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): December 7, 2009

McDERMOTT INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

REPUBLIC OF PANAMA	001-08430	72-0593134
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer 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

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 5.02           Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

          On December 7, 2009, McDermott International, Inc. (“McDermott”) announced its plans to separate its two principal operating subsidiaries, The Babcock & Wilcox Company (“B&W”) and J. Ray McDermott, S.A. (“J. Ray”) into two independent, publicly traded companies.  Upon completion of the separation, John A. Fees, Chief Executive Officer of McDermott, will become a member of the B&W Board of Directors.  Stephen M. Johnson, McDermott’s current President and Chief Operating Officer, has been appointed President and Chief Executive Officer of J. Ray, effective January 1, 2010, in connection with the previously announced retirement of Robert A. Deason.  Upon completion of the proposed separation, Mr. Johnson will become the Chief Executive Officer of McDermott, which is expected to be renamed J. Ray. Brandon C. Bethards will continue to serve as B&W’s President and Chief Executive Officer.  Mr. Bethards and Mr. Johnson will join the Board of Directors of B&W and J. Ray, respectively.  A copy of the press releases regarding the proposed separation and Mr. Johnson’s appointment as an officer of J. Ray are attached hereto as Exhibit 99.1 and 99.2, respectively, and incorporated herein by reference.

Item 7.01           Regulation FD Disclosure.

A conference call to discuss the separation was held on December 7, 2009, at 8:30 a.m. EST.  A copy of the presentation from that conference call is attached hereto as Exhibit 99.3, and will also be available for a limited time on our website at www.mcdermott.com under “Investor Relations – Webcasts & Presentations.”

The information furnished pursuant to this Item 7.01, including Exhibit 99.3, 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 may be expressly provided by specific reference in such filing.

Item 8.01           Other Events.

          On December 7, 2009, McDermott announced plans to separate its two principal operating subsidiaries into two independent, publicly traded companies.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.    

Item 9.01           Financial Statements and Exhibits.

(d)	Exhibits
	99.1	Press Release dated December 7, 2009
	99.2	Press Release dated December 7, 2009
	99.3	Investor Conference Call Presentation dated December 7, 2009

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
December 7, 2009

EX-99.1

Exhibit 99.1

McDermott Plans to Separate Into Two Independent Companies: Babcock & Wilcox and J. Ray McDermott

Babcock & Wilcox to be Distributed to Shareholders as a Tax-Free Spin-Off

HOUSTON--(BUSINESS WIRE)--December 7, 2009--McDermott International, Inc. (NYSE:MDR) (“McDermott” or “the Company”) announced today that it plans to separate its operating subsidiaries, The Babcock & Wilcox Company (“B&W”) and J. Ray McDermott, S.A. (“J. Ray”), into two independent, publicly traded companies. The separation is anticipated to be effected through a spin-off of B&W, a transaction that is intended to be tax-free to McDermott shareholders. Following completion of the separation, McDermott intends to be renamed J. Ray McDermott, S.A., and shareholders will own 100 percent of two separate companies: B&W and J. Ray. The transaction is expected to be completed in nine to twelve months.

The separation of B&W and J. Ray into two independent, publicly traded companies is expected to provide numerous benefits for McDermott shareholders, each company and its stakeholders. Selected benefits resulting from the transaction include:

• Each company will be better positioned to accelerate growth based on its distinct corporate strategy, market opportunities, free cash flow and customer relationships;
• More efficient allocation of capital, which would allow each company to develop an independent investment program without the constraints of a holding company structure;
• Distinct publicly traded stock that could be used as currency for future acquisitions;
• Elimination of the risk posed by recent modifications in the rules under the Federal Acquisition Regulations (“FAR”) that limit the U.S. Government’s ability to contract with “inverted” companies and their subsidiaries; and
• Sharpened management focus and strategic vision, and closer alignment of incentives with shareholder value creation.

