Announces 3 for 2 Stock Split of Common Shares McDermott
International, Inc. (NYSE:MDR) ("McDermott" or the "Company") today
reported net income of $54.1 million, or $0.72 per diluted share,
for the 2006 first quarter, compared to net income of $22.4
million, or $0.32 per diluted share, for the corresponding period
in 2005. The 2006 first quarter includes approximately one month of
The Babcock & Wilcox Company's ("B&W") financial results as
well as the reconsolidation of B&W into McDermott's balance
sheet. From February 2000 through February 22, 2006, the results of
B&W were deconsolidated from the Company's reported results.
Weighted average common shares outstanding on a fully diluted basis
were approximately 75.3 million and 70.8 million for the quarters
ended March 31, 2006 and March 31, 2005, respectively. McDermott's
revenues in the first quarter of 2006 were $644.9 million, compared
to $436.0 million in the corresponding period in 2005, primarily
reflecting the addition of B&W's revenues for the month of
March 2006. Operating income was $66.5 million in the 2006 first
quarter, compared to the 2005 first quarter operating income of
$39.6 million. "The first quarter has the Company off to a good
start in 2006," said Bruce W. Wilkinson, Chairman of the Board and
Chief Executive Officer of McDermott. "The power generation systems
segment reflects an exceptional month from B&W, while marine
construction services produced a solid quarter considering it
included a $16 million non-cash impairment as part of its results."
At March 31, 2006, McDermott's consolidated backlog was $5.9
billion, compared to $2.8 billion and $3.6 billion, at March 31,
2005 and December 31, 2005, respectively. Earlier today, the
Company's Board of Directors declared a three-for-two split of
McDermott's common stock. The stock split will be applicable to
shareholders of record at the close of business on May 17, 2006 and
will be effected in the form of a stock dividend to be issued on
May 31, 2006. Any fractional shares as a result of the split will
be paid in cash based upon the closing price of McDermott's stock
price on the record date. RESULTS OF OPERATIONS 2006 First Quarter
Compared to 2005 First Quarter Marine Construction Services Segment
("J. Ray") Revenues in the Marine Construction Services segment
were $295.4 million in the 2006 first quarter, compared to $283.4
million for the same period a year ago. The year-over-year increase
in revenues resulted primarily from increased project activity in
the Middle East, Caspian and Asia Pacific regions, partially offset
by declines in the Americas and worldwide marine. Segment income
for the 2006 first quarter was $21.0 million, compared to $28.0
million in the 2005 first quarter. Major items contributing to
operating income in the 2006 first quarter were projects in the
Middle East, Asia Pacific and Caspian regions. Also during the
first quarter 2006, J. Ray recorded a non-cash impairment of $16.4
million for currency translation losses associated with the planned
termination of its Mexican joint venture. At March 31, 2006, J.
Ray's backlog was $2.4 billion, compared to backlog of $1.1 billion
and $1.8 billion at March 31, 2005 and December 31, 2005,
respectively. Power Generation Systems Segment ("B&W") Revenues
in the Power Generation Systems segment for the first quarter 2006
were $189.0 million, representing B&W's revenues beginning
February 22, 2006. Throughout 2005, B&W was deconsolidated from
McDermott's reported financial results due to its asbestos-related
reorganization and therefore the Power Generation Systems segment
did not report any revenues. Segment income for the 2006 first
quarter was $27.6 million, compared to $0.1 million in the 2005
first quarter. The increase in segment income was due to
consolidating B&W for approximately one month in the first
quarter 2006. At March 31, 2006, B&W's backlog was $1.9 billion
and was not consolidated during 2005. Government Operations Segment
("BWXT") Revenues in the Government Operations segment were $161.0
million in the 2006 first quarter, compared to $152.6 million for
the same period a year ago. The increase was primarily due to
higher volumes in the manufacture of nuclear components for certain
U.S. Government programs and uranium recovery operations, as well
as increased revenues from engineering services for U.S. Department
of Energy sites. Segment income for the 2006 first quarter was
$26.4 million, compared to $24.0 million in the 2005 first quarter.
