-----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, VN2VvizjV8id48lLA4rzXytj8C95M7KAJmD4+rdc2+zXVgIYODNJLpHepIjhMHsA /aF8lyW/sL9SgDaT8YKyjg== 0001157523-07-010927.txt : 20071107 0001157523-07-010927.hdr.sgml : 20071107 20071107163353 ACCESSION NUMBER: 0001157523-07-010927 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20071107 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071107 DATE AS OF CHANGE: 20071107 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: 071221932 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 a5540514.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): November 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 November 7, 2007, we issued a press release announcing our financial results for the quarter ended September 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 November 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/Dennis S. Baldwin ----------------------------- Dennis S. Baldwin Vice President and Chief Accounting Officer November 7, 2007 2 EX-99.1 2 a5540514ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 McDermott Reports Third Quarter 2007 Results Net Income of $140.4 million, $0.61 per fully diluted share Continued project execution produces outstanding results, Expecting 4th Quarter to complete strong 2007 HOUSTON--(BUSINESS WIRE)--Nov. 7, 2007--McDermott International, Inc. (NYSE:MDR) ("McDermott" or the "Company") today reported net income of $140.4 million, or $0.61 per diluted share, for the 2007 third quarter, compared to net income of $102.7 million, or $0.45 per diluted share, for the corresponding period in 2006. Weighted average common shares outstanding on a fully diluted basis were approximately 228.9 million and 228.3 million in the quarters ended September 30, 2007 and September 30, 2006, respectively. For 2006, the Company's common shares outstanding and earnings per share are adjusted to reflect the 2-for-1 stock split effected in September 2007. McDermott's revenues in the third quarter of 2007 were $1,324.0 million, compared to $1,118.3 million in the corresponding period in 2006. The 18.4 percent growth in Company revenues, compared to a year ago, was led by the Offshore Oil & Gas Construction segment which increased $142 million, or 32.3 percent. The revenues in the Power Generation Systems and Government Operations segments increased 6.2 percent and 20.3 percent, respectively. Operating income was $155.2 million in the 2007 third quarter, a 25.0 percent improvement compared to $124.1 million in the 2006 third quarter. The increase in operating income is attributable to continued exceptional performance within the Offshore Oil & Gas Construction segment combined with improved results from the Power Generation Systems segment. "Our employees' continued commitment to outstanding project execution again produced superior results for our shareholders," said Bruce W. Wilkinson, Chairman of the Board and Chief Executive Officer of McDermott. "With the continued strength of McDermott's Offshore Oil & Gas Construction business, we believe the 2007 fourth quarter will complete a remarkably strong year at McDermott." At September 30, 2007, McDermott's consolidated backlog was $9.3 billion, compared to $8.6 billion at September 30, 2006 and $8.9 billion at June 30, 2007. RESULTS OF OPERATIONS 2007 Third Quarter Compared to 2006 Third Quarter Offshore Oil & Gas Construction Segment Revenues in the Offshore Oil & Gas Construction segment were $582.2 million in the 2007 third quarter, compared to $440.2 million for the same period a year ago. The year-over-year increase in revenues resulted from a higher workload in the Middle East and Americas regions, in addition to increased worldwide marine activities. Segment income for the 2007 third quarter was $88.1 million, compared to $58.3 million in the 2006 third quarter. Major areas contributing to third quarter 2007 segment income include activities in the Middle East and Asia Pacific regions and projects within worldwide marine operations, including related settlements, change orders and contract close outs. At September 30, 2007, segment backlog was $4.9 billion, compared to backlog of $4.0 billion and $4.6 billion at September 30, 2006 and June 30, 2007, respectively. Power Generation Systems Segment Revenues in the Power Generation Systems segment for the third quarter 2007 were $567.2 million, compared to $534.1 million reported in the third quarter of 2006. The year-over-year improvement resulted from increased boiler activity and replacement part orders. Segment income for the 2007 third quarter was $49.4 million, compared to $37.0 million in the 2006 third quarter. Major areas contributing to third quarter 2007 segment income