10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-08430

McDERMOTT INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

REPUBLIC OF PANAMA	72-0593134
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
757 N. ELDRIDGE PKWY HOUSTON, TEXAS	77079
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (281) 870-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes þ    No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	þ	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨    No   þ

The number of shares of the registrant’s common stock outstanding at May 7, 2015 was 238,604,332.

McDERMOTT INTERNATIONAL, INC.

INDEX—FORM 10-Q

	PAGE
PART I—FINANCIAL INFORMATION	1
Item 1—Consolidated Financial Statements	1
Consolidated Statements of Operations	1
Consolidated Statements of Comprehensive Loss	2
Consolidated Balance Sheets	3
Consolidated Statements of Cash Flows	4
Consolidated Statements of Stockholders’ Equity	5
Notes to the Consolidated Financial Statements	7
Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3—Quantitative and Qualitative Disclosures about Market Risk	32
Item 4—Controls and Procedures	34
PART II—OTHER INFORMATION	35
Item 1—Legal Proceedings	35
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 5—Other Information	35
Item_6_Exhibits	36
SIGNATURES	37

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended March 31,
	2015			2014
	(Unaudited)
	(In thousands, except shares
	and per share amounts)
Revenues	$	550,463		$	603,811
Costs and Expenses:
Cost of operations		475,459			591,493
Selling, general and administrative expenses		51,676			51,964
Gain on disposal of assets		(367	)		(6,439	)
Restructuring expenses		10,389			6,125
Total costs and expenses		537,157			643,143
(Loss) Income from Investments in Unconsolidated Affiliates		(6,741	)		1,123
Operating Income (Loss)		6,565			(38,209	)
Other Income (Expense):
Interest income (expense), net		(12,179	)		61
Loss on foreign currency, net		(1,468	)		(4,082	)
Other expense, net		(97	)		(265	)
Total other expense		(13,744	)		(4,286	)
Loss before provision for income taxes and noncontrolling interests		(7,179	)		(42,495	)
Provision for income taxes		4,869			3,489
Net loss		(12,048	)		(45,984	)
Less: net income attributable to noncontrolling interest		2,459			536
Net loss attributable to McDermott International, Inc.	$	(14,507	)	$	(46,520	)
Loss per share
Net loss attributable to McDermott International, Inc.:
Basic	$	(0.06	)	$	(0.20	)
Diluted	$	(0.06	)	$	(0.20	)
Shares used in the computation of losses per share:
Basic:		237,504,719			236,961,158
Diluted:		237,504,719			236,961,158

See accompanying notes to the Consolidated Financial Statements.

1

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	Three Months Ended March 31,
	2015			2014
	(Unaudited)
	(in thousands)
Net Loss	$	(12,048	)	$	(45,984	)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on investments		12			(24	)
Foreign currency translation adjustment		(2,042	)		(320	)
Gain (loss) on derivatives		(16,885	)		14,529
Other comprehensive income (loss), net of tax		(18,915	)		14,185
Total Comprehensive Loss	$	(30,963	)	$	(31,799	)
Less: Comprehensive Income Attributable to Non-controlling Interests		2,426			503
Comprehensive Loss Attributable to McDermott International, Inc.	$	(33,389	)	$	(32,302	)

See accompanying notes to the Consolidated Financial Statements.

2

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

	March 31, 2015			December 31, 2014
	(Unaudited)
	(In thousands, except shares and par value data)
Assets
Current Assets:
Cash and cash equivalents	$	600,636		$	665,309
Restricted cash and cash equivalents		199,764			187,585
Accounts receivable – trade, net		213,144			143,370
Accounts receivable  – other		73,837			81,088
Contracts in progress		380,756			357,617
Deferred income taxes		12,646			7,514
Assets held for sale		14,253			14,253
Other current assets		49,971			44,898
Total Current Assets		1,545,007			1,501,634
Property, Plant and Equipment		2,479,797			2,473,563
Less Accumulated depreciation		(850,378	)		(830,467	)
Net Property, Plant and Equipment		1,629,419			1,643,096
Accounts Receivable – Long-Term Retainages		136,908			137,468
Investments in Unconsolidated Affiliates		36,206			38,186
Deferred Income Taxes		17,034			17,313
Investments		2,151			2,216
Other Assets		93,306			76,966
Total Assets	$	3,460,031		$	3,416,879
Liabilities and Equity
Current Liabilities:
Notes payable and current maturities of long-term debt	$	27,092		$	27,026
Accounts payable		374,927			251,924
Accrued liabilities		330,889			337,209
Advance billings on contracts		162,004			199,865
Deferred income taxes		19,265			19,753
Income taxes payable		29,813			25,165
Total Current Liabilities		943,990			860,942
Long-Term Debt		834,247			837,443
Self-Insurance		18,140			17,026
Pension Liability		18,079			18,403
Non-current Income Taxes		48,442			49,229
Other Liabilities		85,707			94,722
Commitments and Contingencies
Stockholders' Equity:
Common stock, par value $1.00 per share, authorized
400,000,000 shares; issued and outstanding 246,199,889 and 245,209,850 shares, respectively		246,200			245,210
Capital in excess of par value (including prepaid common stock purchase contracts)		1,679,631			1,676,815
Accumulated Deficit		(254,079	)		(239,572	)
Treasury stock, at cost: 7,700,580 and 7,400,027 shares, respectively		(96,972	)		(96,441	)
Accumulated other comprehensive loss		(116,690	)		(97,808	)
Stockholders' Equity - McDermott International, Inc.		1,458,090			1,488,204
Noncontrolling interest		53,336			50,910
Total Equity		1,511,426			1,539,114
Total Liabilities and Equity	$	3,460,031		$	3,416,879

See accompanying notes to the Consolidated Financial Statements.

3

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Month Ended March 31,
	2015			2014
	(Unaudited)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(12,048	)	$	(45,984	)
Non-cash items included in net loss:
Depreciation and amortization		25,327			24,602
Drydock amortization		5,272			6,946
Stock-based compensation charges		4,278			4,387
Losses (gains) from Investments in unconsolidated affiliates		6,741			(1,123	)
Gain on asset disposals		(367	)		(6,439	)
Restructuring expense		4,169			675
Deferred taxes		(5,341	)		(2,628	)
Other non-cash items		(1,472	)		1,752
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable		(69,214	)		26,365
Net contracts in progress and advance billings on contracts		(61,021	)		(5,974	)
Accounts payable		110,785			32,727
Accrued and other current liabilities		(5,723	)		15,046
Pension liability and accrued postretirement and employee benefits		(555	)		5,880
Other assets and liabilities		(19,370	)		(78,560	)
TOTAL CASH USED IN OPERATING ACTIVITIES		(18,539	)		(22,328	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(23,972	)		(37,893	)
(Increase) in Restricted cash and cash equivalents		(12,179	)		(19,634	)
Purchases of available-for-sale securities		-			(1,997	)
Sales and maturities of available-for-sale securities		1,775			10,055
Investments in unconsolidated affiliates		(4,696	)		-
Proceeds from asset dispositions		-			8,370
Other		76			(1,950	)
TOTAL CASH USED IN INVESTING ACTIVITIES		(38,996	)		(43,049	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt		-			250,000
Repayment of debt		(4,706	)		(31,373	)
Other		(1,323	)		(3,858	)
TOTAL CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(6,029	)		214,769
EFFECTS OF EXCHANGE RATE CHANGES ON CASH		(1,109	)		36
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(64,673	)		149,428
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		665,309			118,702
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	600,636		$	268,130

See accompanying notes to the Consolidated Financial Statements.

4

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

											Accumulated
					Capital						Other
	Common Stock				in Excess			Accumulated			Comprehensive			Treasury			Stockholders'			Noncontrolling			Total
	Shares		Par Value		of Par Value			Deficit			Loss  ("AOCI")			Stock			Equity			Interest ("NCI")			Equity
	(Unaudited)
	(In thousands, except shares)
Balance at December 31, 2014		245,209,850	$	245,210	$	1,676,815		$	(239,572	)	$	(97,808	)	$	(96,441	)		1,488,204		$	50,910			1,539,114
Net loss		-		-		-			(14,507	)		-			-			(14,507	)		2,459			(12,048	)
Other comprehensive loss, net of tax		-		-		-			-			(18,882	)		-			(18,882	)		(33	)		(18,915	)
Share vesting		990,039		990		(990	)		-			-			-			-			-			-
Stock-based compensation charges		-		-		3,806			-			-			472			4,278			-			4,278
Purchase of treasury shares		-		-		-			-			-			(1,003	)		(1,003	)		-			(1,003	)
Balance at March 31, 2015		246,199,889	$	246,200	$	1,679,631		$	(254,079	)	$	(116,690	)	$	(96,972	)	$	1,458,090		$	53,336		$	1,511,426

See accompanying notes to the Consolidated Financial Statements.

5

McDERMOTT INTERNATIONAL, INC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) TABLE OF CONTENTS	PAGE
Note 1—Basis of Presentation and Significant Accounting Policies	7
Note 2—Revenue Recognition	8
Note 3—Use of Estimates	9
Note 4—Accounts Receivable	10
Note 5—Contracts in Progress and Advance Billings on Contracts	11
Note 6—Restructuring	11
Note 7—Long-Term Debt and Notes Payable	13
Note 8—Pension Plans	14
Note 9—Derivative Financial Instruments	14
Note 10—Fair Value Measurements	15
Note 11—Accumulated Other Comprehensive Loss	16
Note 12—Earnings Per Share	17
Note 13—Segment Reporting	17
Note 14—Commitments and Contingencies	19

6

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

NOTE 1—BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

McDermott International, Inc. (“MII”), a corporation incorporated under the laws of the Republic of Panama in 1959, is an engineering, procurement, construction and installation (“EPCI”) company focused on designing and executing complex offshore oil and gas projects worldwide. Providing fully integrated EPCI services, we deliver fixed and floating production facilities, pipeline installations and subsea systems from concept to commissioning. Operating in approximately 20 countries across the Americas, Europe, Africa, the Middle East and Asia, our integrated resources include a diversified fleet of marine vessels, fabrication facilities and engineering offices. We support our activities with comprehensive project management and procurement services, while utilizing our fully integrated capabilities in both shallow water and deepwater construction. Our customers include national, major integrated and other oil and gas companies, and we operate in most major offshore oil and gas producing regions throughout the world. We execute our contracts through a variety of methods, principally fixed-price, but also including cost reimbursable, cost-plus, day-rate and unit-rate basis or some combination of those methods. In these notes to our accompanying unaudited Consolidated Financial Statements, unless the context otherwise indicates, “we,” “us” and “our” mean MII and its consolidated subsidiaries.

Basis of Presentation

The accompanying Consolidated Financial Statements are unaudited and have been prepared from our books and records in accordance with Rule 10-1 of Regulation S-X for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of our management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of results of operations for a full year. These Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and notes thereto included in MII’s Current Report on Form 8-K filed with the SEC on May 11, 2015.

Business Segments

In the first quarter of 2015, we completed changes to our organizational structure which resulted in realignment of our reporting segments. Our North Sea and Africa operations were previously aggregated into the Middle East (“MEA”) reporting segment. However, the responsibility for business decisions relating to the North Sea and Africa was moved to our Americas reporting segment in the first quarter of 2015. As a result, the North Sea and Africa businesses are reflected in our Americas reporting segment, now referred to as Americas, Europe and Africa (collectively, “AEA”). All comparable periods presented have been revised to reflect this change. Accordingly, we report financial results under three reporting segments consisting of AEA, MEA and Asia (“ASA”). We also report certain corporate and other non-operating activities under the heading “Corporate and other,” which primarily reflects corporate personnel and activities, incentive compensation programs and other costs that are generally fully allocated to our reporting segments. However, Corporate restructuring costs associated with our corporate reorganization are not allocated to our reporting segments. See Note 13 for summarized financial information on our segments.

Recently Issued and Adopted Accounting Guidance

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The standard does not affect the recognition and measurement of debt issuance costs. Therefore, the amortization of debt issuance costs will be calculated using the interest method and be reported as interest expense. Retrospective application of this ASU is required for public entities for annual and interim periods beginning on or after December 15, 2015, and early adoption is permitted. We early adopted this ASU. Our accompanying Consolidated Financial Statements classify debt issuance costs related to long-term debt as components of Long-term debt. These costs were previously reported by us as Assets (see Note 7). All comparable periods presented have been revised to reflect this change.

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements and Property, Plant, and Equipment—Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which amends the definition of a discontinued operation by raising the threshold for a disposal to qualify as discontinued operations. ASU 2014-08 also requires entities to provide additional disclosures about discontinued operations as well as disposal transactions that do not meet the discontinued operations criteria. The pronouncement is effective prospectively for all disposals (except disposals classified as held for sale before the adoption

7

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

date) or components initially classified as held for sale in periods beginning on or after December 15, 2014. The application of this ASU did not have any impact on the accompanying Consolidated Financial Statements.

Accounting Guidance Issued But Not Adopted as of March 31, 2015

In April 2015, the FASB issued ASU 2015-04, Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets. This ASU is intended to provide a practical expedient for the measurement date of defined benefit plan assets and obligations. The practical expedient allows employers with fiscal year-end dates that do not fall on a calendar month-end (e.g., companies with a 52/53-week fiscal year) to measure pension and post-retirement benefit plan assets and obligations as of the calendar month-end date closest to the fiscal year-end. The FASB also provided a similar practical expedient for interim remeasurements for significant events. This ASU requires perspective application and is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the impact of this amendment on our future Consolidated Financial Statements and related disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which amends and changes the consolidation analysis currently required under U.S. GAAP. This ASU modifies the process used to evaluate whether limited partnerships and similar entities are variable interest entities or voting interest entities; affects the analysis performed by reporting entities regarding variable interest entities, particularly those with fee arrangements and related party relationships; and provides a scope exception for certain investment funds. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. We are currently assessing the impact of these amendments on our future Consolidated Financial Statements and related disclosures.

In January 2015, the FASB issued ASU 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which eliminates the concept of extraordinary items. Under this new guidance, entities will no longer be required to separately classify, present and disclose extraordinary events and transactions. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2015. The application of these amendments is not expected to have an impact on our future Consolidated Financial Statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Currently, there is no guidance in effect under U.S. GAAP regarding management’s responsibility to assess whether there is substantial doubt about an entity’s ability to continue as a going concern. Under ASU 2014-15, we will be required to assess our ability to continue as a going concern each interim and annual reporting period and provide certain disclosures if there is substantial doubt about our ability to continue as a going concern, including management’s plan to alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter with early adoption permitted. We are currently assessing the impact of the adoption of ASU 2014-15 on our future Consolidated Financial Statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. It also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 will be effective for us for annual and interim reporting periods beginning after December 15, 2016, with early application not permitted. Retrospective and modified retrospective application is allowed. We are currently evaluating the requirements of this ASU and have not yet determined its impact on our future Consolidated Financial Statements and related disclosures.

NOTE 2—REVENUE RECOGNITION

Unapproved Change Orders

As of March 31, 2015, total unapproved change orders included in our estimates at completion aggregated approximately $240.3 million, of which approximately $73.0 million was included in backlog. As of March 31, 2014, total unapproved change orders included in our estimates at completion aggregated approximately $223.5 million, of which approximately $38.1 million was included in backlog.

8

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

Claims Revenue

The amount of revenues and costs included in our estimates at completion (i.e., contract values) associated with claims was $6.5 million as of March 31, 2015 and 2014. All of these claim amounts at March 31, 2015 and 2014 were related to our MEA segment. For the quarters ended March 31, 2015 and 2014, no revenues or costs pertaining to claims were included in the accompanying Consolidated Financial Statements. None of the pending claims as of March 31, 2015 were the subject of any litigation proceedings.

Our unconsolidated joint ventures did not include any claims revenue or associated cost in their financial results for the quarters ended March 31, 2015 and 2014.  

Deferred Profit Recognition

As of March 31, 2015 and 2014, we were not accounting for any projects under our deferred profit recognition policy.

Completed Contract Method

As of March 31, 2015 and 2014, we were not accounting for any contracts under the completed contract method.

Loss Recognition

As of March 31, 2015, we have provided for our estimated costs to complete on all of our ongoing contracts. However, it is possible that current estimates could change due to unforeseen events, which could result in adjustments to overall contract costs. Variations from estimated contract performance could result in material adjustments to operating results for any fiscal quarter or year. For all contracts, if a current estimate of total contract cost indicates a loss, the projected loss is recognized in full when determined.

Of the March 31, 2015 backlog, approximately $406.7 million related primarily to four active projects that were in loss positions, whereby future revenues are expected to equal costs when recognized. Included in this amount was $130.4 million of backlog associated with an EPCI project, PB Litoral, in Mexico, which is expected to be completed in the fourth quarter of 2015, $87.5 million of backlog pertaining to a five-year charter of the Agile in Brazil, which is expected to be completed in the first quarter of 2017, and $20.8 million of backlog relating to NO102 vessel charter project in Brazil, scheduled for completion in the second quarter of 2015, all of which are being conducted in our AEA segment. The March 31, 2015 backlog amount also included $166.5 million relating to an EPCI project in our MEA segment, which is also in a loss position and is expected to be completed by the fourth quarter of 2017.  It is possible that our estimates of gross profit could increase or decrease based on changes in productivity, actual downtime and the resolution of change orders and claims with the customers.

NOTE 3—USE OF ESTIMATES

We use estimates and assumptions to prepare our financial statements in conformity with U.S. GAAP. Those estimates and assumptions affect the amounts we report in our consolidated financial statements and accompanying notes. Our actual results could differ from those estimates, and variances could materially affect our financial condition and results of operations in future periods. Changes in project estimates generally exclude change orders and changes in scope, but may include, without limitation, changes in cost recovery estimates, unexpected changes in weather conditions, changes in productivity, unidentified required vessel repairs, customer and vendor delays and other costs. We generally expect to experience a reasonable amount of unanticipated events, and some of those events can result in significant cost increases above cost amounts we previously estimated. As of March 31, 2015, we have provided for our estimated costs to complete on all of our ongoing contracts. However, it is possible that current estimates could change due to unforeseen events, which could result in adjustments to overall contract costs. Variations from estimated contract performance could result in material adjustments to operating results. For all contracts, if a current estimate of total contract cost indicates a loss, the projected loss is recognized in full when determined.

The following is a discussion of our most significant changes in estimates that impacted operating income for the three months ended March 31, 2015 and 2014.

Three months ended March 31, 2015

Operating income for the three months ended March 31, 2015 was positively impacted by net favorable changes in cost estimates totaling approximately $21.6 million across all segments.

9

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

The AEA segment was positively impacted by net favorable changes in estimates aggregating approximately $6.6 million, primarily due to $4.4 million in reduced cost estimates attributable to a revised demobilization plan for one of our vessels, North Ocean 105 (the “NO 105”), which is working on a  subsea project in Brazil.

The MEA segment was positively impacted by net favorable changes in estimates aggregating approximately $9.1 million. Two EPCI projects in Saudi Arabia were positively impacted by $6.9 million of changes in revenue recovery and cost savings based on constructive discussions with a customer on design optimization and by $6.3  million for improvement in revenue recovery estimates and due to the favorable outcome of our discussions with a customer on compensation for vessel downtime due to weather and standby delays. These favorable changes were partially offset by the $4.5 million negative impact on a Saudi Arabia EPCI project, primarily due to change in cost estimates as a result of a change in marine execution plans.

The ASA segment was positively impacted by net favorable changes in estimates aggregating approximately $5.9 million, driven by multiple projects, none of the individual results of which were material.

Three months ended March 31, 2014

Operating income for the three months ended March 31, 2014 was impacted by net unfavorable changes in cost estimates relating to projects in our AEA and MEA segments, partially offset by net favorable changes in ASA segment.

The AEA segment was negatively impacted by changes in estimates of approximately $35.4 million on an EPCI project, PB Litoral, in Mexico, in the first quarter of 2014. The estimated cost at completion on this project increased primarily due to delays in final project delivery, resulting in a revised execution plan, increased fabrication labor costs and recognition of liquidated damages.

The MEA segment was negatively impacted by losses of approximately $31.9 million, mostly due to changes in estimates on three projects in Saudi Arabia during the three months ended March 31, 2014. On two EPCI projects in Saudi Arabia, we increased our estimated cost at completion by approximately $24.3 million, primarily as a result of vessel downtime due to weather and standby delays (which may be recoverable from the customer, but which were not recognizable at March 31, 2014), and reduced productivity on fabrication and engineering activities. Both projects remain in a profitable position at March 31, 2014. On another EPCI project in Saudi Arabia, we increased our estimated cost to complete by approximately $7.6 million, primarily due to increases in our cost estimates for the completion of onshore activities on the project.

The ASA segment experienced an improvement of approximately $20.6 million, mostly due to changes in estimates on a subsea project, Siakap Subsea Development, in Malaysia during the quarter ended March 31, 2014, primarily due to productivity improvements on our marine vessels as well as offshore support activities.

NOTE 4—ACCOUNTS RECEIVABLE

Accounts Receivable—Trade, Net

A summary of contract receivables is as follows:

	March 31, 2015			December 31, 2014
	(in thousands)
Contract receivables:
Contracts in progress	$	176,027			106,174
Completed contracts		26,512			34,698
Retainages		32,100			28,586
Unbilled		4,303			4,303
Less allowances		(25,798	)		(30,391	)
Accounts receivable—trade, net	$	213,144		$	143,370

Contract retainages generally represent amounts withheld by our customers until project completion, in accordance with the terms of the applicable contracts. The following is a summary of retainages on our contracts:

10

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

	March 31, 2015		December 31, 2014
	(in thousands)
Retainages expected to be collected within one year	$	32,100	$	28,586
Retainages expected to be collected after one year		136,908		137,468
Total retainages	$	169,008	$	166,054

NOTE 5—CONTRACTS IN PROGRESS AND ADVANCE BILLINGS ON CONTRACTS

Contracts in progress were $380.8 million and $357.6 million at March 31, 2015 and December 31, 2014, respectively. Advance billings on contracts were $162.0 million at March 31, 2015 and $199.9 million at December 31, 2014. A detail of the components of contracts in progress and advance billings on contracts is as follows:

	March 31, 2015			December 31, 2014
	(In thousands)
Costs incurred less costs of revenue recognized	$	160,306		$	90,191
Revenues recognized less billings to customers		220,450			267,426
Contracts in Progress	$	380,756		$	357,617
Billings to customers less revenue recognized		514,089			578,896
Costs incurred less costs of revenue recognized		(352,085	)		(379,031	)
Advance Billings on Contracts	$	162,004		$	199,865

NOTE 6—RESTRUCTURING

In 2014 we completed a major review of our cost structure, and we are implementing a plan, which we refer to as the McDermott Profitability Initiative (“MPI”), to increase our profitability and flexibility through reduced fixed and variable costs. The plan includes headcount reductions, centralization of operational activities, other cost reduction initiatives and certain asset impairments. For the quarter ended March 31, 2015, expenses incurred under the MPI totaled $8.6 million.

During 2013 and 2014, we implemented a restructuring of our Americas operations, which involved our Morgan City, Louisiana, Houston, Texas, New Orleans, Louisiana and some Brazil locations. The restructuring involved, among other things, reductions of management, administrative, fabrication and engineering personnel, and the discontinued utilization of the Morgan City facility. For the quarter ended March 31, 2015, expenses incurred under the Americas restructuring totaled $1.8 million.

