-----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, KmP5Kmo4MnYsOKbQ5kr1KAS5kB9MzCMVbIbzktmH62iCbeV8SuwWdPhVMXSJkQ2R VjFeaP8HYLUkeBey0FC/Jw== 0001157523-06-004561.txt : 20060503 0001157523-06-004561.hdr.sgml : 20060503 20060503164803 ACCESSION NUMBER: 0001157523-06-004561 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060503 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060503 DATE AS OF CHANGE: 20060503 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: 06804519 BUSINESS ADDRESS: STREET 1: 777 N. ELDRIDGE PARKWAY CITY: HOUSTON STATE: TX ZIP: 77079 BUSINESS PHONE: 281-870-5000 MAIL ADDRESS: STREET 1: 777 N. ELDRIDGE PARKWAY CITY: HOUSTON STATE: TX ZIP: 77079 8-K 1 a5139764.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 3, 2006 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.) 777 N. Eldridge Parkway, Houston, Texas 77079 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, including Area Code: (281) 870-5000 -------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) 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 3, 2006, we issued a press release announcing our financial results for the quarter ended March 31, 2006. 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 that 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 3, 2006. 2 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/Michael S. Taff ------------------------------------------- Michael S. Taff Vice President and Chief Accounting Officer May 3, 2006 3 EX-99.1 2 a5139764ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 McDermott Reports First Quarter 2006 Results; Net Income of $54.1 Million, $0.72 Per Diluted Share HOUSTON--(BUSINESS WIRE)--May 3, 2006-- Announces 3 for 2 Stock Split of Common Shares McDermott International, Inc. (NYSE:MDR) ("McDermott" or the "Company") today reported net income of $54.1 million, or $0.72 per diluted share, for the 2006 first quarter, compared to net income of $22.4 million, or $0.32 per diluted share, for the corresponding period in 2005. The 2006 first quarter includes approximately one month of The Babcock & Wilcox Company's ("B&W") financial results as well as the reconsolidation of B&W into McDermott's balance sheet. From February 2000 through February 22, 2006, the results of B&W were deconsolidated from the Company's reported results. Weighted average common shares outstanding on a fully diluted basis were approximately 75.3 million and 70.8 million for the quarters ended March 31, 2006 and March 31, 2005, respectively. McDermott's revenues in the first quarter of 2006 were $644.9 million, compared to $436.0 million in the corresponding period in 2005, primarily reflecting the addition of B&W's revenues for the month of March 2006. Operating income was $66.5 million in the 2006 first quarter, compared to the 2005 first quarter operating income of $39.6 million. "The first quarter has the Company off to a good start in 2006," said Bruce W. Wilkinson, Chairman of the Board and Chief Executive Officer of McDermott. "The power generation systems segment reflects an exceptional month from B&W, while marine construction services produced a solid quarter considering it included a $16 million non-cash impairment as part of its results." At March 31, 2006, McDermott's consolidated backlog was $5.9 billion, compared to $2.8 billion and $3.6 billion, at March 31, 2005 and December 31, 2005, respectively. Earlier today, the Company's Board of Directors declared a three-for-two split of McDermott's common stock. The stock split will be applicable to shareholders of record at the close of business on May 17, 2006 and will be effected in the form of a stock dividend to be issued on May 31, 2006. Any fractional shares as a result of the split will be paid in cash based upon the closing price of McDermott's stock price on the record date. RESULTS OF OPERATIONS 2006 First Quarter Compared to 2005 First Quarter Marine Construction Services Segment ("J. Ray") Revenues in the Marine Construction Services segment were $295.4 million in the 2006 first quarter, compared to $283.4 million for the same period a year ago. The year-over-year increase in revenues resulted primarily from increased project activity in the Middle East, Caspian and Asia Pacific regions, partially offset by declines in the Americas and worldwide marine. Segment income for the 2006 first quarter was $21.0 million, compared to $28.0 million in the 2005 first quarter. Major items contributing to operating income in the 2006 first quarter were projects in the Middle East, Asia Pacific and Caspian regions. Also during the first quarter 2006, J. Ray recorded a non-cash impairment of $16.4 million for currency translation losses associated with the planned termination of its Mexican joint venture. At March 31, 2006, J. Ray's backlog was $2.4 billion, compared to backlog of $1.1 billion and $1.8 billion at March 31, 2005 and December 31, 2005, respectively. Power Generation Systems Segment ("B&W") Revenues in the Power Generation Systems segment for the first quarter 2006 were $189.0 million, representing B&W's revenues beginning February 22, 2006. Throughout 2005, B&W was deconsolidated from McDermott's reported financial results due to its asbestos-related reorganization and therefore the Power Generation Systems segment did not report any revenues. Segment income for the 2006 first quarter was $27.6 million, compared to $0.1 million in the 2005 first quarter. The increase in segment income was due to consolidating B&W for approximately one month in the first quarter 2006. At March 31, 2006, B&W's backlog was $1.9 billion and was not consolidated during 2005. Government Operations Segment ("BWXT") Revenues in the Government Operations segment were $161.0 million in the 2006 first quarter, compared to $152.6 million for the same period a year ago. The increase was primarily due to higher volumes in the manufacture of nuclear components for certain U.S. Government programs and uranium recovery operations, as well as increased revenues from engineering services for U.S. Department of Energy sites. Segment income for the 2006 first quarter was $26.4 million, compared to $24.0 million in the 2005 first quarter. The increase was primarily due to higher volumes and margins in the manufacture of nuclear components and uranium recovery operations, and higher margins on commercial work for the research test reactor area which were partially offset by a decline in equity in income from investees. At March 31, 2006, BWXT's backlog was $1.6 billion, compared to backlog of $1.7 billion and $1.8 billion at March 31, 2005 and December 31, 2005, respectively. Corporate Unallocated corporate expenses were $8.4 million in the 2006 first quarter, compared to $12.6 million in the 2005 first quarter. Other Income and Expense The Company's other income, net, for the first quarter of 2006 was $8.9 million, compared to other expense, net, of $3.6 million in the first quarter of 2005. The expense reduction was primarily due to increased interest income and an adjustment to interest resulting from a settlement with U.S. and Canadian tax authorities. OTHER INFORMATION About the Company McDermott International, Inc. is a leading worldwide energy services company. The Company's subsidiaries provide engineering, construction, 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 about backlog, to the extent backlog may be viewed as an indicator of future revenues. 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 there are adverse changes in the industries in which we operate. 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 and quarterly filings with the Securities and Exchange Commission, including its report on Form 10-K for the year ended December 31, 2005. Conference Call to Discuss 2006 First Quarter Earnings Release - -------------------------------------------------------------- Date: Thursday, May 4, 2006, 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 Three Months Ended March 31, 2006 2005 ---------- ---------- (Unaudited) (In thousands, except per share amounts) Revenues $644,907 $435,959 - ---------------------------------------------------------------------- Costs and Expenses: Cost of operations 502,926 361,424 (Gain) Loss on asset disposals and impairments - net 16,006 (2,296) Selling, general and administrative expenses 66,994 47,089 - ---------------------------------------------------------------------- 585,926 406,217 - ---------------------------------------------------------------------- Equity in Income of Investees 7,547 9,871 - ---------------------------------------------------------------------- Operating Income 66,528 39,613 - ---------------------------------------------------------------------- Other Income (Expense): Interest income 7,535 2,909 Interest expense (10,303) (9,696) IRS interest expense adjustment 13,210 - Other income (expense)-net (1,561) 3,226 - ---------------------------------------------------------------------- 8,881 (3,561) - ---------------------------------------------------------------------- Income from Continuing Operations before Provision for Income Taxes 75,409 36,052 Provision for Income Taxes 20,394 14,486 - ---------------------------------------------------------------------- Income from Continuing Operations 55,015 21,566 Income (Loss) from Discontinued Operations (892) 870 - ---------------------------------------------------------------------- Net Income $54,123 $22,436 - ---------------------------------------------------------------------- Earnings (Loss) per Common Share: Basic: Income from Continuing Operations $0.77 $0.33 