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 16, 2005

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.)

1450 Poydras Street, New Orleans, Louisiana	70112-6050
(Address of principal executive offices)	(Zip Code)

Registrant’s Telephone Number, including Area Code: (504) 587-5400

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

Item 7.01 Regulation FD Disclosure

The following information is furnished pursuant to both Item 2.02 and Item 7.01.

Attached hereto as Exhibit 99.1 and incorporated herein is a presentation to be given by McDermott International, Inc. (“McDermott”) at a Marine Construction and Offshore Field Development Forum presented by Johnson Rice & Company in Houston, Texas on November 16, 2005 at 1:00 p.m. central time. The presentation slides will also be available on McDermott’s website at www.mcdermott.com and will be available for a period of time.

The information furnished pursuant to these Items, 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 such 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.

(c) Exhibits

99.1 Marine Construction Forum November 2005.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

McDERMOTT INTERNATIONAL, INC.
By:	/s/    MICHAEL S. TAFF
	Michael S. Taff
	Chief Accounting Officer

November 16, 2005

2

EX-99.1

McDermott International, Inc.

with focus on the Marine Construction Services Segment

Johnson Rice & Company

Johnson Rice & Company

Marine Construction & Offshore

Marine Construction & Offshore

Field Development Forum

Field Development Forum

November 16, 2005

November 16, 2005

Exhibit 99.1

Forward Looking Statements

Statements in this presentation which express a forecast, expectation or estimate, as well

as those which are not historical fact, are forward looking and include statements

regarding

the

proposed

settlement

of

B&W’s

Chapter

11

proceeding,

B&W’s

favorable

business

environment,

management’s

expectations

regarding

outstanding

bids,

J.

Ray’s

position to capture industry growth and prospects for growing its backlog, positioning of

subsidiaries to address challenges, growth opportunities for each subsidiary and

management’s areas of focus.  They involve a number of risks and uncertainties which

may

cause

actual

results

to

differ

materially

from

such

forward-looking

statements.

These

risks and uncertainties include, without limitation, the risk that the proposed Chapter 11

settlement may not be finalized on the terms we have described, adverse changes in the

company’s

liquidity

or

in

the

industry,

and

such

other

factors

detailed

in

McDermott

International’s filings with the U.S. Securities & Exchange Commission, including its Form

10-K

for

the

year

ended

December

31,

2004

and

its

Form

10-Q’s

which

are

filed

quarterly.

McDermott Snapshot

Worldwide energy services company

Worldwide energy services company

–

–

Engineering & construction, manufacturing, procurement & installation

Engineering & construction, manufacturing, procurement & installation

–

–

Manage & operate government and nuclear facilities

Manage & operate government and nuclear facilities

Three operating segments with franchise name businesses

Three operating segments with franchise name businesses

–

–

Power Generation –

Power Generation –

The Babcock & Wilcox Company (“B&W”)

The Babcock & Wilcox Company (“B&W”)

–

–

Marine Construction –

Marine Construction –

J. Ray McDermott (“J. Ray”)

J. Ray McDermott (“J. Ray”)

–

–

Government Operations –

Government Operations –

BWX Technologies (“BWXT”)

BWX Technologies (“BWXT”)

Diversified operations by customer base, energy fuel source

Diversified operations by customer base, energy fuel source

–

–

Utilities, electric power producers, offshore O&G & U.S. Government

Utilities, electric power producers, offshore O&G & U.S. Government

–

–

Coal, oil & gas and nuclear

Coal, oil & gas and nuclear

Experienced, shareholder-focused management team

Experienced, shareholder-focused management team

Franchise Names in Each Segment

Lifecycle management of highly

enriched uranium, facilities &

technologies primarily for the

U.S. government

BWX Technologies

(BWXT)

Government Operations

Power generation and

environmental equipment -

design, supply and

construction; OEM &

upgrades, parts & services

Babcock & Wilcox

(B&W)

