Earnings per share of 22 cents; Sizable $5.7 Billion Backlog and Solid Balance Sheet

HOUSTON--(BUSINESS WIRE)--August 6, 2012--McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today reported income from continuing operations of $52.7 million, or $0.22 per diluted share, for the 2012 second quarter. The results of the 2012 second quarter compare to income from continuing operations of $63.7 million, or $0.27 per diluted share, in the corresponding period of 2011. Classified as discontinued operations, the results of McDermott’s former charter fleet business, which was sold in March 2012, are excluded from the periods presented. Weighted average common shares outstanding on a fully diluted basis were approximately 237.5 million in the quarters ended June 30, 2012 and June 30, 2011.

McDermott’s revenues were $889.2 million for the 2012 second quarter compared to $849.8 million in the corresponding period of 2011. The year-over-year increase was attributable to the Middle East and Atlantic segments, primarily due to increased fabrication and marine activity. The increase from these segments was partially offset by lower revenues in the Asia Pacific segment due to lower marine activity.

The Company’s operating income in the 2012 second quarter was $79.4 million compared to $83.8 million in the 2011 second quarter. Increased operating income in the Middle East segment and improved results in the Atlantic segment were more than offset by the decline in the Asia Pacific segment, attributable to lower marine activity.

“We are pleased with the results of our 2012 second quarter which keeps us on pace for the year,” said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott. “Both the Middle East and Asia Pacific segments reported solid operating results in the 2012 second quarter, with each providing over $46 million in operating income. As anticipated, the Atlantic segment reported an operating loss; however, its 2012 second quarter level was an improvement as compared to the 2011 second quarter. McDermott is in a solid financial position, with a strong balance sheet and a solid backlog of work, and we believe our growth strategy is well designed for the markets we serve.”

The Company’s other income for the second quarter of 2012 was $2.9 million, which represents an improvement of $1.6 million as compared to other income of $1.3 million in the second quarter of 2011 primarily attributable to increased interest income.

At June 30, 2012, the Company’s backlog was approximately $5.7 billion, compared to $5.8 billion and $4.7 billion at March 31, 2012 and June 30, 2011, respectively.

As of June 30, 2012, McDermott reported total assets of approximately $3.2 billion. Included in this amount was $748.7 million of cash and cash equivalents, restricted cash and investments. Net working capital, calculated as current assets less current liabilities, was $611.5 million. Additionally, total equity was over $1.8 billion, or approximately 57% of total assets, with total debt of $109.8 million.

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.

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, and our belief that McDermott’s growth strategy is well designed 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 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 June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(In thousands, except share and per share amounts)

Revenues	$	889,248		$	849,801		$	1,616,926		$	1,749,041
Costs and Expenses:
Cost of operations		759,704			703,805			1,357,138			1,451,030
Selling, general and administrative expenses		47,482			60,412			94,093			115,781
(Gain) loss on asset disposals		29			(71	)		(197	)		(296	)
Total costs and expenses		807,215			764,146			1,451,034			1,566,515

Equity in Income (Loss) of Unconsolidated Affiliates		(2,651	)		(1,876	)		(6,334	)		1,551

Operating Income		79,382			83,779			159,558			184,077

Other Income (Expense):
Interest income		1,585			292			3,219			741
Interest expense		-			(263	)		-			(263	)
Gain (loss) on foreign currency--net		1,256			1,372			10,697			(2,860	)
Other income (expense)--net		51			(117	)		(530	)		(1,288	)
Total other income (expense)		2,892			1,284			13,386			(3,670	)

Income from continuing operations before provision for income taxes and noncontrolling interests		82,274			85,063			172,944			180,407
Provision for Income Taxes		28,345			17,237			57,088			39,816
Income from continuing operations before noncontrolling interests		53,929			67,826			115,856			140,591
Total income from discontinued operations, net of tax		-			3,610			3,497			5,272
Net Income		53,929			71,436			119,353			145,863
Less: Net Income Attributable to Noncontrolling Interests		1,190			4,108			3,856			8,115
Net Income Attributable to McDermott International, Inc.	$	52,739		$	67,328		$	115,497		$	137,748


McDERMOTT INTERNATIONAL, INC. EARNINGS PER SHARE COMPUTATION

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
	(In thousands, except share and per share amounts)


Income from continuing operations less noncontrolling interests	$	52,739	$	63,718	$	112,000	$	132,476
Income from discontinued operations, net of tax		-		3,610		3,497		5,272
Net income attributable to McDermott International, Inc.	$	52,739	$	67,328	$	115,497	$	137,748

Weighted average common shares (basic)		235,681,213		234,573,031		235,444,733		234,207,053
Effect of dilutive securities:
Stock options, restricted stock and restricted stock units		1,779,552		2,971,643		1,951,964		2,938,073
Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards (diluted)		237,460,765		237,544,674		237,396,697		237,145,126

Basic earnings per share:
Income from continuing operations less noncontrolling interests		0.22		0.27		0.48		0.57
Income from discontinued operations, net of tax		-		0.02		0.01		0.02
Net income attributable to McDermott International, Inc.		0.22		0.29		0.49		0.59

Diluted earnings per share:
Income from continuing operations less noncontrolling interests		0.22		0.27		0.47		0.56
Income from discontinued operations, net of tax		-		0.02		0.01		0.02
Net income attributable to McDermott International, Inc.		0.22		0.28		0.49		0.58