We completed a Corporate restructuring by the end of 2014. Costs associated with our Corporate restructuring activities primarily included severance, relocation and other personnel-related costs and costs for advisors, as well as costs for certain executive management changes which became effective during the fourth quarter of 2013.

11

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

The following table presents amounts incurred during the three months ended March 31, 2015 and 2014, as well as amounts incurred from the inception of our restructuring efforts up to March 31, 2015 and amounts expected to be incurred in the future by major type of cost and by segment.

	Incurred in the three months ended March 31, 2015		Incurred in the three months ended March 31, 2014		Incurred from inception to March 31, 2015		Estimate of remaining amounts to be incurred		Total
	(In thousands)
Americas Restructuring
Impairments and write offs	$	-	$	-	$	12,923	$	-	$	12,923
Severance and other personnel-related costs		881		2,029		14,261		-		14,261
Morgan City environmental reserve		-		-		5,925		-		5,925
Morgan City yard-related expenses		914		1,602		11,764		4,002		15,766
Other		-		-		158		-		158
	$	1,795	$	3,631	$	45,031	$	4,002	$	49,033
Corporate Restructuring
Severance and other personnel-related costs	$	-	$	908	$	2,599	$	-	$	2,599
Legal and other advisor fees		-		1,586		3,204		-		3,204
Other		-		-		798		-		798
	$	-	$	2,494	$	6,601	$	-	$	6,601
MPI
Severance and other personnel-related costs
AEA segment	$	1,252	$	-	$	1,252	$	3,877	$	5,129
MEA segment		607		-		607		3,300		3,907
ASA segment		1,800		-		1,800		5,329		7,129
Corporate and other		719		-		719		6,967		7,686
Asset impairment
ASA segment		4,168		-		4,168		-		4,168
Legal and other advisor fees
Corporate		48		-		4,051		-		4,051
	$	8,594	$	-	$	12,597	$	19,473	$	32,070
Total	$	10,389	$	6,125	$	64,229	$	23,475	$	87,704

In the first quarter of 2015, we reclassified certain MPI-related legal and other advisory fees of $4.0 million incurred in 2014 from Corporate restructuring costs to MPI costs.

The following table presents a roll forward of accrued liabilities associated with our restructuring activities:

	December 31, 2014		Accruals		Payments			March 31, 2015
	(In thousands)
Morgan City environmental reserve	$	3,675	$	-	$	(715	)	$	2,960
Morgan City yard-related expenses and other		373		833		(141	)		1,065
Total	$	4,048	$	833	$	(856	)	$	4,025

12

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

NOTE 7—LONG-TERM DEBT AND NOTES PAYABLE

The carrying values of our long-term debt obligations are as follows:

	March 31, 2015		December 31,2014
	(In thousands)
Long-term debt consists of:
Senior Notes	$	490,625	$	490,354
Term Loan		291,040		291,424
North Ocean 105 Construction Financing		46,024		45,888
Amortizing Notes		30,354		33,258
Capital lease obligation		2,802		2,802
Other financing		494		743
		861,339		864,469
Less: Amounts due within one year		27,092		27,026
Total long-term debt	$	834,247	$	837,443

LC Facility and Cash-Collateralized Bilateral Letters of Credit

As of March 31, 2015 and December 31, 2014, the aggregate face amount of letters of credit issued under our $400.0 million first-lien, first-out three-year letter of credit facility (the “LC Facility”) was $201.4 million and $195.8 million, respectively. No financial letters of credit have been issued under the LC Facility.

As of March 31, 2015, we had an aggregate face amount of approximately $111.8 million of cash collateralized letters of credit issued on a bilateral basis outside the LC Facility outstanding, including financial letters of credit of $20.8 million. As of December 31, 2014, we had an aggregate face amount of approximately $88.8 million of cash collateralized letters of credit issued on a bilateral basis outside the LC Facility outstanding, including financial letters of credit of $19.7 million. We have included the supporting cash collateral in restricted cash and cash equivalents in the accompanying Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014.

Bank Guarantees

In 2012, McDermott Middle East, Inc. and MII executed a general reimbursement agreement in favor of a bank located in the UAE relating to issuances of bank guarantees in support of contracting activities in the Middle East and India. As of March 31, 2015 and December 31, 2014, bank guarantees issued under those arrangements totaled $73.7 million and $56.2 million, respectively.

Surety Bonds

In 2012 and 2011, we executed general agreements of indemnity in favor of surety underwriters based in Mexico relating to surety bonds issued in support of contracting activities of our subsidiaries J. Ray McDermott de México, S.A. de C.V. and McDermott, Inc. As of March 31, 2015 and December 31, 2014, bonds issued under these arrangements totaled $46.3 million and $52.5 million, respectively.

Debt Issuance Costs

Debt issuance costs of $25.5 million and $27.1 million as of March 31, 2015 and December 31, 2014, respectively, are included in the above carrying values of our long-term debt obligations.

13

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

NOTE 8—PENSION PLANS

In 2014 we elected to change our accounting method for recognizing actuarial gains and losses for our pension and other postretirement benefit plans. In connection with our accounting change we have revised previously reported amounts to conform to our current method of accounting.

Net periodic benefit gain for our non-contributory qualified defined benefit pension plan and several of our non-qualified supplemental defined benefit pension plans (the “Domestic Plans”) and our J. Ray McDermott, S.A. Third Country National Employees Pension Plan (the “TCN Plan”) includes the following components:

	Domestic Plans						TCN Plan
	Three Months Ended March 31,
	2015			2014			2015			2014
	(In thousands)
Interest cost	$	5,382		$	6,778		$	407		$	475
Expected return on plan assets		(6,677	)		(6,875	)		(710	)		(740	)
Recognized net actuarial loss and other		-			(217	)		-			-
Net periodic benefit gain	$	(1,295	)	$	(314	)	$	(303	)	$	(265	)

NOTE 9—DERIVATIVE FINANCIAL INSTRUMENTS

We enter into derivative financial instruments primarily to hedge certain firm purchase commitments and forecasted transactions denominated in foreign currencies. We record these contracts at fair value on our Consolidated Balance Sheets. Depending on the hedge designation at the inception of the contract, the related gains and losses on these contracts are either: (1) deferred as a component of AOCI until the hedged item is recognized in earnings; (2) offset against the change in fair value of the hedged firm commitment through earnings; or (3) recognized immediately in earnings. At inception and on an ongoing basis, we assess the hedging relationship to determine its effectiveness in offsetting changes in cash flows or fair value attributable to the hedged risk. We exclude from our assessment of effectiveness the portion of the fair value of the forward contracts attributable to the difference between spot exchange rates and forward exchange rates. The ineffective portion of a derivative’s change in fair value and any portion excluded from the assessment of effectiveness are immediately recognized in earnings. Gains and losses on derivative financial instruments that are immediately recognized in earnings are included as a component of gain (loss) on foreign currency-net in the accompanying Consolidated Statements of Operations.

As of March 31, 2015, the majority of our foreign currency forward contracts were designated as cash flow hedging instruments. In addition, we deferred approximately $99.7 million of net losses on these derivative financial instruments in AOCI, and we expect to reclassify approximately $78.4 million of deferred losses out of AOCI by March 31, 2016, as hedged items are recognized. The notional value of our outstanding derivative contracts totaled $631.4 million at March 31, 2015, with maturities extending through 2017. Of this amount, approximately $424.8 million is associated with various foreign currency expenditures we expect to incur on one of our ASA segment EPCI projects. These instruments consist of contracts to purchase or sell foreign-denominated currencies. As of March 31, 2015, the fair value of these contracts was in a net liability position totaling $58.5 million. The fair value of outstanding derivative instruments is determined using observable financial market inputs, such as quoted market prices, and is classified as Level 2 in nature.

The following tables summarize our derivative financial instruments:

Asset and Liability Derivatives

	March 31, 2015		December 31, 2014
	(in thousands)
Derivatives Designated as Hedges:
Location:
Accounts receivable-other	$	1,342	$	1,173
Other assets		-		16
Total asset derivatives	$	1,342	$	1,189
Accounts payable	$	49,965	$	32,431
Other liabilities		9,833		15,670
Total liability derivatives	$	59,798	$	48,101

14

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

The Effects of Derivative Instruments on our Financial Statements

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Derivatives Designated as Hedges:
Amount of gain/(loss) recognized in other comprehensive income (loss)	$	(36,690	)	$	12,358
Income (loss)  reclassified from AOCI into income: effective portion
Location: Cost of operations		19,854		$	202
Gain(loss) recognized in income (loss): ineffective portion and amount excluded from effectiveness testing
Location: Gain (loss) on foreign currency—net		1,817			(847	)

NOTE 10—FAIR VALUE MEASUREMENTS

The following is a summary of our available-for-sale securities measured at fair value:

	March 31, 2015
	Total		Level 1		Level 2		Level 3
	(in thousands)
Mutual funds(1)	$	751	$	-	$	751	$	-
Commercial paper		1,400		-		1,400		-
Total	$	2,151	$	-	$	2,151	$	-
	December 31, 2014
	Total		Level 1		Level 2		Level 3
	(in thousands)
Mutual funds(1)	$	2,216	$	-	$	2,216	$	-
Commercial paper		1,699		-		1,699		-
Total	$	3,915	$	-	$	3,915	$	-

⁽¹⁾ Various U.S. equities and other investments managed under mutual funds

Our Level 2 investments consist primarily of commercial paper, asset-backed commercial paper notes backed by a pool of mortgage-backed securities and mutual funds. The fair value of our Level 2 investments was determined using a market approach that is based on quoted prices and other information for similar or identical instruments.

Other Financial Instruments

We used the following methods and assumptions in estimating our fair value disclosures for our other financial instruments:

Cash and cash equivalents and restricted cash and cash equivalents. The carrying amounts that we have reported in the accompanying Consolidated Balance Sheets for cash, cash equivalents and restricted cash and cash equivalents approximate their fair values and are classified as Level 1 within the fair value hierarchy.

Short-term and long-term debt. The fair value of debt instruments is classified as Level 2 within the fair value hierarchy and is valued using a market approach based on quoted prices for similar instruments traded in active markets. Where quoted prices are not available, the income approach is used to value these instruments based on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms.

Forward contracts. The fair value of forward contracts is classified as Level 2 within the fair value hierarchy and is valued using observable market parameters for similar instruments traded in active markets. Where quoted prices are not available, the income approach is used to value forward contracts, which discounts future cash flows based on current market expectations and credit risk.

15

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

The estimated fair values of certain of our financial instruments are as follows:

	March 31, 2015						December 31, 2014
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
	(In thousands)
Balance Sheet Instruments
Cash and cash equivalents	$	600,636		$	600,636		$	665,309		$	665,309
Restricted cash and cash equivalents		199,764			199,764			187,585			187,585
Investments		2,151			2,151			3,915			3,915
Debt		(861,339	)		(773,619	)		(864,469	)		(737,980	)
Forward contracts		(58,456	)		(58,456	)		(46,912	)		(46,912	)

Non-financial Instruments

In accordance with ASC 360-10, Property, Plant and Equipment, one of our vessels, the DB101, which is held and used in our ASA segment, was written down to a fair value of $13.6 million, resulting in a non-cash impairment charge of $4.2 million in the first quarter of 2015. This asset impairment is related to our plan to decommission this vessel in the second quarter of 2015.

NOTE 11—ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of AOCI included in stockholders’ equity are as follows:

	March 31, 2015			December 31, 2014
	(In thousands)
Foreign currency translation adjustments	$	(17,254	)	$	(15,212	)
Net gain on investments		253			241
Net loss on derivative financial instruments		(99,689	)		(82,837	)
Accumulated other comprehensive loss	$	(116,690	)	$	(97,808	)

The following table presents the components of AOCI and the amounts that were reclassified during the period:

For the three months ended March 31, 2015	Foreign currency gain (loss)			Unrealized holding loss on investment		Deferred gain (loss) on derivatives (1)			TOTAL
	(in thousands)
Balance, December 31, 2014	$	(15,212	)	$	241	$	(82,837	)	$	(97,808	)
Other comprehensive income (loss) before reclassification		(2,042	)		12		(36,690	)		(38,720	)
Amounts reclassified from AOCI		-			-		19,838	(2)		19,838
Net current period other comprehensive income (loss)		(2,042	)		12		(16,852	)		(18,882	)
Balance, March 31, 2015	$	(17,254	)	$	253	$	(99,689	)	$	(116,690	)

¹ Refer to Note 9 for additional details.

² Reclassified to cost of operations and gain on foreign currency, net.

16

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

NOTE 12—EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per common share:

	Three Months Ended March 31,
	2015			2014
	(In thousands, except share and per share amounts)
Net loss attributable to McDermott International, Inc.	$	(14,507	)	$	(46,520	)
Weighted average common shares (basic)		237,504,719			236,961,158
Effect of dilutive securities:
Stock options, restricted stock and restricted stock units					-
Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards (diluted)		237,504,719			236,961,158
Basic loss per share
Net loss attributable to McDermott International, Inc.	$	(0.06	)	$	(0.20	)
Diluted loss per share:
Net loss attributable to McDermott International, Inc.	$	(0.06	)	$	(0.20	)

Approximately 3.3 million and 3.0 million shares underlying outstanding stock-based awards were excluded from the computation of diluted earnings per share because they were anti-dilutive for the three months ended March 31, 2015 and March 31, 2014, respectively.

Potential dilutive common shares for the settlement of the common stock purchase contracts totaling 40.9 million shares were considered in the calculation of diluted weighted-average shares for the three months ended March 31, 2015; however, due to our net loss position, they have not been reflected above because they would be anti-dilutive.

NOTE 13—SEGMENT REPORTING

In the first quarter of 2015, we completed changes to our organizational structure which resulted in the realignment of our reporting segments. Our North Sea and Africa operations were previously aggregated into the Middle East reporting segment. However, the responsibility for business decisions relating to the North Sea and Africa was moved to our Americas reporting segment in the first quarter of 2015.  As a result, the North Sea and Africa businesses are now reflected in our Americas segment, now referred to as Americas, Europe and Africa (collectively, “AEA”). All comparable periods presented have been revised to reflect this change. Accordingly, we report financial results under three reporting segments consisting of AEA, the Middle East (“MEA”) and Asia (“ASA”). We also report certain corporate and other non-operating activities under the heading “Corporate and other,” which primarily reflects corporate personnel and activities, incentive compensation programs and other costs that are generally fully allocated to our reporting segments. However, Corporate restructuring costs associated with our corporate reorganization are not allocated to our reporting segments.

17

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

Reporting segments are measured based on operating income, which is defined as revenues reduced by total costs and expenses and equity in income (loss) of unconsolidated affiliates. Summarized financial information is shown in the following tables:

	Three Months Ended March 31,
	2015			2014
	(In thousands)
Revenues(1):
AEA	$	143,313		$	181,686
MEA		153,800			260,300
ASA		253,350			161,825
Total revenues	$	550,463		$	603,811
Operating income (loss)(2):
AEA	$	15,071		$	(36,412	)
MEA		5,177			(2,734	)
ASA		(12,916	)		3,431
Corporate		(767	)		(2,494	)
Total operating income (loss)	$	6,565		$	(38,209	)
Capital expenditures(3):
AEA	$	2,913		$	7,409
MEA		10,114			22,575
ASA		10,824			4,068
Corporate and Other		121			3,841
Total capital expenditures	$	23,972		$	37,893
Depreciation and amortization:
AEA	$	12,823		$	10,827
MEA		5,738			8,169
ASA		3,916			3,908
Corporate and Other		2,850			1,698
Total depreciation and amortization	$	25,327		$	24,602
Drydock amortization:
AEA	$	3,083		$	4,562
MEA		613			429
ASA		1,576			1,955
Total drydock amortization	$	5,272		$	6,946

⁽¹⁾ Intersegment transactions included in revenues were not significant for either of the periods presented.

⁽²⁾ The ASA segment’s operating loss includes an impairment charge of $4.2 million related to the DB101.

⁽³⁾ Total capital expenditures presents expenditures for which cash payments were made during the period. Capital expenditures for the three months ended March 31, 2015 include $3.3 million of cash payments for accrued capital expenditures outstanding as of December 31, 2014. Capital expenditures for the three months ended March 31, 2014 include $8.3 million of cash payments for accrued capital expenditures outstanding as of December 31, 2013.

	March 31, 2015		December 31, 2014
	(In thousands)
Segment assets:
AEA	$	922,868	$	976,179
MEA		932,028		990,671
ASA		758,473		601,394
Corporate and Other		846,662		848,635
	$	3,460,031	$	3,416,879

18

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

NOTE 14—COMMITMENTS AND CONTINGENCIES

Investigations and Litigation

On or about August 23, 2004, a declaratory judgment action entitled Certain Underwriters at Lloyd’s London, et al. v. J. Ray McDermott, Inc. et al., was filed by certain underwriters at Lloyd’s, London and Threadneedle Insurance Company Limited (the “London Insurers”), in the 23rd Judicial District Court, Assumption Parish, Louisiana, against MII, J. Ray McDermott, Inc. (“JRMI”) and two insurer defendants, Travelers and INA, seeking a declaration that the London Insurers have no obligation to indemnify MII and JRMI for certain bodily injury claims, including claims for asbestos and welding rod fume personal injury which have been filed by claimants in various state courts. Additionally, Travelers filed a cross-claim requesting a declaration of non-coverage in approximately 20 underlying matters. This proceeding was stayed by the Court on January 3, 2005. We do not believe an adverse judgment or material losses in this matter are probable, and, accordingly, we have not accrued any amounts relating to this contingency. Although there is a possibility of an adverse judgment, the amount or potential range of loss is not estimable at this time. The insurer-plaintiffs in this matter commenced this proceeding in a purported attempt to obtain a determination of insurance coverage obligations for occupational exposure and/or environmental matters for which we have given notice that we could potentially seek coverage. Because estimating losses would require, for every matter, known and unknown, on a case by case basis, anticipating what impact on coverage a judgment would have and a determination of an otherwise expected insured value, damages cannot be reasonably estimated.

On December 16, 2005, a proceeding entitled Antoine, et al. vs. J. Ray McDermott, Inc., et al. (“Antoine Suit”), was filed in the 24th Judicial District Court, Jefferson Parish, Louisiana, by approximately 88 plaintiffs against approximately 215 defendants, including our subsidiaries formerly known as JRMI and Delta Hudson Engineering Corporation (“DHEC”), generally alleging injuries for exposure to asbestos, and unspecified chemicals, metals and noise while the plaintiffs were allegedly employed as Jones Act seamen. This case was dismissed by the Court on January 10, 2007, without prejudice to plaintiffs’ rights to refile their claims. On January 29, 2007, 21 plaintiffs from the dismissed Antoine Suit filed a matter entitled Boudreaux, et al. v. McDermott, Inc., et al. (the “Boudreaux Suit”), in the United States District Court for the Southern District of Texas, against JRMI and our subsidiary formerly known as McDermott Incorporated, and approximately 30 other employer defendants, alleging Jones Act seaman status and generally alleging exposure to welding fumes, solvents, dyes, industrial paints and noise. The Boudreaux Suit was transferred to the United States District Court for the Eastern District of Louisiana on May 2, 2007, which entered an order in September 2007 staying the matter until further order of the Court due to the bankruptcy filing of one of the co-defendants. On June 18, 2014, the Boudreaux Suit was voluntarily dismissed without prejudice. Additionally, on January 29, 2007, another 43 plaintiffs from the dismissed Antoine Suit filed a matter entitled Antoine, et al. v. McDermott, Inc., et al. (the “New Antoine Suit”), in the 164th Judicial District Court for Harris County, Texas, against JRMI, our subsidiary formerly known as McDermott Incorporated and approximately 65 other employer defendants and 42 maritime products defendants, alleging Jones Act seaman status and generally alleging personal injuries for exposure to asbestos and noise. On April 27, 2007, the District Court entered an order staying all activity and deadlines in the New Antoine Suit, other than service of process and answer/appearance dates, until further order of the Court. By order dated December 12, 2014, the Court dismissed all remaining plaintiffs’ claims in the New Antoine Suit, without prejudice to refiling.  

On August 15, 2013 and August 20, 2013, two separate alleged purchasers of our common stock filed purported class action complaints against us, Stephen M. Johnson and Perry L. Elders in the United States District Court for the Southern District of Texas. Both of the complaints sought to represent a class of purchasers of our stock between November 6, 2012 and August 5, 2013, and alleged, among other things, that the defendants violated federal securities laws by disseminating materially false and misleading information and failing to disclose material information relating to weaknesses in project bidding and execution, poor risk evaluation, poor project management and losses in each of our reporting segments. Each complaint sought relief, including unspecified compensatory damages and an award for attorneys’ fees and other costs. By order dated December 5, 2013, the District Court consolidated the two cases and appointed a lead plaintiff and lead plaintiff’s counsel. The lead plaintiff filed a consolidated amended complaint on February 6, 2014. The consolidated amended complaint asserts substantially the same claims as were made in the two original complaints, with some additional factual allegations, and purports to extend the class period to August 6, 2013. It also seeks relief, including unspecified compensatory damages and an award for attorneys’ fees and other costs. On April 7, 2014, MII and the other defendants filed a motion to dismiss the case. On May 22, 2014, the lead plaintiff filed an opposition to the motion to dismiss, and MII and the other defendants filed a reply in support of the defendants’ motion to dismiss on June 23, 2014. On March 13, 2015, the Court granted our motion to dismiss and dismissed the consolidated amended complaint, with prejudice.  The period for filing an appeal of the Court’s decision has since expired, without an appeal.

19

McDERMOTT INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)

Additionally, due to the nature of our business, we and our affiliates are, from time to time, involved in litigation or subject to disputes or claims related to our business activities, including, among other things:

· performance—or warranty-related matters under our customer and supplier contracts and other business arrangements; and

· workers’ compensation claims, Jones Act claims, occupational hazard claims, including asbestos-exposure claims, premises liability claims and other claims.

Based upon our prior experience, we do not expect that any of these other litigation proceedings, disputes and claims will have a material adverse effect on our consolidated financial condition, results of operations or cash flows; however, because of the inherent uncertainty of litigation and, in some cases, the availability and amount of potentially applicable insurance, we can provide no assurance that the resolution of any particular claim or proceeding to which we are a party will not have a material effect on our consolidated financial condition, results of operations or cash flows for the fiscal period in which that resolution occurs.

Environmental Matters

We have been identified as a potentially responsible party at various cleanup sites under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”). CERCLA and other environmental laws can impose liability for the entire cost of cleanup on any of the potentially responsible parties, regardless of fault or the lawfulness of the original conduct. Generally, however, where there are multiple responsible parties, a final allocation of costs is made based on the amount and type of wastes disposed of by each party and the number of financially viable parties, although this may not be the case with respect to any particular site. We have not been determined to be a major contributor of wastes to any of these sites. On the basis of our relative contribution of waste to each site, we expect our share of the ultimate liability for the various sites will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows in any given year.