Consolidated Operating

Subsidiaries

Currently

Not Consolidated

Chapter 11

Providing solutions for

offshore field development

to the worldwide oil and

gas industry; engineer,

procure, construct & install

J. Ray McDermott

(J. Ray)

Marine Construction

Power Generation

Major operating subsidiaries only

McDermott Today -

B&W deconsolidated

Backlog

$3.2 bln

3Q05

Revenues

$1.5 bln

3Q05 YTD

Segment

Income

$197 mln

3Q05 YTD

Marine Construction Services

Government Operations

Excludes corporate segment, YTD 3Q05 expense of $28 mln

B&W -

Chapter 11 Update

B&W filed Chapter 11 bankruptcy in February 2000

B&W filed Chapter 11 bankruptcy in February 2000

–

–

To comprehensively resolve outstanding asbestos claims

To comprehensively resolve outstanding asbestos claims

Deconsolidated from financials since filing C11

Deconsolidated from financials since filing C11

Previous plan of reorganization involved spin-off of

Previous plan of reorganization involved spin-off of

B&W to claimants trust, in addition to additional

B&W to claimants trust, in addition to additional

consideration

consideration

McDermott announced revised settlement on 8/29/05

McDermott announced revised settlement on 8/29/05

–

–

Retain B&W, federal asbestos legislation provides upside

Retain B&W, federal asbestos legislation provides upside

Expect revised plan to be effective early 2006, and

Expect revised plan to be effective early 2006, and

B&W reconsolidated at that time

B&W reconsolidated at that time

Diversified Operations with B&W

[1]

W/ B&W

Backlog

$4.8 bln

3Q05

W/ B&W

Revenues

$2.5 bln

3Q05 YTD

With

Non-GAAP B&W

[2]

Segment Income

$266 mln

3Q05 YTD

Power Generation

[1]

Marine Construction

Government Operations

[1]  On non-GAAP basis.  B&W is not currently consolidated in

financial statements.  Reconsolidation expected in early 2006. 

See Appendix A for reconciliation of non-GAAP measures.

Excludes corporate segment.

[2] B&W GAAP loss for YTD 9/30/05 was $407.7 million.  See

Appendix A for reconciliation to non-GAAP measures.

Strong Presence in Growing Markets

Energy

Energy

demand

demand

is

is

steadily

steadily

growing

growing

worldwide

worldwide

–

–

all

all

sources

sources

–

–

Electricity, oil & gas, LNG & nuclear

Electricity, oil & gas, LNG & nuclear

Meeting world’s energy needs presents challenges to

Meeting world’s energy needs presents challenges to

McDermott’s customer base

McDermott’s customer base

–

–

Infrastructure issues –

Infrastructure issues –

equipment age, access to supply, delivery

equipment age, access to supply, delivery

–

–

Environmental issues –

Environmental issues –

SOx, NOx, CO

SOx, NOx, CO², site remediation

2

,

–

–

Security issues –

Security issues –

homeland security, operational safety, secure supply

homeland security, operational safety, secure supply

Each McDermott subsidiary

Each McDermott subsidiary

–

–

Is well-positioned with its customer base to address challenges

Is well-positioned with its customer base to address challenges

–

–

Maintains track record of excellence, innovation, safety and quality

Maintains track record of excellence, innovation, safety and quality

–

–

Has growth opportunities ahead

Has growth opportunities ahead

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Marine Construction Services Segment

J. Ray’s Core Capabilities

Engineering and Procurement

Construction and Installation

–

Jackets, Topsides, Floating & Fixed Structures

Offshore pipeline installation

Subsea/Deepwater Technology

–

–

In-house

In-house

and

and

through

through

FloaTec

FloaTec

joint

joint

venture

venture

Providing solutions for offshore field developments worldwide

Spectrum of Offshore Infrastructure

(Graphics compliments of Offshore Magazine (2002 Offshore Oil & Gas Industry Deepwater Solutions for Concept Selections Poster May 2002) 