include utility steam system fabrication, industrial boiler, parts and service activities, including related settlements, change orders and contract close outs. At September 30, 2007, segment backlog was $3.0 billion compared to backlog of $3.2 billion and $2.8 billion at September 30, 2006 and June 30, 2007, respectively. Government Operations Segment Revenues in the Government Operations segment were $177.2 million in the 2007 third quarter, compared to $147.3 million for the same period a year ago. The improvement was primarily due to higher volumes in the manufacture of nuclear components for certain U.S. Government programs, including revenues from the recent acquisition of Marine Mechanical Corporation in April 2007. Segment income for the 2007 third quarter was $25.2 million, compared to $34.6 million in the 2006 third quarter. Major items contributing to the third quarter 2007 segment income include the manufacture of nuclear components for certain U.S. Government programs and the management and operations of various U.S. Government sites. In the third quarter of 2006, segment income benefited from the recognition of cost savings in backlog associated with the combination of two prior operating divisions into the Nuclear Operations Division. At September 30, 2007, segment backlog was $1.4 billion, compared to backlog of $1.4 billion and $1.5 billion at September 30, 2006 and June 30, 2007, respectively. Corporate Unallocated corporate expenses were $7.6 million in the 2007 third quarter, compared to $5.8 million in the 2006 third quarter. The increase was primarily related to higher stock based compensation expenses due to McDermott's 30.1 percent stock price increase during the third quarter, as well as other increased general corporate expenses. Other Income and Expense The Company's other income for the third quarter of 2007 was $13.6 million, compared to other income of $7.5 million in the third quarter of 2006. 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 and our optimism for the continued strength of our Offshore Oil & Gas Construction segment and completion of a strong 2007. 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 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 Third Quarter Earnings Release Date: Thursday, November 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 Nine Months Ended September 30, September 30, 2007 2006 2007 2006 ----------- ----------- ----------- ----------- (Unaudited) (In thousands, except per share amounts) Revenues $1,324,018 $1,118,260 $4,105,594 $2,812,097 - ---------------------------------------------------------------------- Costs and Expenses: Cost of operations 1,067,437 900,351 3,278,055 2,244,880 (Gains) losses on asset disposals and impairments - net (630) 28 (2,380) 14,949 Selling, general and administrative expenses 114,538 104,091 327,525 272,926 - ---------------------------------------------------------------------- Total Costs and Expenses 1,181,345 1,004,470 3,603,200 2,532,755 - ---------------------------------------------------------------------- Equity in Income of Investees 12,477 10,310 27,026 25,197 - ---------------------------------------------------------------------- Operating Income 155,150 124,100 529,420 304,539 - ---------------------------------------------------------------------- Other Income (Expense): Interest income 17,272 16,644 45,411 36,646 Interest expense (3,476) (4,992) (18,431) (22,403) IRS interest expense adjustment - 421 - 11,011 Loss on early retirement of debt - - - (49,016) Other expense - net (205) (4,609) (5,050) (10,608) - ---------------------------------------------------------------------- Total Other Income (Expense) 13,591 7,464 21,930 (34,370) - ---------------------------------------------------------------------- Income from Continuing Operations before Provision for Income Taxes 168,741 131,564 551,350 270,169 Provision for Income Taxes 28,333 28,897 103,507 78,059 - ---------------------------------------------------------------------- Income from Continuing Operations 140,408 102,667 447,843 192,110 Income from Discontinued Operations - - - 12,894 - ---------------------------------------------------------------------- Net Income $ 140,408 $ 102,667 $ 447,843 $ 205,004 ====================================================================== Earnings per Common Share: Basic: Income from Continuing Operations $ 0.63 $ 0.47 $ 2.01 $ 0.88 Income from Discontinued Operations $ 0.00 $ 0.00 $ 0.00 $ 0.06 Net Income $ 0.63 $ 0.47 $ 2.01 $ 0.94 Diluted: Income from Continuing Operations $ 0.61 $ 0.45 $ 1.96 $ 0.84 Income from Discontinued Operations $ 0.00 $ 0.00 $ 0.00 $ 0.06 Net Income $ 0.61 $ 0.45 $ 1.96 $ 0.90 ====================================================================== McDERMOTT INTERNATIONAL, INC. SELECTED SEGMENT INFORMATION Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 ----------- ----------- ----------- ----------- (Unaudited; In Thousands) REVENUES Offshore Oil and Gas Construction $ 582,168 $ 440,164 $1,712,414 $1,134,451 Government Operations 177,215 147,337 506,340 471,816 Power Generation Systems 567,173 534,074 1,896,178 1,211,807 Adjustments and Eliminations (2,538) (3,315) (9,338) (5,977) - ---------------------------------------------------------------------- TOTAL $1,324,018 $1,118,260 $4,105,594 $2,812,097 - ---------------------------------------------------------------------- SEGMENT INCOME Offshore Oil and Gas Construction $ 88,143 $ 58,262 $ 300,402 $ 145,943 Government Operations 25,207 34,648 89,635 91,773 Power Generation Systems 49,376 36,965 168,204 89,750 - ---------------------------------------------------------------------- 162,726 129,875 558,241 327,466 Corporate (7,576) (5,775) (28,821) (22,927) - ---------------------------------------------------------------------- TOTAL $ 155,150 $ 124,100 $ 529,420 $ 304,539 - ---------------------------------------------------------------------- EQUITY IN INCOME (LOSS) OF INVESTEES (1) Offshore Oil and Gas Construction $ (1,082) $ (677) $ (2,938) $ (2,058) Government Operations 6,615 6,464 19,607 18,963 Power Generation Systems 6,944 4,523 10,357 8,292 - ---------------------------------------------------------------------- TOTAL $ 12,477 $ 10,310 $ 27,026 $ 25,197 - ---------------------------------------------------------------------- DEPRECIATION & AMORTIZATION (1) Offshore Oil and Gas Construction $ 21,997 $ 7,511 $ 37,056 $ 19,798 Government Operations 5,259 3,481 13,633 10,093 Power Generation Systems 5,071 4,908 15,564 11,446 Corporate 279 209 855 726 - ---------------------------------------------------------------------- TOTAL $ 32,606 $ 16,109 $ 67,108 $ 42,063 - ---------------------------------------------------------------------- CAPITAL EXPENDITURES Offshore Oil and Gas Construction $ 46,761 $ 23,613 $ 136,929 $ 69,863 Government Operations 2,859 3,697 7,732 11,122 Power Generation Systems 10,467 9,878 31,269 17,985 Corporate 5,697 173 5,873 2,777 - ---------------------------------------------------------------------- TOTAL $ 65,784 $ 37,361 $ 181,803 $ 101,747 - ---------------------------------------------------------------------- BACKLOG Offshore Oil and Gas Construction $4,905,011 $4,014,670 $4,905,011 $4,014,670 Government Operations 1,366,905 1,376,701 1,366,905 1,376,701 Power Generation Systems 3,048,323 3,202,147 3,048,323 3,202,147 - ---------------------------------------------------------------------- TOTAL $9,320,239 $8,593,518 $9,320,239 $8,593,518 - ---------------------------------------------------------------------- (1) Included in Segment Income (Loss) above. McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2007 2006 ------------------- ------------------- (Unaudited) (In thousands) ASSETS Current Assets: Cash and cash equivalents $ 735,599 $ 600,843 Restricted cash and cash equivalents 98,295 106,674 Investments 248,089 172,171 Accounts receivable - trade, net 761,341 668,310 Accounts and notes receivable - unconsolidated affiliates 33,227 29,825 Accounts receivable - other 95,769 48,041 Contracts in progress 217,641 230,146 Inventories 94,428 77,769 Deferred income taxes 120,575 180,234 Other current assets 87,100 39,461 - --------------------------------------------------------------------- Total Current Assets 2,492,064 2,153,474 - --------------------------------------------------------------------- Property, Plant and Equipment 1,966,456 1,525,187 Less accumulated depreciation 1,071,111 1,011,693 - --------------------------------------------------------------------- Net Property, Plant and Equipment 895,345 513,494 - --------------------------------------------------------------------- Investments 159,610 121,914 - --------------------------------------------------------------------- Goodwill 149,229 89,226 - --------------------------------------------------------------------- Deferred Income Taxes 226,497 260,341 - --------------------------------------------------------------------- Long-Term Income Tax Receivable 2,958 299,786 - --------------------------------------------------------------------- Other Assets 269,081 195,527 - --------------------------------------------------------------------- TOTAL $4,194,784 $3,633,762 ===================================================================== McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31, 2007 2006 -------------------- ------------------- (Unaudited) (In thousands) Current Liabilities: Notes payable and current maturities