At March 31, 2015, we had total environmental reserves of $3.0 million, all of which was included in current liabilities and related to our plan to discontinue the utilization of our Morgan City fabrication facility. Inherent in the estimates of those reserves are our expectations regarding the levels of contamination and remediation costs, which may vary significantly as remediation activities progress. Accordingly, changes in estimates could result in material adjustments to our operating results, and the ultimate loss may differ materially from the amounts we have provided for in our consolidated financial statements.

Contracts Containing Liquidated Damages Provisions

Some of our contracts contain provisions that require us to pay liquidated damages if we are responsible for the failure to meet specified contractual milestone dates and the applicable customer asserts a claim under those provisions. Those contracts define the conditions under which our customers may make claims against us for liquidated damages. In many cases in which we have historically had potential exposure for liquidated damages, such damages ultimately were not asserted by our customers. As of March 31, 2015, it is possible that we may incur liabilities for liquidated damages aggregating approximately $73.5 million, of which approximately $19.6 million has been recorded in our financial statements, based on our actual or projected failure to meet certain specified contractual milestone dates. The dates for which these potential liquidated damages could arise extend to July 2015. We believe we will be successful in obtaining schedule extensions or other customer-agreed changes that should resolve the potential for unaccrued liquidated damages. Accordingly, we believe that no amounts for these unaccrued liquidated damages in excess of the amounts currently reflected in our financial statements are probable of being paid by us. However, we may not achieve relief on some or all of the issues involved and, as a result, could be subject to higher damage amounts.

Contractual Obligations

As of March 31, 2015, we had outstanding obligations related to our new vessel construction contract on the DLV 2000 of $235.1 million in the aggregate, with $210.5 million and $24.6 million due in the years ending December 31, 2015 and 2016, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In this quarterly report on Form 10-Q, unless the context otherwise indicates, “we,” “us” and “our” mean McDermott International, Inc. and its consolidated subsidiaries.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

We are including the following discussion to inform our existing and potential security holders generally of some of the risks and uncertainties that can affect our company and to take advantage of the “safe harbor” protection for forward-looking statements that applicable federal securities law affords. This information should be read in conjunction with the unaudited Consolidated Financial Statements and the notes thereto included under Item 1 and the audited Consolidated Financial Statements and the related notes and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Current Report on Form 8-K filed with the SEC on May 11, 2015.

From time to time, our management or persons acting on our behalf make forward-looking statements to inform existing and potential security holders about our company. These statements may include projections and estimates concerning the scope, execution, timing and success of specific projects and our future backlog, revenues, income and capital spending. Forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “forecast,” “believe,” “expect,” “anticipate,” “plan,” “seek,” “goal,” “could,” “may,” or “should” or other words that convey the uncertainty of future events or outcomes. Sometimes we will specifically describe a statement as being a forward-looking statement and refer to this cautionary statement.

These forward-looking statements include, but are not limited to, statements that relate to, or statements that are subject to risks, contingencies or uncertainties that relate to:

· future levels of revenues, operating margins, income from operations, cash flows, net income or earnings per share;

· outcome of project awards and scope, execution and timing of specific projects, including timing to complete and cost to complete these projects;

· future project activities, including the commencement and subsequent timing of marine or installation campaigns on specific projects, and the ability of projects to generate sufficient revenues to cover our fixed costs;

· estimates of percentage of completion and contract profits or losses;

· anticipated levels of demand for our products and services;

· global demand for oil and gas and fundamentals of the oil and gas industry;

· expectations regarding trends towards offshore development of oil and gas;

· market outlook for the EPCI market;

· expectations regarding backlog;

· future levels of capital, environmental or maintenance expenditures;

· the success or timing of completion of ongoing or anticipated capital or maintenance projects;

· the adequacy of our sources of liquidity and capital resources;

· interest expense;

· the effectiveness of our derivative contracts in mitigating foreign currency risk;

· results of our capital investment program;

· expectations regarding the acquisition or divestiture of assets;

· the ability to dispose of assets held for sale in a timely manner or for a price at or above net realizable value;

· the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows;

· the anticipated effects of actions of third parties such as competitors, or federal, foreign, state or local regulatory authorities, or plaintiffs in litigation; and

· the results and cost of our review of our cost structure and plan to increase profitability and flexibility.

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These forward-looking statements speak only as of the date of this report; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following:

· general economic and business conditions and industry trends;

· general developments in the industries in which we are involved;

· decisions about offshore developments to be made by oil and gas companies;

· the highly competitive nature of our industry;

· the volatility of oil and gas prices;

· our ability to appropriately bid, estimate and effectively perform projects on time, in accordance with the schedules established by the applicable contracts with customers;

· changes in project design or schedule;

· changes in scope or timing of work to be completed under contracts;

· cancellations of contracts, change orders and other modifications and related adjustments to backlog and the resulting impact from using backlog as an indicator of future revenues or earnings;

· the collectability of amounts reflected in change orders and claims relating to work previously performed on contracts;

· the capital investment required to construct new-build vessels and maintain and/or upgrade our existing fleet of vessels;

· the ability of our suppliers and subcontractors to deliver raw materials in sufficient quantities and/or perform in a timely manner;

· volatility and uncertainty of the credit markets;

· our ability to comply with covenants in our credit agreement, indentures and other debt instruments and availability, terms and deployment of capital;

· the unfunded liabilities of our pension plans, which may negatively impact our liquidity and, depending upon future operations, may impact our ability to fund our pension obligations;

· the continued availability of qualified personnel;

· the operating risks normally incident to our lines of business, including the potential impact of liquidated damages;

· natural or man-caused disruptive events that could damage our facilities, equipment or our work-in-progress and cause us to incur losses and/or liabilities;

· equipment failure;

· changes in, or our failure or inability to comply with, government regulations;

· adverse outcomes from legal and regulatory proceedings;

· impact of potential regional, national and/or global requirements to significantly limit or reduce greenhouse gas and other emissions in the future;

· changes in, and liabilities relating to, existing or future environmental regulatory matters;

· changes in tax laws;

· rapid technological changes;

· the consequences of significant changes in interest rates and currency exchange rates;

· difficulties we may encounter in obtaining regulatory or other necessary approvals of any strategic transactions;

· the risks associated with integrating acquired businesses;

· the risk we may not be successful in updating and replacing current information technology;

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· social, political and economic situations in countries where we do business;

· the risks associated with our international operations, including local content requirements;

· interference from adverse weather or sea conditions;

· the possibilities of war, other armed conflicts or terrorist attacks;

· the effects of asserted and unasserted claims and the extent of available insurance coverages;

· our ability to obtain surety bonds, letters of credit and financing;

· our ability to maintain builder’s risk, liability, property and other insurance in amounts and on terms we consider adequate and at rates that we consider economical;

· the aggregated risks retained in our captive insurance subsidiary; and

· the impact of the loss of insurance rights as part of the Chapter 11 Bankruptcy settlement concluded in 2006 involving several of our former subsidiaries.

We believe the items we have outlined above are important factors that could cause estimates in our financial statements to differ materially from actual results and those expressed in a forward-looking statement made in this quarterly report or elsewhere by us or on our behalf. We have discussed many of these factors in more detail elsewhere in this report and in our annual report on Form 10-K for the year ended December 31, 2014. These factors are not necessarily all the factors that could affect us. Unpredictable or unanticipated factors we have not discussed in this report could also have material adverse effects on actual results of matters that are the subject of our forward-looking statements. We do not intend to update our description of important factors each time a potential important factor arises, except as required by applicable securities laws and regulations. We advise our security holders that they should (1) be aware that factors not referred to above could affect the accuracy of our forward-looking statements and (2) use caution and common sense when considering our forward-looking statements.

Recent Developments

Joint Ventures

In January 2015, we and GE Oil & Gas formed new joint venture entities focused on the front-end engineering and design (FEED) phases of projects in the offshore market.  The entities, which are owned 50 percent each by us and GE Oil & Gas, are operating under the name io Oil & Gas™.  

Restructuring

In 2014 we completed a major review of our cost structure, and we are implementing a plan, which we refer to as the McDermott Profitability Initiative (“MPI”), to increase our profitability and flexibility through reduced fixed and variable costs. The plan includes headcount reductions, centralization of operational activities, other cost reduction initiatives and certain asset impairments. We expect to incur an aggregate of $25.0 million to $35.0 million in restructuring costs in 2015, primarily as a result of the implementation of MPI.  In addition, we expect to realize annual cash savings from MPI of approximately $50.0 million in 2015, before restructuring charges.    

During 2013 and 2014, we implemented a restructuring of our Americas operations, which involved our Morgan City, Louisiana, Houston, Texas, New Orleans, Louisiana and some Brazil locations. The restructuring involved, among other things, reductions of management, administrative, fabrication and engineering personnel, and the discontinued utilization of the Morgan City facility.

We completed a Corporate restructuring by the end of 2014. Costs associated with our Corporate restructuring activities primarily included severance, relocation and other personnel-related costs and costs for advisors, as well as costs for certain executive management changes which became effective during the fourth quarter of 2013.

Accounting for Contracts

We execute our contracts through a variety of methods, including fixed-price, cost reimbursable, cost-plus, day-rate and unit-rate basis or some combination of those methods, with fixed-price being the most prevalent. Contracts are usually awarded through a competitive bid process. Factors that customers may consider include price, facility or equipment availability, technical capabilities of equipment and personnel, efficiency, safety record and reputation.

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Fixed-price contracts are for a fixed amount to cover costs and any profit element for a defined scope of work. Fixed-price contracts entail more risk to us because they require us to predetermine both the quantities of work to be performed and the costs associated with executing the work.

We have contracts that extend beyond one year. Most of our long-term contracts have provisions for progress payments. We attempt to cover anticipated increases in labor, material and service costs of our long-term contracts either through an estimate of such charges, which is reflected in the original price, or through risk-sharing mechanisms, such as escalation or price adjustments for items such as labor and commodity prices.

We generally recognize our contract revenues and related costs on a percentage-of-completion basis. Accordingly, for each contract, we regularly review contract price and cost estimates as the work progresses and reflect adjustments in profit proportionate to the percentage of completion of the related project in the period when we revise those estimates. To the extent that these adjustments result in a reduction or elimination of previously reported profits with respect to a project, we would recognize a charge against current earnings, which could be material.

Our arrangements with customers frequently require us to provide letters of credit, bid and performance bonds or guarantees to secure bids or performance under contracts. While these letters of credit, bonds and guarantees may involve significant dollar amounts, historically, there have been no material payments to our customers under these arrangements.

Some of our contracts contain provisions that require us to pay liquidated damages if we are responsible for the failure to meet specified contractual milestone dates and the applicable customer asserts a claim under those provisions. Those contracts define the conditions under which our customers may make claims against us for liquidated damages. In many cases in which we have historically had potential exposure for liquidated damages, such damages ultimately were not asserted by our customers. As of March 31, 2015, it is possible that we may incur liabilities for liquidated damages aggregating to approximately $73.5 million, of which approximately $19.6 million has been recorded in our financial statements, based on our actual or projected failure to meet certain specified contractual milestone dates. The dates for which these potential liquidated damages could arise extend to July 2015. We believe we will be successful in obtaining schedule extensions or other customer-agreed changes that should resolve the potential for unaccrued liquidated damages. Accordingly, we believe that no amounts for these unaccrued liquidated damages in excess of the amounts currently reflected in our financial statements are probable of being paid by us. However, we may not achieve relief on some or all of the issues involved and, as a result, could be subject to higher damage amounts.

Change orders, which are a normal and recurring part of our business, can increase (sometimes substantially) the future scope and cost of a job. Therefore, change order awards (although frequently beneficial in the long term) can have the short-term effect of reducing the job percentage of completion and thus the revenues and profits recognized to date. We regularly review contract price and cost estimates as the work progresses and reflect adjustments in profit, proportionate to the job percentage of completion in the period when those estimates are revised. Revenue from unapproved change orders is recognized to the extent of amounts management expects to recover or costs incurred. Unapproved change orders that are disputed by the customer are treated as claims.

In the event of a contract deferral or cancellation, we generally would be entitled to recover costs incurred, settlement expenses and profit on work completed prior to deferral or termination. Significant or numerous cancellations could adversely affect our business, financial condition, results of operations and cash flows.

Critical Accounting Policies and Estimates

For a discussion of critical accounting policies and estimates we use in the preparation of our Consolidated Financial Statements, refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Current Report on Form 8-K filed with the SEC on May 11, 2015. See Note 1 to our unaudited Consolidated Financial Statements included in this report for information on recently adopted accounting standards.

Business Segments and Results of Operations

Business Segments

In the first quarter of 2015 we completed changes to our organizational structure which resulted in the realignment of our reporting segments. Our North Sea and Africa operations were previously aggregated into the Middle East reporting segment. However, the responsibility for business decisions relating to the North Sea and Africa was moved to our Americas reporting segment in the first quarter of 2015. As a result, the North Sea and Africa businesses are now reflected in our Americas segment, now referred to as Americas, Europe, and Africa (collectively, “AEA”). All comparable periods presented have been revised to reflect this change. Accordingly, we report financial results under three reporting segments consisting of AEA, the Middle East (“MEA”) and Asia (“ASA”). We also report certain corporate and other non-operating activities under the heading “Corporate and other,” which

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primarily reflects corporate personnel and activities, incentive compensation programs and other costs that are generally fully allocated to our reporting segments. However, Corporate restructuring costs associated with our corporate reorganization are not allocated to our reporting segments.  

AEA Segment

Through our AEA segment, which includes the North Sea and Africa, we serve the needs of customers primarily in the United States, Brazil, Mexico, Trinidad, the North Sea, West Africa and East Africa. Project focus in this segment includes the fabrication and installation of fixed and floating structures and the installation of pipelines and subsea systems. Engineering and procurement services are supported by engineering resources in Chennai, India, Dubai, U.A.E., London, the United Kingdom and Houston, Texas. The primary fabrication facility for this segment is located in Altamira, Mexico.

MEA Segment

Through our MEA segment, which includes the Caspian region, we serve the needs of customers in Saudi Arabia, Qatar, the U.A.E., Kuwait, Azerbaijan and Russia. Project focus in this segment relates primarily to the fabrication and offshore installation of fixed and floating structures and the installation of pipelines and subsea systems. The majority of our projects in this segment are performed on an engineering, procurement, construction and installation (“EPCI”) basis. Engineering and procurement services are provided by our Dubai, U.A.E., Chennai, India and Al Khobar, Saudi Arabia offices and are supported by additional resources from our Houston office. The primary fabrication facility for this segment is located in Dubai, U.A.E.

ASA Segment

Through our ASA segment, we serve the needs of customers primarily in Australia, Indonesia, India, Vietnam, Malaysia and Thailand. Project focus in this segment includes the fabrication and installation of fixed and floating structures and the installation of pipelines and subsea systems. The majority of our projects in this segment are performed on an EPCI basis. Engineering and procurement services are provided by our Singapore office and are supported by additional resources located in Chennai, India, Dubai, U.A.E. and Houston, Texas. The primary fabrication facility for this segment is located on Batam Island, Indonesia. Additionally, through our equity ownership interest in two separate joint ventures, we have access to fabrication capacity in China and Malaysia.

The above-mentioned fabrication facilities in each segment are equipped with a wide variety of heavy-duty construction and fabrication equipment, including cranes, welding equipment, machine tools and robotic and other automated equipment. Project installation is performed by major construction vessels, which we own or lease and are stationed throughout the various regions and provide structural lifting/lowering and pipelay services. These major construction vessels are supported by our multi-function vessels and chartered vessels from third parties to perform a wide array of installation activities that include anchor handling, pipelay, cable/umbilical lay, dive support and hookup/commissioning.

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Results of Operations

Selected Financial Data:

	Three Months Ended March 31,
	2015			2014
	(In thousands)
Revenues:
AEA	$	143,313		$	181,686
MEA		153,800			260,300
ASA		253,350			161,825
Total revenues		550,463			603,811
Cost of operations		475,459			591,493
Selling, general and administrative expenses		51,676			51,964
Gain on disposal of assets		(367	)		(6,439	)
Restructuring expenses		10,389			6,125
Total costs and expenses		537,157			643,143
(Loss) Income from Investments in Unconsolidated Affiliates		(6,741	)		1,123
Operating income (loss):
AEA		15,071			(36,412	)
MEA		5,177			(2,734	)
ASA		(12,916	)		3,431
Corporate		(767	)		(2,494	)
Total operating income (loss)		6,565			(38,209	)
Other income (expense):
Interest income (expense)-net		(12,179	)		61
Loss on foreign currency-net		(1,468	)		(4,082	)
Other expense, net		(97	)		(265	)
Total other expense		(13,744	)		(4,286	)
Loss before provision for income taxes and noncontrolling interests		(7,179	)		(42,495	)
Provision for Income Taxes		4,869			3,489
Net Income Attributable to Noncontrolling Interests		2,459			536
Net Loss Attributable to McDermott International, Inc.	$	(14,507	)	$	(46,520	)

Three months ended March 31, 2015 vs. three months ended March 31, 2014

Revenues

Revenues decreased by 9%, or $53.3 million, in the first quarter of 2015 relative to the first quarter of 2014. The decrease in revenues in both of our AEA and MEA segments was partially offset by an increase in revenue in our ASA segment.

Revenues in our AEA segment decreased 21%, or $38.4 million, in the first quarter of 2015 compared to the first quarter of 2014 primarily due to reduced marine installation activity in the Gulf of Mexico and Brazil. The reduced marine installation activity was primarily the result of the completion of activities on two projects in 2014, Tubular Bells Gulfstar in the Gulf of Mexico and the Papa Terra project in Brazil. The decrease in revenue was partly offset by additional marine installation activities undertaken by the NO105 and NO102 vessels in Brazil and the close-out of an Ayatsil EPC project at Altamira in the first quarter of 2015.

Revenues in our MEA segment decreased 41%, or $106.5 million, in the first quarter of 2015 compared to the first quarter of 2014, largely due to the substantial completion of activities on multiple EPCI projects in Saudi Arabia and the Chirag Oil Pipelay project in the Caspian. These projects had significant fabrication and marine activities in the first quarter of 2014 and were either completed or were substantially complete by December 31, 2014. These were partially offset by increased marine activities on several new projects and changes in scope of work and improvements in cost recovery estimates on projects in the U.A.E. and Saudi Arabia.

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Revenues in our ASA segment increased 57%, or $91.6 million, to $253.4 million in the first quarter of 2015 compared to the first quarter of 2014, primarily due to an increase in revenues associated with marine installation activity on an ongoing EPCI project, Ichthys, in Australia and on a recently commenced marine installation project in Brunei. The increase was partly offset by near completion of a subsea project, Siakap Subsea Development, and an EPCI project in Malaysia, each of which had a high activity during the first quarter of 2014 and was completed or close to completion at March 31, 2015.

Cost of Operations

Cost of operations decreased by 20%, or $116.0 million, in the first quarter of 2015 compared to the first quarter of 2014, primarily due to reduced activity in our AEA and MEA segments, which was partially offset by increased activity at our ASA segment.

Cost of operations in our AEA segment decreased by $94.2 million in the first quarter of 2015 compared to the first quarter of 2014, primarily due to reduced marine installation activity on the Tubular Bells Gulfstar project in the Gulf of Mexico and the Papa Terra project in Brazil discussed above.  In addition, the first quarter of 2014 included an unfavorable change in estimate on one of our EPCI projects, PB Litoral, at Altamira, with no corresponding impact in the current period. This decrease in Cost of operations was partially offset by additional marine charter activities undertaken by the NO105 and NO102 vessels in Brazil.

Cost of operations in our MEA segment decreased by $118.6 million in the first quarter of 2015 compared to the first quarter of 2014. This decrease was primarily due to substantial completion of activities on the multiple EPCI projects in Saudi Arabia and Chirag Oil Pipelay project in the Caspian discussed above. The decrease was partially offset by increased fabrication and marine activities on various new projects in the U.A.E. and Saudi Arabia.

Cost of operations in our ASA segment increased by $96.8 million in the first quarter of 2015 compared to the first quarter of 2014. The increase in cost of operations was primarily driven by commencement of marine installation activity on one of our EPCI projects, Ichthys, in Australia and a recently commenced marine installation project in Brunei. The increase was partially offset by decreased activity on certain Malaysian subsea projects that were substantially complete in the first quarter of 2015.

Operating Income (Loss)

Operating income, which increased by $44.8 million in the first quarter of 2015 compared to the first quarter of 2014, benefited from favorable changes in estimates across all segments in the first quarter of 2015 compared to unfavorable changes in estimates in the first quarter of 2014. See Note 3, Use of Estimates, in the accompanying Consolidated Financial Statements.

The operating income in our AEA segment improved by $51.5 million from an operating loss of $36.4 million in the first quarter of 2014 to operating income of $15.1 million in the first quarter of 2015. The improvement was primarily due to a benefit from net favorable changes in estimates of $6.6 million in the first quarter of 2015, compared to a net unfavorable change in estimates of $35.4 million, primarily on our PB Litoral EPCI project, in the first quarter of 2014. In addition, improved profitability in Brazil from the NO105 and NO102 vessel charters and the close-out of an Ayatsil EPC project at Altamira contributed to higher operating income.  

The operating income in our MEA segment improved by $7.9 million from an operating loss of $2.7 million in the first quarter of 2014 to operating income of $5.2 million in the first quarter of 2015. The first quarter of 2014 operating loss included $6.4 million in gains on the sale of the DLB KP1 vessel. The change was primarily due to the settlement of change orders for the KJO Hout and North Dome projects, a benefit from favorable changes in estimates and cost savings totaling $17.9 million related to our Middle East projects, all of which were partially offset by lower activity on substantially completed projects.

Our ASA segment recognized an operating loss of $12.9million in the first quarter of 2015 compared to operating income of $3.4 million in the first quarter of 2014. The first quarter of 2014 operating income included a $27.8 million benefit on a Malaysian subsea project, Siakap Subsea Development, which was primarily driven by changes to the estimated costs at completion due to favorable productivity on our marine vessels as well as offshore support activities and recognition of approved change orders. Lower engineering, fabrication and marine activities contributed to the first quarter of 2015 operating loss. The first quarter of 2015 operating loss also included a $4.2 million impairment related to the DB 101 vessel.

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Operating Margins

Operating income is frequently influenced by the resolution of change orders, project close-outs and settlements, which generally can cause operating margins to improve during the period in which these items are approved or finalized as these items generally contribute higher operating margins. While we expect change orders, close-outs and settlements to continue as part of our normal business activities, the period in which they are recognized is largely driven by the finalization of agreements with customers and suppliers and, as a result, is difficult to predict. Additionally, the future margin increases or decreases associated with these items are difficult to predict, due to, among other items, the difficulty of predicting the timing of recognition of change orders, close-outs and settlements and the timing of new project awards.

Other Items in Operating Income

Selling, general and administrative expenses of $51.7 million and $52.0 million for the three months ended March 31, 2015 and 2014, respectively, were consistent.

Earnings from Investments in unconsolidated affiliates decreased by $7.9 million from a $1.1 million gain in the first quarter of 2014 to a $6.8 million loss in the first quarter of 2015, primarily due to increased losses recognized from two of our joint ventures.

In the first quarter of 2015, one of our vessels, the DB101,which is held and used in the ASA segment, was written down to a fair value of $13.6 million, resulting in a non-cash impairment charge of $4.2 million.