J. Ray’s experience covers shallow to the deepest water

Field Development Lifecycle

Source: Morgan Stanley

Source: Morgan Stanley

Field infrastructure fabrication and installation accounts for a

Field infrastructure fabrication and installation accounts for a

small portion of operators’

small portion of operators’

overall costs to first production

overall costs to first production

Production

Infrastructure

Well

Completion

Drilling

Seismic /

Reservoir

Identification

1 Year

1 Year

1 –

2 Years

1 –

2 Years

5 –

20 Years

Years of development and considerable resources have

Years of development and considerable resources have

been committed prior to the infrastructure stage of the cycle

been committed prior to the infrastructure stage of the cycle

J. Ray McDermott Snapshot

Long, established track record as a pioneer in the marine construction

Long, established track record as a pioneer in the marine construction

industry

industry

Worldwide fabrication/installation operations

Worldwide fabrication/installation operations

Location

Location

Facility

Facility

Major Vessels

Major Vessels

–

–

Asia Pacific (Batam)

Asia Pacific ( Batam)

Batam )

)

Fabrication

Fabrication

3

3

–

–

Caspian (Baku)

Caspian (Baku)

Fabrication (Operate only)

Fabrication (Operate only)

2 (Operate only)

2 (Operate only)

–

–

Gulf of Mexico (Morgan City)

Gulf of Mexico (Morgan City)

Fabrication

Fabrication

3

3

–

–

Middle East (Dubai)

Middle East (Dubai)

Fabrication

Fabrication

1

1

–

–

Mexico

Mexico

Ship Repair

Ship Repair

5 (Joint Venture)

5 (Joint Venture)

Engineering offices in Houston, New Orleans, Jakarta & Dubai

Engineering offices in Houston, New Orleans, Jakarta & Dubai

Approximately 9,300 employees at September 30, 2005

Approximately 9,300 employees at September 30, 2005

World Wide Operations

Americas

Caspian

Middle

East

Asia

Pacific

Engineering Services

Conceptual Designs

Conceptual Designs

FEED Studies

FEED Studies

Bid Document Preparation

Bid Document Preparation

Project Planning &

Project Planning &

Development

Development

Detailed Engineering

Detailed Engineering

Procurement Services

Procurement Services

Installation, Hookup,

Installation, Hookup,

Commissioning, & Startup

Commissioning, & Startup

Assistance

Assistance

Pipelines, Risers, Spars &

Pipelines, Risers, Spars &

Subsea

Subsea

Designs

Designs

FloaTec

Joint Venture

Forming venture with Keppel FELS

Forming venture with Keppel FELS

Provide unbiased deepwater floating solutions

Provide unbiased deepwater floating solutions

–

–

Spar, Semi-submersible, Extended TLP & Single Column Floater

Spar, Semi-submersible, Extended TLP & Single Column Floater

–

–

Develop & procure new floating solution technologies

Develop & procure new floating solution technologies

Draw upon partners’

Draw upon partners’