The increase was primarily due to higher volumes and margins in the
manufacture of nuclear components and uranium recovery operations,
and higher margins on commercial work for the research test reactor
area which were partially offset by a decline in equity in income
from investees. At March 31, 2006, BWXT's backlog was $1.6 billion,
compared to backlog of $1.7 billion and $1.8 billion at March 31,
2005 and December 31, 2005, respectively. Corporate Unallocated
corporate expenses were $8.4 million in the 2006 first quarter,
compared to $12.6 million in the 2005 first quarter. Other Income
and Expense The Company's other income, net, for the first quarter
of 2006 was $8.9 million, compared to other expense, net, of $3.6
million in the first quarter of 2005. The expense reduction was
primarily due to increased interest income and an adjustment to
interest resulting from a settlement with U.S. and Canadian tax
authorities. OTHER INFORMATION About the Company McDermott
International, Inc. is a leading worldwide energy services company.
The Company's subsidiaries provide engineering, construction,
installation, procurement, research, manufacturing, environmental
systems, project management and facility management services to a
variety of customers in the energy and power industries, including
the U.S. Department of Energy. In accordance with the Safe Harbor
provisions of the Private Securities Litigation Reform Act of 1995,
McDermott cautions that statements in this press release, which are
forward-looking and provide other than historical information,
involve risks and uncertainties that may impact the Company's
actual results of operations. These forward-looking statements
include statements about backlog, to the extent backlog may be
viewed as an indicator of future revenues. Although we believe that
the expectations reflected in those forward-looking statements are
reasonable, we can give no assurance that those expectations will
prove to have been correct. Those statements are made by using
various underlying assumptions and are subject to numerous
uncertainties and risks, including, but not limited to, risks that
there are adverse changes in the industries in which we operate. If
one or more of these risks materialize, or if underlying
assumptions prove incorrect, actual results may vary materially
from those expected. For a more complete discussion of these and
other risk factors, please see McDermott's annual and quarterly
filings with the Securities and Exchange Commission, including its
report on Form 10-K for the year ended December 31, 2005. -0- *T
Conference Call to Discuss 2006 First Quarter Earnings Release
--------------------------------------------------------------
Date: Thursday, May 4, 2006, at 10:00 a.m. EST (9:00 a.m. CST) Live
Webcast: Investor Relations section of Web site at
www.mcdermott.com Replay: Available for two weeks in the investor
relations section of www.mcdermott.com *T -0- *T McDERMOTT
INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 2006 2005 ---------- ----------
(Unaudited) (In thousands, except per share amounts) Revenues
$644,907 $435,959
----------------------------------------------------------------------
Costs and Expenses: Cost of operations 502,926 361,424 (Gain) Loss
on asset disposals and impairments - net 16,006 (2,296) Selling,
general and administrative expenses 66,994 47,089
----------------------------------------------------------------------
585,926 406,217
----------------------------------------------------------------------
Equity in Income of Investees 7,547 9,871
----------------------------------------------------------------------
Operating Income 66,528 39,613
----------------------------------------------------------------------
Other Income (Expense): Interest income 7,535 2,909 Interest
expense (10,303) (9,696) IRS interest expense adjustment 13,210 -
Other income (expense)-net (1,561) 3,226
----------------------------------------------------------------------
8,881 (3,561)
----------------------------------------------------------------------
Income from Continuing Operations before Provision for Income Taxes
75,409 36,052 Provision for Income Taxes 20,394 14,486
----------------------------------------------------------------------
Income from Continuing Operations 55,015 21,566 Income (Loss) from
Discontinued Operations (892) 870
----------------------------------------------------------------------
Net Income $54,123 $22,436
----------------------------------------------------------------------
Earnings (Loss) per Common Share: Basic: Income from Continuing
Operations $0.77 $0.33 Income (Loss) from Discontinued Operations
$(0.01) $0.01 Net Income $0.76 $0.34 Diluted: Income from
