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
10, 2012
________________________
McDermott International, Inc.
(Exact
name of registrant as specified in its charter)
________________________
REPUBLIC OF PANAMA
(State or other jurisdiction of
incorporation)
001-08430 | 72-0593134 |
(Commission File Number) | (IRS Employer Identification No.) |
757 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 10, 2012, we issued a press release announcing our financial results for the first quarter ended March 31, 2012. A copy of the press release is furnished 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
5.07 Submission of Matters to a Vote of Security Holders.
Results of Annual Meeting of Stockholders
We held our 2012 Annual Meeting of Stockholders (the “Annual Meeting”)
on Thursday, May 10, 2012, in Houston, Texas. Set forth below are the
final voting results on each matter submitted to a vote of stockholders
at the Annual Meeting. Each proposal is described in more detail in our
Proxy Statement for the Annual Meeting dated March 30, 2012.
Proposal
1: The stockholders elected each of the eight director nominees to
our Board of Directors for a one-year term, with the voting results as
follows:
Nominee | Votes For | Votes Withheld | Broker Non-Votes | |||
John F. Bookout, III | 194,975,527 | 1,599,019 | 24,802,642 | |||
Roger A. Brown | 194,549,367 | 2,025,179 | 24,802,642 | |||
Stephen G. Hanks | 194,745,781 | 1,828,765 | 24,802,642 | |||
Stephen M. Johnson | 191,274,264 | 5,300,282 | 24,802,642 | |||
D. Bradley McWilliams | 194,785,938 | 1,788,608 | 24,802,642 | |||
Thomas C. Schievelbein | 192,599,517 | 3,975,029 | 24,802,642 | |||
Mary L. Shafer-Malicki | 195,121,911 | 1,452,635 | 24,802,642 | |||
David A. Trice | 194,939,419 | 1,635,127 | 24,802,642 |
Proposal 2: The stockholders approved, on an advisory basis, our
named executive officer compensation, with the voting results as follows:
For | Against | Abstentions | Broker Non-Votes | |||
190,639,242 | 5,314,278 | 621,026 | 24,802,642 |
Proposal 3: The stockholders ratified the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2012, with the voting results as follows:
For | Against | Abstentions | ||
220,705,210 | 508,043 | 163,935 |
A copy of our press release announcing the results of the Annual Meeting is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits | |
99.1 | Press Release Announcing Results for First Quarter dated May 10, 2012. | |
99.2 | Press Release Announcing the Results of the Annual Meeting dated May 10, 2012. |
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. |
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By: |
/s/ Perry L. Elders |
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Perry L. Elders |
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Senior Vice President and Chief Financial Officer |
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May 10, 2012 |
4
Exhibit 99.1
McDermott Reports First Quarter 2012 Financial Results
Record Quarterly Bookings Produce Backlog of $5.8 Billion
HOUSTON--(BUSINESS WIRE)--May 10, 2012--McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today reported income from continuing operations of $59.3 million, or $0.25 per diluted share, for the 2012 first quarter. The results of the 2012 first quarter compare to income from continuing operations of $68.8 million, or $0.29 per diluted share, in the corresponding period of 2011. Classified as discontinued operations, the results of McDermott’s charter fleet business are excluded from all periods presented. This charter fleet business was sold on March 19, 2012, with the Company receiving proceeds of approximately $61 million. Weighted average common shares outstanding on a fully diluted basis were approximately 237.3 million and 236.7 million in the quarters ended March 31, 2012 and March 31, 2011, respectively.
McDermott’s revenues were $727.7 million for the 2012 first quarter compared to $899.2 million in the corresponding period of 2011. The year-over-year decrease was primarily due to fewer fabrication manhours and lower marine activity in the Asia Pacific segment, partially offset by an approximate 150 percent increase in the Atlantic segment’s revenues, primarily as a result of increased fabrication work in the United States.
The Company’s operating income in the 2012 first quarter was $80.2 million compared to $100.3 million in the 2011 first quarter. Increased operating income in the Asia Pacific segment and improved results in the Atlantic segment, both as compared to the 2011 first quarter, were more than offset by reduced operating income in the Middle East segment, as a result of lower marine activity.