“The separation of B&W and J. Ray will be a transformational event for McDermott, which we expect to deliver important benefits to our shareholders, as well as the employees of each business,” said John A. Fees, Chief Executive Officer of McDermott. “We believe that as separate, independent, publicly traded entities, B&W and J. Ray will benefit from enhanced management focus, more efficient capital allocation and greater operational and strategic flexibility. Given that McDermott has historically operated each business independently under the B&W and J. Ray franchises, including separate external credit facilities, we believe this should be viewed as a seamless transition for our customers and employees.”

Mr. Fees continued, “Both B&W and J. Ray have made great strides in recent years. As the performance of each business has improved, the attractiveness of their respective prospects and the magnitude of their opportunities have become more evident. In light of recent changes in the rules under the FAR, our Board of Directors, together with its independent financial and legal advisors, engaged in a fresh, comprehensive review of the Company and its businesses, focusing on the best way for B&W to continue serving the U.S. Government’s defense and nuclear operations objectives, while enhancing long-term value for McDermott’s shareholders. We believe B&W and J. Ray are well-positioned to operate as well-capitalized, independent public companies and that the separation is the best way to achieve the objectives of our shareholders as well as the B&W and J. Ray businesses.”

Creating Two Focused, Pure-Play Companies

Upon completion of the transaction, McDermott shareholders will hold shares of two standalone, highly focused, publicly traded companies:

The Babcock & Wilcox Company

B&W is a leading technology innovator in power generation and a specialty manufacturer of nuclear components with a rich legacy spanning over 140 years. B&W designs, engineers, manufactures, and constructs power generation systems, primarily for large utility and industrial customers, as well as related aftermarket parts, services and environmental control systems. For its largest customer, the U.S. Government, B&W supplies nuclear components for defense programs and manages and operates nuclear facilities and environmental management sites. Between 2006 and 2008, B&W generated an average of over $3 billion in annual revenues, with approximately $350 million in average annual operating income. B&W, including its joint venture companies, employs over 15,000 people worldwide.

B&W plans to establish new corporate headquarters in Charlotte, North Carolina, in the near future, and no significant impact is expected in its operational locations as a result of the separation. B&W will remain incorporated in Delaware. Brandon C. Bethards will continue to serve as B&W’s President and Chief Executive Officer and will join B&W’s Board of Directors upon completion of the transaction. Mr. Bethards joined B&W in 1974, and has held positions of increasing responsibility within the power industry, leading to his current appointment in November 2008. In addition, John Fees will join Mr. Bethards on the Board of Directors of B&W and will play an integral role in establishing B&W as a publicly traded company. B&W expects to list its shares on the New York Stock Exchange.

J. Ray McDermott, S.A.

J. Ray is a leading engineering, construction and installation company focused on the offshore upstream oil and gas market. J. Ray provides front-end design and detailed engineering, construction and installation of offshore production facilities, pipelines and subsea systems. J. Ray’s customers include national and major oil and gas companies worldwide, and the company has a significant presence in the Americas, Asia-Pacific, Caspian and Middle East markets. Between 2006 and 2008, J. Ray generated an average of $2.4 billion in annual revenues with approximately $245 million in average annual operating income. J. Ray employs approximately 16,000 people worldwide.

J. Ray’s principal executive offices will remain in Houston, Texas. J. Ray will be led by Stephen M. Johnson as President and Chief Executive Officer and he will assume this role at year-end in connection with the previously announced retirement of Robert A. Deason,

J. Ray’s current President and Chief Executive Officer. Mr. Johnson currently serves as President and Chief Operating Officer of McDermott and has over 35 years of experience in the engineering and construction industry. He will join J. Ray’s Board of Directors upon completion of the separation. J. Ray will retain the McDermott “MDR” listing on the New York Stock Exchange.

Management

McDermott’s existing corporate management team, including John Fees and Michael S. Taff, Chief Financial Officer, will continue to lead the Company until the separation is completed.

Mr. Fees concluded, “We are confident that the management teams of B&W and J. Ray have the experience to lead these two businesses as separate, public companies and create value for their respective shareholders, employees, customers and other stakeholders. Finally, the Board of Directors and I wish to express our gratitude to our talented and dedicated employees, who will be instrumental to the future success of B&W and J. Ray.”