Income (Loss) from Discontinued Operations $(0.01) $0.01 Net Income $0.76 $0.34 Diluted: Income from Continuing Operations $0.73 $0.31 Income (Loss) from Discontinued Operations $(0.01) $0.01 Net Income $0.72 $0.32 - ---------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. SELECTED SEGMENT INFORMATION Three Months Ended March 31, 2006 2005 ------------ ------------ (Unaudited; In thousands) REVENUES Marine Construction Services $295,439 $283,447 Government Operations 160,999 152,593 Power Generation Systems 189,023 - Adjustments and Eliminations (554) (81) - ---------------------------------------------------------------------- TOTAL $644,907 $435,959 - ---------------------------------------------------------------------- SEGMENT INCOME (LOSS) Marine Construction Services 20,983 28,018 Government Operations 26,365 24,041 Power Generation Systems 27,552 123 - ---------------------------------------------------------------------- 74,900 52,182 Corporate (8,372) (12,569) - ---------------------------------------------------------------------- TOTAL $66,528 $39,613 - ---------------------------------------------------------------------- EQUITY IN INCOME FROM INVESTEES(1) Marine Construction Services $(666) $(94) Government Operations 6,453 9,623 Power Generation Systems 1,760 342 - ---------------------------------------------------------------------- TOTAL $7,547 $9,871 - ---------------------------------------------------------------------- DEPRECIATION & AMORTIZATION(1) Marine Construction Services $6,392 $6,715 Government Operations 3,233 3,148 Power Generation Systems 1,679 - Corporate 390 656 - ---------------------------------------------------------------------- TOTAL $11,694 $10,519 - ---------------------------------------------------------------------- CAPITAL EXPENDITURES Marine Construction Services $20,659 $12,330 Government Operations 4,130 5,353 Power Generation Systems 1,855 - Corporate 2,393 21 - ---------------------------------------------------------------------- TOTAL $29,037 $17,704 - ---------------------------------------------------------------------- BACKLOG Marine Construction Services $2,383,833 $1,112,316 Government Operations 1,640,793 1,745,182 Power Generation Systems 1,909,592 - - ---------------------------------------------------------------------- TOTAL $5,934,218 $2,857,498 - ---------------------------------------------------------------------- (1) Included in Segment Income (Loss) above. McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS March 31, December 31, 2006 2005 ------------ ------------ (Unaudited) (In thousands) Current Assets: Cash and cash equivalents $232,431 $19,263 Restricted cash and cash equivalents 141,300 152,086 Investments 455,222 384,202 Accounts receivable - trade, net 466,733 232,236 Accounts receivable from The Babcock & Wilcox Company - 3,778 Accounts and notes receivable - unconsolidated affiliates 47,279 52,867 Accounts and notes receivable - other 48,091 32,982 Contracts in progress 191,203 73,732 Inventories 65,365 319 Deferred income taxes 76,295 32,131 Assets held for sale 11,201 10,886 Other current assets 29,098 8,147 - ---------------------------------------------------------------------- Total Current Assets 1,764,218 1,002,629 - ---------------------------------------------------------------------- Restricted Cash and Cash Equivalents - 2,886 - ---------------------------------------------------------------------- Property, Plant and Equipment 1,426,267 1,097,427 Less accumulated depreciation 981,357 779,694 - ---------------------------------------------------------------------- Net Property, Plant and Equipment 444,910 317,733 - ---------------------------------------------------------------------- Investments 126,919 116,304 - ---------------------------------------------------------------------- Goodwill 88,236 12,926 - ---------------------------------------------------------------------- Deferred Income Taxes 462,962 93,880 - ---------------------------------------------------------------------- Other Assets 273,215 121,928 - ---------------------------------------------------------------------- TOTAL $3,160,460 $1,668,286 - ---------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) March 31, December 31, 2006 2005 ------------ ------------ (Unaudited) (In thousands) Current Liabilities: Notes payable and current maturities of long-term debt $12,007 $4,250 Accounts payable 280,698 110,970 Accounts payable to The Babcock & Wilcox Company - 11,429 Accrued employee benefits 112,663 81,196 Accrued liabilities - other 225,764 132,932 Accrued contract cost 68,093 56,566 Advance billings on contracts 753,807 314,467 Liabilities held for sale 8,385 7,182 U.S. and foreign income taxes payable 25,764 49,696 - ---------------------------------------------------------------------- Total