“The 2012 first quarter proved to be a positive start to the year, exceeding our prior expectations,” said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott. “With record bookings, an all-time high backlog and a continued strong balance sheet, McDermott is building a solid foundation for the future. We are pleased to have completed the sale of the charter fleet business during the quarter, and we expect both the new North Ocean 105 and the upgraded DB50 to be available for work this summer. We continue to believe the market opportunities ahead remain strong.”
The Company’s other income for the first quarter of 2012 was $10.5 million, primarily due to foreign currency gains, which represents an improvement of $15.4 million as compared to the other expense of $5.0 million in the first quarter of 2011.
At March 31, 2012, the Company’s backlog was $5.8 billion, compared to $3.9 billion and $4.8 billion at December 31, 2011 and March 31, 2011, respectively. Of the March 31, 2012 backlog, approximately $360 million is from projects currently in a loss position, primarily a 5-year Brazilian vessel charter contract, whereby future revenues are expected to equal costs when recognized.
Balance Sheet Summary
As of March 31, 2012, McDermott reported total assets of approximately $3.1 billion. Included in this amount was $899.5 million of cash and cash equivalents, restricted cash and investments. Net working capital, calculated as current assets less current liabilities, was $605.1 million. Additionally, total equity was almost $1.8 billion, or approximately 58% of total assets, with total debt of $92.2 million.
Discontinued Operations
For the first quarter of 2012, McDermott recorded net income from discontinued operations of $3.5 million, or $0.01 per diluted share, primarily due to the first quarter 2012 operations, and a gain on sale, of the charter fleet business. Including the results of discontinued operations, total net income attributable to McDermott was $62.8 million, or $0.26 per diluted share, for the 2012 first quarter.
OTHER INFORMATION
About the Company
McDermott is a leading engineering, procurement, construction and installation (“EPCI”) company focused on executing complex offshore oil and gas projects worldwide. Providing fully integrated EPCI services for upstream field developments, the Company delivers fixed and floating production facilities, pipelines and subsea systems from concept to commissioning. McDermott’s customers include national and major energy companies. Operating in approximately 20 countries across the Atlantic, Middle East and Asia Pacific, the Company’s integrated resources include approximately 13,500 employees and a diversified fleet of marine vessels, fabrication facilities and engineering offices. McDermott has served the energy industry since 1923. To learn more, please visit McDermott’s website on the Internet at www.mcdermott.com.
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 McDermott'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, McDermott building a solid foundation for the future, the expected availability of the North Ocean 105 and DB50 for work this summer, and our continued belief that the market opportunities ahead remain strong. 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 adverse changes in the markets in which we operate or credit markets, our inability to successfully execute on contracts in backlog, changes in project design or schedules, changes in the scope or timing of contracts, and contract cancellations, change orders and other modifications. 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 annual report on Form 10-K for the year ended December 31, 2011 and subsequent quarterly reports on Form 10-Q. This news release reflects management's views as of the date hereof. Except to the extent required by applicable law, McDermott undertakes no obligation to update or revise any forward-looking statement.