SUPPLEMENTARY DATA

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
	(In thousands)
Pension expense	$	189	$	5,435	$	768	$	11,588
Depreciation & amortization expense	$	22,598	$	19,574	$	45,874	$	40,099
Capital expenditures	$	86,910	$	77,696	$	131,661	$	141,682
Backlog	$	5,746,701	$	4,715,590	$	5,746,701	$	4,715,590


McDERMOTT INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS

	June 30, 2012			December 31, 2011
	(In thousands, except share and per share amounts)
Assets
Current Assets:
Cash and cash equivalents	$	644,060		$	570,854
Restricted cash and cash equivalents		24,024			21,962
Investments		48,970			109,522
Accounts receivable--trade, net		402,503			445,808
Accounts receivable--other		62,478			53,386
Contracts in progress		471,010			287,390
Deferred income taxes		12,316			11,931
Assets held for sale		-			3,197
Other current assets		38,349			33,135
Total Current Assets		1,703,710			1,537,185
Property, Plant and Equipment		2,087,422			1,958,877
Less accumulated depreciation		(898,635	)		(857,012	)
Net Property, Plant and Equipment		1,188,787			1,101,865
Assets Held for Sale		-			55,571
Investments		31,661			29,484
Goodwill		41,202			41,202
Investments in Unconsolidated Affiliates		37,873			42,659
Other Assets		187,809			184,848
Total Assets	$	3,191,042		$	2,992,814

Liabilities and Equity
Current Liabilities:
Notes payable and current maturities of long-term debt	$	14,573		$	8,941
Accounts payable		318,743			315,514
Accrued liabilities		337,076			309,515
Advance billings on contracts		353,457			320,438
Deferred income taxes		13,195			13,187
Income taxes payable		55,197			54,181
Total Current Liabilities		1,092,241			1,021,776
Long-Term Debt		95,207			84,794
Self-Insurance		26,214			23,585
Pension Liability		19,652			21,295
Other Liabilities		123,168			107,652
Commitments and Contingencies
Stockholders’ Equity:
Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 243,379,604 and 242,416,424 shares at June 30, 2012 and December 31, 2011, respectively		243,380			242,416
Capital in excess of par value		1,383,538			1,375,976
Retained earnings		354,600			239,103
Treasury stock, at cost, 7,874,779 and 7,359,983 shares at June 30, 2012 and December 31, 2011, respectively		(98,723	)		(95,827	)
Accumulated other comprehensive loss		(110,540	)		(102,030	)
Stockholders’ Equity--McDermott International, Inc.		1,772,255			1,659,638
Noncontrolling Interests		62,305			74,074
Total Equity		1,834,560			1,733,712
Total Liabilities and Equity	$	3,191,042		$	2,992,814


McDERMOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended June 30,
	2012			2011
	(In thousands)
Cash Flows From Operating Activities:
Net income	$	119,353		$ 145,863
Less: Income from discontinued operations, net of tax		3,497		5,272
Income from continuing operations	$	115,856		$ 140,591
Non-cash items included in net income:
Depreciation and amortization		45,874		40,099
Equity in (income) loss of unconsolidated affiliates		6,334		(1,551		)
Gain on asset disposals and impairments--net		(197	)	(296		)
Provision (benefit) from deferred taxes		1,194		(11,648		)
Pension costs		768		11,588
Other non-cash items		10,090		10,369
Changes in assets and liabilities, net of effects from dispositions:
Accounts receivable		36,237		(54,481		)
Net contracts in progress and advance billings on contracts		(150,712	)	(257,381		)
Accounts payable		4,074		27,589
Accrued and other current liabilities		10,145		40,505
Pension liability and accrued postretirement and employee benefits		15,426		(42,067		)
Other assets and liabilities		(3,902	)	24,907
Net Cash Provided By (Used In) Operating Activities--Continuing Operations		91,187		(71,776		)
Net Cash Provided By Operating Activities--Discontinued Operations		-		62
Total Cash Provided By (Used In) Operating Activities		91,187			(71,714	)

Cash Flows From Investing Activities:
Purchases of property, plant and equipment		(131,661	)	(141,682		)
(Increase) decrease in restricted cash and cash equivalents		(2,062	)	39,950
Purchases of available-for-sale securities		(66,266	)	(377,018		)
Sales and maturities of available-for-sale securities		125,895		424,452
Other investing activities, net		(2,071	)	303
Net Cash Used In Investing Activities--Continuing Operations		(76,165	)	(53,995		)
Net Cash Provided By Investing Activities--Discontinued Operations		60,671		-
Total Cash Used In Investing Activities		(15,494	)	(53,995		)

Cash Flows From Financing Activities:
Increase in debt		19,033		30,745
Payment of debt		(2,988	)	(4,288		)
Distributions to noncontrolling interests		(15,726	)	-
Other financing activities, net		(2,638	)	(2,361		)
Net Cash Provided By (Used In) Financing Activities--Continuing Operations		(2,319	)	24,096
Effects of exchange rate changes on cash and cash equivalents		(168	)	45
Net increase (decrease) in cash and cash equivalents		73,206		(101,568		)
Cash and cash equivalents at beginning of period		570,854		403,463
Cash and cash equivalents at end of period--Continuing Operations	$	644,060		$ 301,895

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

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)

	McDERMOTT INTERNATIONAL, INC.



	By:	/s/ Perry L. Elders
		Perry L. Elders
		Senior Vice President and Chief Financial Officer

August 6, 2012