of long-term debt $ 6,555 $ 257,492 Accounts payable 462,828 407,094 Accrued employee benefits 273,791 246,182 Accrued liabilities - other 220,241 185,762 Accrued contract cost 111,050 110,992 Advance billings on contracts 1,392,893 1,116,118 Accrued warranty expense 102,041 79,077 Income taxes payable 42,332 58,557 - ---------------------------------------------------------------------- Total Current Liabilities 2,611,731 2,461,274 - ---------------------------------------------------------------------- Long-Term Debt 10,653 15,242 - ---------------------------------------------------------------------- Accumulated Postretirement Benefit Obligation 99,630 100,316 - ---------------------------------------------------------------------- Self-Insurance 80,929 84,704 - ---------------------------------------------------------------------- Pension Liability 248,590 372,504 - ---------------------------------------------------------------------- Other Liabilities 155,700 156,621 - ---------------------------------------------------------------------- Commitments and Contingencies Stockholders' Equity: Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 231,159,285 at September 30, 2007 and 227,794,618 at December 31, 2006 231,159 227,795 Capital in excess of par value 1,161,571 1,100,384 Accumulated deficit (23,008) (458,886) Treasury stock at cost, 5,867,590 shares at September 30, 2007 and 6,025,418 shares at December 31, 2006 (63,962) (60,581) Accumulated other comprehensive loss (318,209) (365,611) - ---------------------------------------------------------------------- Total Stockholders' Equity 987,551 443,101 - ---------------------------------------------------------------------- TOTAL $4,194,784 $3,633,762 ====================================================================== McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 2007 2006 ------------------- ------------------- (Unaudited) (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 447,843 $ 205,004 - ---------------------------------------------------------------------- Depreciation and amortization 67,108 42,063 Income of investees, less dividends (10,196) (9,329) (Gains) losses on asset disposals and impairments - net (2,380) 14,949 Gain on sale of business - (13,786) Provision for deferred taxes 73,485 264,681 Excess tax benefits from FAS 123(R) stock-based compensation (27,234) (18,126) Other 27,916 20,625 Changes in assets and liabilities, net of effects of acquisitions and divestitures: Accounts receivable (129,353) 44,853 Income tax receivable 262,185 (236,291) Net contracts in progress and advance billings on contracts 287,980 179,440 Accounts payable 46,522 36,401 Income taxes (22,514) 10,817 Accrued and other current liabilities 47,003 17,888 Pension liability, accumulated postretirement benefit obligation and accrued employee benefits (78,728) (16,757) Other, net (30,359) 17,233 - ---------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 959,278 559,665 - ---------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in restricted cash and cash equivalents 8,379 70,968 Purchases of property, plant and equipment (181,803) (101,747) Acquisition of businesses, net of cash acquired (334,457) - Net (increase) decrease in available-for-sale securities (106,151) 44,683 Proceeds from asset disposals 4,582 21,516 Cash acquired from the reconsolidation of The Babcock & Wilcox Company - 164,200 Other (2,016) (2,612) - ---------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (611,466) 197,008 - ---------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt - 592 Payment of long-term debt (255,629) (237,066) Issuance of common stock 12,683 17,804 Payment of debt issuance costs (3,468) (8,654) Excess tax benefits from FAS 123(R) stock-based compensation 27,234 18,126 Other 4 1,624 - ---------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES (219,176) (207,574) - ---------------------------------------------------------------------- EFFECTS OF EXCHANGE RATE CHANGES ON CASH 6,120 1,957 NET INCREASE IN CASH AND CASH EQUIVALENTS 134,756 551,056 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 600,843 19,263 - ---------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 735,599 $ 570,319 ====================================================================== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $ 23,896 $ 33,212 Income taxes (net of refunds) $ (223,285) $ 17,720 ====================================================================== CONTACT: McDermott International, Inc. Investor Relations & Corporate Communications Vice President Jay Roueche, 281-870-5462 jroueche@mcdermott.com or Manager Robby Bellamy, 281-870-5165 rbellamy@mcdermott.com -----END PRIVACY-ENHANCED MESSAGE-----