construction and installation

construction and installation

capabilities

capabilities

Caspian Operations

Field

Field

development

development

for

for

AIOC

AIOC

and

and

BP

BP

Shah

Shah

Deniz

Deniz

project

project

Topsides fabrication, pipelay, installation and procurement

Topsides fabrication, pipelay, installation and procurement

Currently, J. Ray is only in the Azeri section of the Caspian

Currently, J. Ray is only in the Azeri section of the Caspian

At 9/30/05 –

At 9/30/05 –

Caspian operations were 26% of JRM backlog

Caspian operations were 26% of JRM backlog

Caspian Projects

Constructed CA deck in 2004 (left) and WA deck (right) in 2005

Constructed CA deck in 2004 (left) and WA deck (right) in 2005

Ongoing projects include the EA & DUQ decks plus pipelines

Ongoing projects include the EA & DUQ decks plus pipelines

Evaluating additional opportunities within Caspian market

Evaluating additional opportunities within Caspian market

Middle East Operations

Fabrication in Dubai, UAE

Fabrication in Dubai, UAE

–

–

145 Acres

145 Acres

Engineering offices

Engineering offices

Able to serve W. Africa and

Able to serve W. Africa and

North Sea thru Mid East

North Sea thru Mid East

Primary vessel: DB27

Primary vessel: DB27

–

–

Lift Capacity: 2400 tons

Lift Capacity: 2400 tons

–

–

Pipelay

Pipelay

Capacity: 60 inches

Capacity: 60 inches

At 9/30/05 –

At 9/30/05 –

Middle East

Middle East

was 52% of JRM backlog

was 52% of JRM backlog

Middle East Projects

Completed

Completed

Amenam

Amenam

deck

deck

in

in

2003 (right) and Front

2003 (right) and Front

Runner hull (below) in 2004

Runner hull (below) in 2004

Numerous ongoing projects

Numerous ongoing projects

& recent awards; including

& recent awards; including

Dolphin & RasGas

Dolphin & RasGas

LNG 2

LNG 2

Market remains robust

Market remains robust

Asia Pacific Operations

Batam

Batam

Island, Indonesia

Island, Indonesia

–

–

242 Acres

242 Acres

Engineering in Jakarta

Engineering in Jakarta

Primary vessel: DB30

Primary vessel: DB30

–

–

Lift Capacity: 3080 tons

Lift Capacity: 3080 tons

–

–

Pipelay

Pipelay

Capacity: 60 inches

Capacity: 60 inches

At 9/30/05 –

At 9/30/05 –

Asia Pacific

Asia Pacific

was 16% of JRM backlog

was 16% of JRM backlog

Asia Pacific Projects

Completed Belanak

Completed Belanak

FPSO (left) in 2004 and John

FPSO (left) in 2004 and John

Brookes development in 2005 (pipelay

Brookes development in 2005 (pipelay

shown)

shown)

Awarded Arthit

Awarded Arthit

and Woodside LNG projects in 3Q05

and Woodside LNG projects in 3Q05

Region remains active

Region remains active

Americas Operations

Morgan City, Louisiana

Morgan City, Louisiana

–

–

300+ Acres

300+ Acres

Engineering in Houston &

Engineering in Houston &

New Orleans

New Orleans

Primary vessel: DB50

Primary vessel: DB50

–

–

Lift Capacity: 4400 tons

Lift Capacity: 4400 tons

–

–

Pipelay

Pipelay

Capacity: 20 inches

Capacity: 20 inches

At 9/30/05 –

At 9/30/05 –

Americas

Americas

was 6% of JRM backlog

was 6% of JRM backlog

Americas Projects

In early 2005, completed the major topsides program for BP

In early 2005, completed the major topsides program for BP

Originally awarded in 2000, BP had exclusive use of Morgan

Originally awarded in 2000, BP had exclusive use of Morgan

City during fabrication period

City during fabrication period

J. Ray has re-entered market upon completion

J. Ray has re-entered market upon completion

Turned J. Ray Bids into Backlog in 3Q05

Bids outstanding exceeded $2 billion in June 2005

Bids outstanding exceeded $2 billion in June 2005

Awarded Saudi Aramco

Awarded Saudi Aramco

project in August

project in August

Chevron Gulf of Mexico marine contract signed

Chevron Gulf of Mexico marine contract signed

Awarded $77 million Woodside LNG contract in Asia Pacific

Awarded $77 million Woodside LNG contract in Asia Pacific

Signed $500 million+ Phase 2 LNG Expansion Project

Signed $500 million+ Phase 2 LNG Expansion Project

Asia Pacific received $110 million contract for Thailand project

Asia Pacific received $110 million contract for Thailand project

Plan to win our share of remaining bids

Plan to win our share of remaining bids

–

–

Maintain financial discipline in bids; manage risk and reward

Maintain financial discipline in bids; manage risk and reward

–

–

Selectively pursue projects, a rifle approach

Selectively pursue projects, a rifle approach

–

–

Manage the business from a global perspective

Manage the business from a global perspective

J.

