UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT 1934
For the transition period from ______________to______________
Commission File No. 1-8430
McDERMOTT INTERNATIONAL, INC.
_____________________________________________________________________________
(Exact name of registrant as specified in its charter)
REPUBLIC OF PANAMA 72-0593134
_____________________________________________________________________________
(State of Incorporation) (I.R.S. Employer Identification No.)
1450 Poydras Street, New Orleans, Louisiana 70112-6050
Post Office Box 61961, New Orleans, Louisiana 70161-1961
_____________________________________________________________________________
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code (504) 587-5400
______________
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No
The number of shares of Common Stock, par value $1 per share, outstanding as
of January 20, 1994 was 53,311,335.
PAGE 2
M c D E R M O T T I N T E R N A T I O N A L , I N C.
I N D E X - F O R M 1 0 - Q
_______________________________
PAGE
____
PART I - FINANCIAL INFORMATION
______________________________
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheet - December 31, 1993
and March 31, 1993 4
Consolidated Statement of Income (Loss) and Retained
Earnings (Deficit) - Three Months Ended and Nine Months
Ended December 31, 1993 and December 31, 1992 6
Consolidated Statement of Cash Flows - Nine Months
Ended December 31, 1993 and December 31, 1992 8
Notes to Consolidated Financial Statements 10
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 18
Exhibit 11 - Calculation of Earnings (Loss) Per
Common and Common Equivalent Share 28
PART II - OTHER INFORMATION
___________________________
Item 6 - Exhibits and Reports on Form 8-K 29
SIGNATURES 30
PAGE 3
PART I
McDERMOTT INTERNATIONAL, INC.
FINANCIAL INFORMATION
_____________________
Item 1. Consolidated Financial Statements
PAGE 4
<TABLE>
<CAPTION>
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
ASSETS
12/31/93 3/31/93
(Unaudited)
(In thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 135,863 $ 139,522
Short-term investments, at amortized
cost, which approximates market 839 179,444
Accounts receivable - trade 390,492 467,381
Accounts receivable - other 129,223 141,182
Contracts in progress 258,955 250,569
Inventories 71,639 65,376
Deferred income taxes 87,874 101,969
Other current assets 15,724 10,545
_________________________________________________________________________
Total Current Assets 1,090,609 1,355,988
_________________________________________________________________________
Property, Plant and Equipment, at Cost: 2,085,392 2,057,146
Less accumulated depreciation 1,373,361 1,334,853
_________________________________________________________________________
Net Property, Plant and Equipment 712,031 722,293
_________________________________________________________________________
Investments:
Government obligations 385,125 362,042
Other investments 330,479 125,174
_________________________________________________________________________
Total Investments 715,604 487,216
_________________________________________________________________________
Excess of Cost Over Fair Value of Net Assets
of Purchased Businesses Less Accumulated
Amortization of $82,476,000 at December 31, 1993
and $77,828,000 at March 31, 1993 144,954 132,236
_________________________________________________________________________
Prepaid Pension Costs 238,563 231,778
_________________________________________________________________________
Other Assets 246,203 163,452
_________________________________________________________________________
TOTAL $3,147,964 $3,092,963
_________________________________________________________________________
_________________________________________________________________________
</TABLE>
See accompanying notes to consolidated financial statements.
PAGE 5
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
12/31/93 3/31/93
(Unaudited)
(In thousands)
<S> <C> <C>
Current Liabilities:
Notes payable and current
maturities of long-term debt $ 73,854 $ 210,188
Accounts payable 189,125 264,552
Accrued employee benefits 106,431 109,994
Accrued interest 51,027 55,471
Accrued liabilities - other 249,058 311,160
Advance billings on contracts 225,610 173,709
U.S. and foreign income taxes 107,000 114,850
_________________________________________________________________________
Total Current Liabilities 1,002,105 1,239,924
_________________________________________________________________________
Long-Term Debt 647,152 583,211
_________________________________________________________________________
Accumulated Postretirement Benefit Obligation 377,744 369,502
_________________________________________________________________________
Reserve for Environmental and Products Liabilities 139,822 11,867
_________________________________________________________________________
Other Liabilities 216,556 219,013
_________________________________________________________________________
Contingencies
_________________________________________________________________________
Minority Interest:
Subsidiary's Redeemable Preferred Stocks:
Series A $2.20 cumulative convertible,
$1.00 par value; at redemption value 88,089 88,089
Series B $2.60 cumulative, $1.00 par
value; at redemption value 112,807 116,393
Other minority interest 16,770 4,546
_________________________________________________________________________
Total Minority Interest 217,666 209,028
_________________________________________________________________________
Stockholders' Equity:
Preferred stock, Series C, par value $1.00 per
share, 2,875,000 shares authorized and outstanding
at December 31, 1993 (liquidation preference
$143,750,000) 2,875 -
Common stock, par value $1.00 per share,
authorized 150,000,000 shares; outstanding
53,208,661 at December 31, 1993 and
52,211,961 at March 31, 1993 53,209 52,212
Capital in excess of par value 728,837 568,329
Deficit (192,580) (126,264)
Minimum pension liability (74) (74)
Cumulative foreign exchange
translation adjustments (45,348) (33,785)
_________________________________________________________________________
Total Stockholders' Equity 546,919 460,418
_________________________________________________________________________
TOTAL $ 3,147,964 $ 3,092,963
_________________________________________________________________________
_________________________________________________________________________
</TABLE>
PAGE 6
<TABLE>
<CAPTION>
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF INCOME (LOSS) AND RETAINED EARNINGS (DEFICIT)
DECEMBER 31, 1993
THREE NINE
MONTHS ENDED MONTHS ENDED
12/31/93 12/31/92 12/31/93 12/31/92
(Unaudited)
(In thousands)
<S> <C> <C> <C> <C>
Revenues $ 798,886 $ 848,720 $ 2,279,763 $ 2,409,893
________________________________________________________________________________
Costs and Expenses:
Cost of Operations 697,226 719,502 1,966,780 2,094,121
Depreciation and amortization 20,230 36,510 76,860 93,996