Financial Overview

At September 30, 2009, McDermott reported cash, cash equivalents and investments totaling approximately $1.1 billion, virtually no funded long-term debt, shareholders’ equity in excess of $1.7 billion and total assets of $4.7 billion. In addition, McDermott’s subsidiaries had credit facilities totaling $1.3 billion. McDermott believes that following the separation, each resulting company will have substantial liquidity, ample access to capital and a strong balance sheet. Both companies are expected to be well capitalized, providing the financial flexibility to take advantage of future growth opportunities.

Completing the Spin-Off

The proposed tax-free spin-off will be accomplished through a pro rata distribution to McDermott shareholders. Completion of the spin-off is subject to a number of conditions, including final approval by McDermott’s Board of Directors, confirmation of the tax-free nature of the transaction, as well as effectiveness of a Form 10 registration statement to be filed with the U.S. Securities and Exchange Commission (“SEC”). The Form 10 will include detailed information about B&W, the spin-off and related matters. McDermott will distribute an information statement to shareholders following completion of the SEC’s review of the Form 10. Approval by the McDermott shareholders is not required for completion of the spin-off.

Advisors

Morgan Stanley & Co. is serving as financial advisor and Baker Botts LLP is serving as legal counsel to McDermott. Goldman, Sachs & Co. is serving as financial advisor and Wachtell, Lipton, Rosen & Katz is serving as legal counsel to the McDermott Board of Directors.

Conference Call to Discuss Separation

Date: Monday, December 7, 2009, at 8:30 a.m. EST (7:30 a.m. CST)
Dial in: (800) 299.7098 (U.S.); (617) 801.9715 (International)
Passcode: 35502183
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

NOTE: To access an investor presentation related to the transaction, please visit the Investor Relations section of McDermott’s Web site at www.mcdermott.com

About McDermott

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 25,000 employees.

Forward Looking Statements

In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended, 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 or may otherwise be material. These forward-looking statements include statements about the manner, timing, tax-free nature and expected benefits associated with separating McDermott’s principal operating subsidiaries, as well as the anticipated management teams of the separated companies and their experience to lead the two companies and create value for their respective shareholders and the impact of pending regulations on their respective businesses. 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 the risk that the proposed separation may not be completed as anticipated or at all, delays or other difficulties in completing the separation, disruptions experienced with customers and suppliers, the inability of either J. Ray or B&W to successfully operate independently and the inability to retain key personnel. If one or more of these risks materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected, projected or implied. 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 annual report on Form 10-K and quarterly reports on Forms 10-Q. This news release reflects management's views as of December 7, 2009. Except to the extent required by applicable law, McDermott undertakes no obligation to update or revise any forward-looking statement.

CONTACT:
McDermott Investor Relations & Corporate Communications
Jay Roueche, 281-870-5462
Vice President
jroueche@mcdermott.com
or
Robby Bellamy, 281-870-5165
Director
rbellamy@mcdermott.com

EX-99.2

Exhibit 99.2

Stephen M. Johnson Named President and Chief Executive Officer of J. Ray McDermott

HOUSTON--(BUSINESS WIRE)--December 7, 2009--McDermott International, Inc. (NYSE:MDR) (“McDermott” or the “Company”) announced today that Stephen M. Johnson, the Company’s current President and Chief Operating Officer, has been appointed President and Chief Executive Officer of J. Ray McDermott, S.A. (“J. Ray”), effective January 1, 2010. He succeeds Robert A. Deason, who, as previously announced, will retire at the end of the year.

Separately, McDermott announced today that it plans to separate its operating subsidiaries, The Babcock & Wilcox Company (“B&W”) and J. Ray, into two independent, publicly traded companies. Following completion of the separation, McDermott intends to be renamed J. Ray McDermott, S.A., and McDermott shareholders will own 100 percent of two separate companies: B&W and J. Ray. Mr. Johnson will continue to serve as President and CEO of the newly independent J. Ray and will join the company’s Board of Directors.

