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PENSION PLANS
 6 Months Ended
Jun. 30, 2011
PENSION PLANS

NOTE 3 – PENSION PLANS

We historically provided retirement benefits for certain U.S.-based employees through the McDermott (U.S.) Retirement Plan (the “McDermott Plan”) and other supplemental defined pension benefits. The McDermott Plan and the supplemental defined pension benefits are collectively referred to as the “Domestic Plan.” The J. Ray McDermott, S.A. Third Country National Employees Pension Plan (the “TCN Plan”) provides retirement benefits for certain of our foreign employees.

During the quarter ended June 30, 2011, we changed the investment strategy of the McDermott Plan to approximately 85% fixed income and approximately 15% equities, which caused us to remeasure the plan’s assets and benefit obligations. In connection with the investment strategy change, we increased the expected rate of return on plan assets assumption to 6.50%, as compared to 5.75% at December 31, 2010, which is consistent with the long-term asset returns expected from the portfolio after the investment strategy change. Additionally, the discount rate assumption increased to 5.40%, as compared to 5.30% at December 31, 2010.

 

Net periodic benefit cost for the Domestic Plan and the TCN Plan includes the following components:

 

     Domestic Plan  
     Three Months Ended
June 30,		     Six Months Ended
June 30,		  
     2011     2010     2011     2010  
    

(Unaudited)

(In thousands)

  

Service cost

    $ —        $ 180      $ —        $ 348   

Interest cost

      7,155        10,142        14,230        19,643   

Expected return on plan assets

      (7,550 )      (10,205 )      (14,075 )      (19,765 ) 

Recognized net actuarial loss and other

      4,482        5,500        8,730        10,653   

Curtailments

      (8 )      —          (8 )      —     
                                

Net periodic benefit cost

    $ 4,079      $ 5,617      $ 8,877      $ 10,879   
                                
     TCN Plan  
     Three Months Ended
June 30,		     Six Months Ended
June 30,		  
     2011     2010     2011     2010  
    

(Unaudited)

(In thousands)

  

Service cost

    $ 686      $ 576      $ 1,371      $ 1,152   

Interest cost

      595        546        1,190        1,092   

Expected return on plan assets

      (613 )      (457 )      (1,226 )      (914 ) 

Amortization of prior service cost

      4        546        8        1,092   

Recognized net actuarial loss

      684        —          1,368        —     
                                

Net periodic benefit cost

    $ 1,356      $ 1,211      $ 2,711      $ 2,422