Selling, general and
administrative expenses 63,058 60,325 190,142 179,426
________________________________________________________________________________
780,514 816,337 2,233,782 2,367,543
18,372 32,383 45,981 42,350
________________________________________________________________________________
Equity in Income of Investees 14,845 24,801 108,210 81,626
________________________________________________________________________________
Operating Income 33,217 57,184 154,191 123,976
________________________________________________________________________________
Other Income (Expense):
Interest income 9,995 10,746 29,073 30,468
Interest expense (16,803) (24,084) (53,493) (68,596)
Minority interest (4,956) (5,709) (13,381) (12,523)
Other-net 1,118 (5,131) (1,797) (11,087)
________________________________________________________________________________
(10,646) (24,178) (39,598) (61,738)
________________________________________________________________________________
Income before Provision for Income
Taxes, Extraordinary Item and
Cumulative Effect of Accounting
Changes 22,571 33,006 114,593 62,238
Provision for Income Taxes 7,194 13,580 36,419 21,519
________________________________________________________________________________
Income before Extraordinary Item
and Cumulative Effect
of Accounting Changes 15,377 19,426 78,174 40,719
Extraordinary Item - (610) - (610)
Cumulative Effect of Accounting
Changes - - (100,750) (245,624)
____________________________________________________________________________________
Net Income (Loss) 15,377 18,816 (22,576) (205,515)
____________________________________________________________________________________
Retained Earnings (Deficit) - Beginning
of Period (192,595) (135,888) (126,264) 114,204
Deduct Cash Dividends:
Common stock 13,295 12,940 39,722 38,701
Preferred stock, Series C 2,067 - 4,018 -
____________________________________________________________________________________
Deficit - End of Period $ (192,580) $ (130,012) $ (192,580) $ (130,012)
____________________________________________________________________________________
____________________________________________________________________________________
</TABLE>
PAGE 7
<TABLE>
<CAPTION>
CONTINUED
THREE NINE
MONTHS ENDED MONTHS ENDED
12/31/93 12/31/92 12/31/93 12/31/92
PRIMARY AND FULLY DILUTED:
(Unaudited)
<S> <C> <C> <C> <C>
Earnings (Loss) Per Common and Common
Equivalent Share:
Income before Extraordinary
Item and Cumulative Effect
of Accounting Changes $ 0.25 $ 0.37 $ 1.39 $ 0.79
Extraordinary item - (0.01) - (0.01)
Accounting changes - - (1.89) (4.74)
__________________________________________________________________________________
Net income (loss) $ 0.25 $ 0.36 $ (0.50) $ (3.96)
__________________________________________________________________________________
__________________________________________________________________________________
Weighted Average Number
of Shares 53,566,764 52,015,884 53,454,702 51,852,198
Cash Dividends Per
Common Share $ 0.25 $ 0.25 $ 0.75 $ 0.75
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
PAGE 8
<TABLE>
<CAPTION>
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
DECEMBER 31, 1993
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
NINE MONTHS ENDED
12/31/93 12/31/92
(Unaudited)
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (22,576) $ (205,515)
________________________________________________________________________
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 76,860 93,996
Equity in income of investees,
less dividends (44,834) (63,687)
Gain on sale and disposal of assets (3,549) (5,311)
Cumulative effect of accounting changes 100,750 245,624
Extraordinary item - 610
Provision for (Benefit from) deferred taxes (27,931) 9,677
Other 5,471 7,185
Changes in assets and liabilities, net of
effects from acquisition:
Accounts receivable 109,025 83,770
Accounts payable (75,661) (27,546)
Inventories (3,405) 12,349
Net contracts in progress and advance
billings 58,198 86,592
Income taxes 31,523 (51,243)
Accrued interest (4,393) (60,576)
Accrued liabilities (75,756) (9,334)
Other, net (23,674) 25,249
________________________________________________________________________
NET CASH PROVIDED BY OPERATING ACTIVITIES 100,048 141,840
________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Delta Catalytic Corporation (28,249) -
Purchases of property, plant and equipment (52,370) (61,559)
Purchases of short-term investments, government
obligations and other investments (3,309,168) (1,275,625)
Proceeds from sale and disposal of assets 6,553 19,775
Sales of short-term investments, government
obligations and other investments 3,262,454 1,268,077
Other (643) 773
________________________________________________________________________
NET CASH USED IN INVESTING ACTIVITIES (121,423) (48,559)
________________________________________________________________________
</TABLE>
PAGE 9
CONTINUED
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
NINE MONTHS ENDED
12/31/93 12/31/92
(Unaudited)
(In thousands)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt $ (215,838) $ (32,694)
Issuance of long-term debt 92,475 75,000
Increase (decrease) in short-term borrowing 27,910 (10,556)
Issuance of common stock 16,227 3,909
Issuance of preferred stock 140,322 -
Dividends paid (41,412) (38,587)
Other (952) (1,620)
__________________________________________________________________________
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 18,732 (4,548)
__________________________________________________________________________
EFFECTS OF EXCHANGE RATE CHANGES ON CASH (1,016) (8,490)
__________________________________________________________________________
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,659) 80,243
__________________________________________________________________________
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 139,522 71,585
__________________________________________________________________________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 135,863 $ 151,828
__________________________________________________________________________
__________________________________________________________________________
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 57,886 $ 129,172
Income taxes $ 13,660 $ 57,659
__________________________________________________________________________
__________________________________________________________________________
</TABLE>
See accompanying notes to consolidated financial statements.
PAGE 10
McDERMOTT INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1993 AND 1992
AND AT DECEMBER 31 AND MARCH 31, 1993
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements are presented in U.S. Dollars in
accordance with accounting principles generally accepted in the United States.
The consolidated financial statements include the accounts of McDermott
International, Inc. and all subsidiaries and controlled joint ventures.