McDERMOTT INTERNATIONAL, INC. | |||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||
Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2012 | 2011 | ||||||||||||
(In thousands) | |||||||||||||
Revenues | $ | 727,678 | $ | 899,240 | |||||||||
Costs and Expenses: | |||||||||||||
Cost of operations | 597,434 | 747,225 | |||||||||||
Selling, general and administrative expenses | 46,611 | 55,369 | |||||||||||
Gain on asset disposals | (226 | ) | (225 | ) | |||||||||
Total costs and expenses | 643,819 | 802,369 | |||||||||||
Equity in Income (Loss) of Unconsolidated Affiliates | (3,683 | ) | 3,427 | ||||||||||
Operating Income | 80,176 | 100,298 | |||||||||||
Other Income (Expense): | |||||||||||||
Interest income | 1,634 | 449 | |||||||||||
Gain (loss) on foreign currency – net | 9,441 | (4,232 | ) | ||||||||||
Other expense – net | (581 | ) | (1,171 | ) | |||||||||
Total other income (expense) | 10,494 | (4,954 | ) | ||||||||||
Income from continuing operations before provision for income taxes and | |||||||||||||
noncontrolling interests | 90,670 | 95,344 | |||||||||||
Provision for Income Taxes | 28,743 | 22,579 | |||||||||||
Income from continuing operations before noncontrolling interests | 61,927 | 72,765 | |||||||||||
Gain on disposal of discontinued operations | 257 |
- |
|||||||||||
Income from discontinued operations, net of tax | 3,240 | 1,662 | |||||||||||
Total income from discontinued operations, net of tax | 3,497 | 1,662 | |||||||||||
Net Income | 65,424 | 74,427 | |||||||||||
Less: Net Income Attributable to Noncontrolling | |||||||||||||
Interests | 2,666 | 4,007 | |||||||||||
Net Income Attributable to McDermott International, Inc. | $ | 62,758 | $ | 70,420 | |||||||||
McDERMOTT INTERNATIONAL, INC. | |||||||||||
EARNINGS PER SHARE COMPUTATION | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2012 | 2011 | ||||||||||
(In thousands, except share and per share amounts) | |||||||||||
Basic: | |||||||||||
Income from continuing operations less noncontrolling interests | $ | 59,261 | $ | 68,758 | |||||||
Income from discontinued operations, net of tax | 3,497 | 1,662 | |||||||||
Net income attributable to McDermott International, Inc. | $ | 62,758 | $ | 70,420 | |||||||
Diluted: | |||||||||||
Weighted average common shares (basic) | 235,208,252 | 233,841,075 | |||||||||
Effect of dilutive securities: | |||||||||||
Stock options, restricted stock and restricted stock units | 2,124,375 | 2,904,503 | |||||||||
Adjusted weighted average common shares and assumed exercises of | |||||||||||
stock options and vesting of stock awards (diluted) | 237,332,627 | 236,745,578 | |||||||||
Basic earnings per share: | |||||||||||
Income from continuing operations less noncontrolling interests | 0.25 | 0.29 | |||||||||
Income from discontinued operations, net of tax | 0.01 | 0.01 | |||||||||
Net income attributable to McDermott International, Inc. | 0.27 | 0.30 | |||||||||
Diluted earnings per share: | |||||||||||
Income from continuing operations less noncontrolling interests | 0.25 | 0.29 | |||||||||
Income from discontinued operations, net of tax | 0.01 | 0.01 | |||||||||
Net income attributable to McDermott International, Inc. | 0.26 | 0.30 | |||||||||
SUPPLEMENTARY DATA |
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Three Months Ended | ||||||||||||
March 31, | ||||||||||||
2012 | 2011 | |||||||||||
(In thousands) | ||||||||||||
Pension expense | $ | 579 | $ | 6,153 | ||||||||
Depreciation & amortization expense | $ | 23,276 | $ | 20,525 | ||||||||
Capital expenditures | $ | 44,751 | $ | 63,986 | ||||||||
Backlog | $ | 5,806,633 | $ | 4,764,005 | ||||||||
McDERMOTT INTERNATIONAL, INC. | ||||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||||
March 31, 2012 |
December 31, 2011 | |||||||||||||
(In thousands, except share | ||||||||||||||
and per share amounts) | ||||||||||||||
Assets | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents | $ | 788,965 | $ | 570,854 | ||||||||||
Restricted cash and cash equivalents | 24,832 | 21,962 | ||||||||||||
Investments | 54,708 | 109,522 | ||||||||||||
