January 1, 2005, McDermott now allocates to its Government Operations segment the related pension expense of that segment. "The Company has started the year off right by delivering strong first quarter results," said Bruce W. Wilkinson, Chairman of the Board and Chief Executive Officer of McDermott. "McDermott has now produced net income for four consecutive quarters and, as a result of this performance, our liquidity continued to strengthen. Both of our consolidated operating segments continued to deliver solid results in the quarter, but as McDermott, and particularly J. Ray, continues to deliver finished projects to our customers, it is becoming more essential that we obtain new awards to replace the recently completed work. I am optimistic that as the year progresses, we will start to see J. Ray's backlog build again." RESULTS OF OPERATIONS 2005 First Quarter Compared to 2004 First Quarter Marine Construction Services Segment ("J. Ray") Revenues in the Marine Construction Services segment were $286.6 million in the 2005 first quarter, compared to $365.8 million a year ago. The year-over-year reduction in revenues resulted primarily from the 2004 completion of several large EPIC projects and decreased fabrication activity on projects in Louisiana, partially offset by a field development project in Australia and a number of marine installation projects in the Middle East and Asia Pacific regions. Segment income for the 2005 first quarter was $29.1 million, compared to a segment loss of $3.6 million in the 2004 first quarter. Major items contributing operating income to the 2005 first quarter were change orders, contract close-outs and settlements on projects in the Caspian, Asia Pacific and Middle East regions, increased international marine operations, increased activity in our Mexican ship repair facility and gains on sales of assets. At March 31, 2005, J. Ray's backlog was $1.1 billion, compared to backlog of $1.25 billion and $1.3 billion at December 31, 2004 and March 31, 2004, respectively. Government Operations Segment ("BWXT") Revenues in the Government Operations segment increased $19.1 million, to $152.6 million in the 2005 first quarter, compared to $133.5 million a year ago. The increase was primarily due to higher volumes in the manufacture of nuclear components for certain U.S. government programs, and increased revenues from commercial nuclear environmental services and other commercial work, including increased uranium downblending. Segment income increased $4.3 million, to $24.0 million, compared to the 2004 first quarter, primarily due to higher volume and margins from the manufacture of nuclear components for certain U.S. government programs, timing on the recognition of equity in income from investees and increased commercial activity. These improvements were partially offset by the previously announced corporate allocation of $5.3 million related to qualified pension expense, which in prior years resided in the corporate segment. At March 31, 2005, BWXT's backlog was $1.7 billion, essentially equivalent to the backlog at both December 31, 2004 and March 31, 2004. Corporate Unallocated corporate expenses were $12.6 million in the 2005 first quarter, a decrease of $5.7 million compared to the 2004 first quarter. The decrease was primarily due to a reduction in qualified corporate pension expense during the first quarter of 2005, partially offset by increased expenses associated with McDermott's captive insurance program. Other Income and Expense The Company's other expense for the first quarter of 2005 was $3.5 million, compared to other expense of $3.9 million in the first quarter of 2004, which included net interest expense of $6.8 million and $7.5 million in the respective quarters. During the 2005 first quarter, revaluation of certain components of the estimated settlement cost related to the B&W Chapter 11 proceedings generated a reduction in the estimated cost of the settlement to $139.3 million, resulting in the recognition of other pretax income of $0.5 million ($0.6 million after tax). The decrease in the first quarter 2005 estimated settlement cost is due primarily to a reduction in the fair market value of the promissory notes to be issued as a result of increased prevailing interest rates, partially offset by an increase in the closing price of McDermott's common stock from $18.36 per share at December 31, 2004 to $18.93 per share at March 31, 2005. In the first quarter of 2004, the revaluation of the estimated B&W settlement cost resulted in the recognition of other pretax income of $2.4 million ($2.7 million after tax). As discussed in the Company's annual report on Form 10-K for the year ended December 31, 2004, 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 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 $344.7 million in the first quarter of 2005, a decrease of $32.4 million compared to the first quarter of 2004. B&W's net income for the 2005 first quarter was $12.7 million, compared to $24.2 million in the corresponding period in 2004. LIQUIDITY At March 31, 2005, McDermott's consolidated unrestricted cash balance was $324 million, with J. Ray representing approximately $201 million of this total. In addition, McDermott's consolidated restricted cash balance was $168 million at March 31, 2005, with J. Ray representing $139 million of the consolidated amount. As of March 31, 2005, approximately $44 million of J. Ray's restricted cash was available for use on capital expenditures, in accordance with the indenture relating to J. Ray's senior secured notes issued in December 2003. 