Investments in joint venture and other entities in which McDermott
International, Inc. has a 20% to 50% interest are accounted for on the equity
method. Differences between the cost of equity method investments and the
amount of underlying equity in net assets of the investees are amortized
systematically to income. All significant intercompany transactions and
accounts have been eliminated. Certain amounts previously reported have been
reclassified to conform with the presentation at December 31, 1993. Results
for the three and nine months ended December 31, 1992 have been restated to
reflect the adoption of Statement of Financial Accounting Standards ("SFAS")
No. 106 (See Note 6).
Unless the context otherwise requires, hereinafter "International" will be
used to mean McDermott International, Inc., a Panamanian corporation; the
"Delaware Company" will be used to mean McDermott Incorporated, a Delaware
corporation which is a subsidiary of International, and its consolidated
subsidiaries (including Babcock & Wilcox Investment Company and its principal
subsidiary, The Babcock & Wilcox Company); and "McDermott International" will
be used to mean the consolidated enterprise.
In the opinion of management, all adjustments necessary for a fair statement
of the results have been recorded. Such adjustments are of a normal,
recurring nature except for a favorable warranty reserve adjustment
($6,710,000, net of tax of $4,290,000 or $0.13 per share), included in the
nine months ended December 31, 1993; favorable worker's compensation cost
adjustments ($8,582,000 and $10,539,000, net of tax of $3,419,000 and
$6,803,000, or $0.16 and $0.20 per share, respectively), in the three and nine
PAGE 11
months ended December 31, 1993 and 1992, respectively; the cumulative effect
of the accounting changes included in the nine months ended December 31, 1993
and 1992 (See Notes 4 and 6); a foreign marine asset casualty gain ($6,782,000
or $0.13 per share), in the nine months ended December 31, 1992; and the
accelerated depreciation and write-off of certain fabrication facilities and
marine construction equipment ($8,076,000, net of tax of $3,632,000, or $0.16
per share), and the extraordinary item (See Note 7) included in the three and
nine months ended December 31, 1992. The results for interim periods are not
necessarily indicative of results to be expected for the year.
NOTE 2 - INVENTORIES
Consolidated inventories at December 31, 1993 and March 31, 1993 are
summarized below:
<TABLE>
<CAPTION>
December 31, March 31,
1993 1993
(In thousands)
<S> <C> <C>
Raw Materials and Supplies $ 44,731 $ 36,320
Work in Progress 20,638 17,678
Finished Goods 6,270 11,378
___________________________________________________________________
$ 71,639 $ 65,376
___________________________________________________________________
___________________________________________________________________
</TABLE>
NOTE 3 - SEGMENT REPORTING INFORMATION
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
12/31/93 12/31/92 12/31/93 12/31/92
(In thousands)
<S> <C> <C> <C> <C>
REVENUES:
Power Generation Systems
and Equipment $ 423,081 $ 397,793 $1,159,359 $1,105,464
Marine Construction Services 378,548 450,980 1,125,056 1,304,721
Intersegment Transfer Eliminations (2,743) (53) (4,652) (292)
_____________________________________________________________________________________
Total Revenues $ 798,886 $ 848,720 $2,279,763 $2,409,893
_____________________________________________________________________________________
_____________________________________________________________________________________
</TABLE>
PAGE 12
<TABLE>
<CAPTION>
NOTE 3 - SEGMENT REPORTING INFORMATION (CONTINUED)
THREE NINE
MONTHS ENDED MONTHS ENDED
12/31/93 12/31/92 12/31/93 12/31/92
(In thousands)
<S> <C> <C> <C> <C>
OPERATING INCOME:
Segment Operating Income:
Power Generation Systems
and Equipment $ 9,715 $ 8,866 $ 28,850 $ 21,145
Marine Construction Services 20,881 36,411 57,823 59,125
_____________________________________________________________________________________
Total Segment Operating Income 30,596 45,277 86,673 80,270
_____________________________________________________________________________________
Equity in Income of Investees:
Power Generation Systems
and Equipment 3,041 1,825 10,190 5,965
Marine Construction Services 11,804 22,976 98,020 75,661
_____________________________________________________________________________________
Total Equity in Income
of Investees 14,845 24,801 108,210 81,626
_____________________________________________________________________________________
General Corporate Expenses (12,224) (12,894) (40,692) (37,920)
_____________________________________________________________________________________
Total Operating Income $ 33,217 $ 57,184 $ 154,191 $ 123,976
_____________________________________________________________________________________
_____________________________________________________________________________________
</TABLE>
NOTE 4 - CHANGE OF ACCOUNTING PRINCIPLE
As a result of the issuance of Emerging Issues Task Force ("EITF") Issue No.
93-5, a company is no longer permitted to offset, for recognition purposes,
reasonably possible recoveries against probable losses which had been
McDermott International's practice with respect to estimated future costs for
non-employee products liability asbestos claims. During the third quarter of
fiscal 1994, and effective April 1, 1993, McDermott International adopted this
provision of EITF No. 93-5 as a change in accounting principle and provided
for estimated future costs to the extent that recovery from its insurers is
not determined to be probable. As previously reported, McDermott
International has an agreement with a majority of its principal insurers
concerning the method of allocation of these claims to the years of coverage,
which operates to reduce McDermott International's liability for such claims.
However, claims allocated to policy year 1979 are excluded from this
agreement, and McDermott International's ability to recover these claims, and
claims against certain insolvent insurers, is only reasonably possible, thus a
provision for these estimated future costs has been recognized. McDermott
International's estimated future costs relating to policy year 1979 and
certain insolvent insurers are derived from its loss history and constitute
management's best estimate of such future costs. Inherent in the estimate of
PAGE 13
such future costs are assumptions which may vary significantly as claims are
settled. Accordingly, the ultimate loss may differ materially from the amount
provided in consolidated financial statements.