Ray

Backlog

Characteristics

[1]

Americas

6%

Middle East

52%

Asia Pacific

16%

Caspian

26%

Unit

Rate

8%

Fixed Price

65%

Combination

27%

by Type of Contract

by Geographic Region

[1]  Based on 9/30/05 backlog of $1.7 billion

J. Ray Summary

Late-cycle service company in offshore field

Late-cycle service company in offshore field

development

development

Well positioned to capture industry growth

Well positioned to capture industry growth

Strong franchise in strategic geographical locations

Strong franchise in strategic geographical locations

Management team leading change in all areas

Management team leading change in all areas

$1.7 billion backlog with good growth prospects

$1.7 billion backlog with good growth prospects

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Financial Review

Stock symbol (NYSE):

Stock symbol (NYSE):

MDR

MDR

Recent price/share

Recent price/share

[1]

[1]

:

:

$37.45

$37.45

Shares outstanding:

Shares outstanding:

73 million

73 million

Market capitalization

Market capitalization

[1]

[1]

:

:

$2.7 billion

$2.7 billion

52-week trading range:

$15.05-$38.70

Daily

Daily

volume

volume

average

average

[1]

[1]

848,741

848,741

[1]

[1]

1]

As of November 14, 2005

As of November 14, 2005

Common Share Information

Revenues:

Revenues:

$1.5 billion

$1.5 billion

Op. Income:

Op. Income:

$169.5 million

$169.5 million

GAAP Net Income

GAAP Net Income

[3]

[3]

:

:

$161.9 million

$161.9 million

GAAP EPS

GAAP EPS

[3]

[3]

:

:

$2.25

$2.25

Total Assets:

Total Assets:

$1.63 billion

$1.63 billion

Debt:

Debt:

$264 million

$264 million

Unrestricted cash:

Unrestricted cash:

$374 million

$374 million

Shareholders’

deficit:

$53 million

$53 million

[2] Income

statement

items

are

for

the

9-months

ended

9/30/05.

Balance

sheet

items

are as of September 30, 2005.   All amounts exclude B&W.

[3]  GAAP Net Income & EPS includes $50.4 million benefit from tax valuation

allowance

Summary 3Q05 YTD Financial Statistics

[2]

McDermott Financial Snapshot

J. Ray Backlog –

Revenue Relationship

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

4Q00

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

$0

$100

$200

$300

$400

$500

$600

Backlog

Revenues

-$100

$0

$100

$200

$300

$400

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

Unrestricted Cash

Restricted Cash

[

1]  See

Appendix

B

for

items

included

in

full-year

2004

Marine

Construction

Services

segment

income

-$10

$0

$10

$20

$30

$40

$50

$60

$70

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

J. Ray Segment Income [1]

Improving quarterly results…..

…and growing J. Ray cash balances

(dollars in millions)

Solid Recent Performance by J. Ray

Revenue in millions

$0

$100

$200

$300

$400

$500

$600

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

BWXT

J. Ray

-$0.35

-$0.15

$0.05

$0.25

$0.45

$0.65

$0.85

$1.05

$1.25

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

McDermott EPS

Fully diluted GAAP Earnings Per Share

[1]

[

1]  See Appendix B for items included in full-year 2004 operating income

[2]  2Q05 net income includes $50.4 million benefit from tax valuation allowance.

(note: excludes B&W)

[2]

McDermott’s Consolidated Results

Net Cash / (Debt) Position

[1]

-$50,000

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

[1]  Net Cash/Debt is the sum of total unrestricted cash, restricted cash and short-term investments less total debt.  See Appendix C for detailed calculation.