Current Liabilities 1,487,181 768,688 - ---------------------------------------------------------------------- Long-Term Debt 210,285 207,861 - ---------------------------------------------------------------------- Accumulated Postretirement Benefit Obligation 80,488 25,519 - ---------------------------------------------------------------------- Self-Insurance 81,145 60,989 - ---------------------------------------------------------------------- Pension Liability 512,630 311,319 - ---------------------------------------------------------------------- Accrued Cost of The Babcock & Wilcox Company Bankruptcy Settlement 660,308 117,990 - ---------------------------------------------------------------------- Deferred Babcock & Wilcox Company Pension Plan Spin-Off - 150,136 - ---------------------------------------------------------------------- Other Liabilities 78,215 109,082 - ---------------------------------------------------------------------- Commitments and Contingencies Stockholders' Equity (Deficit): Common stock, par value $1.00 per share, authorized 150,000,000 shares; issued 74,565,433 at March 31, 2006 and 73,857,922 at December 31, 2005 74,565 73,858 Capital in excess of par value 1,208,983 1,183,123 Accumulated deficit (801,783) (862,931) Treasury stock at cost, 2,076,549 shares at March 31, 2006 and 2,055,096 at December 31, 2005 (59,958) (56,496) Accumulated other comprehensive loss (371,599) (420,852) - ---------------------------------------------------------------------- Total Stockholders' Equity (Deficit) 50,208 (83,298) - ---------------------------------------------------------------------- TOTAL $3,160,460 $1,668,286 - ---------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, 2006 2005 ---- ---- (Unaudited) (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $54,123 $22,436 - ---------------------------------------------------------------------- Depreciation and amortization 11,694 10,519 Income of investees, less dividends (1,399) (4,612) (Gain) loss on asset disposals and impairments - net 16,006 (2,296) Provision for deferred taxes 70,022 257 Estimated loss on The Babcock & Wilcox Company bankruptcy settlement - (468) Excess tax benefits from stock options exercised (4,918) - Other 13,526 3,367 Changes in assets and liabilities, net of effects of acquisitions and divestitures: Accounts receivable 141,523 18,029 Income taxes receivable (55,857) - Net contracts in progress and advance billings 7,005 40,719 Accounts payable (46,901) 19,590 Income taxes 6,463 (1,455) Accrued and other current liabilities 1,012 (9,689) Accrued employee benefits (25,264) (26,478) Pension liability 6,787 4,148 Other, net (52,985) (1,980) - ---------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 140,837 72,087 - ---------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in restricted cash and cash equivalents 13,672 9,640 Purchases of property, plant and equipment (29,037) (17,704) Purchases of available-for-sale securities (5,131,607) (69,960) Sales of available-for-sale securities 68,088 - Maturities of available-for-sale securities 4,984,734 62,797 Proceeds from asset disposals 874 6,106 Cash acquired from the reconsolidation of The Babcock & Wilcox Company 164,200 - Other (1,732) - - ---------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 69,192 (9,121) - ---------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt 592 - Payment of long-term debt (4,323) (1,500) Issuance of common stock 9,347 1,935 Payment of debt issuance costs (16) 926 Excess tax benefits from stock options exercised 4,918 - Other (7,519) 727 - ---------------------------------------------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 2,999 2,088 - ---------------------------------------------------------------------- EFFECTS OF EXCHANGE RATE CHANGES ON CASH 140 (44) - ---------------------------------------------------------------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 213,168 65,010 - ---------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19,263 259,319 - ---------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $232,431 $324,329 - ---------------------------------------------------------------------- McDERMOTT INTERNATIONAL, INC. SUPPLEMENTAL UNAUDITED PRO FORMA FINANCIAL INFORMATION Presentation of combined results of operations ASSUMING B&W had been reconsolidated with McDermott at the beginning of the respective periods presented Three Months Ended March 31, 2006 2005 ---- ---- (Unaudited) (In thousands, except per share amounts) Revenues $903,174 $780,529 Operating Income $68,206 $62,761 Net Income $55,915 $35,156 Diluted Earnings Per Share $0.74 $0.50 CONTACT: McDermott International, Inc., Houston Jay Roueche, 281-870-5462 jroueche@mcdermott.com -----END PRIVACY-ENHANCED MESSAGE-----