The cumulative effect of the change on years prior to April 1, 1993 was a charge
of $100,750,000 (net of income taxes of $54,250,000), or $1.89 a share for the
nine months ended December 31, 1993. Other than the cumulative effect of the
accounting change, the adoption of this provision of EITF Issue No. 93-5
resulted in an increase in Income before Extraordinary Item and Cumulative
Effect of Accounting Changes and a decrease in Net Loss of $3,047,000, or $0.06
a share, and $10,560,000, or $0.20 a share, for the three and nine months ended
December 31, 1993, respectively, as costs that would have been recognized under
McDermott International's prior practice are included in the cumulative effect
of the accounting change. Pro forma amounts reflecting the effect of
retroactive application of the accounting change to prior periods are not
presented because the amounts are not determinable.
The effect of the change on the first and second quarters of fiscal 1994 is as
follows:
<TABLE>
<CAPTION>
THREE THREE
MONTHS ENDED MONTHS ENDED
6/30/93 9/30/93
<S> <C> <C>
Net income as previously reported $ 25,676 $ 29,608
Effect of change in method (467) 7,980
_______________________________________________________________________
Income before cumulative effect of
a change in accounting principle 25,209 37,588
Cumulative effect on prior years (to
March 31, 1993) of changing method (100,750) -
_______________________________________________________________________
Net income (loss) as restated $ (75,541) $ 37,588
_______________________________________________________________________
_______________________________________________________________________
PRIMARY AND FULLY DILUTED:
Earnings (Loss) Per Common and Common
Equivalent Share as Restated:
Income before cumulative effect of
a change in accounting principle $ 0.47 $ 0.66
Net income (loss) $ (1.42) $ 0.66
</TABLE>
PAGE 14
NOTE 5 - INCOME TAXES
In the second quarter of fiscal 1994, McDermott International revised its
estimated annual effective tax rate to reflect a change in the U. S. federal
statutory rate from 34% to 35% and applied the newly enacted tax rate to
deferred tax balances as of April 1, 1993. This change had no material effect
on the results for the three and nine months ended December 31, 1993.
Effective April 1, 1992, McDermott International adopted SFAS No. 109,
"Accounting for Income Taxes". The cumulative effect of the accounting
change on prior years at April 1, 1992 of $3,727,000, (or $0.07 a share) is
included in the accompanying consolidated Statement of Income (Loss) and
Retained Earnings (Deficit) for the nine months ended December 31, 1992.
Other than the cumulative effect, the accounting change had no material effect
on the results for the three and nine months ended December 31, 1992.
NOTE 6 - POSTRETIREMENT HEALTH CARE BENEFITS
During the fourth quarter of fiscal 1993, and effective April 1, 1992,
McDermott International adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions". In accordance with the
Statement, McDermott International elected immediate recognition of its
transition obligation and recorded $249,351,000 (net of income tax benefit of
$136,228,000), or $4.81 per share for the nine months ended December 31, 1992,
as the cumulative effect of an accounting change. In the three and nine
months ended December 31, 1992, other than the cumulative effect of the
accounting change, the adoption of SFAS No. 106 resulted in a decrease in
Income before Extraordinary Item and Cumulative Effect of Accounting Changes
and an increase in Net Loss of $1,350,000, or $0.03 per share, and $2,804,000,
or $0.05 per share, respectively.
NOTE 7 - EXTRAORDINARY ITEM
During the three months ended December 31, 1992, the Delaware Company
purchased $10,600,000 par value of its 12.25% Senior Subordinated Notes due
June 1, 1998 for $11,366,000 in cash. This transaction resulted in an
extraordinary loss of $610,000 (net of income tax benefit of $314,000), or
$0.01 per share.
PAGE 15
NOTE 8 - ACQUISITION OF DELTA CATALYTIC CORPORATION
During June 1993, the Delaware Company acquired a controlling interest in
Delta Catalytic Corporation ("DCC") of Calgary, Alberta, Canada for
$28,249,000. This was the first step in a two-step transaction which will be
completed during fiscal 1997, when the Delaware Company intends to acquire the
balance of DCC. The purchase price for the second step in fiscal 1997 will be
determined by DCC's future earnings. DCC provides engineering, procurement,
construction, industrial maintenance, tool rental and specialty services to
industries worldwide, including oil and gas; power generation; industrial,
civil and marine construction; petrochemical; and pulp and paper. The
purchase has been reflected in the consolidated balance sheet of McDermott
International. Results of DCC's operations from the date of acquisition to
November 30, 1993 have been included in McDermott International's consolidated
results and are included in the Marine Construction Services' segment.