Earnings for the first quarter of 2015 were impacted by restructuring expense of $10.4 million. See Note 6, Restructuring, to the accompanying Consolidated Financial Statements.

Other Items

Earnings for the first quarter of 2015 were significantly impacted by interest expense from the financing arrangements which were put in place in April 2014.  The first quarter of 2014 was not significantly impacted by interest expense.

The first quarter of 2015 foreign currency losses of $1.5 million were lower compared to the $4.1 million foreign currency losses in the first quarter of 2014. In the first quarter of 2015, the foreign currency losses of $3.3 million were partially offset by $1.8 million in gains related to hedging activities, whereas the first quarter of 2014 had foreign currency losses of $3.2 million and $0.9 million in losses related to hedging activities.

Provision for Income Taxes

For the three months ended March 31, 2015, we recognized a loss before provision for income taxes of $7.2 million, compared to loss of $42.5 million in the three months ended March 31, 2014.  In the aggregate, the provision for income taxes was $4.9 million and $3.5 million for the three months ended March 31, 2015 and 2014, respectively.  

The increase in the provision for income taxes was primarily driven by higher income in jurisdictions in which no loss carryforwards were available to absorb the net taxable income, which was partially offset by the release of the valuation allowance on certain previously unrecognized deferred tax assets.

Noncontrolling Interests

Net income attributable to noncontrolling interests was $2.5 million and $0.5 million for the first quarter of 2015 and 2014, respectively. The increase was primarily due to increased activity and higher net income at one of our joint ventures.

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Backlog

Backlog represents the dollar amount of revenues we expect to recognize in the future from contracts awarded and those that are in progress. These amounts are presented in U.S. dollars. Currency risk associated with backlog contracts that is not mitigated within the contract is generally mitigated with the use of foreign currency derivative (hedging) instruments, when deemed significant. However, these actions may not eliminate all currency risk exposure included within our long-term contracts. Backlog is not a measure defined by generally accepted accounting principles and is not a measure of contract profitability. Our methodology for determining backlog may not be comparable to methodologies used by other companies in determining their backlog amounts. The backlog values we disclose include anticipated revenues associated with: (1) the original contract amounts; (2) change orders for which we have received written confirmations from the applicable customers; (3) change orders for which we expect to receive confirmations in the ordinary course of business; and (4) claims that we have made against our customers. We do not include expected revenues of contracts related to unconsolidated joint ventures in our backlog, except to the extent of any contract awards we may receive from those joint ventures.

We include unapproved change orders for which we expect to receive confirmations in the ordinary course of business in backlog, generally to the extent of the lesser of the amounts we expect to recover or the associated costs incurred. Any revenue that would represent profit associated with unapproved change orders is generally excluded from backlog until written confirmation is obtained from the applicable customer. However, consideration is given to our history with the customer as well as the contractual basis under which we may be operating. Accordingly, in certain cases based on our historical experience in resolving unapproved change orders with a customer, the associated profit may be included in backlog. At March 31, 2015 and December 31, 2014, the total unapproved change orders included in our estimates at completion aggregated approximately $240.3 million and $277.0 million, respectively, of which approximately $73.0 million and $75.0 million, respectively, was included in backlog. If an unapproved change order is disputed or rejected by the customer, the associated amount of revenue is treated as a claim.

We include claims in backlog only when we have a legal basis to do so, consider collection to be probable and believe we can reliably estimate the ultimate value. Claims revenue is included in backlog to the extent of the lesser of the amounts we expect to recover or associated costs incurred. Total claims revenue included in backlog at March 31, 2015 and December 31, 2014 was approximately $6.5 million. See Note 2 to our unaudited Consolidated Financial Statements included in this report for a discussion of claims revenue included in our estimates at completion as of March 31, 2015.

Backlog may not be indicative of future operating results, and projects in our backlog may be cancelled, modified or otherwise altered by customers. We can provide no assurance as to the profitability of our contracts reflected in backlog. It is possible that our estimates of profit could increase or decrease based on, among other things, changes in productivity, actual downtime and the resolution of change orders and claims with the customers.

Of the March 31, 2015 backlog, approximately $406.7 million related primarily to four active projects that were in loss positions, whereby future revenues are expected to equal costs when recognized. Included in this amount was $130.4 million of backlog associated with EPCI project, PB Litoral, in Mexico, which is expected to be completed in the fourth quarter of 2015, $87.5 million of backlog pertaining to a five-year charter of the Agile in Brazil, which is expected to be completed in the first quarter of 2017, and $20.8 million of backlog relating to NO102 vessel charter project in Brazil, scheduled for completion in the second quarter of 2015, all of which are being conducted in our AEA segment. The March 31, 2015 backlog amount also included $166.5 million relating to an EPCI project in our MEA segment, which is also in a loss position and is expected to be completed by the fourth quarter of 2017.  It is possible that our estimates of gross profit could increase or decrease based on changes in productivity, actual downtime and the resolution of change orders and claims with the customers.

The following table summarizes changes to our backlog (in thousands):

Backlog at December 31, 2014	$	3,600,999
Bookings from new awards		490,848
Additions and reductions on existing contracts		207,000
Less: Amounts recognized in revenues		550,463
Backlog at March 31, 2015	$	3,748,384

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Our backlog by segment was as follows:

	March 31, 2015				December 31, 2014
	(dollars in approximate millions)
AEA	$	408	11	%	$	426	12	%
MEA		1,497	40	%		1,162	32	%
ASA		1,843	49	%		2,013	56	%
Total Backlog	$	3,748	100	%	$	3,601	100	%

Of the March 31, 2015 backlog, we expect to recognize revenues as follows:

	2015		2016		Thereafter
	(in approximate millions)
Total backlog(1)	$	2,420	$	1,190	$	138

⁽¹⁾ Backlog revenue expected to be recognized on loss projects is approximately $198.5 million, $161.6 million and $46.6 million for 2015, 2016 and thereafter, respectively.

Liquidity and Capital Resources

Our primary ongoing sources of liquidity are cash flows generated from operations and cash and cash equivalents on hand. Management believes that our cash flows from operations and the sources of liquidity and capital resources described below will be sufficient to fund our liquidity requirements for at least the next twelve months.

The credit agreement relating to our $400.0 million, first-lien, first-out three-year letter of credit facility (the “LC Facility”) and our $300.0 million, first-lien, second-out, five-year term loan (the “Term Loan”) requires us to generate consolidated earnings before interest, taxes, depreciation and amortization, as adjusted (“Covenant EBITDA”) of at least specified minimum amounts over the term of the LC Facility. Covenant EBITDA is a non-GAAP measure, with a specific definition under the terms of the LC Facility.  The definition includes a provision for increasing the Covenant EBITDA calculation results by an amount up to $40.0 million on a trailing twelve month (TTM) basis, less the aggregate amount of all adjustments for prior periods. As of March 31, 2015 and December 31, 2014, we had increased the Covenant EBITDA by approximately $5.5 million and $12.0 million, respectively, on the TTM basis. As of March 31, 2015, the remaining provision available for further utilization is $28.0 million. A comparison of the Covenant EBITDA and current compliance is as follows:

	Twelve months ended		Twelve months ended		Nine months ended		Six months ended		Three months ended
	March 31, 2015		December 31, 2014		September 30, 2014		June 30, 2014		March 31, 2014
	(In millions)
Calculated EBITDA (TTM) (1)	$	198.8	$	130.9	$	58.0	$	33.5	$	(6.5	)
Provision utilized (TTM) (1)		5.5		12.0		12.0		6.5		6.5
Actual Covenant EBITDA (TTM) (1)	$	204.3	$	142.9	$	70.0	$	40.0	$	-
Required Covenant EBITDA (TTM) (1)	$	169.0	$	127.0	$	70.0	$	37.0	$	-

30

¹ TTM starts from April 2014

Covenant EBITDA is presented above for the purpose of disclosing our compliance with the covenants in the Credit Agreement. Covenant EBITDA is not a substitute for or superior to, operating income, net income, operating cash flow and other measures of financial performance prepared in accordance with the U.S GAAP.  Covenant EBITDA has a specific definition per the LC Facility and will differ in the method of calculation from similarly titled measures used by other companies. The following reconciliation shows the calculation of Covenant EBITDA based on net income for each of the periods presented:

	Quarter ended			Quarter ended		Quarter ended			Quarter ended			Quarter ended
	March 31, 2015			December 31, 2014		September 30, 2014			June 30, 2014			March 31, 2014
	(In millions)
Net Income (loss)	$	(14.5	)	$	8.2	$	(30.3	)	$	(7.4	)	$	(46.5	)
Adjustments:
Interest Expense (including interest capitalized)		18.7			18.9		18.7			44.5			3.3
Tax expense (benefit)		4.9			10.3		1.5			4.8			3.5
Depreciation, drydock and amortization (excluding attributable to Nonguarantors)		31.1			26.1		25.4			21.9			29.0
Other items:
Equity (income) loss		6.7			2.2		3.4			3.3			(1.1	)
(Gain) loss on assets disposal		(0.4	)		0.1		(4.8	)		(35.1	)		(6.4	)
Restructuring - impairment expense		4.2			-		-			-			-
Restructuring - other expense		6.2			6.0		4.7			1.3			6.1
Others		4.5			1.1		5.9			6.7			5.6
Total adjustments	$	75.9		$	64.7	$	54.8		$	47.4		$	40.0
Calculated EBITDA	$	61.4		$	72.9	$	24.5		$	40.0		$	(6.5	)
Calculated EBITDA - Cumulative/TTM(1)	$	198.8		$	130.9	$	58.0		$	33.5		$	(6.5	)

¹ TTM starts from April 2014

Cash and Cash Equivalents

In the aggregate, our cash and cash equivalents and restricted cash decreased by $52.5 million to $800.4 million as of March 31, 2015 from $852.9 million as of December 31, 2014.

As of March 31, 2015, we had current restricted cash and cash equivalents totaling $199.8 million compared to $187.6 million as of December 31, 2014. The amount at March 31, 2015 includes $177.4 million of cash collateral for letters of credit which generally may be replaced with letters of credit under the LC Facility.

Our current assets, less current liabilities, excluding cash and cash equivalents and current restricted cash, improved by $12.8 million to a negative $199.4 million at March 31, 2015 from a negative $212.2 million at December 31, 2014, primarily due to the increase in accounts receivable.

Cash Flow Activities

Operating activities. Our net cash used in operating activities was $18.5 million in the three months ended March 31, 2015, as compared to the $22.3 million used in the three months ended March 31, 2014.

During the quarter ended March 31, 2015 and in the first half of April 2015, we reached agreements with a representative we previously utilized in our Middle East operations and certain of its affiliates and associates regarding:  (1) the value and timing of payment of ongoing future amounts that were to be paid under a representation agreement that we elected to allow to expire, with respect to: (a) commissions on customer contracts that we had entered into prior to such expiration; and (b) future commissions payable on customer contracts we expected to enter into during a specified post-expiration period under the representation agreement (pursuant to provisions that provided for commissions to be payable on customer contracts entered into during such post-expiration period); and (2) our repurchase of shares of capital stock in one of our subsidiaries previously held by them.  Under the new

31

agreements, we agreed to make a series of payments in respect of the commissions that were expected to become due and payable under the prior arrangement.  The majority of those payments have been made as of the date of this report, including approximately $21.0 million paid in the quarter ended March 31, 2015 and approximately $25.5 million was paid in April 2015.  In connection with those payments, we have recorded amounts in both “contracts in progress” and “other assets,” which we intend to reduce over time as expenses are recognized on the associated customer contracts in accordance with percentage-of-completion accounting.

Investing activities. Our net cash used in investing activities was $39.0 million in the three months ended March 31, 2015, compared to cash used in investing activities of $43.0 million in the three months ended March 31, 2014. These cash uses, in both periods, primarily related to the capital expenditure discussed below.

Financing activities. Our net cash used in financing activities was $6.0 million in the three months ended March 31, 2015 as compared to net cash provided by financing activities of $214.8 million in the three months ended March 31, 2014. The change was primarily attributable to short-term financing obtained in the first quarter ended March 31, 2014.

Capital Expenditures

Our management regularly evaluates our marine vessel fleet and fabrication facilities to ensure our capability is adequately aligned with our overall growth strategy. These assessments may result in capital expenditures to upgrade, acquire or operate vessels and cost associated with fabrication facilities upgrade that would enhance or grow our technical capabilities, or may involve engaging in discussions to dispose of certain marine vessels or fabrication facilities.

Capital expenditures for the three months ended March 31, 2015 were $24.0 million, as compared to $37.9 million for the three months ended March 31, 2014. Capital expenditures for the three months ended March 31, 2015 were primarily attributable to the construction of the Deepwater Lay Vessel (“DLV 2000”), as well as costs associated with upgrading the capabilities of other marine vessels. Capital expenditures for the three months ended March 31, 2014 were primarily attributable to the construction of the Construction Support Vessel (“CSV 108”) and the continued development of our Altamira Mexico fabrication facility, as well as costs associated with upgrading the capabilities of other marine vessels. The construction of the CSV 108 was substantially complete at December 31, 2014, and the vessel was put into service in February 2015. As of March 31, 2015 the remaining obligations on the DLV 2000 amounted to $235.1 million, with $210.5 million and $24.6 million due in the years ending December 31, 2015 and 2016, respectively.

Derivative Contracts

We previously entered into derivative contracts to mitigate currency exchange movements primarily associated with certain firm purchase commitments and various foreign currency expenditures we expect to incur on one of our ASA segment’s EPCI projects through 2017. Although we currently believe that these contracts will be effective in mitigating the associated currency exchange risks, it is possible that changes in the project may cause reduced effectiveness of these derivative contracts. Therefore, we may experience larger gains or losses on foreign currency movements due to the ineffective portion or the portion excluded from the assessment of effectiveness of these and other derivative contracts.

At March 31, 2015, our derivative financial instruments consisted primarily of foreign currency forward contracts. The notional value of our outstanding derivative contracts totaled approximately $631.4 million at March 31, 2015, with maturities extending through 2017. Of this amount, approximately $424.8 million is associated with various foreign currency expenditures we expect to incur on the ASA segment EPCI project.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, our results of operations are exposed to certain market risks, primarily associated with fluctuations in currency exchange rates and interest rate risk. Our exposure to market risk from changes in interest rates relates primarily to our Term Loan, cash equivalents and our investment portfolio, which primarily consists of investments in commercial paper and other highly liquid money market instruments denominated in U.S. dollars. We are averse to principal loss and seek to ensure the safety and preservation of our invested funds by limiting default risk, market risk and reinvestment risk. All of our investments in debt securities are classified as available-for-sale.

We have operations in many locations around the world, and, as a result, our financial results could be significantly affected by factors such as changes in currency exchange rates or weak economic conditions in foreign markets. In order to manage the risks associated with currency exchange rate fluctuations, we attempt to hedge those risks with foreign currency derivative instruments. Historically, we have hedged those risks with foreign currency forward contracts. In certain cases, contracts with our customers may contain provisions under which payments from our customers are denominated in U.S. Dollars and in a foreign currency. The payments

32

denominated in a foreign currency are designed to compensate us for costs that we expect to incur in such foreign currency. In these cases, we may use derivative instruments to reduce the risks associated with currency exchange rate fluctuations arising from differences in timing of our foreign currency cash inflows and outflows. Our operational cash flows and cash balances, though predominately held in U.S. dollars, may consist of different currencies at various points in time in order to execute our project contracts globally. Non-U.S. denominated asset and liability balances are subject to currency fluctuations when measured period to period for financial reporting purposes in U.S. dollars.

We have exposure to changes in interest rates under the Term Loan. As of March 31, 2015, we had no material future earnings or cash flow exposures from changes in interest rates on our other outstanding debt obligations, as substantially all of those obligations had fixed interest rates.

Our operational cash flows and cash balances, though predominately held in U.S. dollars, may consist of different currencies at various points in time in order to execute our project contracts globally. Non-U.S. denominated asset and liability balances are subject to currency fluctuations when measured period to period for financial reporting purposes in U.S. dollars.

Interest Rate Sensitivity

The following tables provide information about our financial instruments that are sensitive to changes in interest rates. The tables present principal cash flows and related weighted-average interest rates by expected maturity dates.

At March 31, 2015:	Principal Amount by Expected Maturity (in thousands)
	Years Ending December 31,																				Fair Value at
																					March 31,
	2015			2016			2017			2018			2019			Thereafter			Total		2015
Investments	$	1,400		$	-		$	-		$	-		$	-		$	751		$	2,151	$	2,151
Average Interest Rate	0.21		%
Long-term Debt — fixed rate		20,071			25,274			17,558			8,616			9,403			508,169			589,091		479,031
Average Interest Rate	7.59		%	7.66		%	7.74		%	7.81		%		7.90	%	7.98		%
Long-term Debt — floating rate		2,250			3,000			3,000			3,000			286,500			-			297,750		294,588
Average Interest Rate	5.25		%	5.48		%	6.05		%	6.35		%	6.47		%
At December 31, 2014:	Principal Amount by Expected Maturity (in thousands)
	Years Ending December 31,																				Fair Value at
																					December 31,
	2015			2016			2017			2018			2019			Thereafter			Total		2014
Investments	$	1,699		-			-			-			-			$	2,216		$	3,915	$	3,915
Average Interest Rate	0.21		%
Long-term Debt — fixed rate		24,026			25,274			17,558			8,616			9,403			508,170			593,047		448,993
Average Interest Rate	7.58		%	7.64		%	7.72		%	7.79		%	7.87		%	7.97		%
Long-term Debt — floating rate		3,000			3,000			3,000			3,000			286,500			-			298,500		288,987
Average Interest Rate	5.25		%	5.86		%	6.53		%	6.72		%	6.86		%

Currency Exchange Rate Sensitivity

The following table provides information about our foreign currency forward contracts outstanding at March 31, 2015 and presents such information in U.S. dollar equivalents. The table presents notional amounts and related weighted-average exchange rates by expected (contractual) maturity dates and constitutes a forward-looking statement. These notional amounts generally are used to calculate the contractual payments to be exchanged under the contract. The average contractual exchange rates are expressed using market convention, which is dependent on the currencies being bought and sold under the forward contract.

Forward Contracts to Purchase or Sell Foreign Currencies in U.S. Dollars (in thousands)

33

Foreign Currency	Year Ending December 31, 2015		Fair Value at March 31, 2015			Average Contractual Exchange Rate
Australian Dollar	$	177,147	$	(20,478	)		0.8660
Danish Krone		32,472		(2,778	)		6.3399
Euros		75,486		(3,335	)		1.1288
Pound Sterling		8,497		(80	)		1.5097
Indian Rupee		5,674		(59	)		63.4508
Norwegian Kroner		83,857		(1,832	)		7.6902
Singapore Dollar		121,844		(7,995	)		1.2878
Foreign Currency	Year Ending December 31, 2016		Fair Value at March 31, 2015			Average Contractual Exchange Rate
Australian Dollar	$	77,104	$	(15,037	)		0.9349
Danish Krone		6,654		(1,231	)		5.6143
Pound Sterling		861		(14	)		1.6431
Norwegian Kroner		22,184		(2,190	)		7.2080
Foreign Currency	Year Ending December 31, 2017		Fair Value at March 31, 2015			Average Contractual Exchange Rate
Australian Dollar	$	19,632	$	(3,427	)		0.9062

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) adopted by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Our disclosure controls and procedures were developed through a process in which our management applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives. You should note that the design of any system of disclosure controls and procedures is based in part upon various assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based on the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures are effective as of March 31, 2015 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and such information is accumulated and communicated to management, including our principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure. There has been no change in our internal control over financial reporting during the quarter ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding ongoing investigations and litigation, see Note 14 to our unaudited Consolidated Financial Statements in Part I of this report, which we incorporate by reference into this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information on our purchases of equity securities during the quarter ended March 31, 2015, all of which involved repurchases of shares of MII common stock in connection with the vesting of restricted stock units pursuant to the provisions of employee benefit plans that permit the repurchase of common stock to satisfy statutory tax withholding obligations associated with the vesting of restricted stock units:

Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs
January 1 - January 31, 2015		167	$	3.04	not applicable	not applicable
February 1 - February 28, 2015		121		2.77	not applicable	not applicable
March 1 - March 31, 2015		300,265		3.34	not applicable	not applicable
		300,553	$	3.34

Item 5.Other Information

On May 8, 2015, our Board of Directors appointed Kelly C. Janzen as Vice President, Finance and Chief Accounting Officer, effective May 12, 2015.  Ms. Janzen will serve as our principal accounting officer.  Also effective May 12, 2015, Mr. Stuart Spence, our Executive Vice President and Chief Financial Officer, will cease to also serve as our principal accounting officer.

Ms. Janzen joined McDermott in December 2014 and has served as Vice President, Finance and Corporate Controller, McDermott International Management, S. de RL., since that time.  Previously, she served as: Distributed Power Global Controller for General Electric Company, a multinational conglomerate corporation (“GE”), from April 2013 to November 2014; Operational Controller, Global Growth and Operations, GE from August 2011 to April 2013; Global Assistant Controller for GE Healthcare, a division of GE from August 2010 to August 2011; Americas Controller for GE Healthcare from March 2007 to August 2010; and other positions of increasing responsibility since she joined GE in February 2002.  Ms. Janzen is a Certified Public Accountant.

Ms. Janzen does not have any interest in any transactions requiring disclosure under Item 404(a) of Regulation S-K and there are no arrangements or understandings between Ms. Janzen and any other person pursuant to which she was appointed as an officer of MII.

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Item 6. Exhibits

Exhibit Number	Description
3.1*	McDermott International, Inc.’s Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to McDermott International, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (File No. 1-08430)).
3.2*	McDermott International, Inc.’s Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2 to McDermott International, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (File No. 1-08430)).
3.3*	Amended and Restated Certificate of Designation of Series D Participating Preferred Stock of McDermott International, Inc. (incorporated by reference to Exhibit 3.3 to McDermott International, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 (File No. 1-08430)).
4.1*	Assumption Agreement, dated January 16, 2015, by and among North Ocean II KS, North Ocean II AS, McDermott Blackbird Holdings, LLC and Crédit Agricole Corporate and Investment Bank, as administrative agent and collateral agent for the LC Facility and the Term Loan (incorporated by reference to Exhibit 4.21 to McDermott International, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08430)).
4.2*	Assumption Agreement, dated January 16, 2015, by and among North Ocean II KS, North Ocean II AS, McDermott Blackbird Holdings, LLC and Wells Fargo Bank, National Association, as collateral agent for the Secured Parties (incorporated by reference to Exhibit 4.22 to McDermott International, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08430)).
4.3*	First Supplemental Indenture and Guarantee, dated January 16, 2015, by and among North Ocean II KS, North Ocean II AS, McDermott Blackbird Holdings, LLC, McDermott International, Inc., as the Issuer, each other then-existing Guarantor under the Indenture, Wells Fargo Bank, National Association, as Trustee, paying agent, registrar, and Wells Fargo Bank, National Association, as Collateral Agent (incorporated by reference to Exhibit 4.23 to McDermott International, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08430)).
10.1*	Form of 2015 Restricted Stock Unit Grant Agreement (incorporated by reference to Exhibit 10.31 to McDermott International, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08430)).
10.2*	Form of 2015 Performance Share Grant Agreement (incorporated by reference to Exhibit 10.32 to McDermott International, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08430)).
10.3	Form of 2015 Non-Executive Director Restricted Stock Grant Letter.
12.1	Ratio of Earnings to Fixed Charges.
31.1	Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer.
32.1	Section 1350 certification of Chief Executive Officer.
32.2	Section 1350 certification of Chief Financial Officer.
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*Incorporated by reference to the filing indicated.