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, the Company's ability to continue delivering finished projects and optimism regarding the building of J. Ray's backlog. 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, negative developments in the industries in which McDermott operates, 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 December 31, 2004 and its 2005 quarterly reports filed with the Securities and Exchange Commission. Conference Call to Discuss 2005 First Quarter Earnings Release Date: Tuesday, May 10, 2005, at 10:00 a.m. EST (9:00 a.m. CST) 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. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) Three Months Ended March 31, 2005 2004 ---- ---- (Unaudited) (In thousands, except per share amounts) Revenues $439,115 $499,334 - --------------------------------------------------------------------- Costs and Expenses: Cost of operations 363,032 465,568 Selling, general and administrative expenses 45,278 43,592 - --------------------------------------------------------------------- 408,310 509,160 - --------------------------------------------------------------------- Equity in Income of Investees 9,871 7,743 - --------------------------------------------------------------------- Operating Income (Loss) 40,676 (2,083) - --------------------------------------------------------------------- Other Income (Expense): Interest income 2,914 948 Interest expense (9,696) (8,471) Reduction in estimated cost of The Babcock & Wilcox Company bankruptcy settlement 468 2,411 Other-net 2,770 1,203 - --------------------------------------------------------------------- Total Other Income (Expense) (3,544) (3,909) - --------------------------------------------------------------------- Income (Loss) before Provision for Income Taxes 37,132 (5,992) Provision for Income Taxes 14,696 4,875 - --------------------------------------------------------------------- Net Income (Loss) $22,436 $(10,867) - --------------------------------------------------------------------- Earnings (Loss) per Common Share: Basic $0.34 $(0.17) Diluted $0.32 $(0.17) - --------------------------------------------------------------------- Weighted Average Shares Basic 66,774,239 65,272,103 Diluted 70,814,225 65,272,103 - --------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. SELECTED SEGMENT INFORMATION Three Months Ended March 31, 2005 2004 ---- ---- (Unaudited; in thousands) REVENUES Marine Construction Services $286,603 $365,808 Government Operations 152,593 133,529 Adjustments and Eliminations (81) (3) ----------------------------------------------------------------- TOTAL $439,115 $499,334 ----------------------------------------------------------------- SEGMENT INCOME (LOSS) Marine Construction Services $29,081 $(3,601) Government Operations 24,041 19,709 Power Generation Systems 123 111 ----------------------------------------------------------------- 53,245 16,219 Corporate (12,569) (18,302) ----------------------------------------------------------------- TOTAL $40,676 $(2,083) ----------------------------------------------------------------- EQUITY IN INCOME FROM INVESTEES (1) Marine Construction Services $(94) $1,163 Government Operations 9,623 6,247 Power Generation Systems 342 333 ----------------------------------------------------------------- TOTAL $9,871 $7,743 ----------------------------------------------------------------- DEPRECIATION & AMORTIZATION (1) Marine Construction Services $6,715 $5,210 Government Operations 3,148 3,091 Corporate 656 625 ----------------------------------------------------------------- TOTAL $10,519 $8,926 ----------------------------------------------------------------- CAPITAL EXPENDITURES Marine Construction Services $12,330 $1,749 Government Operations 5,353 1,906 Power Generation Systems - - Corporate 21 - ----------------------------------------------------------------- TOTAL $17,704 $3,655 ----------------------------------------------------------------- BACKLOG Marine Construction Services $1,112,316 $1,266,637 Government Operations 1,745,182 1,713,984 ----------------------------------------------------------------- TOTAL $2,857,498 $2,980,621 ----------------------------------------------------------------- (1) Included in Segment Operating Income (Loss) above. McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS March 31, December 31, 2005 2004 ---- ---- (Unaudited) (In thousands) Current Assets: Cash and cash equivalents $324,329 $259,319 Restricted cash and cash equivalents 59,815 111,455 Accounts receivable - trade, net 224,146 226,731 Accounts receivable from The Babcock & Wilcox Company 10,395 6,121 Accounts and notes receivable - unconsolidated affiliates 37,939 29,330 Accounts receivable - other 40,740 71,522 Contracts in progress 81,822 72,355 Deferred income taxes 10,480 9,813 Other current assets 19,582 13,277 - --------------------------------------------------------------------- Total Current Assets 809,248 799,923 - --------------------------------------------------------------------- Restricted Cash and Cash Equivalents 108,498 66,498 - --------------------------------------------------------------------- Property, Plant