Revenues, segment operating income and net loss were $78,455,000, $3,346,000
and $696,000, respectively, for the three months ended December 31, 1993, and
$152,468,000, $5,743,000 and $899,000, respectively, for the nine months ended
December 31, 1993. The following pro forma income statement information for
McDermott International is presented as though the purchase of DCC had
occurred on April 1, 1992:
<TABLE>
<CAPTION>
NINE
MONTHS ENDED
12/31/93 12/31/92
(Unaudited)
(In thousands)
<S> <C> <C>
Revenues $ 2,383,254 $ 2,822,955
Income before Extraordinary Item and
Cumulative Effect of Accounting Changes $ 78,649 $ 42,038
Net Loss $ (22,101) $ (204,196)
Earnings (Loss) Per Common and Common
Equivalent Share:
Income before extraordinary item and
cumulative effect of accounting changes $ 1.40 $ 0.81
Net Loss $ (0.49) $ (3.94)
</TABLE>
PAGE 16
The acquisition was accounted for under the purchase method and goodwill is
being amortized over a period of 10 years. The purchase price has been
allocated to the underlying assets and liabilities based on estimated fair
values, which approximate book value, at the date of acquisition. Such
estimates may be revised at a later date. A summary of the purchase price
allocation is as follows:
<TABLE>
<CAPTION>
(Unaudited)
(In thousands)
<S> <C>
Net Working Capital $ 10,139
Excess of Cost Over Fair Value of Net Assets
of Purchased Business 17,366
Net Property, Plant and Equipment 14,870
Other Non-Current Liabilities, Net (14,126)
____________________________________________________________________
Total $ 28,249
____________________________________________________________________
____________________________________________________________________
</TABLE>
NOTE 9 - SUMMARIZED INCOME STATEMENT INFORMATION OF AFFILIATES
The combined financial results of McDermott International's equity investments
in two Marine Construction Services' segment joint ventures are summarized
below. Each of these ventures is significant as defined by applicable SEC
regulations. The following summarizes the combined income statements:
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
12/31/93 12/31/92 12/31/93 12/31/92
(In thousands)
<S> <C> <C> <C> <C>
Revenues $ 130,026 $ 240,041 $ 713,668 $ 873,431
__________________________________________________________________________
Operating Income $ 22,946 $ 31,593 $ 186,797 $ 133,467
__________________________________________________________________________
Income before Income Taxes $ 25,264 $ 46,085 $ 197,915 $ 151,768
Provision for Income Taxes 1,324 595 4,118 1,470
__________________________________________________________________________
Net Income $ 23,940 $ 45,490 $ 193,797 $ 150,298
__________________________________________________________________________
__________________________________________________________________________
Equity in Net Income $ 11,925 $ 22,622 $ 96,833 $ 74,984
__________________________________________________________________________
__________________________________________________________________________
</TABLE>
PAGE 17
NOTE 10 - PREFERRED STOCK ISSUANCE
In July 1993, International issued 2,875,000 shares of Series C Cumulative
Convertible Preferred Stock. Net cash proceeds to International were
$140,322,000. The Series C shares have a par value of $1.00 per share, and a
liquidation preference of $50.00 per share, plus an amount equal to accrued
and unpaid dividends. Dividends on Series C shares are cumulative at the
annual rate of 5.75% per share on the liquidation preference, equal to $2.875
per annum. International may not redeem Series C shares prior to July 1,
1997. On or after July 1, 1997, the Series C shares are redeemable, in whole
or in part, at the option of International, either in cash, shares of
International common stock, or a combination thereof. Holders of Series C
shares may convert them, in whole or in part, at any time, into International
common stock shares at a conversion price of $35.25 per share of common stock
(equivalent to a conversion rate of 1.4184 shares of common stock for each
share of Series C Preferred Stock), subject to certain adjustments.
PAGE 18
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 1993 VS. THREE MONTHS
ENDED DECEMBER 31, 1992
Power Generation Systems and Equipment's revenues increased $25,288,000 to
$423,081,000. This was primarily due to higher revenues from fabrication and
erection of fossil fuel steam and environmental control systems, replacement
nuclear steam generators, nuclear fuel assemblies and reactor components for
the U. S. Government, and the repair and alteration of existing fossil fuel
steam systems. These increases were partially offset by lower revenues from
extended scope of supply and fabrication of industrial boilers as well as
defense and space-related products other than nuclear fuel assemblies and
reactor components.
Power Generation Systems and Equipment's segment operating income increased
$849,000 to $9,715,000. The increase was primarily due to higher volume and
margins on fabrication and erection of fossil fuel steam and environmental
control systems, replacement nuclear steam generators, nuclear fuel
assemblies and reactor components for the U. S. Government, and a favorable
workers' compensation cost adjustment. These increases were partially offset
by lower volume and margins from extended scope of supply and fabrication of
industrial boilers as well as defense and space-related products other than
nuclear fuel assemblies and reactor components. There were also lower margins
on repair and alterations of existing fossil fuel steam systems, and higher
royalty income recorded in the prior year.
Power Generation Systems and Equipment's equity in income of investees
increased $1,216,000 to $3,041,000 primarily due to improved results in a
foreign joint venture.
Backlog for this segment at December 31, 1993 was $2,547,666,000 compared to
$2,792,110,000 at December 31, 1992. At December 31, 1993, this segment's
backlog with the U.S. Government was $850,600,000 (of which $27,723,000 had
not been funded). These amounts reflect McDermott International's estimate of
the impact of Congressional budget reductions on the Advanced Solid Rocket
Motor and Super Conducting Super Collider projects. Demand for supply of new
PAGE 19
base load electric power plants is not expected to increase before the mid-
1990's in the U.S. The current economic environment and uncertainties created
by passage of the Clean Air Act have caused utilities to defer repair and
refurbishments on existing plants. However, the Clean Air Act has created
significant demand for pollution control equipment and related plant
enhancements. In order to comply with Phase I of the Clean Air Act, many
utilities are purchasing wet scrubbers to reduce emissions of sulphur oxides
and replacement burners to reduce emissions of nitrous oxides. Conversely,
the current economic environment has negatively affected demand for other
industrial related product lines and these markets are expected to remain very
competitive. Also, additional U. S. Government budget reductions have
negatively affected this segment's other government operations.
Marine Construction Services' revenues decreased $72,432,000 to $378,548,000
primarily due to lower volume in worldwide fabrication operations, foreign
marine operations, and procured materials. These were partially offset by the
acquisition of Delta Catalytic Corporation ("DCC"), (See Note 8 to the
consolidated financial statements).
Marine Construction Services' segment operating income decreased $15,530,000
to $20,881,000 primarily due to lower volume in worldwide fabrication
operations, foreign marine operations, and procured materials, as well as
lower margins in domestic marine operations and a foreign fabrication
operation. These were partially offset by improved margins on other foreign
fabrication and marine operations, the accelerated depreciation and write-off
of certain fabrication facilities and marine construction equipment in the
prior year, reduced operating costs, and the acquisition of DCC.
Marine Construction Services' equity in income of investees decreased
$11,172,000 to $11,804,000, due to lower operating results in the segment's
foreign joint ventures this year and foreign currency transaction gains in the
prior year.