36

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.

May 11, 2015	McDERMOTT INTERNATIONAL, INC.
	By:	/s/ Stuart Spence
		Stuart Spence Executive Vice President and Chief Financial Officer

37

EXHIBIT INDEX

Exhibit Number	Description
3.1*	McDermott International, Inc.’s Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to McDermott International, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (File No. 1-08430)).
3.2*	McDermott International, Inc.’s Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2 to McDermott International, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (File No. 1-08430)).
3.3*	Amended and Restated Certificate of Designation of Series D Participating Preferred Stock of McDermott International, Inc. (incorporated by reference to Exhibit 3.3 to McDermott International, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 (File No. 1-08430)).
4.1*	Assumption Agreement, dated January 16, 2015, by and among North Ocean II KS, North Ocean II AS, McDermott Blackbird Holdings, LLC and Crédit Agricole Corporate and Investment Bank, as administrative agent and collateral agent for the LC Facility and the Term Loan (incorporated by reference to Exhibit 4.21 to McDermott International, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08430)).
4.2*	Assumption Agreement, dated January 16, 2015, by and among North Ocean II KS, North Ocean II AS, McDermott Blackbird Holdings, LLC and Wells Fargo Bank, National Association, as collateral agent for the Secured Parties (incorporated by reference to Exhibit 4.22 to McDermott International, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08430)).
4.3*	First Supplemental Indenture and Guarantee, dated January 16, 2015, by and among North Ocean II KS, North Ocean II AS, McDermott Blackbird Holdings, LLC, McDermott International, Inc., as the Issuer, each other then-existing Guarantor under the Indenture, Wells Fargo Bank, National Association, as Trustee, paying agent, registrar, and Wells Fargo Bank, National Association, as Collateral Agent (incorporated by reference to Exhibit 4.23 to McDermott International, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08430)).
10.1*	Form of 2015 Restricted Stock Unit Grant Agreement (incorporated by reference to Exhibit 10.31 to McDermott International, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08430)).
10.2*	Form of 2015 Performance Share Grant Agreement (incorporated by reference to Exhibit 10.32 to McDermott International, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-08430)).
10.3	Form of 2015 Non-Executive Director Restricted Stock Grant Letter.
12.1	Ratio of Earnings to Fixed Charges.
31.1	Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer.
32.1	Section 1350 certification of Chief Executive Officer.
32.2	Section 1350 certification of Chief Financial Officer.
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101.DEF XBRL	Taxonomy Extension Definition Linkbase Document

38

*Incorporated by reference to the filing indicated.

39

EX-10.3

Exhibit 10.3

May 14, 2015

PERSONAL & CONFIDENTIAL

[Director]

Board of Directors

McDermott International, Inc.

RE:  RESTRICTED STOCK AWARD

Dear [Director]:

I am pleased to advise you that the Compensation Committee of the Board of Directors (the “Committee”) of McDermott International, Inc. (the “Company”) approved a grant to you (the “Grant”) of [●] shares of restricted stock under the 2014 McDermott International, Inc. Long-Term Incentive Plan (the “Plan”) to be made on May 14, 2015 (the “Grant Date”).  A copy of the Prospectus relating to the Plan, which includes a copy of the Plan, has previously been made available to you.   The restricted stock award will have no Vesting Period (as defined in the Plan), and the restrictions on the Grant will lapse on the Grant Date.  

Restricted Stock Award.  On the Grant Date, you will have the right to be issued the number of shares of Common Stock of the Company set forth above.  Such shares will be issued to you in book-entry form in an account in your name with our transfer agent, Computershare, absent other instructions from you, subject to the terms and conditions of the Plan.

Tax Consequences.  You are solely responsible for the taxes associated with the Grant, and you should consult with and rely on your own tax advisor, accountant or legal advisor as to the tax consequences to you of the Grant.  A general description of the tax consequences relating to the type of award provided through the Grant is included in the Prospectus.

Securities and Exchange Commission Requirements.  Because you are a Section 16 insider, this type of transaction must be reported on a Form 4 before the end of the second (2^nd) business day following the Grant Date.  Please be aware that if you are going to reject the Grant, you should do so as soon as possible to avoid potential Section 16 liability.  Please advise Kim Wolford and Dennis Edge immediately by e-mail, fax or telephone call if you intend to reject this grant.  

Absent such notice of rejection, we will prepare and file the required Form 4 on your behalf (pursuant to your standing authorization for us to do so) within the required two business day deadline.

You are also deemed to be an “affiliate” for purposes of Rule 144 under the Securities Act of 1933, as amended, and accordingly subject to Rule 144.  Rule 144 is applicable only when the shares are sold, so you need not take any action under Rule 144 at this time.

Other Information.  If you have any questions concerning the Grant, please do not hesitate to contact Dennis Edge at 281/870-7342.

Please acknowledge receipt and acceptance of all of the aforesaid by signing both this letter and the duplicate copy enclosed and returning one of them in the pre-paid envelope provided and addressed to the Company at 757 N. Eldridge Parkway, Houston, Texas 77079, attention of Dennis Edge, and marked “Personal and Confidential” within sixty (60) days from the date hereof.

Very truly yours,

McDERMOTT INTERNATIONAL, INC.

David Dickson

President and Chief Executive Officer

2

ACCEPTED:

_________________________________                Date:    _____________________

SIGNATURE

EX-12.1

Exhibit 12.1

RATIO OF EARNINGS TO FIXED CHARGES

(in thousands)

Our ratio of earnings to fixed charges is as follows:

	Three months ended March 31, 2015	2014			2013			2012			2011		2010
Earnings:
Income from continuing operations before provision for income taxes and noncontrolling interest	$         (7,179)	$	(45,321	)	$	(440,859	)	$	330,942		$	314,657	$	303,516
Interest expense and other	15,081		62,919			5,748			(372	)		3,046		2,584
Portion of rents representative of the interest factor	4,003		35,516			38,850			20,239			17,977		15,955
	$         11,905	$	53,114		$	(396,261	)	$	350,809		$	335,680	$	322,055
Fixed charges:
Interest expense, including amount capitalized	$         18,654	$	85,361		$	8,886		$	8,568		$	9,314	$	14,621
Portion of rents representative of the interest factor(1)	4,003		35,516			38,850			20,239			17,977		15,955
	22,657	$	120,877		$	47,736		$	28,807		$	27,291	$	30,576
Ratio of earnings to fixed charges(2)	—		—			—			12.18x			12.30x		10.53x

(1) 33% of rental expense

(2) For the three months ended March 31, 2015 and for the years ended December 31, 2014 and December 31, 2013 and, earnings were deficient to cover fixed charges by $10,752, $67,763 and $443,997 respectively, primarily as a result of operating losses during the periods.

EX-31

Exhibit 31.1

CERTIFICATIONS

I, David Dickson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of McDermott International, Inc. for the quarterly period ended March 31, 2015;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 11, 2015
	/s/ David Dickson
	David Dickson President and Chief Executive Officer

EX-31

Exhibit 31.2

I, Stuart Spence, certify that:

1. I have reviewed this quarterly report on Form 10-Q of McDermott International, Inc. for the quarterly period ended March 31, 2015;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 11, 2015
	/s/ Stuart Spence
	Stuart Spence Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

MCDERMOTT INTERNATIONAL, INC.

Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, David Dickson, President and Chief Executive Officer of McDermott International, Inc., a Panamanian corporation (the “Company”), hereby certify, to my knowledge, that:

(1) the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 11, 2015
	/s/ David Dickson
	David Dickson President and Chief Executive Officer

EX-32

Exhibit 32.2

MCDERMOTT INTERNATIONAL, INC.

Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Stuart Spence, Executive Vice President and Chief Financial Officer of McDermott International, Inc., a Panamanian corporation (the “Company”), hereby certify, to my knowledge, that:

(1) the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 11, 2015
	/s/ Stuart Spence
	Stuart Spence Executive Vice President and Chief Financial Officer

XML

Contracts in Progress and Advance Billings on Contracts - Components of Contracts in Progress and Advance Billings on Contracts (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Contractors [Abstract]
Costs incurred less costs of revenue recognized	$ 160,306	$ 90,191
Revenues recognized less billings to customers	220,450	267,426
Contracts in Progress	380,756	357,617
Billings to customers less revenue recognized	514,089	578,896
Costs incurred less costs of revenue recognized	(352,085)	(379,031)
Advance Billings on Contracts	$ 162,004	$ 199,865

XML

Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive Income (Loss) Reclassified (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	$ (97,808)
Other comprehensive income (loss) before reclassification	(38,720)
Amounts reclassified from AOCI	19,838
Net current period other comprehensive income (loss)	(18,882)
Ending Balance	(116,690)
Foreign currency gain (loss) [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(15,212)
Other comprehensive income (loss) before reclassification	(2,042)
Net current period other comprehensive income (loss)	(2,042)
Ending Balance	(17,254)
Unrealized holding loss on investment [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	241
Other comprehensive income (loss) before reclassification	12
Net current period other comprehensive income (loss)	12
Ending Balance	253
Deferred gain (loss) on derivatives [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(82,837)	[1]
Other comprehensive income (loss) before reclassification	(36,690)	[1]
Amounts reclassified from AOCI	19,838	[1],[2]
Net current period other comprehensive income (loss)	(16,852)	[1]
Ending Balance	$ (99,689)	[1]

[1] Refer to Note 9 for additional details.

[2] Reclassified to cost of operations and gain on foreign currency, net.

XML

Derivative Financial Instruments - Derivative Financial Instruments (Detail) (Derivatives Designated as Hedges [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Derivative [Line Items]
Asset derivatives fair value	$ 1,342	$ 1,189
Liability derivatives fair value	59,798	48,101
Accounts receivable-other [Member]
Derivative [Line Items]
Asset derivatives fair value	1,342	1,173
Accounts payable [Member]
Derivative [Line Items]
Liability derivatives fair value	49,965	32,431
Other assets [Member]
Derivative [Line Items]
Asset derivatives fair value		16
Other liabilities [Member]
Derivative [Line Items]
Liability derivatives fair value	$ 9,833	$ 15,670

XML

Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Net loss attributable to McDermott International, Inc.	$ (14,507)	$ (46,520)
Weighted average common shares (basic)	237,504,719	236,961,158
Effect of dilutive securities:
Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards (diluted)	237,504,719	236,961,158
Basic loss per share
Net loss attributable to McDermott International, Inc.	$ (0.06)	$ (0.20)
Diluted loss per share:
Net loss attributable to McDermott International, Inc.	$ (0.06)	$ (0.20)

XML

Pension Plans - Net Periodic Benefit Gain (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Domestic Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 5,382	$ 6,778
Expected return on plan assets	(6,677)	(6,875)
Recognized net actuarial loss and other		(217)
Net periodic benefit gain	(1,295)	(314)
TCN Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	407	475
Expected return on plan assets	(710)	(740)
Net periodic benefit gain	$ (303)	$ (265)

XML

Basis of Presentation and Significant Accounting Policies - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2015 Segment Country
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of countries	20
Number of reporting segments	3

XML

Segment Reporting - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2015 Segment
Segment Reporting [Abstract]
Number of reporting segments	3

XML

RESTRUCTURING (Tables)

3 Months Ended

Mar. 31, 2015

Restructuring And Related Activities [Abstract]

Amounts Incurred and Amounts Expected to be Incurred in Future by Major Type of Cost and by Segment

The following table presents amounts incurred during the three months ended March 31, 2015 and 2014, as well as amounts incurred from the inception of our restructuring efforts up to March 31, 2015 and amounts expected to be incurred in the future by major type of cost and by segment.

	Incurred in the three months ended March 31, 2015		Incurred in the three months ended March 31, 2014		Incurred from inception to March 31, 2015		Estimate of remaining amounts to be incurred		Total
	(In thousands)
Americas Restructuring
Impairments and write offs	$	-	$	-	$	12,923	$	-	$	12,923
Severance and other personnel-related costs		881		2,029		14,261		-		14,261
Morgan City environmental reserve		-		-		5,925		-		5,925
Morgan City yard-related expenses		914		1,602		11,764		4,002		15,766
Other		-		-		158		-		158
	$	1,795	$	3,631	$	45,031	$	4,002	$	49,033
Corporate Restructuring
Severance and other personnel-related costs	$	-	$	908	$	2,599	$	-	$	2,599
Legal and other advisor fees		-		1,586		3,204		-		3,204
Other		-		-		798		-		798
	$	-	$	2,494	$	6,601	$	-	$	6,601
MPI
Severance and other personnel-related costs
AEA segment	$	1,252	$	-	$	1,252	$	3,877	$	5,129
MEA segment		607		-		607		3,300		3,907
ASA segment		1,800		-		1,800		5,329		7,129
Corporate and other		719		-		719		6,967		7,686
Asset impairment
ASA segment		4,168		-		4,168		-		4,168
Legal and other advisor fees
Corporate		48		-		4,051		-		4,051
	$	8,594	$	-	$	12,597	$	19,473	$	32,070
Total	$	10,389	$	6,125	$	64,229	$	23,475	$	87,704

Roll Forward of Accrued Liabilities Associated with Restructuring Activities

The following table presents a roll forward of accrued liabilities associated with our restructuring activities:

	December 31, 2014		Accruals		Payments			March 31, 2015
	(In thousands)
Morgan City environmental reserve	$	3,675	$	-	$	(715	)	$	2,960
Morgan City yard-related expenses and other		373		833		(141	)		1,065
Total	$	4,048	$	833	$	(856	)	$	4,025

XML

Fair Value Measurements - Available-for-Sale Securities Measured at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale securities	$ 2,151	$ 3,915
Mutual funds [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale securities	751	2,216
Commercial paper [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale securities	1,400	1,699
Level 2 [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale securities	2,151	3,915
Level 2 [Member] | Mutual funds [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale securities	751	2,216
Level 2 [Member] | Commercial paper [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale securities	$ 1,400	$ 1,699

XML

Restructuring - Roll Forward of Accrued Liabilities Associated with Restructuring Activities (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Restructuring Reserve [Line Items]
Beginning balance	$ 4,048
Accruals	833
Payments	(856)
Ending balance	4,025
Morgan City environmental reserve [Member]
Restructuring Reserve [Line Items]
Beginning balance	3,675
Payments	(715)
Ending balance	2,960
Morgan City yard-related expenses and Other [Member]
Restructuring Reserve [Line Items]
Beginning balance	373
Accruals	833
Payments	(141)
Ending balance	$ 1,065

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Accounts Receivable - Retainages on Contracts (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Contractors [Abstract]
Retainages expected to be collected within one year	$ 32,100	$ 28,586
Retainages expected to be collected after one year	136,908	137,468
Total retainages	$ 169,008	$ 166,054

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Fair Value Measurements - Additional Information (Detail) (ASA [Member], USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
ASA [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Property plant and equipment, fair value	$ 13.6
Non-cash impairment charges	$ 4.2

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	0 Months Ended	3 Months Ended	0 Months Ended
	Apr. 27, 2007	Mar. 31, 2015	Dec. 16, 2005 LegalMatter	Jan. 29, 2007 LegalMatter
Loss Contingencies [Line Items]
Legal claims		On December 16, 2005, a proceeding entitled Antoine, et al. vs. J. Ray McDermott, Inc., et al. (“Antoine Suit”), was filed in the 24th Judicial District Court, Jefferson Parish, Louisiana, by approximately 88 plaintiffs against approximately 215 defendants, including our subsidiaries formerly known as JRMI and Delta Hudson Engineering Corporation (“DHEC”), generally alleging injuries for exposure to asbestos, and unspecified chemicals, metals and noise while the plaintiffs were allegedly employed as Jones Act seamen. This case was dismissed by the Court on January 10, 2007, without prejudice to plaintiffs’ rights to refile their claims. On January 29, 2007, 21 plaintiffs from the dismissed Antoine Suit filed a matter entitled Boudreaux, et al. v. McDermott, Inc., et al. (the “Boudreaux Suit”), in the United States District Court for the Southern District of Texas, against JRMI and our subsidiary formerly known as McDermott Incorporated, and approximately 30 other employer defendants, alleging Jones Act seaman status and generally alleging exposure to welding fumes, solvents, dyes, industrial paints and noise. The Boudreaux Suit was transferred to the United States District Court for the Eastern District of Louisiana on May 2, 2007, which entered an order in September 2007 staying the matter until further order of the Court due to the bankruptcy filing of one of the co-defendants.
Remaining plaintiffs date of dismissal	Dec. 12, 2014
Environmental reserves, current		$ 3.0
Aggregate possible liquidated damage due to failure to meet specified contractual milestone dates, offshore oil and gas construction segment		73.5
Liquidated damage contingencies, accrued		19.6
Trigger dates, potential liquidated damages		2015-07
Outstanding obligation in 2015		210.5
Outstanding obligation in 2016		24.6
Outstanding obligation		$ 235.1
Antoine, et al. vs. J. Ray McDermott, Inc., et al. [Member]
Loss Contingencies [Line Items]
Number of plaintiffs			88
Number of defendants			215
Antoine, et al. vs. J. Ray McDermott, Inc., et al. [Member] | Judicial District Court for Harris County, Texas [Member]
Loss Contingencies [Line Items]
Number of plaintiffs				43
Number of defendants				65
Antoine, et al. vs. J. Ray McDermott, Inc., et al. [Member] | Judicial District Court for Harris County, Texas [Member] | Maritime products [Member]
Loss Contingencies [Line Items]
Number of defendants				42
Boudreaux, et al. v. McDermott, Inc., et al. [Member] | United States District Court for the Southern District of Texas [Member]
Loss Contingencies [Line Items]
Number of plaintiffs				21
Number of defendants				30

XML

Derivative Financial Instruments - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Net gain (loss) on derivative financial instruments	$ (99,689,000)	$ (82,837,000)
Net deferred losses expected to be reclassified from AOCI over next 12 months	(78,400,000)
Derivative contracts, maturity date	Dec. 31, 2017
Fair value of derivative contracts	58,500,000
EPCI projects [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Notional value of outstanding derivative contracts	424,800,000
Foreign Exchange Forward
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Notional value of outstanding derivative contracts	$ 631,400,000

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REVENUE RECOGNITION

3 Months Ended

Mar. 31, 2015

Revenue Recognition [Abstract]

REVENUE RECOGNITION

NOTE 2—REVENUE RECOGNITION

Unapproved Change Orders

As of March 31, 2015, total unapproved change orders included in our estimates at completion aggregated approximately $240.3 million, of which approximately $73.0 million was included in backlog. As of March 31, 2014, total unapproved change orders included in our estimates at completion aggregated approximately $223.5 million, of which approximately $38.1 million was included in backlog.

Claims Revenue

The amount of revenues and costs included in our estimates at completion (i.e., contract values) associated with claims was $6.5 million as of March 31, 2015 and 2014. All of these claim amounts at March 31, 2015 and 2014 were related to our MEA segment. For the quarters ended March 31, 2015 and 2014, no revenues or costs pertaining to claims were included in the accompanying Consolidated Financial Statements. None of the pending claims as of March 31, 2015 were the subject of any litigation proceedings.

Our unconsolidated joint ventures did not include any claims revenue or associated cost in their financial results for the quarters ended March 31, 2015 and 2014.  

Deferred Profit Recognition

As of March 31, 2015 and 2014, we were not accounting for any projects under our deferred profit recognition policy.

Completed Contract Method

As of March 31, 2015 and 2014, we were not accounting for any contracts under the completed contract method.

Loss Recognition

As of March 31, 2015, we have provided for our estimated costs to complete on all of our ongoing contracts. However, it is possible that current estimates could change due to unforeseen events, which could result in adjustments to overall contract costs. Variations from estimated contract performance could result in material adjustments to operating results for any fiscal quarter or year. For all contracts, if a current estimate of total contract cost indicates a loss, the projected loss is recognized in full when determined.

Of the March 31, 2015 backlog, approximately $406.7 million related primarily to four active projects that were in loss positions, whereby future revenues are expected to equal costs when recognized. Included in this amount was $130.4 million of backlog associated with an EPCI project, PB Litoral, in Mexico, which is expected to be completed in the fourth quarter of 2015, $87.5 million of backlog pertaining to a five-year charter of the Agile in Brazil, which is expected to be completed in the first quarter of 2017, and $20.8 million of backlog relating to NO102 vessel charter project in Brazil, scheduled for completion in the second quarter of 2015, all of which are being conducted in our AEA segment. The March 31, 2015 backlog amount also included $166.5 million relating to an EPCI project in our MEA segment, which is also in a loss position and is expected to be completed by the fourth quarter of 2017.  It is possible that our estimates of gross profit could increase or decrease based on changes in productivity, actual downtime and the resolution of change orders and claims with the customers.