Accounts receivable-trade, net |
388,373 | 445,808 | ||||||||||||
Accounts receivable-other |
61,140 | 53,386 | ||||||||||||
Contracts in progress | 259,664 | 287,390 | ||||||||||||
Deferred income taxes | 15,097 | 11,931 | ||||||||||||
Assets held for sale |
- |
3,197 | ||||||||||||
Other current assets | 40,680 | 33,135 | ||||||||||||
Total Current Assets | 1,633,459 | 1,537,185 | ||||||||||||
Property, Plant and Equipment | 2,019,289 | 1,958,877 | ||||||||||||
Less accumulated depreciation | (878,048 | ) | (857,012 | ) | ||||||||||
Net Property, Plant and Equipment | 1,141,241 | 1,101,865 | ||||||||||||
Assets Held for Sale |
- |
55,571 | ||||||||||||
Investments | 30,991 | 29,484 | ||||||||||||
Goodwill | 41,202 | 41,202 | ||||||||||||
Investments in Unconsolidated Affiliates | 39,912 | 42,659 | ||||||||||||
Other Assets | 178,589 | 184,848 | ||||||||||||
Total Assets | $ | 3,065,394 | $ | 2,992,814 | ||||||||||
Liabilities and Equity | ||||||||||||||
Current Liabilities: | ||||||||||||||
Notes payable and current maturities of long-term debt | $ | 10,061 | $ | 8,941 | ||||||||||
Accounts payable | 272,746 | 315,514 | ||||||||||||
Accrued liabilities | 307,797 | 309,515 | ||||||||||||
Advance billings on contracts | 358,052 | 320,438 | ||||||||||||
Deferred income taxes | 12,396 | 13,187 | ||||||||||||
Income taxes payable | 67,316 | 54,181 | ||||||||||||
Total Current Liabilities | 1,028,368 | 1,021,776 | ||||||||||||
Long-Term Debt | 82,180 | 84,794 | ||||||||||||
Self-Insurance | 24,969 | 23,585 | ||||||||||||
Pension Liability | 20,134 | 21,295 | ||||||||||||
Other Liabilities | 122,416 | 107,652 | ||||||||||||
Commitments and Contingencies | ||||||||||||||
Stockholders’ Equity: | ||||||||||||||
Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 243,085,098 and 242,416,424 shares at March 31, 2012 and December 31, 2011, respectively |
||||||||||||||
243,085 | 242,416 | |||||||||||||
Capital in excess of par value | 1,379,153 | 1,375,976 | ||||||||||||
Retained earnings | 301,861 | 239,103 | ||||||||||||
Treasury stock, at cost, 7,811,017 and 7,359,983 shares at March 31, 2012 and December 31, 2011, respectively |
||||||||||||||
(98,011 | ) | (95,827 | ) | |||||||||||
Accumulated other comprehensive loss | (99,921 | ) | (102,030 | ) | ||||||||||
Stockholders’ Equity-McDermott International, Inc. |
1,726,167 | 1,659,638 | ||||||||||||
Noncontrolling Interests | 61,160 | 74,074 | ||||||||||||
Total Equity | 1,787,327 | 1,733,712 | ||||||||||||
Total Liabilities and Equity | $ | 3,065,394 | $ | 2,992,814 | ||||||||||
McDERMOTT INTERNATIONAL, INC. | ||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2012 | 2011 | |||||||||||||
(In thousands) | ||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
Net income | $ | 65,424 | $ | 74,427 | ||||||||||
Less: Income from discontinued operations, net of tax | 3,497 | 1,662 | ||||||||||||
Income from continuing operations | 61,927 | 72,765 | ||||||||||||
Non-cash items included in net income: | ||||||||||||||
Depreciation and amortization | 23,276 | 20,525 | ||||||||||||
Equity in (income) loss of unconsolidated affiliates | 3,683 | (3,427 | ) | |||||||||||
Gain on asset disposals | (226 | ) | (225 | ) | ||||||||||
Benefit for deferred taxes | (4,131 | ) | (6,929 | ) | ||||||||||
Pension costs | 579 | 6,153 | ||||||||||||
Other non-cash items | 3,224 | 4,368 | ||||||||||||
Changes in assets and liabilities, net of effects from dispositions: | ||||||||||||||
Accounts receivable | 50,017 | 17,045 | ||||||||||||
Net contracts in progress and advance billings on contracts | 65,363 | (244,062 | ) | |||||||||||
Accounts payable | (55,292 | ) | 23,947 | |||||||||||
Accrued and other current liabilities | (10,040 | ) | 39,311 | |||||||||||
Pension liability and accrued postretirement and employee benefits | 7,489 | (41,546 | ) | |||||||||||
Other assets and liabilities | 26,992 | 20,038 | ||||||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES-CONTINUING OPERATIONS |
172,861 | (92,037 | ) | |||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES-DISCONTINUED OPERATIONS |
- |