Backlog for this segment at December 31, 1993 was $1,375,245,000 (including
$156,725,000 from DCC). Excluding DCC, this amount has increased from the
level of backlog at December 31, 1992, which was $985,270,000. Not included in
backlog at December 31, 1993 and 1992 was backlog relating to contracts to be
performed by unconsolidated joint ventures of approximately $800,000,000 and
$1,000,000,000, respectively. This segment's markets in the Gulf of Mexico
PAGE 20
and North Sea are expected to remain weak during the remainder of fiscal 1994.
If oil prices remain under pressure for the next six to twelve months, this
could have a further negative effect on this segment's fiscal 1995 operating
income and equity in income of investees. In all areas, the overcapacity of
marine equipment will continue to result in a competitive environment.
Interest income decreased $751,000 to $9,995,000 primarily due to lower
interest rates on, and, investments in, government obligations, partially
offset by higher investments in, and rates on, other investments, including
corporate bonds.
Interest expense decreased $7,281,000 to $16,803,000 primarily due to changes
in debt obligations and interest rates prevailing thereon. The decrease
reflects the redemption of high coupon debt during April and June 1993.
Other-net income increased $6,249,000 from expense of $5,131,000 to income of
$1,118,000. This increase was primarily due to a loss on the sale of an
office building in the prior period.
Minority interest expense decreased $753,000 to $4,956,000 primarily due to
minority shareholder participation in higher operating results of the
McDermott-ETPM East joint venture last year, partially offset by participation
in the results of DCC since its acquisition in June 1993.
The provision for income taxes decreased $6,386,000 to $7,194,000, while
income from operations before provision for income taxes decreased
$10,435,000 to $22,571,000. The decrease in the provision for income taxes is
due primarily to a decrease in income from operations.
PAGE 21
RESULTS OF OPERATIONS - NINE MONTHS ENDED DECEMBER 31, 1993 VS. NINE MONTHS
ENDED DECEMBER 31, 1992
Power Generation Systems and Equipment's revenues increased $53,895,000 to
$1,159,359,000. This was primarily due to higher revenues from fabrication
and erection of fossil fuel steam and environmental control systems,
replacement nuclear steam generators, nuclear fuel assemblies and reactor
components for the U. S. Government, and repair and alteration of existing
fossil fuel steam systems. These increases were partially offset by lower
revenues from extended scope of supply and fabrication of industrial boilers,
defense and space-related products other than nuclear fuel assemblies and
reactor components, and air cooled heat exchangers.
Power Generation Systems and Equipment's segment operating income increased
$7,705,000 to $28,850,000. The increase was primarily due to higher volume
and margins on fabrication and erection of fossil fuel steam and environmental
control systems, replacement nuclear steam generators, and higher volume on
nuclear fuel assemblies and reactor components for the U.S. Government. There
were also favorable warranty reserve and workers' compensation cost
adjustments. These increases were partially offset by lower volume and
margins on extended scope of supply and fabrication of industrial boilers as
well as defense and space-related products other than nuclear fuel assemblies
and reactor components. There were also lower margins on plant enhancements
and repair and alteration of existing fossil fuel steam systems, as well as
higher royalty income recorded in the prior year.
Power Generation Systems and Equipment's equity in income of investees
increased $4,225,000 to $10,190,000 primarily due to improved results in a
foreign joint venture and in three domestic joint ventures which own and
operate a cogeneration plant and two small power plants.
Marine Construction Services' revenues decreased $179,665,000 to
$1,125,056,000 primarily due to lower volume in foreign fabrication
operations, procured materials, and worldwide engineering operations. These
were partially offset by the acquisition of DCC and improved price levels in
worldwide fabrication operations.
PAGE 22
Marine Construction Services' segment operating income decreased $1,302,000 to
$57,823,000 primarily due to lower volume in foreign fabrication operations,
procured materials and worldwide engineering operations. This was partially
offset by the acquisition of DCC, improved price levels in worldwide
fabrication operations, the accelerated depreciation and write-off of certain
fabrication facilities and marine construction equipment in the prior year,
and reduced operating costs.
Marine Construction Services' equity in income of investees increased
$22,359,000 to $98,020,000 primarily due to higher activity and margins in one
of the segment's foreign joint ventures.
General corporate expenses increased $2,772,000 to $40,692,000 primarily due
to non-recurring charges related to certain cost reduction initiatives.
Interest income decreased $1,395,000 to $29,073,000 primarily due to lower
interest rates on, and, investments in, government obligations, partially
offset by higher investments in, and rates on, other investments, including
corporate bonds.
Interest expense decreased $15,103,000 to $53,493,000 primarily due to changes
in debt obligations and interest rates prevailing thereon. The decrease
reflects the redemption of high coupon debt during April and June 1993.
Minority interest expense increased $858,000 to $13,381,000 primarily due to
minority shareholder participation in the results of DCC since its acquisition
in June 1993, which was partially offset by participation in lower operating
results of the McDermott-ETPM East joint venture this year.
Other-net expense decreased $9,290,000 to $1,797,000. This was primarily due
to provisions for an uncollectible non-trade receivable and a settlement of a
lawsuit, and a loss on the sale of a building, all in the prior period. The
decrease was offset partially by a foreign marine asset casualty gain in the
prior period.
PAGE 23
The provision for income taxes increased $14,900,000 to $36,419,000, while
income from operations before provision for income taxes increased $52,355,000
to $114,593,000. The increase in the provision for income taxes is due
primarily to an increase in income from operations.
Net loss decreased $182,939,000 to $22,576,000 reflecting the cumulative
effect of the change in accounting for non-employee products liability
asbestos claims of $100,750,000 in the current period and the cumulative
effect of the adoption of SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," of $249,351,000 in the prior
period, in addition to the other items described above.