XML

Long-Term Debt and Notes Payable - Summary of Long-Term Debt Obligations (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Long-term debt consists of:
Long-term borrowing	$ 861,339	$ 864,469
Less: Amounts due within one year	27,092	27,026
Long-Term Debt	834,247	837,443
Senior Notes [Member]
Long-term debt consists of:
Long-term borrowing	490,625	490,354
Term Loan [Member]
Long-term debt consists of:
Long-term borrowing	291,040	291,424
Amortizing Notes [Member]
Long-term debt consists of:
Long-term borrowing	30,354	33,258
Capital lease obligation [Member]
Long-term debt consists of:
Long-term borrowing	2,802	2,802
Other financing [Member]
Long-term debt consists of:
Long-term borrowing	494	743
North Ocean 105 [Member]
Long-term debt consists of:
Long-term borrowing	$ 46,024	$ 45,888

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Available-for-Sale Securities Measured at Fair Value

The following is a summary of our available-for-sale securities measured at fair value:

	March 31, 2015
	Total		Level 1		Level 2		Level 3
	(in thousands)
Mutual funds(1)	$	751	$	-	$	751	$	-
Commercial paper		1,400		-		1,400		-
Total	$	2,151	$	-	$	2,151	$	-
	December 31, 2014
	Total		Level 1		Level 2		Level 3
	(in thousands)
Mutual funds(1)	$	2,216	$	-	$	2,216	$	-
Commercial paper		1,699		-		1,699		-
Total	$	3,915	$	-	$	3,915	$	-

⁽¹⁾ Various U.S. equities and other investments managed under mutual funds

Estimated Fair Values of Financial Instruments

The estimated fair values of certain of our financial instruments are as follows:

	March 31, 2015						December 31, 2014
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
	(In thousands)
Balance Sheet Instruments
Cash and cash equivalents	$	600,636		$	600,636		$	665,309		$	665,309
Restricted cash and cash equivalents	$	199,764		$	199,764		$	187,585		$	187,585
Investments	$	2,151		$	2,151		$	3,915		$	3,915
Debt	$	(861,339	)	$	(773,619	)	$	(864,469	)	$	(737,980	)
Forward contracts	$	(58,456	)	$	(58,456	)	$	(46,912	)	$	(46,912	)

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

The following tables summarize our derivative financial instruments:

Asset and Liability Derivatives

	March 31, 2015		December 31, 2014
	(in thousands)
Derivatives Designated as Hedges:
Location:
Accounts receivable-other	$	1,342	$	1,173
Other assets		-		16
Total asset derivatives	$	1,342	$	1,189
Accounts payable	$	49,965	$	32,431
Other liabilities		9,833		15,670
Total liability derivatives	$	59,798	$	48,101

Effects of Derivative Instruments on Financial Statements

The Effects of Derivative Instruments on our Financial Statements

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Derivatives Designated as Hedges:
Amount of gain/(loss) recognized in other comprehensive income (loss)	$	(36,690	)	$	12,358
Income (loss)  reclassified from AOCI into income: effective portion
Location: Cost of operations		19,854		$	202
Gain(loss) recognized in income (loss): ineffective portion and amount excluded from effectiveness testing
Location: Gain (loss) on foreign currency—net		1,817			(847	)

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Earnings Per Share - Additional Information (Detail) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Antidilutive securities excluded from earnings per share computation, shares	3.3	3.0
Antidilutive securities excluded from diluted weighted average shares computation, shares	40.9

XML

Long-Term Debt and Notes Payable - Additional Information 1 (Detail) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Line of Credit Facility maximum amount outstanding	$ 201,400,000	$ 195,800,000
Letter of Credit Facility [Member]
Debt Instrument [Line Items]
Letter of credit, first lien	400,000,000	400,000,000
Letter of credit supported by Cash collateral	111,800,000	88,800,000
Financial Letter of Credit [Member]
Debt Instrument [Line Items]
Line of Credit Facility maximum amount outstanding	0	0
Letter of credit supported by Cash collateral	$ 20,800,000	$ 19,700,000

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) (Reclassifications [Member])

3 Months Ended

Mar. 31, 2015

Reclassifications [Member]

Accumulated Other Comprehensive Income Loss [Line Items]

Components of Accumulated Other Comprehensive Income (Loss) Included in Stockholders' Equity

The components of AOCI included in stockholders’ equity are as follows:

	March 31, 2015			December 31, 2014
	(In thousands)
Foreign currency translation adjustments	$	(17,254	)	$	(15,212	)
Net gain on investments		253			241
Net loss on derivative financial instruments		(99,689	)		(82,837	)
Accumulated other comprehensive loss	$	(116,690	)	$	(97,808	)

The following table presents the components of AOCI and the amounts that were reclassified during the period:

For the three months ended March 31, 2015	Foreign currency gain (loss)			Unrealized holding loss on investment		Deferred gain (loss) on derivatives (1)			TOTAL
	(in thousands)
Balance, December 31, 2014	$	(15,212	)	$	241	$	(82,837	)	$	(97,808	)
Other comprehensive income (loss) before reclassification		(2,042	)		12		(36,690	)		(38,720	)
Amounts reclassified from AOCI		-			-		19,838	(2)		19,838
Net current period other comprehensive income (loss)		(2,042	)		12		(16,852	)		(18,882	)
Balance, March 31, 2015	$	(17,254	)	$	253	$	(99,689	)	$	(116,690	)

¹ Refer to Note 9 for additional details.

² Reclassified to cost of operations and gain on foreign currency, net.

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per common share:

	Three Months Ended March 31,
	2015			2014
	(In thousands, except share and per share amounts)
Net loss attributable to McDermott International, Inc.	$	(14,507	)	$	(46,520	)
Weighted average common shares (basic)		237,504,719			236,961,158
Effect of dilutive securities:
Stock options, restricted stock and restricted stock units					-
Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards (diluted)		237,504,719			236,961,158
Basic loss per share
Net loss attributable to McDermott International, Inc.	$	(0.06	)	$	(0.20	)
Diluted loss per share:
Net loss attributable to McDermott International, Inc.	$	(0.06	)	$	(0.20	)

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1—BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

McDermott International, Inc. (“MII”), a corporation incorporated under the laws of the Republic of Panama in 1959, is an engineering, procurement, construction and installation (“EPCI”) company focused on designing and executing complex offshore oil and gas projects worldwide. Providing fully integrated EPCI services, we deliver fixed and floating production facilities, pipeline installations and subsea systems from concept to commissioning. Operating in approximately 20 countries across the Americas, Europe, Africa, the Middle East and Asia, our integrated resources include a diversified fleet of marine vessels, fabrication facilities and engineering offices. We support our activities with comprehensive project management and procurement services, while utilizing our fully integrated capabilities in both shallow water and deepwater construction. Our customers include national, major integrated and other oil and gas companies, and we operate in most major offshore oil and gas producing regions throughout the world. We execute our contracts through a variety of methods, principally fixed-price, but also including cost reimbursable, cost-plus, day-rate and unit-rate basis or some combination of those methods. In these notes to our accompanying unaudited Consolidated Financial Statements, unless the context otherwise indicates, “we,” “us” and “our” mean MII and its consolidated subsidiaries.

Basis of Presentation

The accompanying Consolidated Financial Statements are unaudited and have been prepared from our books and records in accordance with Rule 10-1 of Regulation S-X for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of our management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of results of operations for a full year. These Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and notes thereto included in MII’s Current Report on Form 8-K filed with the SEC on May 11, 2015.

Business Segments

In the first quarter of 2015, we completed changes to our organizational structure which resulted in realignment of our reporting segments. Our North Sea and Africa operations were previously aggregated into the Middle East (“MEA”) reporting segment. However, the responsibility for business decisions relating to the North Sea and Africa was moved to our Americas reporting segment in the first quarter of 2015. As a result, the North Sea and Africa businesses are reflected in our Americas reporting segment, now referred to as Americas, Europe and Africa (collectively, “AEA”). All comparable periods presented have been revised to reflect this change. Accordingly, we report financial results under three reporting segments consisting of AEA, MEA and Asia (“ASA”). We also report certain corporate and other non-operating activities under the heading “Corporate and other,” which primarily reflects corporate personnel and activities, incentive compensation programs and other costs that are generally fully allocated to our reporting segments. However, Corporate restructuring costs associated with our corporate reorganization are not allocated to our reporting segments. See Note 13 for summarized financial information on our segments.

Recently Issued and Adopted Accounting Guidance

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The standard does not affect the recognition and measurement of debt issuance costs. Therefore, the amortization of debt issuance costs will be calculated using the interest method and be reported as interest expense. Retrospective application of this ASU is required for public entities for annual and interim periods beginning on or after December 15, 2015, and early adoption is permitted. We early adopted this ASU. Our accompanying Consolidated Financial Statements classify debt issuance costs related to long-term debt as components of Long-term debt. These costs were previously reported by us as Assets (see Note 7). All comparable periods presented have been revised to reflect this change.

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements and Property, Plant, and Equipment—Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which amends the definition of a discontinued operation by raising the threshold for a disposal to qualify as discontinued operations. ASU 2014-08 also requires entities to provide additional disclosures about discontinued operations as well as disposal transactions that do not meet the discontinued operations criteria. The pronouncement is effective prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially classified as held for sale in periods beginning on or after December 15, 2014. The application of this ASU did not have any impact on the accompanying Consolidated Financial Statements.

Accounting Guidance Issued But Not Adopted as of March 31, 2015

In April 2015, the FASB issued ASU 2015-04, Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets. This ASU is intended to provide a practical expedient for the measurement date of defined benefit plan assets and obligations. The practical expedient allows employers with fiscal year-end dates that do not fall on a calendar month-end (e.g., companies with a 52/53-week fiscal year) to measure pension and post-retirement benefit plan assets and obligations as of the calendar month-end date closest to the fiscal year-end. The FASB also provided a similar practical expedient for interim remeasurements for significant events. This ASU requires perspective application and is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the impact of this amendment on our future Consolidated Financial Statements and related disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which amends and changes the consolidation analysis currently required under U.S. GAAP. This ASU modifies the process used to evaluate whether limited partnerships and similar entities are variable interest entities or voting interest entities; affects the analysis performed by reporting entities regarding variable interest entities, particularly those with fee arrangements and related party relationships; and provides a scope exception for certain investment funds. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. We are currently assessing the impact of these amendments on our future Consolidated Financial Statements and related disclosures.

In January 2015, the FASB issued ASU 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which eliminates the concept of extraordinary items. Under this new guidance, entities will no longer be required to separately classify, present and disclose extraordinary events and transactions. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2015. The application of these amendments is not expected to have an impact on our future Consolidated Financial Statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Currently, there is no guidance in effect under U.S. GAAP regarding management’s responsibility to assess whether there is substantial doubt about an entity’s ability to continue as a going concern. Under ASU 2014-15, we will be required to assess our ability to continue as a going concern each interim and annual reporting period and provide certain disclosures if there is substantial doubt about our ability to continue as a going concern, including management’s plan to alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter with early adoption permitted. We are currently assessing the impact of the adoption of ASU 2014-15 on our future Consolidated Financial Statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. It also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 will be effective for us for annual and interim reporting periods beginning after December 15, 2016, with early application not permitted. Retrospective and modified retrospective application is allowed. We are currently evaluating the requirements of this ASU and have not yet determined its impact on our future Consolidated Financial Statements and related disclosures.

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SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Information about Operations in Different Segments

Summarized financial information is shown in the following tables:

	Three Months Ended March 31,
	2015			2014
	(In thousands)
Revenues(1):
AEA	$	143,313		$	181,686
MEA		153,800			260,300
ASA		253,350			161,825
Total revenues	$	550,463		$	603,811
Operating income (loss)(2):
AEA	$	15,071		$	(36,412	)
MEA		5,177			(2,734	)
ASA		(12,916	)		3,431
Corporate		(767	)		(2,494	)
Total operating income (loss)	$	6,565		$	(38,209	)
Capital expenditures(3):
AEA	$	2,913		$	7,409
MEA		10,114			22,575
ASA		10,824			4,068
Corporate and Other		121			3,841
Total capital expenditures	$	23,972		$	37,893
Depreciation and amortization:
AEA	$	12,823		$	10,827
MEA		5,738			8,169
ASA		3,916			3,908
Corporate and Other		2,850			1,698
Total depreciation and amortization	$	25,327		$	24,602
Drydock amortization:
AEA	$	3,083		$	4,562
MEA		613			429
ASA		1,576			1,955
Total drydock amortization	$	5,272		$	6,946

⁽¹⁾ Intersegment transactions included in revenues were not significant for either of the periods presented.

⁽²⁾ The ASA segment’s operating loss includes an impairment charge of $4.2 million related to the DB101.

⁽³⁾ Total capital expenditures presents expenditures for which cash payments were made during the period. Capital expenditures for the three months ended March 31, 2015 include $3.3 million of cash payments for accrued capital expenditures outstanding as of December 31, 2014. Capital expenditures for the three months ended March 31, 2014 include $8.3 million of cash payments for accrued capital expenditures outstanding as of December 31, 2013.

Information about Segment Assets by Country

	March 31, 2015		December 31, 2014
	(In thousands)
Segment assets:
AEA	$	922,868	$	976,179
MEA		932,028		990,671
ASA		758,473		601,394
Corporate and Other		846,662		848,635
	$	3,460,031	$	3,416,879

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Restructuring - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Restructuring expenses	$ 10,389	$ 6,125
Incurred from inception to March 31, 2015	64,229
MPI Plan [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Restructuring expenses	8,600
Americas Restructuring [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Restructuring expenses	1,795	3,631
Incurred from inception to March 31, 2015	45,031
MPI [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Restructuring expenses	8,594
Incurred from inception to March 31, 2015	12,597
MPI [Member] | Legal and other advisor fees [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred from inception to March 31, 2015	$ 4,000

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Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive Income (Loss) included in Stockholders' Equity (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Statement Of Income And Comprehensive Income [Abstract]
Foreign currency translation adjustments	$ (17,254)	$ (15,212)
Net gain on investments	253	241
Net gain (loss) on derivative financial instruments	(99,689)	(82,837)
Accumulated other comprehensive loss	$ (116,690)	$ (97,808)

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Revenues	$ 550,463	$ 603,811
Costs and Expenses:
Cost of operations	475,459	591,493
Selling, general and administrative expenses	51,676	51,964
Gain on disposal of assets	(367)	(6,439)
Restructuring expenses	10,389	6,125
Total costs and expenses	537,157	643,143
(Loss) Income from Investments in Unconsolidated Affiliates	(6,741)	1,123
Operating Income (Loss)	6,565	(38,209)
Other Income (Expense):
Interest income (expense), net	(12,179)	61
Loss on foreign currency, net	(1,468)	(4,082)
Other expense, net	(97)	(265)
Total other expense	(13,744)	(4,286)
Loss before provision for income taxes and noncontrolling interests	(7,179)	(42,495)
Provision for income taxes	4,869	3,489
Net loss	(12,048)	(45,984)
Less: net income attributable to noncontrolling interest	2,459	536
Net loss attributable to McDermott International, Inc.	$ (14,507)	$ (46,520)
Net loss attributable to McDermott International, Inc.:
Basic	$ (0.06)	$ (0.20)
Diluted	$ (0.06)	$ (0.20)
Shares used in the computation of losses per share:
Basic:	237,504,719	236,961,158
Diluted:	237,504,719	236,961,158

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Long-Term Debt and Notes Payable - Additional Information 2 (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Debt issuance costs	$ 25.5	$ 27.1
Mexico [Member]
Debt Instrument [Line Items]
Bonds issued related to JRMSA general agreement of indemnity	46.3	52.5
Reimbursement Agreement [Member]
Debt Instrument [Line Items]
Bank guarantees issued	$ 73.7	$ 56.2

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (12,048)	$ (45,984)
Non-cash items included in net loss:
Depreciation and amortization	25,327	24,602
Drydock amortization	5,272	6,946
Stock-based compensation charges	4,278	4,387
Losses (gains) from Investments in unconsolidated affiliates	6,741	(1,123)
Gain on disposal of assets	(367)	(6,439)
Restructuring expense	4,169	675
Deferred taxes	(5,341)	(2,628)
Other non-cash items	(1,472)	1,752
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable	(69,214)	26,365
Net contracts in progress and advance billings on contracts	(61,021)	(5,974)
Accounts payable	110,785	32,727
Accrued and other current liabilities	(5,723)	15,046
Pension liability and accrued postretirement and employee benefits	(555)	5,880
Other assets and liabilities	(19,370)	(78,560)
TOTAL CASH USED IN OPERATING ACTIVITIES	(18,539)	(22,328)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(23,972)	(37,893)
(Increase) in Restricted cash and cash equivalents	(12,179)	(19,634)
Purchases of available-for-sale securities		(1,997)
Sales and maturities of available-for-sale securities	1,775	10,055
Investments in unconsolidated affiliates	(4,696)
Proceeds from asset dispositions		8,370
Other	76	(1,950)
TOTAL CASH USED IN INVESTING ACTIVITIES	(38,996)	(43,049)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt		250,000
Repayment of debt	(4,706)	(31,373)
Other	(1,323)	(3,858)
TOTAL CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(6,029)	214,769
EFFECTS OF EXCHANGE RATE CHANGES ON CASH	(1,109)	36
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(64,673)	149,428
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	665,309	118,702
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 600,636	$ 268,130

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Segment Reporting - Information about Operations in Different Segments (Parenthetical) (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Capital expenditures	$ 23,972,000	$ 37,893,000
Accrued Capital Expenditures of 2014 [Member]
Segment Reporting Information [Line Items]
Capital expenditures	3,300,000
Accrued Capital Expenditures of 2013 [Member]
Segment Reporting Information [Line Items]
Capital expenditures		8,300,000
ASA [Member]
Segment Reporting Information [Line Items]
Impairment charge	4,200,000
Capital expenditures	$ 10,824,000	$ 4,068,000

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Use of Estimates - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 Project	Mar. 31, 2014 Project
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Increase (decrease) in project estimated costs	$ 21.6
AEA [Member]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Changes in project estimates	6.6
MEA [Member]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Changes in project estimates	9.1
ASA [Member]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Changes in project estimates	5.9
Brazil [Member] | AEA [Member]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Increase (decrease) in project estimated costs	(4.4)
SAUDI ARABIA | MEA [Member]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Changes in project estimates		31.9
Number of project	2	3
Partial offset on estimated costs on project	4.5
SAUDI ARABIA | MEA [Member] | Project One [Member]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Changes in project estimates	6.9
SAUDI ARABIA | MEA [Member] | Project Two [Member]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Increase (decrease) in project estimated costs		24.3
Changes in project estimates	6.3
SAUDI ARABIA | MEA [Member] | Project Three
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Increase (decrease) in project estimated costs		7.6
Mexico [Member] | AEA [Member]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Changes in project estimates		35.4
Malaysia [Member] | ASA [Member]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Changes in project estimates		$ 20.6

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Nature of Operations

Nature of Operations

McDermott International, Inc. (“MII”), a corporation incorporated under the laws of the Republic of Panama in 1959, is an engineering, procurement, construction and installation (“EPCI”) company focused on designing and executing complex offshore oil and gas projects worldwide. Providing fully integrated EPCI services, we deliver fixed and floating production facilities, pipeline installations and subsea systems from concept to commissioning. Operating in approximately 20 countries across the Americas, Europe, Africa, the Middle East and Asia, our integrated resources include a diversified fleet of marine vessels, fabrication facilities and engineering offices. We support our activities with comprehensive project management and procurement services, while utilizing our fully integrated capabilities in both shallow water and deepwater construction. Our customers include national, major integrated and other oil and gas companies, and we operate in most major offshore oil and gas producing regions throughout the world. We execute our contracts through a variety of methods, principally fixed-price, but also including cost reimbursable, cost-plus, day-rate and unit-rate basis or some combination of those methods. In these notes to our accompanying unaudited Consolidated Financial Statements, unless the context otherwise indicates, “we,” “us” and “our” mean MII and its consolidated subsidiaries.

Basis of Presentation

Basis of Presentation

The accompanying Consolidated Financial Statements are unaudited and have been prepared from our books and records in accordance with Rule 10-1 of Regulation S-X for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of our management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of results of operations for a full year. These Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and notes thereto included in MII’s Current Report on Form 8-K filed with the SEC on May 11, 2015.

Business Segments

Business Segments

In the first quarter of 2015, we completed changes to our organizational structure which resulted in realignment of our reporting segments. Our North Sea and Africa operations were previously aggregated into the Middle East (“MEA”) reporting segment. However, the responsibility for business decisions relating to the North Sea and Africa was moved to our Americas reporting segment in the first quarter of 2015. As a result, the North Sea and Africa businesses are reflected in our Americas reporting segment, now referred to as Americas, Europe and Africa (collectively, “AEA”). All comparable periods presented have been revised to reflect this change. Accordingly, we report financial results under three reporting segments consisting of AEA, MEA and Asia (“ASA”). We also report certain corporate and other non-operating activities under the heading “Corporate and other,” which primarily reflects corporate personnel and activities, incentive compensation programs and other costs that are generally fully allocated to our reporting segments. However, Corporate restructuring costs associated with our corporate reorganization are not allocated to our reporting segments. See Note 13 for summarized financial information on our segments.

Recently Issued and Adopted Accounting Guidance

Recently Issued and Adopted Accounting Guidance

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. The standard does not affect the recognition and measurement of debt issuance costs. Therefore, the amortization of debt issuance costs will be calculated using the interest method and be reported as interest expense. Retrospective application of this ASU is required for public entities for annual and interim periods beginning on or after December 15, 2015, and early adoption is permitted. We early adopted this ASU. Our accompanying Consolidated Financial Statements classify debt issuance costs related to long-term debt as components of Long-term debt. These costs were previously reported by us as Assets (see Note 7). All comparable periods presented have been revised to reflect this change.

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements and Property, Plant, and Equipment—Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which amends the definition of a discontinued operation by raising the threshold for a disposal to qualify as discontinued operations. ASU 2014-08 also requires entities to provide additional disclosures about discontinued operations as well as disposal transactions that do not meet the discontinued operations criteria. The pronouncement is effective prospectively for all disposals (except disposals classified as held for sale before the adoption date) or components initially classified as held for sale in periods beginning on or after December 15, 2014. The application of this ASU did not have any impact on the accompanying Consolidated Financial Statements.

Accounting Guidance Issued But Not Adopted

Accounting Guidance Issued But Not Adopted as of March 31, 2015

In April 2015, the FASB issued ASU 2015-04, Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets. This ASU is intended to provide a practical expedient for the measurement date of defined benefit plan assets and obligations. The practical expedient allows employers with fiscal year-end dates that do not fall on a calendar month-end (e.g., companies with a 52/53-week fiscal year) to measure pension and post-retirement benefit plan assets and obligations as of the calendar month-end date closest to the fiscal year-end. The FASB also provided a similar practical expedient for interim remeasurements for significant events. This ASU requires perspective application and is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the impact of this amendment on our future Consolidated Financial Statements and related disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which amends and changes the consolidation analysis currently required under U.S. GAAP. This ASU modifies the process used to evaluate whether limited partnerships and similar entities are variable interest entities or voting interest entities; affects the analysis performed by reporting entities regarding variable interest entities, particularly those with fee arrangements and related party relationships; and provides a scope exception for certain investment funds. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. We are currently assessing the impact of these amendments on our future Consolidated Financial Statements and related disclosures.

In January 2015, the FASB issued ASU 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which eliminates the concept of extraordinary items. Under this new guidance, entities will no longer be required to separately classify, present and disclose extraordinary events and transactions. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2015. The application of these amendments is not expected to have an impact on our future Consolidated Financial Statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Currently, there is no guidance in effect under U.S. GAAP regarding management’s responsibility to assess whether there is substantial doubt about an entity’s ability to continue as a going concern. Under ASU 2014-15, we will be required to assess our ability to continue as a going concern each interim and annual reporting period and provide certain disclosures if there is substantial doubt about our ability to continue as a going concern, including management’s plan to alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter with early adoption permitted. We are currently assessing the impact of the adoption of ASU 2014-15 on our future Consolidated Financial Statements and related disclosures.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU will supersede most of the existing revenue recognition requirements in U.S. GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. It also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 will be effective for us for annual and interim reporting periods beginning after December 15, 2016, with early application not permitted. Retrospective and modified retrospective application is allowed. We are currently evaluating the requirements of this ASU and have not yet determined its impact on our future Consolidated Financial Statements and related disclosures.