“Steve is the right leader for J. Ray at this transformational time,” said John A. Fees, Chief Executive Officer of McDermott. “He has a deep knowledge of our industry, a strong track record of success and the leadership skills to excel as J. Ray’s President and CEO. We are confident that under his guidance, J. Ray will continue to succeed as a leading engineering and construction company focused on offshore oil and gas projects.”

“I am delighted to take on this new role,” said Mr. Johnson. “During my time at McDermott, I have seen first hand the focus and dedication of our employees, and I look forward to continuing to work with them, the leadership team and the Board in the years to come. This is an exciting time for J. Ray and, I believe, as a standalone, public company, we will be well positioned to drive growth through the expected future upswing in the offshore oil and gas industry.”

J. Ray continues to operate with the same successful management team, and welcomes the new leadership of Mr. Johnson. With sound financial strength, J. Ray’s business fundamentals are unchanged: focusing on providing innovative engineering, strong procurement services, modern fabrication facilities and a flexible, capable fleet to serve customers worldwide for conventional projects, floating facilities, and subsea infrastructure. Its primary focus continues to be on successfully executing projects and making investments that continuously improve its ability to meet customer and market needs.

Mr. Fees added, “J. Ray’s accomplishments under Bob Deason’s leadership have been extraordinary. J. Ray achieved new records in terms of revenues, operating income and backlog, which together are indicative of the improved quality of service that J. Ray provided to its clients under Bob’s tenure. On behalf of the Board, our employees and management team, we thank Bob for all his efforts and wish him a long and fulfilling retirement.”

Mr. Deason stated, “It has been an honor and a privilege to lead J. Ray these past six years. J. Ray’s committed employees have been the key driver of our success, and I am grateful for having had the opportunity to know and work alongside them. Having worked closely with Steve, I am confident J. Ray is in good hands under his leadership.”

Mr. Johnson has served as President and Chief Operating Officer of McDermott since April 2009, with the primary responsibility for directing the day-to-day operations of the Company and its operating subsidiaries, including J. Ray. He has over 35 years of experience in the engineering and construction industry. Previously, Mr. Johnson served as Senior Executive Vice President and Member, Office of the Chairman at Washington Group International (“WGI”), prior to its sale to URS Corporation. In this role, he was an integral member of the WGI-team responsible for that company’s overall strategic direction, operations and financial results. Prior to joining WGI in 2001, Mr. Johnson spent 28 years with Fluor Corporation. Mr. Johnson earned a Bachelor of Science degree in engineering from Texas A&M University in 1973, and is a licensed Professional Engineer in the state of Texas. He also completed executive education in management and finance at Duke University.

About McDermott

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 25,000 employees.

Forward Looking Statements

In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended, McDermott cautions that statements in this press release, which are forward-looking and provide other than historical information, involve risks and uncertainties. These forward-looking statements include statements about McDermott’s plans to separate its operating subsidiaries and rename McDermott, Mr. Johnson’s anticipated role at J. Ray and on its Board of Directors following the proposed separation, our belief that J. Ray will be well-positioned as a standalone company and our expectation for future upswing in its industry. Those statements are subject to numerous uncertainties and risks, including delays or other difficulties in completing the proposed separation and changes in the Company’s or its Board of Directors’ plans with regard to the plans expressed in this release. If one or more of these risks materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected, projected or implied. For a more complete discussion of other risk factors that may affect the Company, please see McDermott’s periodic filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2008 and subsequent quarterly reports on Form 10-Q. This news release reflects management's views as of December 7, 2009. Except to the extent required by applicable law, McDermott undertakes no obligation to update or revise any forward-looking statement.