Significant Balance Sheet Improvement

(excludes cash at B&W)

B&W –

Strong Addition to Consolidated Results

$0

$500

$1,000

$1,500

$2,000

2000

2001

2002

2003

2004

$0

$50

$100

$150

2000

2001

2002

2003

2004

$0

$100

$200

$300

$400

2000

2001

2002

2003

2004

Backlog

Revenues

Non-GAAP Operating Income

[1]

[1]  Non-GAAP Operating income.  See Appendix D for reconciliation between GAAP and Non-GAAP.

Note: pension expense was not recorded in B&W’s

operating income for the years shown, but is included in 2005

Cash & Cash Equivalents

(dollars in millions)

Unrestricted cash

Cash in lieu of LC

$0

$500

$1,000

$1,500

$2,000

2000

2001

2002

2003

2004

Key Areas of Focus

Expedite B&W Chapter 11 bankruptcy resolution with revised

settlement by February 22, 2006

–

Eliminate “asbestos cloud”

and reconsolidate B&W

Keep J. Ray on consistent long-term earnings growth and build

upon industry leadership

–

Successfully execute existing backlog

–

Build profitable backlog while managing risk/reward profile within

pricing guidelines

–

Manage operating and G&A costs for expected revenue level

Maintain strong performance at BWXT

–

Succeed in bidding for additional M&O contracts

Continue delivering value for McDermott’s shareholders

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(NYSE:  MDR)

For more information contact:

Jay Roueche

Director of Investor Relations

281-870-5462

Appendix A:  Non-GAAP Measures with B&W

Presented

above

is

a

reconciliation

of

B&W’s

GAAP

operating

income

and

non-GAAP

operating

income.

The

non-GAAP

measure

is

based

upon

our

unconsolidated

statement

of

operations

for

B&W

for

the

periods

shown.

McDermott

is

providing

the

non-GAAP

information

to

supplement

the

results provided in accordance with GAAP and it should not be considered superior to, or as a substitute for, the comparable GAAP measure.  In

addition, McDermott is adding to its consolidated and reported financial information the results from B&W, a deconsolidated entity.  McDermott

believes these non-GAAP measures provide meaningful insight into B&W’s

operational performance, and McDermott’s diversification assuming

the

reconsolidation

of

B&W,

and

uses

the

non-GAAP

information

internally

to

evaluate

the

operations

for

purposes

of

budget

planning

and

performance

goals..

McDermott

has

chosen

to

provide

this

supplemental

non-GAAP

information

to

investors

to

enable

them

to

perform

additional comparisons of operating results and as a means to emphasize the results of operations absent expenses considered by

management

to

be

outside

B&W’s

customary

business.

As of 9/30/05

Revenues

Segment Income

Backlog

Consolidated Segments

Marine Construction Services

1,002.4

$   

123.7

$                

1,697.0

$      

Government Operations

455.5

$      

73.0

$                  

1,497.6

$      

Total from Consolidated Operating Segments

1,457.9

$   

196.8

$                

3,194.7

$      

Deconsolidated

The Babcock & Wilcox Company ("B&W") -GAAP

1,086.8

$   

(407.7)

$               

1,599.3

$      

Add back:  Asbestos liability & related expenses

477.4

$                

Total B&W Non-GAAP Op. Income

69.7

$                  

Total Consolidated Segment Income with B&W - Non-GAAP

2,544.7

$   

266.5

$                

4,794.0

$      

YTD as of September 30, 2005

(Unaudited, dollars in millions)

Appendix B: Items included in 2004 Income

12/31/04

1. ITEMS INCLUDED IN OPERATING INCOME (LOSS)

Marine Construction Services

Contract cost adjustments on loss projects

$

46.6

Gain on sale of marine assets

30.3

Miscellaneous items, net

(14.5)

TOTAL

$

62.4

Government Operations

Pension funding reimbursement

$

11.8

Miscellaneous items

3.2

TOTAL

$

15.0

Corporate

Gain on U.K. pension plan

$

27.7

Qualified pension Plan Expense

(60.8)