Continuing Operations $0.73 $0.31 Income (Loss) from Discontinued
Operations $(0.01) $0.01 Net Income $0.72 $0.32
----------------------------------------------------------------------
McDERMOTT INTERNATIONAL, INC. SELECTED SEGMENT INFORMATION Three
Months Ended March 31, 2006 2005 ------------ ------------
(Unaudited; In thousands) REVENUES Marine Construction Services
$295,439 $283,447 Government Operations 160,999 152,593 Power
Generation Systems 189,023 - Adjustments and Eliminations (554)
(81)
----------------------------------------------------------------------
TOTAL $644,907 $435,959
----------------------------------------------------------------------
SEGMENT INCOME (LOSS) Marine Construction Services 20,983 28,018
Government Operations 26,365 24,041 Power Generation Systems 27,552
123
----------------------------------------------------------------------
74,900 52,182 Corporate (8,372) (12,569)
----------------------------------------------------------------------
TOTAL $66,528 $39,613
----------------------------------------------------------------------
EQUITY IN INCOME FROM INVESTEES(1) Marine Construction Services
$(666) $(94) Government Operations 6,453 9,623 Power Generation
Systems 1,760 342
----------------------------------------------------------------------
TOTAL $7,547 $9,871
----------------------------------------------------------------------
DEPRECIATION & AMORTIZATION(1) Marine Construction Services
$6,392 $6,715 Government Operations 3,233 3,148 Power Generation
Systems 1,679 - Corporate 390 656
----------------------------------------------------------------------
TOTAL $11,694 $10,519
----------------------------------------------------------------------
CAPITAL EXPENDITURES Marine Construction Services $20,659 $12,330
Government Operations 4,130 5,353 Power Generation Systems 1,855 -
Corporate 2,393 21
----------------------------------------------------------------------
TOTAL $29,037 $17,704
----------------------------------------------------------------------
BACKLOG Marine Construction Services $2,383,833 $1,112,316
Government Operations 1,640,793 1,745,182 Power Generation Systems
1,909,592 -
----------------------------------------------------------------------
TOTAL $5,934,218 $2,857,498
----------------------------------------------------------------------
(1) Included in Segment Income (Loss) above. McDERMOTT
INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS
March 31, December 31, 2006 2005 ------------ ------------
(Unaudited) (In thousands) Current Assets: Cash and cash
equivalents $232,431 $19,263 Restricted cash and cash equivalents
141,300 152,086 Investments 455,222 384,202 Accounts receivable -
trade, net 466,733 232,236 Accounts receivable from The Babcock
& Wilcox Company - 3,778 Accounts and notes receivable -
unconsolidated affiliates 47,279 52,867 Accounts and notes
receivable - other 48,091 32,982 Contracts in progress 191,203
73,732 Inventories 65,365 319 Deferred income taxes 76,295 32,131
Assets held for sale 11,201 10,886 Other current assets 29,098
8,147
----------------------------------------------------------------------
Total Current Assets 1,764,218 1,002,629
----------------------------------------------------------------------
Restricted Cash and Cash Equivalents - 2,886
----------------------------------------------------------------------
Property, Plant and Equipment 1,426,267 1,097,427 Less accumulated
depreciation 981,357 779,694
----------------------------------------------------------------------
Net Property, Plant and Equipment 444,910 317,733
----------------------------------------------------------------------
Investments 126,919 116,304
----------------------------------------------------------------------
Goodwill 88,236 12,926
----------------------------------------------------------------------
Deferred Income Taxes 462,962 93,880
----------------------------------------------------------------------
Other Assets 273,215 121,928
----------------------------------------------------------------------
TOTAL $3,160,460 $1,668,286
----------------------------------------------------------------------
McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) March 31, December
31, 2006 2005 ------------ ------------ (Unaudited) (In thousands)
Current Liabilities: Notes payable and current maturities of
long-term debt $12,007 $4,250 Accounts payable 280,698 110,970
Accounts payable to The Babcock & Wilcox Company - 11,429
Accrued employee benefits 112,663 81,196 Accrued liabilities -
other 225,764 132,932 Accrued contract cost 68,093 56,566 Advance
billings on contracts 753,807 314,467 Liabilities held for sale
8,385 7,182 U.S. and foreign income taxes payable 25,764 49,696