CONTACT:
McDermott Investor Relations & Corporate Communications
Jay Roueche, 281-870-5462
Vice President
jroueche@mcdermott.com
or
Robby Bellamy, 281-870-5165
Director
rbellamy@mcdermott.com

EX-99.3

Exhibit 99.3

McDermott International, Inc.(NYSE: MDR) MCDERMOTT PLANS TO SEPARATE INTO TWO INDEPENDENT COMPANIES: BABCOCK & WILCOX AND J. RAY MCDERMOTT December 7, 2009

Forward Looking Statements / Safe Harbor In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott cautions that statements in this presentation that are forward-looking and provide other than historical information involve risks and uncertainties that may impact actual results and any future performance suggested in the forward-looking statements. The forward-looking statements in this presentation speak to conditions as of the date of this presentation and include statements regarding backlog, to the extent backlog may be viewed as an indicator of future revenues; the proposed separation of B&W and J. Ray, including the manner, timing, tax-free nature and expect benefits thereof; and the anticipated management teams and other information about B&W and J. Ray that is not historical in nature. Although McDermott’s management believes that the expectations reflected in those forward-looking statements are reasonable, McDermott can give no assurance that those expectations will prove to have been correct.  Those statements are made based on various underlying assumptions and are subject to numerous uncertainties and risks, including, without limitation, delays or other difficulties in completing the proposed separation, the risk that the propose separation may not be completed as anticipated or at all, disruptions experienced with customers and suppliers, the inability of either J. Ray or B&W to successfully operate independently and the inability to retain key personnel. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those anticipated. For a more complete discussion of these and other risks, please see McDermott’s periodic filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2008 and subsequent quarterly reports on Form 10-Q. We do not undertake any obligation to update the forward-looking statements included in this presentation to reflect events or circumstances after the date of this presentation, unless we are required by applicable securities laws to do so.

Transaction Overview McDermott International, Inc. (“McDermott”) announced plans to separate its operating subsidiaries into two independent, publicly traded companies: The Babcock & Wilcox Company (“B&W”)J. Ray McDermott (“J. Ray”)Separation anticipated to be effected through a spin-off of B&WTax-free to McDermott shareholdersMcDermott intends to be renamed J. Ray McDermottPost-transaction, shareholders will own 100% of two separate companies: B&W and J. Ray Expected to close in 9 to 12 months Headquarters: Charlotte, NC (future) Incorporation: Delaware CEO: Brandon C. Bethards LTM Revenues: $3.0bn# of Employees: 15,000 Headquarters: Houston, TX Incorporation: Panama CEO: Stephen M. Johnson LTM Revenues: $3.4bn# of Employees: 16,000

Compelling Strategic and Financial Benefits Better positions each company to accelerate growth based on distinct corporate strategy, market opportunities, free cash flow and customer relationships Independent Pure-Play Companies More efficient allocation of capital, which would allow each company to develop an independent investment program without the constraints of a holding company structure Efficient Capital Allocation Distinct publicly traded stock that could be used as currency for future acquisitions Attractive Currencies Sharpened management focus and strategic vision, and closer alignment of incentives with shareholder value creation Focused Management Elimination of the risk posed by recent modifications of the rules under the Federal Acquisition Regulations (“FAR”) that limit the U.S. Government’s ability to contract with “inverted” companies and their subsidiaries Elimination of FAR Issues

Background on U.S. Federal Acquisition Regulation (“FAR”) As outlined in McDermott’s filings with the SEC, recent interim rules prohibit federal agencies from awarding new contracts to inverted companies and their subsidiariesThese interim rules were passed on July 1, 2009 by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations CouncilTo date, FAR has not yet significantly impacted the Company’s operations or profitabilityMcDermott is incorporated in Panama as a result of our inversion in the 1980s, and as such the new regulations may impact our ability to pursue new contract awards with the U.S. GovernmentOnly B&W, which derives a substantial amount of its revenues and profits from services provided to the U.S. Government, would be affected by the regulationsJ. Ray would not be affected – not a Government contractorExisting contracts should not be impacted by FARFollowing the spin-off, B&W would be an independent company still incorporated in Delaware but without a foreign parent, and thus would be able to compete for Government contracts without restriction from the interim rules of the FARNo change to J. Ray’s incorporation is anticipated Separation Eliminates FAR Risks