114 | ||||||||||||
TOTAL CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 172,861 | (91,923 | ) | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
Purchases of property, plant and equipment | (44,751 | ) | (63,986 | ) | ||||||||||
Increase in restricted cash and cash equivalents | (2,870 | ) | (8,493 | ) | ||||||||||
Purchases of available-for-sale securities | (40,319 | ) | (298,169 | ) | ||||||||||
Sales and maturities of available-for-sale securities | 94,380 | 258,361 | ||||||||||||
Other investing activities | (2,150 | ) | 218 | |||||||||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES-CONTINUING OPERATIONS |
4,290 | (112,069 | ) | |||||||||||
NET CASH PROVIDED BY INVESTING ACTIVITIES-DISCONTINUED OPERATIONS |
60,671 |
- |
||||||||||||
TOTAL CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 64,961 | (112,069 | ) | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
Increase in debt |
- |
11,837 | ||||||||||||
Payment of debt | (1,494 | ) | (2,158 | ) | ||||||||||
Distributions to noncontrolling interests | (15,733 | ) |
- |
|||||||||||
Other financing activities | (1,784 | ) | 57 | |||||||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES-CONTINUING OPERATIONS |
(19,011 | ) | 9,736 | |||||||||||
EFFECTS OF EXCHANGE RATE CHANGES ON CASH | (700 | ) |
- |
|||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 218,111 | (194,256 | ) | |||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 570,854 | 403,463 | ||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD-CONTINUING OPERATIONS |
$ | 788,965 | $ | 209,207 | ||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||
Cash paid during the period for: | ||||||||||||||
Income taxes (net of refunds) | $ | 16,036 | $ | 3,574 | ||||||||||
CONTACT:
McDermott International, Inc.
Investors,
Analysts and Financial Media:
Jay Roueche, (281) 870-5462
Vice
President
jroueche@mcdermott.com
or
Trade and General
Media:
Louise Denly, (281) 870-5025
Director, Corporate
Communications
ldenly@mcdermott.com
Exhibit 99.2
McDermott Announces Results of Shareholders’ Meeting
HOUSTON--(BUSINESS WIRE)--May 10, 2012--McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) announced today the results of its 2012 Annual Meeting of Stockholders, held Thursday morning, May 10, 2012 in Houston, Texas.
Based on the voting results from the meeting, shareholders re-elected Messrs. John F. Bookout, III, Roger A. Brown, Stephen G. Hanks, Stephen M. Johnson, D. Bradley McWilliams, Thomas C. Schievelbein and David A. Trice, and Ms. Mary L. Shafer-Malicki to our Board of Directors, all for one-year terms. Each of these existing Board members received a minimum affirmative vote of approximately 97 percent of the votes cast by shareholders.
In addition, shareholders approved, on an advisory basis, our named executive officer compensation with an affirmative vote of 97 percent of votes cast by shareholders, and ratified the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2012.
OTHER INFORMATION
About the Company
McDermott is a leading engineering, procurement, construction and installation (“EPCI”) company focused on executing complex offshore oil and gas projects worldwide. Providing fully integrated EPCI services for upstream field developments, the Company delivers fixed and floating production facilities, pipelines and subsea systems from concept to commissioning. McDermott’s customers include national and major energy companies. Operating in approximately 20 countries across the Atlantic, Middle East and Asia Pacific, the Company’s integrated resources include approximately 13,500 employees and a diversified fleet of marine vessels, fabrication facilities and engineering offices. McDermott has served the energy industry since 1923. To learn more, please visit McDermott’s website on the internet at www.mcdermott.com.
CONTACT:
McDermott International, Inc.
Investors, Analysts and
Financial Media:
Jay Roueche, 281-870-5462
Vice President
jroueche@mcdermott.com
or
Trade
and General Media:
Louise Denly, 281-870-5025
Director,
Corporate Communications
ldenly@mcdermott.com