----------------------------------------------------------------------
Total Current Liabilities 1,487,181 768,688
----------------------------------------------------------------------
Long-Term Debt 210,285 207,861
----------------------------------------------------------------------
Accumulated Postretirement Benefit Obligation 80,488 25,519
----------------------------------------------------------------------
Self-Insurance 81,145 60,989
----------------------------------------------------------------------
Pension Liability 512,630 311,319
----------------------------------------------------------------------
Accrued Cost of The Babcock & Wilcox Company Bankruptcy
Settlement 660,308 117,990
----------------------------------------------------------------------
Deferred Babcock & Wilcox Company Pension Plan Spin-Off -
150,136
----------------------------------------------------------------------
Other Liabilities 78,215 109,082
----------------------------------------------------------------------
Commitments and Contingencies Stockholders' Equity (Deficit):
Common stock, par value $1.00 per share, authorized 150,000,000
shares; issued 74,565,433 at March 31, 2006 and 73,857,922 at
December 31, 2005 74,565 73,858 Capital in excess of par value
1,208,983 1,183,123 Accumulated deficit (801,783) (862,931)
Treasury stock at cost, 2,076,549 shares at March 31, 2006 and
2,055,096 at December 31, 2005 (59,958) (56,496) Accumulated other
comprehensive loss (371,599) (420,852)
----------------------------------------------------------------------
Total Stockholders' Equity (Deficit) 50,208 (83,298)
----------------------------------------------------------------------
TOTAL $3,160,460 $1,668,286
----------------------------------------------------------------------
McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS Three Months Ended March 31, 2006 2005 ---- ----
(Unaudited) (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $54,123 $22,436
----------------------------------------------------------------------
Depreciation and amortization 11,694 10,519 Income of investees,
less dividends (1,399) (4,612) (Gain) loss on asset disposals and
impairments - net 16,006 (2,296) Provision for deferred taxes
70,022 257 Estimated loss on The Babcock & Wilcox Company
bankruptcy settlement - (468) Excess tax benefits from stock
options exercised (4,918) - Other 13,526 3,367 Changes in assets
and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable 141,523 18,029 Income taxes receivable (55,857)
- Net contracts in progress and advance billings 7,005 40,719
Accounts payable (46,901) 19,590 Income taxes 6,463 (1,455) Accrued
and other current liabilities 1,012 (9,689) Accrued employee
benefits (25,264) (26,478) Pension liability 6,787 4,148 Other, net
(52,985) (1,980)
----------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 140,837 72,087
----------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in restricted cash
and cash equivalents 13,672 9,640 Purchases of property, plant and
equipment (29,037) (17,704) Purchases of available-for-sale
securities (5,131,607) (69,960) Sales of available-for-sale
securities 68,088 - Maturities of available-for-sale securities
4,984,734 62,797 Proceeds from asset disposals 874 6,106 Cash
acquired from the reconsolidation of The Babcock & Wilcox
Company 164,200 - Other (1,732) -
----------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 69,192 (9,121)
----------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of long-term debt
592 - Payment of long-term debt (4,323) (1,500) Issuance of common
stock 9,347 1,935 Payment of debt issuance costs (16) 926 Excess
tax benefits from stock options exercised 4,918 - Other (7,519) 727
----------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,999 2,088
----------------------------------------------------------------------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH 140 (44)
----------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 213,168 65,010
----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19,263 259,319
----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $232,431 $324,329
----------------------------------------------------------------------
McDERMOTT INTERNATIONAL, INC. SUPPLEMENTAL UNAUDITED PRO FORMA
FINANCIAL INFORMATION Presentation of combined results of
operations ASSUMING B&W had been reconsolidated with McDermott
at the beginning of the respective periods presented Three Months
Ended March 31, 2006 2005 ---- ---- (Unaudited) (In thousands,
except per share amounts) Revenues $903,174 $780,529 Operating
Income $68,206 $62,761 Net Income $55,915 $35,156 Diluted Earnings
Per Share $0.74 $0.50 *T
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