Overview of The Babcock & Wilcox CompanyLeading technology innovator in power generation and a specialty manufacturer of nuclear components with legacy spanning 140 years Goverment OperationsSupplies components for submarines and aircraft carriers and provides various other services to the U.S. Government, primarily within the nuclear weapons complex of the Department of EnergyPower Generation SystemsDesigns, engineers, manufactures and constructs large utility and industrial power generation systemsSupplies fossil-fired boilers, commercial nuclear steam generators and components, and environmental equipment and related aftermarket parts and servicesPlans to establish new corporate headquarters in Charlotte, NC Do not expect significant impact to operational locations President and CEO: Brandon C. Bethards Over 15,000 employees worldwide

Babcock & Wilcox Global Presence Beijing Wuhan Esbjerg Dumbarton Cambridge Malvern Barberton Mt. Vernon West Point Oak Ridge Erwin Lynchburg West Mifflin Melville New Orleans Amarillo Los Alamos Nye County Livermore Idaho Falls Monterrey Lancaster Aiken Euclid Power Generation Systems Government Operations

Babcock & Wilcox Summary Financials[1] (unaudited, US$ in millions) [1] Represents combined segment operating results for Government Operations and Power Generation Systems; operating income does not include unallocated corporate expenses[2] Through September 30, 2009 $ 3,198 $ 3,402 NM 27.0% 6.4% 16.2% $ 226 $ 357 $ 466 $ 259 9.0% 11.2% 13.7% 12.0% 43.5% $ 31 $ 41 $ 45 $ 52 $ 40 $ 54 $ 50 $ 51 $ 3,500 $ 5,067 $ 5,359 $ 4,601

Leading engineering, construction and installation company focused on the offshore upstream oil & gas marketKey offerings include:Front-end design and detailed engineeringConstruction and installation of offshore production facilitiesInstallation of pipelines and subsea systems Comprehensive project management and procurement services Customers include national and major oil and gas companies worldwideAbout 90% of FY 2008 revenues came from outside of U.S.Principal executive offices remain in Houston, TX President and CEO: Stephen M. JohnsonApproximately 16,000 employees worldwide Overview of J. Ray McDermott Topsides Installation in Gulf of Thailand Construction of Topsides in Middle East

J. Ray Global Presence Altamira Morgan City Dartmouth Baku Bautino Al Khobar Doha Jebel Ali Dubai Chennai Kuala Lumpur Batam Jakarta Perth Singapore Ho Chi Minh City Qingdao Offshore Oil & Gas Construction Houston

J. Ray Summary Financials[1] (unaudited, US$ in millions) [1] Represents segment operating results for Offshore Oil and Gas Construction; operating income does not include unallocated corporate expenses[2] Through September 30, 2009 $ 1,610 $ 2,446 $ 3,181 $ 2,568 30.0% 51.9% 30.1% 40.6% $ 195 $ 400 $ 146 $ 219 12.1% 16.4% 4.6% 8.5% (13.5%) $ 29 $ 54 $ 80 $ 65 $ 90 $ 173 $ 194 $ 124 $ 4,100 $ 4,753 $ 4,457 $ 3,943

Key Next Steps Preparation of intercompany agreements Preparation of financial statements and filing of Form 10 SEC review of Form 10 Confirmation of tax treatment Board action to declare record and distribution dates No shareholder vote required Anticipated completion within 9-12 months

Transaction Summary McDermott shareholders will own two public companies following the spin-off: B&W and J. Ray B&W and J. Ray are each leaders in their fields and are well-positioned to operate as standalone public companies The spin-off will enable B&W and J. Ray to pursue growth opportunities without the constraints of a holding company structure and eliminate FAR risks B&W and J. Ray will benefit substantially from greater operational and strategic flexibility Independent structure will enhance focus and more closely align incentives for management with shareholder interests B&W and J. Ray will each be led by a highly experienced and talented management team