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Accounts Receivable - Contract Receivables (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Accounts Notes And Loans Receivable [Line Items]
Retainages	$ 32,100	$ 28,586
Accounts receivable – trade, net	213,144	143,370
Contract receivables [Member]
Accounts Notes And Loans Receivable [Line Items]
Unbilled	4,303	4,303
Less allowances	(25,798)	(30,391)
Accounts receivable – trade, net	213,144	143,370
Contract receivables [Member] | Contracts in progress [Member]
Accounts Notes And Loans Receivable [Line Items]
Contracts receivable	176,027	106,174
Contract receivables [Member] | Completed contracts [Member]
Accounts Notes And Loans Receivable [Line Items]
Contracts receivable	$ 26,512	$ 34,698

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CONTRACTS IN PROGRESS AND ADVANCE BILLINGS ON CONTRACTS (Tables)

3 Months Ended

Mar. 31, 2015

Contractors [Abstract]

Components of Contracts in Progress and Advance Billings on Contracts

A detail of the components of contracts in progress and advance billings on contracts is as follows:

	March 31, 2015			December 31, 2014
	(In thousands)
Costs incurred less costs of revenue recognized	$	160,306		$	90,191
Revenues recognized less billings to customers		220,450			267,426
Contracts in Progress	$	380,756		$	357,617
Billings to customers less revenue recognized		514,089			578,896
Costs incurred less costs of revenue recognized		(352,085	)		(379,031	)
Advance Billings on Contracts	$	162,004		$	199,865

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (USD $) In Thousands, except Share data	Total	Common Stock [Member]	Capital in Excess of Par Value [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss ("AOCI") [Member]	Treasury Stock [Member]	Stockholders' Equity [Member]	Noncontrolling Interest ("NCI") [Member]
Beginning Balance at Dec. 31, 2014	$ 1,539,114	$ 245,210	$ 1,676,815	$ (239,572)	$ (97,808)	$ (96,441)	$ 1,488,204	$ 50,910
Beginning Balance (in shares) at Dec. 31, 2014		245,209,850
Net Loss	(12,048)			(14,507)			(14,507)	2,459
Other comprehensive loss, net of tax	(18,915)				(18,882)		(18,882)	(33)
Share vesting		990	(990)
Share vesting (in shares)		990,039
Stock-based compensation charges	4,278		3,806			472	4,278
Purchase of treasury shares	(1,003)					(1,003)	(1,003)
Ending Balance at Mar. 31, 2015	$ 1,511,426	$ 246,200	$ 1,679,631	$ (254,079)	$ (116,690)	$ (96,972)	$ 1,458,090	$ 53,336
Ending Balance (in shares) at Mar. 31, 2015		246,199,889

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Statement Of Income And Comprehensive Income [Abstract]
Net Loss	$ (12,048)	$ (45,984)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on investments	12	(24)
Foreign currency translation adjustment	(2,042)	(320)
Gain (loss) on derivatives	(16,885)	14,529
Other comprehensive income (loss), net of tax	(18,915)	14,185
Total Comprehensive Loss	(30,963)	(31,799)
Less: Comprehensive Income Attributable to Non-controlling Interests	2,426	503
Comprehensive Loss Attributable to McDermott International, Inc.	$ (33,389)	$ (32,302)

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 10—FAIR VALUE MEASUREMENTS

The following is a summary of our available-for-sale securities measured at fair value:

	March 31, 2015
	Total		Level 1		Level 2		Level 3
	(in thousands)
Mutual funds(1)	$	751	$	-	$	751	$	-
Commercial paper		1,400		-		1,400		-
Total	$	2,151	$	-	$	2,151	$	-
	December 31, 2014
	Total		Level 1		Level 2		Level 3
	(in thousands)
Mutual funds(1)	$	2,216	$	-	$	2,216	$	-
Commercial paper		1,699		-		1,699		-
Total	$	3,915	$	-	$	3,915	$	-

⁽¹⁾ Various U.S. equities and other investments managed under mutual funds

Our Level 2 investments consist primarily of commercial paper, asset-backed commercial paper notes backed by a pool of mortgage-backed securities and mutual funds. The fair value of our Level 2 investments was determined using a market approach that is based on quoted prices and other information for similar or identical instruments.

Other Financial Instruments

We used the following methods and assumptions in estimating our fair value disclosures for our other financial instruments:

Cash and cash equivalents and restricted cash and cash equivalents. The carrying amounts that we have reported in the accompanying Consolidated Balance Sheets for cash, cash equivalents and restricted cash and cash equivalents approximate their fair values and are classified as Level 1 within the fair value hierarchy.

Short-term and long-term debt. The fair value of debt instruments is classified as Level 2 within the fair value hierarchy and is valued using a market approach based on quoted prices for similar instruments traded in active markets. Where quoted prices are not available, the income approach is used to value these instruments based on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms.

Forward contracts. The fair value of forward contracts is classified as Level 2 within the fair value hierarchy and is valued using observable market parameters for similar instruments traded in active markets. Where quoted prices are not available, the income approach is used to value forward contracts, which discounts future cash flows based on current market expectations and credit risk.

The estimated fair values of certain of our financial instruments are as follows:

	March 31, 2015						December 31, 2014
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
	(In thousands)
Balance Sheet Instruments
Cash and cash equivalents	$	600,636		$	600,636		$	665,309		$	665,309
Restricted cash and cash equivalents	$	199,764		$	199,764		$	187,585		$	187,585
Investments	$	2,151		$	2,151		$	3,915		$	3,915
Debt	$	(861,339	)	$	(773,619	)	$	(864,469	)	$	(737,980	)
Forward contracts	$	(58,456	)	$	(58,456	)	$	(46,912	)	$	(46,912	)

Non-financial Instruments

In accordance with ASC 360-10, Property, Plant and Equipment, one of our vessels, the DB101, which is held and used in our ASA segment, was written down to a fair value of $13.6 million, resulting in a non-cash impairment charge of $4.2 million in the first quarter of 2015. This asset impairment is related to our plan to decommission this vessel in the second quarter of 2015.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 07, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Trading Symbol	MDR
Entity Registrant Name	MCDERMOTT INTERNATIONAL INC
Entity Central Index Key	0000708819
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		238,604,332

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ACCUMULATED OTHER COMPREHENSIVE LOSS

3 Months Ended

Mar. 31, 2015

Statement Of Income And Comprehensive Income [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

NOTE 11—ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of AOCI included in stockholders’ equity are as follows:

	March 31, 2015			December 31, 2014
	(In thousands)
Foreign currency translation adjustments	$	(17,254	)	$	(15,212	)
Net gain on investments		253			241
Net loss on derivative financial instruments		(99,689	)		(82,837	)
Accumulated other comprehensive loss	$	(116,690	)	$	(97,808	)

The following table presents the components of AOCI and the amounts that were reclassified during the period:

For the three months ended March 31, 2015	Foreign currency gain (loss)			Unrealized holding loss on investment		Deferred gain (loss) on derivatives (1)			TOTAL
	(in thousands)
Balance, December 31, 2014	$	(15,212	)	$	241	$	(82,837	)	$	(97,808	)
Other comprehensive income (loss) before reclassification		(2,042	)		12		(36,690	)		(38,720	)
Amounts reclassified from AOCI		-			-		19,838	(2)		19,838
Net current period other comprehensive income (loss)		(2,042	)		12		(16,852	)		(18,882	)
Balance, March 31, 2015	$	(17,254	)	$	253	$	(99,689	)	$	(116,690	)

¹ Refer to Note 9 for additional details.

² Reclassified to cost of operations and gain on foreign currency, net.

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CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current Assets:
Cash and cash equivalents	$ 600,636	$ 665,309
Restricted cash and cash equivalents	199,764	187,585
Accounts receivable – trade, net	213,144	143,370
Accounts receivable – other	73,837	81,088
Contracts in progress	380,756	357,617
Deferred income taxes	12,646	7,514
Assets held for sale	14,253	14,253
Other current assets	49,971	44,898
Total Current Assets	1,545,007	1,501,634
Property, Plant and Equipment	2,479,797	2,473,563
Less Accumulated depreciation	(850,378)	(830,467)
Net Property, Plant and Equipment	1,629,419	1,643,096
Accounts Receivable – Long-Term Retainages	136,908	137,468
Investments in Unconsolidated Affiliates	36,206	38,186
Deferred Income Taxes	17,034	17,313
Investments	2,151	2,216
Other Assets	93,306	76,966
Total Assets	3,460,031	3,416,879
Current Liabilities:
Notes payable and current maturities of long-term debt	27,092	27,026
Accounts payable	374,927	251,924
Accrued liabilities	330,889	337,209
Advance billings on contracts	162,004	199,865
Deferred income taxes	19,265	19,753
Income taxes payable	29,813	25,165
Total Current Liabilities	943,990	860,942
Long-Term Debt	834,247	837,443
Self-Insurance	18,140	17,026
Pension Liability	18,079	18,403
Non-current Income Taxes	48,442	49,229
Other Liabilities	85,707	94,722
Commitments and Contingencies
Stockholders' Equity:
Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued and outstanding 246,199,889 and 245,209,850 shares, respectively	246,200	245,210
Capital in excess of par value (including prepaid common stock purchase contracts)	1,679,631	1,676,815
Accumulated Deficit	(254,079)	(239,572)
Treasury stock, at cost: 7,700,580 and 7,400,027 shares, respectively	(96,972)	(96,441)
Accumulated other comprehensive loss	(116,690)	(97,808)
Stockholders' Equity - McDermott International, Inc.	1,458,090	1,488,204
Noncontrolling interest	53,336	50,910
Total Equity	1,511,426	1,539,114
Total Liabilities and Equity	$ 3,460,031	$ 3,416,879

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CONTRACTS IN PROGRESS AND ADVANCE BILLINGS ON CONTRACTS

3 Months Ended

Mar. 31, 2015

Contractors [Abstract]

CONTRACTS IN PROGRESS AND ADVANCE BILLINGS ON CONTRACTS

NOTE 5—CONTRACTS IN PROGRESS AND ADVANCE BILLINGS ON CONTRACTS

Contracts in progress were $380.8 million and $357.6 million at March 31, 2015 and December 31, 2014, respectively. Advance billings on contracts were $162.0 million at March 31, 2015 and $199.9 million at December 31, 2014. A detail of the components of contracts in progress and advance billings on contracts is as follows:

	March 31, 2015			December 31, 2014
	(In thousands)
Costs incurred less costs of revenue recognized	$	160,306		$	90,191
Revenues recognized less billings to customers		220,450			267,426
Contracts in Progress	$	380,756		$	357,617
Billings to customers less revenue recognized		514,089			578,896
Costs incurred less costs of revenue recognized		(352,085	)		(379,031	)
Advance Billings on Contracts	$	162,004		$	199,865

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ACCOUNTS RECEIVABLE

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

ACCOUNTS RECEIVABLE

NOTE 4—ACCOUNTS RECEIVABLE

Accounts Receivable—Trade, Net

A summary of contract receivables is as follows:

	March 31, 2015			December 31, 2014
	(in thousands)
Contract receivables:
Contracts in progress	$	176,027			106,174
Completed contracts		26,512			34,698
Retainages		32,100			28,586
Unbilled		4,303			4,303
Less allowances		(25,798	)		(30,391	)
Accounts receivable—trade, net	$	213,144		$	143,370

Contract retainages generally represent amounts withheld by our customers until project completion, in accordance with the terms of the applicable contracts. The following is a summary of retainages on our contracts:

	March 31, 2015		December 31, 2014
	(in thousands)
Retainages expected to be collected within one year	$	32,100	$	28,586
Retainages expected to be collected after one year		136,908		137,468
Total retainages	$	169,008	$	166,054

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ACCOUNTS RECEIVABLE (Tables)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Contract Receivables

A summary of contract receivables is as follows:

	March 31, 2015			December 31, 2014
	(in thousands)
Contract receivables:
Contracts in progress	$	176,027			106,174
Completed contracts		26,512			34,698
Retainages		32,100			28,586
Unbilled		4,303			4,303
Less allowances		(25,798	)		(30,391	)
Accounts receivable—trade, net	$	213,144		$	143,370

Retainages on Contracts

The following is a summary of retainages on our contracts:

	March 31, 2015		December 31, 2014
	(in thousands)
Retainages expected to be collected within one year	$	32,100	$	28,586
Retainages expected to be collected after one year		136,908		137,468
Total retainages	$	169,008	$	166,054

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 12—EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per common share:

	Three Months Ended March 31,
	2015			2014
	(In thousands, except share and per share amounts)
Net loss attributable to McDermott International, Inc.	$	(14,507	)	$	(46,520	)
Weighted average common shares (basic)		237,504,719			236,961,158
Effect of dilutive securities:
Stock options, restricted stock and restricted stock units					-
Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards (diluted)		237,504,719			236,961,158
Basic loss per share
Net loss attributable to McDermott International, Inc.	$	(0.06	)	$	(0.20	)
Diluted loss per share:
Net loss attributable to McDermott International, Inc.	$	(0.06	)	$	(0.20	)

Approximately 3.3 million and 3.0 million shares underlying outstanding stock-based awards were excluded from the computation of diluted earnings per share because they were anti-dilutive for the three months ended March 31, 2015 and March 31, 2014, respectively.

Potential dilutive common shares for the settlement of the common stock purchase contracts totaling 40.9 million shares were considered in the calculation of diluted weighted-average shares for the three months ended March 31, 2015; however, due to our net loss position, they have not been reflected above because they would be anti-dilutive.

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PENSION PLANS

3 Months Ended

Mar. 31, 2015

Compensation And Retirement Disclosure [Abstract]

PENSION PLANS

NOTE 8—PENSION PLANS

In 2014 we elected to change our accounting method for recognizing actuarial gains and losses for our pension and other postretirement benefit plans. In connection with our accounting change we have revised previously reported amounts to conform to our current method of accounting.

Net periodic benefit gain for our non-contributory qualified defined benefit pension plan and several of our non-qualified supplemental defined benefit pension plans (the “Domestic Plans”) and our J. Ray McDermott, S.A. Third Country National Employees Pension Plan (the “TCN Plan”) includes the following components:

	Domestic Plans						TCN Plan
	Three Months Ended March 31,
	2015			2014			2015			2014
	(In thousands)
Interest cost	$	5,382		$	6,778		$	407		$	475
Expected return on plan assets		(6,677	)		(6,875	)		(710	)		(740	)
Recognized net actuarial loss and other		-			(217	)		-			-
Net periodic benefit gain	$	(1,295	)	$	(314	)	$	(303	)	$	(265	)

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Segment Reporting - Information about Segment Assets by Country (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Total assets	$ 3,460,031	$ 3,416,879
AEA [Member]
Segment Reporting Information [Line Items]
Assets, continuing operations	922,868	976,179
MEA [Member]
Segment Reporting Information [Line Items]
Assets, continuing operations	932,028	990,671
ASA [Member]
Segment Reporting Information [Line Items]
Assets, continuing operations	758,473	601,394
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Assets, continuing operations	$ 846,662	$ 848,635

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RESTRUCTURING

3 Months Ended

Mar. 31, 2015

Restructuring And Related Activities [Abstract]

RESTRUCTURING

NOTE 6—RESTRUCTURING

In 2014 we completed a major review of our cost structure, and we are implementing a plan, which we refer to as the McDermott Profitability Initiative (“MPI”), to increase our profitability and flexibility through reduced fixed and variable costs. The plan includes headcount reductions, centralization of operational activities, other cost reduction initiatives and certain asset impairments. For the quarter ended March 31, 2015, expenses incurred under the MPI totaled $8.6 million.

During 2013 and 2014, we implemented a restructuring of our Americas operations, which involved our Morgan City, Louisiana, Houston, Texas, New Orleans, Louisiana and some Brazil locations. The restructuring involved, among other things, reductions of management, administrative, fabrication and engineering personnel, and the discontinued utilization of the Morgan City facility. For the quarter ended March 31, 2015, expenses incurred under the Americas restructuring totaled $1.8 million.

We completed a Corporate restructuring by the end of 2014. Costs associated with our Corporate restructuring activities primarily included severance, relocation and other personnel-related costs and costs for advisors, as well as costs for certain executive management changes which became effective during the fourth quarter of 2013.

The following table presents amounts incurred during the three months ended March 31, 2015 and 2014, as well as amounts incurred from the inception of our restructuring efforts up to March 31, 2015 and amounts expected to be incurred in the future by major type of cost and by segment.

	Incurred in the three months ended March 31, 2015		Incurred in the three months ended March 31, 2014		Incurred from inception to March 31, 2015		Estimate of remaining amounts to be incurred		Total
	(In thousands)
Americas Restructuring
Impairments and write offs	$	-	$	-	$	12,923	$	-	$	12,923
Severance and other personnel-related costs		881		2,029		14,261		-		14,261
Morgan City environmental reserve		-		-		5,925		-		5,925
Morgan City yard-related expenses		914		1,602		11,764		4,002		15,766
Other		-		-		158		-		158
	$	1,795	$	3,631	$	45,031	$	4,002	$	49,033
Corporate Restructuring
Severance and other personnel-related costs	$	-	$	908	$	2,599	$	-	$	2,599
Legal and other advisor fees		-		1,586		3,204		-		3,204
Other		-		-		798		-		798
	$	-	$	2,494	$	6,601	$	-	$	6,601
MPI
Severance and other personnel-related costs
AEA segment	$	1,252	$	-	$	1,252	$	3,877	$	5,129
MEA segment		607		-		607		3,300		3,907
ASA segment		1,800		-		1,800		5,329		7,129
Corporate and other		719		-		719		6,967		7,686
Asset impairment
ASA segment		4,168		-		4,168		-		4,168
Legal and other advisor fees
Corporate		48		-		4,051		-		4,051
	$	8,594	$	-	$	12,597	$	19,473	$	32,070
Total	$	10,389	$	6,125	$	64,229	$	23,475	$	87,704

In the first quarter of 2015, we reclassified certain MPI-related legal and other advisory fees of $4.0 million incurred in 2014 from Corporate restructuring costs to MPI costs.

The following table presents a roll forward of accrued liabilities associated with our restructuring activities:

	December 31, 2014		Accruals		Payments			March 31, 2015
	(In thousands)
Morgan City environmental reserve	$	3,675	$	-	$	(715	)	$	2,960
Morgan City yard-related expenses and other		373		833		(141	)		1,065
Total	$	4,048	$	833	$	(856	)	$	4,025

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LONG-TERM DEBT AND NOTES PAYABLE

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

LONG-TERM DEBT AND NOTES PAYABLE

NOTE 7—LONG-TERM DEBT AND NOTES PAYABLE

The carrying values of our long-term debt obligations are as follows:

	March 31, 2015		December 31,2014
	(In thousands)
Long-term debt consists of:
Senior Notes	$	490,625	$	490,354
Term Loan		291,040		291,424
North Ocean 105 Construction Financing		46,024		45,888
Amortizing Notes		30,354		33,258
Capital lease obligation		2,802		2,802
Other financing		494		743
		861,339		864,469
Less: Amounts due within one year		27,092		27,026
Total long-term debt	$	834,247	$	837,443

LC Facility and Cash-Collateralized Bilateral Letters of Credit

As of March 31, 2015 and December 31, 2014, the aggregate face amount of letters of credit issued under our $400.0 million first-lien, first-out three-year letter of credit facility (the “LC Facility”) was $201.4 million and $195.8 million, respectively. No financial letters of credit have been issued under the LC Facility.

As of March 31, 2015, we had an aggregate face amount of approximately $111.8 million of cash collateralized letters of credit issued on a bilateral basis outside the LC Facility outstanding, including financial letters of credit of $20.8 million. As of December 31, 2014, we had an aggregate face amount of approximately $88.8 million of cash collateralized letters of credit issued on a bilateral basis outside the LC Facility outstanding, including financial letters of credit of $19.7 million. We have included the supporting cash collateral in restricted cash and cash equivalents in the accompanying Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014.

Bank Guarantees

In 2012, McDermott Middle East, Inc. and MII executed a general reimbursement agreement in favor of a bank located in the UAE relating to issuances of bank guarantees in support of contracting activities in the Middle East and India. As of March 31, 2015 and December 31, 2014, bank guarantees issued under those arrangements totaled $73.7 million and $56.2 million, respectively.

Surety Bonds

In 2012 and 2011, we executed general agreements of indemnity in favor of surety underwriters based in Mexico relating to surety bonds issued in support of contracting activities of our subsidiaries J. Ray McDermott de México, S.A. de C.V. and McDermott, Inc. As of March 31, 2015 and December 31, 2014, bonds issued under these arrangements totaled $46.3 million and $52.5 million, respectively.

Debt Issuance Costs

Debt issuance costs of $25.5 million and $27.1 million as of March 31, 2015 and December 31, 2014, respectively, are included in the above carrying values of our long-term debt obligations.

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DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2015

Derivative Instruments And Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 9—DERIVATIVE FINANCIAL INSTRUMENTS

We enter into derivative financial instruments primarily to hedge certain firm purchase commitments and forecasted transactions denominated in foreign currencies. We record these contracts at fair value on our Consolidated Balance Sheets. Depending on the hedge designation at the inception of the contract, the related gains and losses on these contracts are either: (1) deferred as a component of AOCI until the hedged item is recognized in earnings; (2) offset against the change in fair value of the hedged firm commitment through earnings; or (3) recognized immediately in earnings. At inception and on an ongoing basis, we assess the hedging relationship to determine its effectiveness in offsetting changes in cash flows or fair value attributable to the hedged risk. We exclude from our assessment of effectiveness the portion of the fair value of the forward contracts attributable to the difference between spot exchange rates and forward exchange rates. The ineffective portion of a derivative’s change in fair value and any portion excluded from the assessment of effectiveness are immediately recognized in earnings. Gains and losses on derivative financial instruments that are immediately recognized in earnings are included as a component of gain (loss) on foreign currency-net in the accompanying Consolidated Statements of Operations.

As of March 31, 2015, the majority of our foreign currency forward contracts were designated as cash flow hedging instruments. In addition, we deferred approximately $99.7 million of net losses on these derivative financial instruments in AOCI, and we expect to reclassify approximately $78.4 million of deferred losses out of AOCI by March 31, 2016, as hedged items are recognized. The notional value of our outstanding derivative contracts totaled $631.4 million at March 31, 2015, with maturities extending through 2017. Of this amount, approximately $424.8 million is associated with various foreign currency expenditures we expect to incur on one of our ASA segment EPCI projects. These instruments consist of contracts to purchase or sell foreign-denominated currencies. As of March 31, 2015, the fair value of these contracts was in a net liability position totaling $58.5 million. The fair value of outstanding derivative instruments is determined using observable financial market inputs, such as quoted market prices, and is classified as Level 2 in nature.

