DISCONTINUED OPERATIONS AND OTHER TRANSACTIONS

9 Months Ended

Sep. 30, 2011

DISCONTINUED OPERATIONS AND OTHER TRANSACTIONS

NOTE 2 – DISCONTINUED OPERATIONS AND OTHER ITEMS

Discontinued Operations

The following discussion provides information pertaining to our significant discontinued operations.

Charter Fleet Business

During the quarter ended September 30, 2010, we classified our charter fleet business as a discontinued operation and recognized a $27.7 million write-down of the carrying value of these assets to their estimated net realizable value. The write-down was based on the estimated fair value of consideration expected from the sale and estimated selling costs, and we considered that fair value measurement as Level 2 in nature.

The following table presents selected financial information regarding the results of operations attributable to our charter fleet business:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Unaudited) (In thousands)
Revenues	$	13,404		$	14,230		$	33,970		$	46,812
Loss on disposal of discontinued operations		—			(27,690	)		—			(27,690	)
Income before provision for income taxes		2,004			1,362			6,745			7,766
		2,004			(26,328	)		6,745			(19,924	)
Provision for income taxes		(817	)		(240	)		(2,286	)		(1,759	)
Income from discontinued operations, net of tax	$	1,187		$	(26,568	)	$	4,459		$	(21,683	)

The following table presents the carrying values of the major classes of assets and liabilities held for sale that are included in our unaudited condensed consolidated balance sheets:

	September 30, 2011		December 31, 2010
	(Unaudited)
	(In thousands)
Cash	$	3,439	$	1,426
Accounts receivable – net		13,200		5,253
Other assets		3,991		3,482
Total current assets held for sale		20,630		10,161
Property, plant and equipment – net		67,247		68,595
Other assets		9,068		8,555
Total long-term assets held for sale		76,315		77,150
Total assets held for sale	$	96,945	$	87,311
Accounts payable and accrued liabilities	$	7,830	$	8,748
Other liabilities		15,458		12,154
Total liabilities associated with assets held for sale	$	23,288	$	20,902

Spin-off of B&W

On July 30, 2010, we completed the spin-off of B&W to our stockholders through a stock distribution. B&W’s assets and businesses primarily consisted of those that we previously reported as our Government Operations and Power Generation Systems segments. In connection with the spin-off, our stockholders received 100% (approximately 116 million shares) of the outstanding common stock of B&W. The distribution of B&W common stock occurred by way of a pro rata stock dividend to our stockholders. Each stockholder generally received one share of B&W common stock for every two shares of our common stock held by such stockholder on July 9, 2010, and cash in lieu of any fractional shares. Prior to the completion of the spin-off, B&W made a cash distribution to us totaling $100 million.

In order to effect the distribution and govern MII’s relationship with B&W after the distribution, MII and B&W entered into a master separation agreement and several other agreements, including a tax sharing agreement and transition services agreements.

The following table presents selected financial information regarding the results of operations of our former B&W business for the three-month and nine-month periods ended September 30, 2010. Loss on disposal of discontinued operations represents costs incurred in connection with the B&W spin-off.

	Three Months Ended September 30, 2010			Nine Months Ended September 30, 2010
	(Unaudited) (In thousands)
Revenues	$	173,540		$	1,524,424
Loss on disposal of discontinued operations		(5,246	)		(95,666	)
Income before provision for income taxes		(12,342	)		105,796
		(17,588	)		10,130
Provision for income taxes		4,126			(22,755	)
Loss from discontinued operations, net of tax	$	(13,462	)	$	(12,625	)

Other Items

Vessel Sale

On August 26, 2011, we completed the sale of the DB 23 marine vessel. Cash consideration received from the vessel sale was approximately $8.0 million, resulting in a pre-tax gain of $7.7 million that is included in our condensed consolidated statements of income for the three months and nine months ended September 30, 2011 for the Atlantic segment.

Fabrication Facility

During the quarter ended September 30, 2010, we incurred approximately $20 million of costs to discontinue our development plans for a new fabrication yard in Kazakhstan, including estimated lease termination costs. These costs are reflected in our condensed consolidated statements of income in costs of operations for the three-month and nine-month periods ended September 30, 2010 for the Middle East segment.