-----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, TNNaVMXt6nXHzJQLb6DJjG8czzZtaYYgHywH+o+IdqL8eQtvbg56fvOKlPbB122Z CQjdQ/jilGy+cLSRbJbt7Q== 0001157523-07-007979.txt : 20070807 0001157523-07-007979.hdr.sgml : 20070807 20070807164836 ACCESSION NUMBER: 0001157523-07-007979 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070807 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070807 DATE AS OF CHANGE: 20070807 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: 071032194 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 a5466517.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): August 7, 2007 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) 870-5901 -------------- - -------------------------------------------------------------------------------- (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 August 7, 2007, we issued a press release announcing our financial results for the quarter ended June 30, 2007. 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. (d) Exhibits 99.1 Press Release Dated August 7, 2007. 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 Senior Vice President and Chief Financial Officer August 7, 2007 EX-99.1 2 a5466517-ex991.txt EXHIBIT 99.1 Exhibit 99.1 McDermott reports Second Quarter 2007 Results; Net Income of $149.4 million, $1.31 per fully diluted share Bookings exceed $2.3 billion during 2007 second quarter; Backlog grows to $8.9 billion Board of Directors declares 2-for-1 stock split HOUSTON--(BUSINESS WIRE)--Aug. 7, 2007--McDermott International, Inc. (NYSE:MDR) ("McDermott" or the "Company") today reported net income of $149.4 million, or $1.31 per diluted share, for the 2007 second quarter, compared to net income of $47.0 million, or $0.41 per diluted share, for the corresponding period in 2006. Weighted average common shares outstanding on a fully diluted basis were approximately 114.0 million in the quarters ended June 30, 2007 and June 30, 2006. McDermott's revenues in the second quarter of 2007 were $1,418.1 million, compared to $1,048.9 million in the corresponding period in 2006. The growth in Company revenues compared to a year ago was led by the Offshore Oil & Gas Construction and Power Generation Systems segments, increasing 45 percent and 37 percent, respectively. Operating income was $181.8 million in the 2007 second quarter, compared to $112.7 million in the 2006 second quarter. The improvement in operating income is primarily attributable to a $50 million increase in segment income in the Power Generation Systems segment. In addition, the Company's Offshore Oil & Gas Construction increased segment income by 39 percent, partially offset by higher unallocated corporate expenses. "At the mid-point of 2007, McDermott's financial performance is on track to deliver another successful year for our shareholders," said Bruce W. Wilkinson, Chairman of the Board and Chief Executive Officer of McDermott. "We have generated strong results year-to-date from the work we signed in the past. The Company's backlog has grown both sequentially and compared to a year ago, which supports our continued optimism for the markets we serve." At June 30, 2007, McDermott's consolidated backlog was $8.9 billion, compared to $7.8 billion at June 30, 2006 and $7.6 billion at December 31, 2006. Earlier today, the Company's Board of Directors declared a two-for-one split of McDermott's common stock. The stock split will be applicable to shareholders of record at the close of business on August 20, 2007 and will be effected in the form of a stock dividend to be issued on September 10, 2007. RESULTS OF OPERATIONS 2007 Second Quarter Compared to 2006 Second Quarter Offshore Oil & Gas Construction Segment ("J. Ray") Revenues in the Offshore Oil & Gas Construction segment were $580.0 million in the 2007 second quarter, compared to $398.8 million for the same period a year ago. The year-over-year increase in revenues resulted primarily from increased activity in the Middle East, Asia Pacific and Americas regions. Segment income for the 2007 second quarter was $91.1 million, compared to $65.5 million in the 2006 second quarter. Each major region contributed to the improvement, led by the increased activities in the Asia Pacific region. In addition, J. Ray experienced an improvement of approximately $15 million compared to a year ago related to project close-outs, change orders and settlements, which are normal, ongoing components to J. Ray's business but which can vary widely quarter-to-quarter. As disclosed a year ago, J. Ray's second quarter 2006 segment income benefited by approximately $21 million related to the accumulated profit recognized from the Dolphin project. At June 30, 2007, J. Ray's backlog was $4.6 billion, compared to backlog of $3.2 billion and $4.1 billion at June 30, 2006 and December 31, 2006, respectively. On July 27, 2007, J. Ray completed its previously announced acquisition of substantially all of the assets of Secunda International, Ltd., including 14 multi-functional vessels as well as its shore base operations for approximately $260 million. Power Generation Systems Segment ("B&W") Revenues in the Power Generation Systems segment for the second quarter 2007 were $673.6 million, compared