TOTAL

$

(33.1)

   Depreciation & amortization

      Marine Construction Services

$

24.0

      Government Operations

12.6

      Corporate & other

3.7

TOTAL

$

40.3

2. OTHER ITEMS (below operating income):

Estimated Change In B&W Bankruptcy Settlement

$

(11.2)

Tax Impact On B&W Settlement

(0.7)

Net After Tax Effect

$

(11.9)

(Unaudited, dollars in millions, for the year ended)

(dollars in millions)

$203.1

$203.1

(260.2)

(260.2)

(4.3)

(4.3)

51.7

51.7

42.7

42.7

111.8

111.8

$261.4

$261.4

2Q05

2Q05

0

0

108.5

108.5

66.5

66.5

55.7

55.7

0

0

0

0

LT Restricted Cash

LT Restricted Cash

& CE

& CE

$314.2

$314.2

$217.1

$217.1

$157.3

$157.3

$91.4

$91.4

$22.9

$22.9

($1.0)

($1.0)

Total Net Cash /

Total Net Cash /

(Debt) Position

(Debt) Position

(260.2)

(260.2)

(261.3)

(261.3)

(268.0)

(268.0)

(268.1)

(268.1)

(268.1)

(268.1)

(278.2)

(278.2)

Long-term Debt

(4.3)

(4.3)

(14.2)

(14.2)

(12.0)

(12.0)

(12.0)

(12.0)

(12.0)

(12.0)

(16.1)

(16.1)

Short-term Debt

59.8

59.8

0

0

0

0

0

0

0

0

0

0

Short-Term

Investment

Investment

144.8

144.8

59.8

59.8

111.5

111.5

112.5

112.5

168.3

168.3

161.5

161.5

ST Restricted Cash

ST Restricted Cash

& CE

& CE

$374.1

$374.1

$324.3

$324.3

$259.3

$259.3

$203.3

$203.3

$134.7

$134.7

$131.8

$131.8

Cash &  Cash

Cash &  Cash

Equivalents

Equivalents

3Q05

3Q05

1Q05

1Q05

4Q04

4Q04

3Q04

3Q04

2Q04

2Q04

1Q04

1Q04

Appendix C: Net Cash/(Debt) Position

$128.1

$128.1

$98.4

$98.4

$101.9

$101.9

$74.2

$74.2

$14.7

$14.7

Non-GAAP

Operating

Operating

Income

Income

12.5

12.5

96.6

96.6

306.7

306.7

32.6

32.6

17.9

17.9

Add back:

Add back:

Asbestos & C11

Asbestos & C11

Expenses

Expenses

$115.6

$115.6

$1.8

$1.8

($204.8)

($204.8)

$41.6

$41.6

($3.2)

($3.2)

GAAP

GAAP

Operating

Operating

Income

Income

2004

2004

2003

2003

2002

2002

2001

2001

2000

2000

(dollars in millions)

Presented

above

is

a

reconciliation

between

B&W’s

GAAP

operating

income

and

non-GAAP

operating

income.

The

non-GAAP

measure

is

based

upon

our

unconsolidated

statement

of

operations

for

B&W

for

the

periods

shown.

McDermott

is

providing

the

non-GAAP

information

to

supplement

the

results

provided

in

accordance

with

GAAP

and

it

should

not

be

considered

superior

to,

or

as

a

substitute

for,

the

comparable

GAAP

measure.

However,

McDermott

believes

this

non-GAAP

measure

provides

meaningful

insight

into

B&W’s

operational

performance

and

has

chosen

to

provide

this

supplemental

non-GAAP

information

to

investors

to

enable

them

to

perform

additional

comparisons

of

operating

results

and

as

a

means

to

emphasize

the

results

of

operations

absent

expenses

considered

by

management

to

be

outside

B&W’s

customary

business.

Appendix D: B&W Non-GAAP Reconciliation