The following tables summarize our derivative financial instruments:

Asset and Liability Derivatives

	March 31, 2015		December 31, 2014
	(in thousands)
Derivatives Designated as Hedges:
Location:
Accounts receivable-other	$	1,342	$	1,173
Other assets		-		16
Total asset derivatives	$	1,342	$	1,189
Accounts payable	$	49,965	$	32,431
Other liabilities		9,833		15,670
Total liability derivatives	$	59,798	$	48,101

The Effects of Derivative Instruments on our Financial Statements

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Derivatives Designated as Hedges:
Amount of gain/(loss) recognized in other comprehensive income (loss)	$	(36,690	)	$	12,358
Income (loss)  reclassified from AOCI into income: effective portion
Location: Cost of operations		19,854		$	202
Gain(loss) recognized in income (loss): ineffective portion and amount excluded from effectiveness testing
Location: Gain (loss) on foreign currency—net		1,817			(847	)

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Revenue Recognition - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015 Contract Project	Mar. 31, 2014 Project Contract
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Unapproved change orders	$ 240,300,000	$ 223,500,000
Revenues	550,463,000	603,811,000
Cost of operations	475,459,000	591,493,000
Number of projects accounted under deferred profit recognition policy	0	0
Number of contracts	0	0
MEA [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Revenues	153,800,000	260,300,000
MEA [Member] | Unconsolidated Joint Ventures [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Revenues	0	0
Cost of operations	0	0
AEA [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Revenues	143,313,000	181,686,000
Consolidated Entities [Member] | MEA [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Revenues	0	0
Cost of operations	0	0
Claims Revenue | MEA [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Revenues	6,500,000	6,500,000
Cost of operations	6,500,000	6,500,000
Backlog [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Unapproved change orders	73,000,000	38,100,000
Backlog [Member] | MEA [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Loss on contracts	166,500,000
Project completion year	2017
Backlog [Member] | AEA [Member] | Mexico [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Loss on contracts	130,400,000
Backlog Related to Active Projects [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Loss on contracts	406,700,000
Backlog Associated with Charter Project [Member] | AEA [Member] | Brazil [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Loss on contracts	20,800,000
Backlog Associated with Charter of Agile [Member] | AEA [Member] | Brazil [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Loss on contracts	$ 87,500,000
Project completion year	2017
Active Projects [Member]
Revenue Recognition Multiple Deliverable Arrangements [Line Items]
Number of projects accounted under deferred profit recognition policy	4

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Fair Value Measurements - Estimated Fair Values of Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Carrying Amount [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 600,636	$ 665,309
Restricted cash and cash equivalents	199,764	187,585
Investments	2,151	3,915
Debt	(861,339)	(864,469)
Forward contracts	(58,456)	(46,912)
Fair value [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and cash equivalents	600,636	665,309
Restricted cash and cash equivalents	199,764	187,585
Investments	2,151	3,915
Debt	(773,619)	(737,980)
Forward contracts	$ (58,456)	$ (46,912)

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2015

Commitments And Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 14—COMMITMENTS AND CONTINGENCIES

Investigations and Litigation

On or about August 23, 2004, a declaratory judgment action entitled Certain Underwriters at Lloyd’s London, et al. v. J. Ray McDermott, Inc. et al., was filed by certain underwriters at Lloyd’s, London and Threadneedle Insurance Company Limited (the “London Insurers”), in the 23rd Judicial District Court, Assumption Parish, Louisiana, against MII, J. Ray McDermott, Inc. (“JRMI”) and two insurer defendants, Travelers and INA, seeking a declaration that the London Insurers have no obligation to indemnify MII and JRMI for certain bodily injury claims, including claims for asbestos and welding rod fume personal injury which have been filed by claimants in various state courts. Additionally, Travelers filed a cross-claim requesting a declaration of non-coverage in approximately 20 underlying matters. This proceeding was stayed by the Court on January 3, 2005. We do not believe an adverse judgment or material losses in this matter are probable, and, accordingly, we have not accrued any amounts relating to this contingency. Although there is a possibility of an adverse judgment, the amount or potential range of loss is not estimable at this time. The insurer-plaintiffs in this matter commenced this proceeding in a purported attempt to obtain a determination of insurance coverage obligations for occupational exposure and/or environmental matters for which we have given notice that we could potentially seek coverage. Because estimating losses would require, for every matter, known and unknown, on a case by case basis, anticipating what impact on coverage a judgment would have and a determination of an otherwise expected insured value, damages cannot be reasonably estimated.

On December 16, 2005, a proceeding entitled Antoine, et al. vs. J. Ray McDermott, Inc., et al. (“Antoine Suit”), was filed in the 24th Judicial District Court, Jefferson Parish, Louisiana, by approximately 88 plaintiffs against approximately 215 defendants, including our subsidiaries formerly known as JRMI and Delta Hudson Engineering Corporation (“DHEC”), generally alleging injuries for exposure to asbestos, and unspecified chemicals, metals and noise while the plaintiffs were allegedly employed as Jones Act seamen. This case was dismissed by the Court on January 10, 2007, without prejudice to plaintiffs’ rights to refile their claims. On January 29, 2007, 21 plaintiffs from the dismissed Antoine Suit filed a matter entitled Boudreaux, et al. v. McDermott, Inc., et al. (the “Boudreaux Suit”), in the United States District Court for the Southern District of Texas, against JRMI and our subsidiary formerly known as McDermott Incorporated, and approximately 30 other employer defendants, alleging Jones Act seaman status and generally alleging exposure to welding fumes, solvents, dyes, industrial paints and noise. The Boudreaux Suit was transferred to the United States District Court for the Eastern District of Louisiana on May 2, 2007, which entered an order in September 2007 staying the matter until further order of the Court due to the bankruptcy filing of one of the co-defendants. On June 18, 2014, the Boudreaux Suit was voluntarily dismissed without prejudice. Additionally, on January 29, 2007, another 43 plaintiffs from the dismissed Antoine Suit filed a matter entitled Antoine, et al. v. McDermott, Inc., et al. (the “New Antoine Suit”), in the 164th Judicial District Court for Harris County, Texas, against JRMI, our subsidiary formerly known as McDermott Incorporated and approximately 65 other employer defendants and 42 maritime products defendants, alleging Jones Act seaman status and generally alleging personal injuries for exposure to asbestos and noise. On April 27, 2007, the District Court entered an order staying all activity and deadlines in the New Antoine Suit, other than service of process and answer/appearance dates, until further order of the Court. By order dated December 12, 2014, the Court dismissed all remaining plaintiffs’ claims in the New Antoine Suit, without prejudice to refiling.  

On August 15, 2013 and August 20, 2013, two separate alleged purchasers of our common stock filed purported class action complaints against us, Stephen M. Johnson and Perry L. Elders in the United States District Court for the Southern District of Texas. Both of the complaints sought to represent a class of purchasers of our stock between November 6, 2012 and August 5, 2013, and alleged, among other things, that the defendants violated federal securities laws by disseminating materially false and misleading information and failing to disclose material information relating to weaknesses in project bidding and execution, poor risk evaluation, poor project management and losses in each of our reporting segments. Each complaint sought relief, including unspecified compensatory damages and an award for attorneys’ fees and other costs. By order dated December 5, 2013, the District Court consolidated the two cases and appointed a lead plaintiff and lead plaintiff’s counsel. The lead plaintiff filed a consolidated amended complaint on February 6, 2014. The consolidated amended complaint asserts substantially the same claims as were made in the two original complaints, with some additional factual allegations, and purports to extend the class period to August 6, 2013. It also seeks relief, including unspecified compensatory damages and an award for attorneys’ fees and other costs. On April 7, 2014, MII and the other defendants filed a motion to dismiss the case. On May 22, 2014, the lead plaintiff filed an opposition to the motion to dismiss, and MII and the other defendants filed a reply in support of the defendants’ motion to dismiss on June 23, 2014. On March 13, 2015, the Court granted our motion to dismiss and dismissed the consolidated amended complaint, with prejudice.  The period for filing an appeal of the Court’s decision has since expired, without an appeal.

Additionally, due to the nature of our business, we and our affiliates are, from time to time, involved in litigation or subject to disputes or claims related to our business activities, including, among other things:

· performance—or warranty-related matters under our customer and supplier contracts and other business arrangements; and

· workers’ compensation claims, Jones Act claims, occupational hazard claims, including asbestos-exposure claims, premises liability claims and other claims.

Based upon our prior experience, we do not expect that any of these other litigation proceedings, disputes and claims will have a material adverse effect on our consolidated financial condition, results of operations or cash flows; however, because of the inherent uncertainty of litigation and, in some cases, the availability and amount of potentially applicable insurance, we can provide no assurance that the resolution of any particular claim or proceeding to which we are a party will not have a material effect on our consolidated financial condition, results of operations or cash flows for the fiscal period in which that resolution occurs.

Environmental Matters

We have been identified as a potentially responsible party at various cleanup sites under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”). CERCLA and other environmental laws can impose liability for the entire cost of cleanup on any of the potentially responsible parties, regardless of fault or the lawfulness of the original conduct. Generally, however, where there are multiple responsible parties, a final allocation of costs is made based on the amount and type of wastes disposed of by each party and the number of financially viable parties, although this may not be the case with respect to any particular site. We have not been determined to be a major contributor of wastes to any of these sites. On the basis of our relative contribution of waste to each site, we expect our share of the ultimate liability for the various sites will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows in any given year.

At March 31, 2015, we had total environmental reserves of $3.0 million, all of which was included in current liabilities and related to our plan to discontinue the utilization of our Morgan City fabrication facility. Inherent in the estimates of those reserves are our expectations regarding the levels of contamination and remediation costs, which may vary significantly as remediation activities progress. Accordingly, changes in estimates could result in material adjustments to our operating results, and the ultimate loss may differ materially from the amounts we have provided for in our consolidated financial statements.

Contracts Containing Liquidated Damages Provisions

Some of our contracts contain provisions that require us to pay liquidated damages if we are responsible for the failure to meet specified contractual milestone dates and the applicable customer asserts a claim under those provisions. Those contracts define the conditions under which our customers may make claims against us for liquidated damages. In many cases in which we have historically had potential exposure for liquidated damages, such damages ultimately were not asserted by our customers. As of March 31, 2015, it is possible that we may incur liabilities for liquidated damages aggregating approximately $73.5 million, of which approximately $19.6 million has been recorded in our financial statements, based on our actual or projected failure to meet certain specified contractual milestone dates. The dates for which these potential liquidated damages could arise extend to July 2015. We believe we will be successful in obtaining schedule extensions or other customer-agreed changes that should resolve the potential for unaccrued liquidated damages. Accordingly, we believe that no amounts for these unaccrued liquidated damages in excess of the amounts currently reflected in our financial statements are probable of being paid by us. However, we may not achieve relief on some or all of the issues involved and, as a result, could be subject to higher damage amounts.

Contractual Obligations

As of March 31, 2015, we had outstanding obligations related to our new vessel construction contract on the DLV 2000 of $235.1 million in the aggregate, with $210.5 million and $24.6 million due in the years ending December 31, 2015 and 2016, respectively.

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LONG-TERM DEBT AND NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Summary of Long-Term Debt Obligations

The carrying values of our long-term debt obligations are as follows:

	March 31, 2015		December 31,2014
	(In thousands)
Long-term debt consists of:
Senior Notes	$	490,625	$	490,354
Term Loan		291,040		291,424
North Ocean 105 Construction Financing		46,024		45,888
Amortizing Notes		30,354		33,258
Capital lease obligation		2,802		2,802
Other financing		494		743
		861,339		864,469
Less: Amounts due within one year		27,092		27,026
Total long-term debt	$	834,247	$	837,443

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Derivative Financial Instruments - Effects of Derivative Instruments on Financial Statements (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Amount of gain/(loss) recognized in other comprehensive income (loss)	$ (36,690)	$ 12,358
Cost of operations [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Income (loss) reclassified from AOCI into income: effective portion	19,854	202
Gain (loss) on foreign currency-net [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Gain(loss) recognized in income (loss): ineffective portion and amount excluded from effectiveness testing	$ 1,817	$ (847)

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Restructuring - Amounts Incurred and Amounts Expected to be Incurred in Future by Major Type of Cost and by Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	$ 10,389	$ 6,125
Incurred from inception to March 31, 2015	64,229
Estimate of remaining amounts to be incurred	23,475
Total	87,704
Americas Restructuring [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	1,795	3,631
Incurred from inception to March 31, 2015	45,031
Estimate of remaining amounts to be incurred	4,002
Total	49,033
Corporate Restructuring
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter		2,494
Incurred from inception to March 31, 2015	6,601
Total	6,601
MPI [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	8,594
Incurred from inception to March 31, 2015	12,597
Estimate of remaining amounts to be incurred	19,473
Total	32,070
Impairments and write offs [Member] | Americas Restructuring [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred from inception to March 31, 2015	12,923
Total	12,923
Severance and other personnel-related costs [Member] | Americas Restructuring [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	881	2,029
Incurred from inception to March 31, 2015	14,261
Total	14,261
Severance and other personnel-related costs [Member] | Corporate Restructuring
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter		908
Incurred from inception to March 31, 2015	2,599
Total	2,599
Morgan City yard-related expenses [Member] | Americas Restructuring [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	914	1,602
Incurred from inception to March 31, 2015	11,764
Estimate of remaining amounts to be incurred	4,002
Total	15,766
Other [Member] | Americas Restructuring [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred from inception to March 31, 2015	158
Total	158
Other [Member] | Corporate Restructuring
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred from inception to March 31, 2015	798
Total	798
Legal and other advisor fees [Member] | Corporate Restructuring
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter		1,586
Incurred from inception to March 31, 2015	3,204
Total	3,204
Legal and other advisor fees [Member] | MPI [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred from inception to March 31, 2015	4,000
Morgan City environmental reserve [Member] | Americas Restructuring [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred from inception to March 31, 2015	5,925
Total	5,925
AEA Segment [Member] | Severance and other personnel-related costs [Member] | MPI [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	1,252
Incurred from inception to March 31, 2015	1,252
Estimate of remaining amounts to be incurred	3,877
Total	5,129
MEA Segment [Member] | Severance and other personnel-related costs [Member] | MPI [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	607
Incurred from inception to March 31, 2015	607
Estimate of remaining amounts to be incurred	3,300
Total	3,907
ASA Segment [Member] | Severance and other personnel-related costs [Member] | MPI [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	1,800
Incurred from inception to March 31, 2015	1,800
Estimate of remaining amounts to be incurred	5,329
Total	7,129
ASA Segment [Member] | Asset impairment [Member] | MPI [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	4,168
Incurred from inception to March 31, 2015	4,168
Total	4,168
Corporate and Other [Member] | Severance and other personnel-related costs [Member] | MPI [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	719
Incurred from inception to March 31, 2015	719
Estimate of remaining amounts to be incurred	6,967
Total	7,686
Corporate [Member] | Legal and other advisor fees [Member] | MPI [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Incurred for the quarter	48
Incurred from inception to March 31, 2015	4,051
Total	$ 4,051

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CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Statement Of Financial Position [Abstract]
Common stock, par value	$ 1.00	$ 1.00
Common stock, shares authorized	400,000,000	400,000,000
Common stock, shares issued	246,199,889	245,209,850
Common stock, shares outstanding	246,199,889	245,209,850
Treasury stock, shares	7,700,580	7,400,027

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USE OF ESTIMATES

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

USE OF ESTIMATES

NOTE 3—USE OF ESTIMATES

We use estimates and assumptions to prepare our financial statements in conformity with U.S. GAAP. Those estimates and assumptions affect the amounts we report in our consolidated financial statements and accompanying notes. Our actual results could differ from those estimates, and variances could materially affect our financial condition and results of operations in future periods. Changes in project estimates generally exclude change orders and changes in scope, but may include, without limitation, changes in cost recovery estimates, unexpected changes in weather conditions, changes in productivity, unidentified required vessel repairs, customer and vendor delays and other costs. We generally expect to experience a reasonable amount of unanticipated events, and some of those events can result in significant cost increases above cost amounts we previously estimated. As of March 31, 2015, we have provided for our estimated costs to complete on all of our ongoing contracts. However, it is possible that current estimates could change due to unforeseen events, which could result in adjustments to overall contract costs. Variations from estimated contract performance could result in material adjustments to operating results. For all contracts, if a current estimate of total contract cost indicates a loss, the projected loss is recognized in full when determined.

The following is a discussion of our most significant changes in estimates that impacted operating income for the three months ended March 31, 2015 and 2014.

Three months ended March 31, 2015

Operating income for the three months ended March 31, 2015 was positively impacted by net favorable changes in cost estimates totaling approximately $21.6 million across all segments.

The AEA segment was positively impacted by net favorable changes in estimates aggregating approximately $6.6 million, primarily due to $4.4 million in reduced cost estimates attributable to a revised demobilization plan for one of our vessels, North Ocean 105 (the “NO 105”), which is working on a  subsea project in Brazil.

The MEA segment was positively impacted by net favorable changes in estimates aggregating approximately $9.1 million. Two EPCI projects in Saudi Arabia were positively impacted by $6.9 million of changes in revenue recovery and cost savings based on constructive discussions with a customer on design optimization and by $6.3  million for improvement in revenue recovery estimates and due to the favorable outcome of our discussions with a customer on compensation for vessel downtime due to weather and standby delays. These favorable changes were partially offset by the $4.5 million negative impact on a Saudi Arabia EPCI project, primarily due to change in cost estimates as a result of a change in marine execution plans.

The ASA segment was positively impacted by net favorable changes in estimates aggregating approximately $5.9 million, driven by multiple projects, none of the individual results of which were material.

Three months ended March 31, 2014

Operating income for the three months ended March 31, 2014 was impacted by net unfavorable changes in cost estimates relating to projects in our AEA and MEA segments, partially offset by net favorable changes in ASA segment.

The AEA segment was negatively impacted by changes in estimates of approximately $35.4 million on an EPCI project, PB Litoral, in Mexico, in the first quarter of 2014. The estimated cost at completion on this project increased primarily due to delays in final project delivery, resulting in a revised execution plan, increased fabrication labor costs and recognition of liquidated damages.

The MEA segment was negatively impacted by losses of approximately $31.9 million, mostly due to changes in estimates on three projects in Saudi Arabia during the three months ended March 31, 2014. On two EPCI projects in Saudi Arabia, we increased our estimated cost at completion by approximately $24.3 million, primarily as a result of vessel downtime due to weather and standby delays (which may be recoverable from the customer, but which were not recognizable at March 31, 2014), and reduced productivity on fabrication and engineering activities. Both projects remain in a profitable position at March 31, 2014. On another EPCI project in Saudi Arabia, we increased our estimated cost to complete by approximately $7.6 million, primarily due to increases in our cost estimates for the completion of onshore activities on the project.

The ASA segment experienced an improvement of approximately $20.6 million, mostly due to changes in estimates on a subsea project, Siakap Subsea Development, in Malaysia during the quarter ended March 31, 2014, primarily due to productivity improvements on our marine vessels as well as offshore support activities.

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Segment Reporting - Information about Operations in Different Segments (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Revenues	$ 550,463,000	$ 603,811,000
Operating income (loss)	6,565,000	(38,209,000)
Capital expenditures	23,972,000	37,893,000
Depreciation and amortization	25,327,000	24,602,000
Drydock amortization	5,272,000	6,946,000
AEA [Member]
Segment Reporting Information [Line Items]
Revenues	143,313,000	181,686,000
Operating income (loss)	15,071,000	(36,412,000)
Capital expenditures	2,913,000	7,409,000
Depreciation and amortization	12,823,000	10,827,000
Drydock amortization	3,083,000	4,562,000
MEA [Member]
Segment Reporting Information [Line Items]
Revenues	153,800,000	260,300,000
Operating income (loss)	5,177,000	(2,734,000)
Capital expenditures	10,114,000	22,575,000
Depreciation and amortization	5,738,000	8,169,000
Drydock amortization	613,000	429,000
ASA [Member]
Segment Reporting Information [Line Items]
Revenues	253,350,000	161,825,000
Operating income (loss)	(12,916,000)	3,431,000
Capital expenditures	10,824,000	4,068,000
Depreciation and amortization	3,916,000	3,908,000
Drydock amortization	1,576,000	1,955,000
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Operating income (loss)	(767,000)	(2,494,000)
Capital expenditures	121,000	3,841,000
Depreciation and amortization	$ 2,850,000	$ 1,698,000

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PENSION PLANS (Tables)

3 Months Ended

Mar. 31, 2015

Compensation And Retirement Disclosure [Abstract]

Net Periodic Benefit Gain

Net periodic benefit gain for our non-contributory qualified defined benefit pension plan and several of our non-qualified supplemental defined benefit pension plans (the “Domestic Plans”) and our J. Ray McDermott, S.A. Third Country National Employees Pension Plan (the “TCN Plan”) includes the following components:

	Domestic Plans						TCN Plan
	Three Months Ended March 31,
	2015			2014			2015			2014
	(In thousands)
Interest cost	$	5,382		$	6,778		$	407		$	475
Expected return on plan assets		(6,677	)		(6,875	)		(710	)		(740	)
Recognized net actuarial loss and other		-			(217	)		-			-
Net periodic benefit gain	$	(1,295	)	$	(314	)	$	(303	)	$	(265	)

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Contracts in Progress and Advance Billings on Contracts - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Contractors [Abstract]
Contracts in progress	$ 380,756	$ 357,617
Advance billing on contracts	$ 162,004	$ 199,865

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SEGMENT REPORTING

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 13—SEGMENT REPORTING

In the first quarter of 2015, we completed changes to our organizational structure which resulted in the realignment of our reporting segments. Our North Sea and Africa operations were previously aggregated into the Middle East reporting segment. However, the responsibility for business decisions relating to the North Sea and Africa was moved to our Americas reporting segment in the first quarter of 2015.  As a result, the North Sea and Africa businesses are now reflected in our Americas segment, now referred to as Americas, Europe and Africa (collectively, “AEA”). All comparable periods presented have been revised to reflect this change. Accordingly, we report financial results under three reporting segments consisting of AEA, the Middle East (“MEA”) and Asia (“ASA”). We also report certain corporate and other non-operating activities under the heading “Corporate and other,” which primarily reflects corporate personnel and activities, incentive compensation programs and other costs that are generally fully allocated to our reporting segments. However, Corporate restructuring costs associated with our corporate reorganization are not allocated to our reporting segments.

Reporting segments are measured based on operating income, which is defined as revenues reduced by total costs and expenses and equity in income (loss) of unconsolidated affiliates. Summarized financial information is shown in the following tables:

	Three Months Ended March 31,
	2015			2014
	(In thousands)
Revenues(1):
AEA	$	143,313		$	181,686
MEA		153,800			260,300
ASA		253,350			161,825
Total revenues	$	550,463		$	603,811
Operating income (loss)(2):
AEA	$	15,071		$	(36,412	)
MEA		5,177			(2,734	)
ASA		(12,916	)		3,431
Corporate		(767	)		(2,494	)
Total operating income (loss)	$	6,565		$	(38,209	)
Capital expenditures(3):
AEA	$	2,913		$	7,409
MEA		10,114			22,575
ASA		10,824			4,068
Corporate and Other		121			3,841
Total capital expenditures	$	23,972		$	37,893
Depreciation and amortization:
AEA	$	12,823		$	10,827
MEA		5,738			8,169
ASA		3,916			3,908
Corporate and Other		2,850			1,698
Total depreciation and amortization	$	25,327		$	24,602
Drydock amortization:
AEA	$	3,083		$	4,562
MEA		613			429
ASA		1,576			1,955
Total drydock amortization	$	5,272		$	6,946

⁽¹⁾ Intersegment transactions included in revenues were not significant for either of the periods presented.

⁽²⁾ The ASA segment’s operating loss includes an impairment charge of $4.2 million related to the DB101.

⁽³⁾ Total capital expenditures presents expenditures for which cash payments were made during the period. Capital expenditures for the three months ended March 31, 2015 include $3.3 million of cash payments for accrued capital expenditures outstanding as of December 31, 2014. Capital expenditures for the three months ended March 31, 2014 include $8.3 million of cash payments for accrued capital expenditures outstanding as of December 31, 2013.

	March 31, 2015		December 31, 2014
	(In thousands)
Segment assets:
AEA	$	922,868	$	976,179
MEA		932,028		990,671
ASA		758,473		601,394
Corporate and Other		846,662		848,635
	$	3,460,031	$	3,416,879