to $488.7 million reported in the second quarter of 2006. The year-over-year increase resulted from increased activity on boiler, scrubber and service projects including approximately $150 million in revenue recognized from the global settlement with TXU. Segment income for the 2007 second quarter was $75.4 million, compared to $25.2 million in the 2006 second quarter. The improvement in segment income resulted from approximately $50 million in benefits resulting from contract terminations and a variety of settlements. In addition, during the second quarter of 2007, B&W had increased boiler, scrubber and service activity compared to the same period a year ago. At June 30, 2007, B&W's backlog was $2.8 billion compared to backlog of $3.1 billion and $2.2 billion at June 30, 2006 and December 31, 2006, respectively. Backlog at June 30, 2006 included $1.1 billion of TXU boiler/SCR projects which were removed from backlog by December 31, 2006. B&W has continued work on three TXU boiler and SCR contracts which are not currently in backlog, but the respective amounts will be rebooked should a new buyer or buyers contract for one or more of these units. Government Operations Segment ("BWXT") Revenues in the Government Operations segment were $167.7 million in the 2007 second quarter, compared to $163.5 million for the same period a year ago. The increase was primarily the result of the acquisition of Marine Mechanical Corporation which was completed in April 2007. Segment income for the 2007 second quarter was $29.7 million, compared to $30.8 million in the 2006 second quarter. The decrease in segment income was primarily related to a $1.1 million gain on an asset sale which occurred in the 2006 second quarter. At June 30, 2007, BWXT's backlog was $1.5 billion, compared to backlog of $1.5 billion and $1.3 billion at June 30, 2006 and December 31, 2006, respectively. Corporate Unallocated corporate expenses were $14.3 million in the 2007 second quarter, compared to $8.8 million in the 2006 second quarter. The increase was primarily related to higher stock based compensation expenses due to McDermott's 70 percent stock price increase during the second quarter, as well as other increased general corporate expenses. Other Income and Expense The Company's other income for the second quarter of 2007 was $9.5 million, compared to other expense of $50.7 million in the second quarter of 2006. The year-over-year improvement is primarily due to a $49 million loss on the early retirement of debt which occurred during the second quarter of 2006 and a $5.1 million improvement in net interest income/expense compared to the 2006 second quarter due to improved cash and investment balances. OTHER INFORMATION About the Company McDermott is an engineering and construction company, with specialty manufacturing and service capabilities, focused on energy infrastructure. McDermott's customers are predominantly utilities and other power generators, major and national oil companies, and the United States Government. With its global operations, McDermott operates in over 20 countries with more than 20,000 employees. Forward Looking Statements 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, our position to deliver a successful year and our continued optimism for the markets we serve. 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, adverse changes in the markets in which we operate, our inability to successfully execute on contracts in backlog or that that awards and contracts in backlog may not otherwise result in the expected revenues. 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, 2006. Conference Call to Discuss 2007 Second Quarter Earnings Release Date: Wednesday, August 8, 2007, at 9:00 a.m. ET (8:00 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 Six Months Ended June 30, June 30, 2007 2006 2007 2006 ----------- ----------- ----------- ----------- (Unaudited) (In thousands, except per share amounts) Revenues $1,418,146 $1,048,930 $2,781,576 $1,693,837 - ---------------------------------------------------------------------- Costs and Expenses: Cost of operations 1,128,552 842,803 2,210,618 1,344,529 (Gains) losses on asset disposals and impairments - net (115) (1,085) (1,750) 14,921 Selling, general and administrative expenses 115,225 101,841 212,987 168,835 - ---------------------------------------------------------------------- 1,243,662 943,559 2,421,855 1,528,285 - ---------------------------------------------------------------------- Equity in Income of Investees 7,308 7,340 14,549 14,887 - ---------------------------------------------------------------------- Operating Income 181,792 112,711 374,270 180,439 - ---------------------------------------------------------------------- Other Income (Expense): Interest income 15,821 12,467 28,139 20,002 Interest expense (5,366) (7,108) (14,955) (17,411) IRS interest expense adjustment - (2,620) - 10,590 Loss on early retirement of debt - (49,016) - (49,016) Other expense - net (975) (4,438) (4,845) (5,999) - ---------------------------------------------------------------------- 9,480 (50,715) 8,339 (41,834) - ---------------------------------------------------------------------- Income from Continuing