Liquidity and Capital Resources
During the nine months ended December 31, 1993, McDermott International's cash
and cash equivalents decreased $3,659,000 to $135,863,000 and total debt
decreased $72,393,000 to $721,006,000. During this period, McDermott
International provided cash of $100,048,000 from operating activities;
$92,475,000 from the issuance of long-term debt; $16,227,000 from the issuance
of common stock (primarily from the exercise of employee stock options); and
$140,322,000 from the issuance of Series C convertible preferred stock; and
used cash of $39,461,000 for dividends on International's common stock;
$1,951,000 for dividends on International's preferred stock; $28,249,000 for
the acquisition of DCC (See Note 8 to the consolidated financial statements);
and $215,838,000 for repayment of long-term debt. Lower accounts receivable
are primarily due to lower Marine Construction Services' fabrication
activities, the timing of foreign offshore contract billings and collections,
and the acceleration of collections of retainage billings on the Naval
Reactors program, partially offset by collection delays on a certain foreign
Power Generation Systems and Equipment segment contract and an outstanding
billing relating to termination of the Advance Solid Rocket Motor contract
(both billings are also reflected in lower net contracts in progress and
advance billings). The decrease in accounts payable is primarily due to lower
volume in the Marine Construction Services' segment while lower accrued
liabilities are primarily due to settlement of subcontract costs on a certain
foreign offshore contract.
PAGE 24
Pursuant to an agreement with the majority of its principal insurers, McDermott
International negotiates and settles products liability asbestos claims from
non-employees and bills these amounts to the appropriate insurers. McDermott
International has outstanding receivables of $32,276,000 at December 31, 1993
from its insurers for reimbursement of these claims. As a result of collection
delays inherent in the process, reimbursement is usually delayed for three
months or more. The number of claims, which management believes peaked in
fiscal year 1990, has declined moderately. However, the average amount of these
claims has continued to rise. Claims paid in the nine months ended December 31,
1993 were $85,475,000, including $5,970,000 applicable to insolvent insurers and
$2,533,000 relating to the policy year 1979 (see Note 4 to consolidated
financial statements). Settlement of the estimated liability of $138,378,000
at December 31, 1993 for future costs relating to insolvent insurers and
policy year 1979 is expected to occur over the next 30 years. McDermott
International's estimated future costs relating to policy year 1979 and
certain insolvent insurers are derived from its loss history and constitute
management's best estimate of such future costs. Inherent in the estimate
of such future costs are assumptions which may vary significantly as claims
are settled. Accordingly, the amounts ultimately paid may differ materially
from the amount provided in consolidated financial statements. The collection
delays, the amount of claims paid that are related to insolvent insurance
carriers and the policy year 1979 have not had a material adverse effect on
McDermott International's liquidity, and management believes, based on
information currently available, that they will not have a material adverse
effect on liquidity in the future.
McDermott International's expenditures for property, plant and equipment were
$52,370,000 for the nine months ended December 31, 1993 compared with
$61,559,000 for the prior year and were incurred principally to maintain
existing facilities.
During April and May 1993, the Delaware Company issued $87,000,000 of Series B
Medium Term Notes at maturities and interest rates ranging from five to thirty
years, and 6.50% to 8.75%, respectively. These notes have an average maturity
of approximately twenty years and an average interest rate of approximately
7.95%.
PAGE 25
Pursuant to its right of redemption, the Delaware Company redeemed its 9.625%
Sinking Fund Debentures, 10% Subordinated Debentures, and 10.20% Sinking Fund
Debentures on April 19, 1993. Additionally, on June 1, 1993 and pursuant to
its redemption option, the Delaware Company redeemed its 12.25% Senior
Subordinated Notes due in 1998. The total redemption price including accrued
interest and redemption premium was $209,694,000.
At December 31, and March 31, 1993, The Babcock & Wilcox Company had sold,
with limited recourse, an undivided interest in a designated pool of qualified
accounts receivable of approximately $170,000,000, under the terms of its
agreement with a certain U.S. bank. The maximum sales limit available under
the agreement, which expires on December 31, 1995, is $225,000,000.
At December 31, and March 31, 1993, International and the Delaware Company
have available to them jointly various unsecured and uncommitted short-term
lines of credit totaling $125,000,000 and $64,000,000, respectively. In
addition, the Delaware Company had available to it an unsecured and
uncommitted short-term line of credit of $10,000,000. The Babcock & Wilcox
Company also had available to it an unsecured and committed revolving line of
credit facility which is restricted when The Babcock & Wilcox Company's net
tangible assets do not reach a certain level. There were no borrowings
outstanding against these facilities at December 31, 1993 and March 31, 1993.
A Canadian subsidiary of The Babcock & Wilcox Company had available to it
unsecured and uncommitted lines of credit totaling approximately $43,000,000,
of which $26,015,000 was outstanding at December 31, 1993. These facilities
are used to meet temporary working capital needs. Additionally, DCC had
available to it from a certain Canadian bank a short-term line of credit of
approximately $23,000,000, of which $18,559,000 was outstanding. DCC also had
available from the same bank a revolving credit facility of approximately
$15,000,000 which expires on May 31, 1997. No borrowings were outstanding
against this facility at December 31, 1993.
PAGE 26
McDermott International maintains an investment portfolio of government
obligations and other investments which is held for long-term investment
purposes. The amortized cost of the long-term portfolio at December 31, 1993
was $715,604,000 (market value $717,849,000). At December 31, 1993,
approximately $168,735,000 amortized cost (market value of $169,197,000) of
these obligations were pledged to secure a letter of credit in connection with
a long-term loan and certain reinsurance agreements.
The Delaware Company is restricted, as a result of covenants in certain credit
agreements, in its ability to transfer funds to International and its
subsidiaries through cash dividends or through unsecured loans or investments.
At December 31, 1993, substantially all of the net assets of the Delaware
Company were subject to such restrictions. It is not expected that these
restrictions will have any significant effect on International's liquidity.
During July 1993, International issued 2,875,000 shares of Series C Cumulative
Convertible Preferred Stock, par value $1.00 per share, and a liquidation
preference of $50.00 per share, plus an amount equal to accrued and unpaid
dividends. Net proceeds received were $140,322,000, and were invested in
the long-term portfolio. (See Note 10 to consolidated financial statements).