and Equipment 1,098,080 1,087,314 Less accumulated depreciation 786,425 780,225 - --------------------------------------------------------------------- Net Property, Plant and Equipment 311,655 307,089 - --------------------------------------------------------------------- Investments 44,614 41,884 - --------------------------------------------------------------------- Goodwill 12,926 12,926 - --------------------------------------------------------------------- Other Assets 162,903 158,612 - --------------------------------------------------------------------- TOTAL $1,449,844 $1,386,932 - --------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' DEFICIT March 31, December 31, 2005 2004 ---- ---- (Unaudited) (In thousands) Current Liabilities: Notes payable and current maturities of long-term debt $14,250 $12,009 Accounts payable 129,256 114,235 Accounts payable to The Babcock & Wilcox Company 59,747 55,180 Accrued employee benefits 52,877 79,362 Accrued liabilities - other 156,622 163,649 Accrued contract cost 78,347 81,591 Advance billings on contracts 267,256 217,053 U.S. and foreign income taxes payable 17,157 18,612 - ---------------------------------------------------------------------- Total Current Liabilities 775,512 741,691 - ---------------------------------------------------------------------- Long-Term Debt 261,315 268,011 - ---------------------------------------------------------------------- Accumulated Postretirement Benefit Obligation 26,440 26,315 - ---------------------------------------------------------------------- Self-Insurance 64,582 61,715 - ---------------------------------------------------------------------- Pension Liability 215,921 328,852 - ---------------------------------------------------------------------- Accrued Cost of The Babcock & Wilcox Company Bankruptcy Settlement 111,635 112,103 - ---------------------------------------------------------------------- Deferred Liability Associated with Babcock & Wilcox Company Pension Plan Spin-Off 117,079 - - ---------------------------------------------------------------------- Other Liabilities 109,411 109,688 - ---------------------------------------------------------------------- Commitments and Contingencies. Stockholders' Deficit: Common stock, par value $1.00 per share, authorized 150,000,000 shares; issued 70,287,108 at March 31, 2005 and 69,560,726 at December 31, 2004 70,287 69,561 Capital in excess of par value 1,129,147 1,122,055 Accumulated deficit (1,038,472) (1,060,908) Treasury stock at cost, 2,320,170 shares at March 31, 2005 and 2,341,902 at December 31, 2004 (64,025) (64,625) Accumulated other comprehensive loss (328,988) (327,526) - ---------------------------------------------------------------------- Total Stockholders' Deficit (232,051) (261,443) - ---------------------------------------------------------------------- TOTAL $1,449,844 $1,386,932 - ---------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, 2005 2004 ---- ---- (Unaudited) (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $22,436 $(10,867) - ---------------------------------------------------------------------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 10,519 8,926 Income or loss of investees, less dividends (4,612) (3,873) Gain on asset disposals and impairments - net (2,296) (641) Provision for (benefit from) deferred taxes 257 (1,205) Reduction in estimated cost of The Babcock & Wilcox Company bankruptcy settlement (468) (2,411) Other 3,367 (198) Changes in assets and liabilities, net of effects of acquisitions and divestitures: Accounts receivable 18,029 (1,887) Net contracts in progress and advance billings 40,719 (35,903) Accounts payable 19,590 34,712 Accrued and other current liabilities (9,689) (28,998) Accrued employee benefits (26,478) (13,501) Pension liability 4,148 12,931 Other - net (3,435) 5,508 - ---------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 72,087 (37,407) - ---------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in restricted cash and cash equivalents 9,640 19,016 Purchases of property, plant and equipment (17,704) (3,655) Purchases of available-for-sale securities (69,960) (14,966) Sales of available-for-sale securities - 3,730 Maturities of available-for-sale securities 62,797 11,315 Proceeds from asset disposals 6,106 1,923 Other - (1) - ---------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (9,121) 17,362 - ---------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Payment of long-term debt (1,500) - Decrease in short-term borrowing - (22,600) Issuance of common stock 1,935 200 Debt issuance costs 926 - Other 727 (534) - ---------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,088 (22,934) - ---------------------------------------------------------------------- EFFECTS OF EXCHANGE RATE CHANGES ON CASH (44) 10 - ---------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 65,010 (42,969) - ---------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 259,319 174,790 - ---------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $324,329 $131,821 - ---------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $2,991 $1,969 Income taxes - net $17,959 $12,851 - ---------------------------------------------------------------------- CONTACT: McDermott International, Inc. Jay Roueche, 281-870-5462 jroueche@mcdermott.com -----END PRIVACY-ENHANCED MESSAGE-----