Operations before Provision for Income Taxes 191,272 61,996 382,609 138,605 Provision for Income Taxes 41,898 28,768 75,174 49,162 - ---------------------------------------------------------------------- Income from Continuing Operations 149,374 33,228 307,435 89,443 Income from Discontinued Operations - 13,786 - 12,894 - ---------------------------------------------------------------------- Net Income $ 149,374 $ 47,014 307,435 $ 102,337 ====================================================================== Earnings per Common Share: Basic: Income from Continuing Operations $ 1.34 $ 0.30 $ 2.77 $ 0.83 Income from Discontinued Operations $ 0.00 $ 0.13 $ 0.00 $ 0.12 Net Income $ 1.34 $ 0.43 $ 2.77 $ 0.95 Diluted: Income from Continuing Operations $ 1.31 $ 0.29 $ 2.69 $ 0.79 Income from Discontinued Operations $ 0.00 $ 0.12 $ 0.00 $ 0.11 Net Income $ 1.31 $ 0.41 $ 2.69 $ 0.90 ====================================================================== McDERMOTT INTERNATIONAL, INC. SELECTED SEGMENT INFORMATION Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 ----------- ----------- ----------- ----------- (Unaudited; In Thousands) REVENUES Offshore Oil and Gas Construction $ 579,977 $ 398,848 $1,130,246 $ 694,287 Government Operations 167,726 163,480 329,125 324,479 Power Generation Systems 673,591 488,710 1,329,005 677,733 Adjustments and Eliminations (3,148) (2,108) (6,800) (2,662) - ---------------------------------------------------------------------- TOTAL $1,418,146 $1,048,930 $2,781,576 $1,693,837 - ---------------------------------------------------------------------- SEGMENT INCOME Offshore Oil and Gas Construction $ 91,056 $ 65,498 $ 212,259 $ 87,681 Government Operations 29,673 30,760 64,428 57,125 Power Generation Systems 75,364 25,233 118,828 52,785 - ---------------------------------------------------------------------- 196,093 121,491 395,515 197,591 Corporate (14,301) (8,780) (21,245) (17,152) - ---------------------------------------------------------------------- TOTAL $ 181,792 $ 112,711 $ 374,270 $ 180,439 - ---------------------------------------------------------------------- EQUITY IN INCOME (LOSS) OF INVESTEES (1) Offshore Oil and Gas Construction $ (1,043) $ (715) $ (1,856) $ (1,381) Government Operations 6,519 6,046 12,992 12,499 Power Generation Systems 1,832 2,009 3,413 3,769 - ---------------------------------------------------------------------- TOTAL $ 7,308 $ 7,340 $ 14,549 $ 14,887 - ---------------------------------------------------------------------- DEPRECIATION & AMORTIZATION (1) Offshore Oil and Gas Construction $ 7,755 $ 5,895 $ 15,059 $ 12,287 Government Operations 4,674 3,379 8,374 6,612 Power Generation Systems 5,280 4,859 10,493 6,538 Corporate 255 127 576 517 - ---------------------------------------------------------------------- TOTAL $ 17,964 $ 14,260 $ 34,502 $ 25,954 - ---------------------------------------------------------------------- CAPITAL EXPENDITURES Offshore Oil and Gas Construction $ 55,744 $ 25,591 $ 90,168 $ 46,250 Government Operations 2,313 3,295 4,873 7,425 Power Generation Systems 9,616 6,252 20,802 8,107 Corporate 145 211 176 2,604 - ---------------------------------------------------------------------- TOTAL $ 67,818 $ 35,349 $ 116,019 $ 64,386 - ---------------------------------------------------------------------- BACKLOG Offshore Oil and Gas Construction $4,611,449 $3,231,059 $4,611,449 $3,231,059 Government Operations 1,491,523 1,524,306 1,491,523 1,524,306 Power Generation Systems 2,780,337 3,056,313 2,780,337 3,056,313 - ---------------------------------------------------------------------- TOTAL $8,883,309 $7,811,678 $8,883,309 $7,811,678 - ---------------------------------------------------------------------- (1) Included in Segment Income (Loss) above. McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS June 30, December 31, 2007 2006 ------------ ------------ (Unaudited) (In thousands) Current Assets: Cash and cash equivalents $ 1,063,681 $ 600,843 Restricted cash and cash equivalents 86,832 106,674 Investments 148,500 172,171 Accounts receivable - trade, net 714,380 668,310 Accounts and notes receivable - unconsolidated affiliates 29,731 29,825 Accounts receivable - other 59,267 48,041 Contracts in progress 246,958 230,146 Inventories 89,744 77,769 Deferred income taxes 168,441 180,234 Other current assets 42,313 39,461 - ---------------------------------------------------------------------- Total Current Assets 2,649,847 2,153,474 - ---------------------------------------------------------------------- Property, Plant and Equipment 1,653,831 1,525,187 Less accumulated depreciation 1,041,617 1,011,693 - ---------------------------------------------------------------------- Net Property, Plant and Equipment 612,214 513,494 - ---------------------------------------------------------------------- Investments 145,100 121,914 - ---------------------------------------------------------------------- Goodwill 127,298 89,226 - ---------------------------------------------------------------------- Deferred Income Taxes 213,923 260,341 - ---------------------------------------------------------------------- Long-Term Income Tax Receivable 33,828 299,786 - ---------------------------------------------------------------------- Other Assets 244,213 195,527 - ---------------------------------------------------------------------- TOTAL $ 4,026,423 $3,633,762 ====================================================================== McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 2007 2006 ------------ ------------ (Unaudited) (In thousands) Current Liabilities: Notes payable and current maturities of long-term debt $ 6,461 $ 257,492 Accounts payable 426,549 407,094 Accrued employee benefits 224,570 246,182 Accrued liabilities - other 289,563 264,839 Accrued contract cost 130,688 110,992 Advance billings on contracts 1,397,721 1,116,118 U.S. and foreign income taxes payable 44,315 58,557 - ---------------------------------------------------------------------- Total Current Liabilities 2,519,867 2,461,274 - ---------------------------------------------------------------------- Long-Term Debt 10,623 15,242 - ---------------------------------------------------------------------- Accumulated Postretirement Benefit Obligation 100,581 100,316 - ---------------------------------------------------------------------- Self-Insurance 84,077 84,704 - ---------------------------------------------------------------------- Pension Liability 339,505 372,504 - ---------------------------------------------------------------------- Other Liabilities 167,762 156,621 - ---------------------------------------------------------------------- Commitments and Contingencies Stockholders' Equity: Common stock, par value $1.00 per share, authorized 150,000,000 shares; issued 115,167,278 at June 30, 2007 and 113,897,309 at December 31, 2006 115,167 113,897 Capital in excess of par value 1,256,519 1,214,282 Accumulated deficit (163,416) (458,886) Treasury stock at cost, 2,939,320 shares at June 30, 2007 and 3,012,709 shares at December 31, 2006 (64,000) (60,581) Accumulated other comprehensive loss (340,262) (365,611) - ---------------------------------------------------------------------- Total Stockholders' Equity 804,008 443,101 - ---------------------------------------------------------------------- TOTAL $4,026,423 $3,633,762 ====================================================================== McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 2007 2006 ------------ ------------ (Unaudited) (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 307,435 $ 102,337 - ---------------------------------------------------------------------- Depreciation and amortization 34,502 25,954 Income of investees, less dividends (3,305) (3,149) (Gains) losses on asset disposals and impairments - net (1,750) 14,921 Gain on sale of business - (13,786) Provision for deferred taxes 53,746 90,678 Excess tax benefits from FAS 123(R) stock-based compensation (20,319) (13,163) Other 11,261 18,421 Changes in assets and liabilities, net of effects of acquisitions and divestitures: Accounts receivable (48,039) 114,023 Income tax receivable 270,368 (92,437) Net contracts in progress and advance billings on contracts 269,807 114,723 Accounts payable 18,945 (19,979) Income taxes (23,120) 31,241 Accrued and other current liabilities 37,592 (9,219) Pension liability, accumulated postretirement benefit obligation and accrued employee benefits (45,167) (25,486) Other, net (18,587) (3,820) - ---------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 843,369 331,259 - ---------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in restricted cash and cash equivalents 19,842 69,981 Purchases of property, plant and equipment (116,019) (64,386) Acquisition of Marine Mechanical Corporation, net of cash acquired (70,950) - Purchases of available-for-sale securities (1,737,053) (917,884) Maturities of available-for-sale securities 1,529,861 859,706 Sales of available-for-sale securities 212,743 172,521 Proceeds from asset disposals 2,531 21,549 Cash acquired from the reconsolidation of The Babcock & Wilcox Company - 164,200 Other (954) (2,549) - ---------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (159,999) 303,138 - ---------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt - 592 Payment of long-term debt (255,501) (236,941) Issuance of common stock 9,576 13,323 Payment of debt issuance costs - (8,606) Excess tax benefits from FAS 123(R) stock-based compensation 20,319 13,163 Other 4 (336) - ---------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES (225,602) (218,805) - ---------------------------------------------------------------------- EFFECTS OF EXCHANGE RATE CHANGES ON CASH 5,070 1,770 NET INCREASE IN CASH AND CASH EQUIVALENTS 462,838 417,362 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 600,843 19,263 - ---------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,063,681 $ 436,625 ====================================================================== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $ 17,790 $ 31,516 Income taxes (net of refunds) $ (237,470) $ 21,811 ====================================================================== CONTACT: McDermott Investor Relations & Corporate Communications Jay Roueche, 281-870-5462 Vice President jroueche@mcdermott.com or Robby Bellamy, 281-870-5165 Manager rbellamy@mcdermott.com -----END PRIVACY-ENHANCED MESSAGE-----