Working capital decreased by $27,560,000 to $88,504,000 at December 31, 1993
from March 31, 1993. During the remainder of fiscal 1994, McDermott
International expects to obtain funds to meet capital expenditure and working
capital requirements from operating activities and borrowings from short-term
lines of credit. Leasing agreements for equipment, which are short-term in
nature, are not expected to impact McDermott International's liquidity nor
capital resources.
McDermott International has provided a valuation allowance ($35,724,000 at
December 31, 1993) for deferred tax assets related primarily to net operating
loss carryforwards which can not be realized through carrybacks and future
reversals of existing taxable temporary differences. Management believes that
remaining deferred tax assets ($337,595,000 at December 31, 1993) in all other
tax jurisdictions are realizable through carrybacks and future reversals of
PAGE 27
existing taxable temporary differences, future taxable income arising
primarily as the result of improved pre-tax earnings and, if necessary, the
implementation of tax planning strategies involving sales and sale/leasebacks
of appreciated assets. Major uncertainties that affect the ultimate
realization of deferred tax assets include the risks of incurring operating
losses in the future and the possibility of declines in value of appreciated
assets involved in identified tax planning strategies. These factors have
been considered in determining the valuation allowance. Management will
continue to assess the adequacy of the valuation allowance on a quarterly
basis.
McDermott International adopted SFAS No. 106 effective April 1, 1992 for all
domestic plans. McDermott International plans to adopt SFAS No. 106 for
foreign plans during 1996, and the adoption is not expected to have a material
effect on the consolidated financial statements of McDermott International.
The new standard does not have any impact on the cash requirements of any
domestic or foreign postretirement health and welfare plan.
In November 1992, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 112, "Employers' Accounting for Postemployment Benefits," effective
for fiscal years beginning after December 15, 1993. SFAS No. 112 requires
accrual accounting, under certain conditions, for the estimated cost of
benefits provided by an employer to former or inactive employees after
employment but before retirement. McDermott International has not yet
finalized its review of the impact of this statement, but the new standard
will have no impact on the cash requirements of any postemployment benefits,
and is not expected to have a material effect on the consolidated financial
statements of McDermott International.
In May 1993, the FASB issued SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," effective for fiscal years beginning after
December 15, 1993. SFAS No. 115 addresses the accounting and reporting for
investments in equity securities that have readily determinable fair values
and for all investments in debt securities. McDermott International has not
finalized its review of the new standard, but, based on its current portfolio
management practices, would report its investments at fair value, with
unrealized gains and losses excluded from earnings and reported as a separate
component of stockholders' equity. The new standard is not expected to have a
material effect on the consolidated financial statements of McDermott
International.
PAGE 28
<TABLE>
<CAPTION>
EXHIBIT 11
MCDERMOTT INTERNATIONAL, INC.
CALCULATION OF EARNINGS (LOSS)
PER COMMON AND COMMON EQUIVALENT SHARE
(In thousands, except shares and per share amounts)
PRIMARY AND FULLY DILUTED
THREE NINE
MONTHS ENDED MONTHS ENDED
12/31/93 12/31/92 12/31/93 12/31/92
<S> <C> <C> <C> <C>
Income before Extraordinary Item and
Cumulative Effect of Accounting
Changes $ 15,377 $ 19,426 $ 78,174 $ 40,719
Less Dividend Requirements of
Preferred Stock Series C 2,067 - 4,018 -
____________________________________________________________________________________
Income before Extraordinary Item
and Cumulative Effect of
Accounting Changes Applicable
to Common Stock 13,310 19,426 74,156 40,719
Extraordinary Item - (610) - (610)
Cumulative Effect of Accounting
Changes - - (100,750) (245,624)
____________________________________________________________________________________
Net Income (Loss) $ 13,310 $ 18,816 $(26,594) $ (205,515)
_______________________________________________________________________________________
_______________________________________________________________________________________
Weighted average number of
common shares outstanding
during the period 53,152,008 51,703,189 52,818,796 51,562,227
Common stock equivalents of stock
appreciation rights based on
"treasury stock" method 414,756 312,695 635,906 289,971
_______________________________________________________________________________________
Weighted average number of
common shares outstanding
during the period 53,566,764 52,015,884 53,454,702 51,852,198
_______________________________________________________________________________________
_______________________________________________________________________________________
Earnings (Loss) per common and
common equivalent share: (1)
Income before Extraordinary Item
and Cumulative Effect of
Accounting Changes $ 0.25 $ 0.37 $ 1.39 $ 0.79
Extraordinary Items - (0.01) - (0.01)
Accounting Changes - - (1.89) (4.74)
______________________________________________________________________________________
Net Income (Loss) $ 0.25 $ 0.36 $ (0.50) $ (3.96)
______________________________________________________________________________________
______________________________________________________________________________________
(1) Earnings (Loss) per common and common equivalent share assuming full
dilution are the same for the periods presented.
</TABLE>
PAGE 29
PART II
MCDERMOTT INTERNATIONAL, INC.
OTHER INFORMATION
_________________
No information is applicable to Part II for the current quarter, except as
noted below:
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11 - Calculation of Earnings (Loss) Per Common and Common
Equivalent Share - Page 28
(b) Reports on Form 8-K
There were no current reports on Form 8-K filed during the three
months ended December 31, 1993.
Signatures
PAGE 30
SIGNATURES
__________
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
McDERMOTT INTERNATIONAL, INC.
_____________________________
(REGISTRANT)
Date: 01/26/94 By: s/ Brock A. Hattox
________ ________________________________
(SIGNATURE)
Brock A. Hattox
Senior Vice President and
Chief Financial Officer
PAGE 30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
McDERMOTT INTERNATIONAL, INC.
_____________________________
(REGISTRANT)
Date: 01/26/94 By: _________________________________
(SIGNATURE)
Brock A. Hattox
Senior Vice President and
Chief Financial Officer
