<PAGE> 1
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 September 30, 1995
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
- --------------------------------------------------------------------------------
(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 October 30, 1995 was 54,350,588.
<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
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1 - Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheet
September 30, 1995 and March 31, 1995 4
Condensed Consolidated Statement of Income (Loss)
Three Months Ended and Six Months Ended
September 30, 1995 and September 30, 1994 6
Condensed Consolidated Statement of Cash Flows
Six Months Ended September 30, 1995 and September 30, 1994 8
Notes to Condensed Consolidated Financial Statements 10
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
PART II - OTHER INFORMATION
- ---------------------------
Item 6 - Exhibits and Reports on Form 8-K 28
SIGNATURES 29
Exhibit 11 - Calculation of Earnings (Loss) Per
Common and Common Equivalent Share 31
</TABLE>
2
<PAGE> 3
PART I
McDERMOTT INTERNATIONAL, INC.
FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
3
<PAGE> 4
McDERMOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
ASSETS
<TABLE>
<CAPTION>
9/30/95 3/31/95
------- -------
(Unaudited)
(In thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 107,554 $ 85,909
Short-term investments 70,606 132,691
Accounts receivable - trade 543,757 475,861
Accounts receivable - unconsolidated affiliates 102,372 75,709
Accounts receivable - other 99,688 104,155
Insurance recoverable - current 114,600 111,188
Contracts in progress 343,822 279,016
Inventories 70,046 64,044
Deferred income taxes 67,680 76,863
Other current assets 42,008 45,131
- --------------------------------------------------------------------------------------------------------------
Total Current Assets 1,562,133 1,450,567
- --------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment, at Cost: 2,252,559 2,237,018
Less accumulated depreciation 1,363,394 1,337,341
- --------------------------------------------------------------------------------------------------------------
Net Property, Plant and Equipment 889,165 899,677
- --------------------------------------------------------------------------------------------------------------
Investments:
Government obligations 158,222 383,023
Other investments 146,379 199,379
- --------------------------------------------------------------------------------------------------------------
Total Investments 304,601 582,402
- --------------------------------------------------------------------------------------------------------------
Insurance Recoverable 680,916 750,219
- --------------------------------------------------------------------------------------------------------------
Excess of Cost Over Fair Value of Net Assets
of Purchased Businesses Less Accumulated
Amortization of $112,228,000 at September 30, 1995
and $96,405,000 at March 31, 1995 363,534 381,491
- --------------------------------------------------------------------------------------------------------------
Prepaid Pension Costs 298,001 277,814
- --------------------------------------------------------------------------------------------------------------
Other Assets 430,340 409,500
- --------------------------------------------------------------------------------------------------------------
TOTAL $ 4,528,690 $ 4,751,670
==============================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
9/30/95 3/31/95
------- -------
(Unaudited)
(In thousands)
<S> <C> <C>
Current Liabilities:
Notes payable and current
maturities of long-term debt $ 363,785 $ 407,586
Accounts payable 281,183 286,219
Environmental and products liabilities - current 156,264 133,280
Accrued employee benefits 102,029 104,883
Accrued liabilities - other 281,377 326,688
Advance billings on contracts 153,458 180,018
U.S. and foreign income taxes 36,757 52,683
- ---------------------------------------------------------------------------------------------------------------
Total Current Liabilities 1,374,853 1,491,357
- ---------------------------------------------------------------------------------------------------------------
Long-Term Debt 579,672 579,101
- ---------------------------------------------------------------------------------------------------------------
Accumulated Postretirement Benefit Obligation 397,425 393,744
- ---------------------------------------------------------------------------------------------------------------
Environmental and Products Liabilities 810,138 913,939
- ---------------------------------------------------------------------------------------------------------------
Other Liabilities 301,432 310,989
- ---------------------------------------------------------------------------------------------------------------
Contingencies
- ---------------------------------------------------------------------------------------------------------------
Minority Interest:
Subsidiary's preferred stocks 179,251 179,251
Other minority interest 169,206 172,710
- ---------------------------------------------------------------------------------------------------------------
Total Minority Interest 348,457 351,961
- ---------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Preferred stock, authorized 25,000,000 shares;
outstanding 2,875,000 Series C $2.875 cumulative
convertible, par value $1.00 per share,
(liquidation preference $143,750,000) 2,875 2,875
Common stock, par value $1.00 per share,
authorized 150,000,000 shares; outstanding
54,250,587 at September 30, 1995 and
53,959,597 at March 31, 1995 54,251 53,960
Capital in excess of par value 939,390 936,134
Deficit (262,392) (249,061)
Minimum pension liability (391) (391)
Net unrealized loss on investments (228) (8,050)
Currency translation adjustments (16,792) (24,888)
- ---------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 716,713 710,579
- ---------------------------------------------------------------------------------------------------------------
TOTAL $ 4,528,690 $ 4,751,670
===============================================================================================================
</TABLE>
5
<PAGE> 6
McDERMOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
9/30/95 9/30/94 9/30/95 9/30/94
------- ------- ------- -------
(Unaudited)
(In thousands)
<S> <C> <C> <C> <C>
Revenues $ 806,756 $ 724,065 $ 1,623,230 $ 1,483,873
- --------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of operations (excluding
depreciation and amortization) 686,460 627,343 1,397,108 1,273,043
Depreciation and amortization 36,660 25,065 70,772 61,983
Selling, general and
administrative expenses 68,168 66,534 135,019 134,195
- --------------------------------------------------------------------------------------------------------------
791,288 718,942 1,602,899 1,469,221
- --------------------------------------------------------------------------------------------------------------
Operating Income before Equity
in Income (Loss) of Investees 15,468 5,123 20,331 14,652
Equity in Income (Loss) of Investees (15) 14,646 33,164 20,948
- --------------------------------------------------------------------------------------------------------------
Operating Income 15,453 19,769 53,495 35,600
- --------------------------------------------------------------------------------------------------------------
Other Income (Expense):
Interest income 8,431 15,744 19,690 26,142
Interest expense (21,376) (14,101) (42,914) (26,940)
Minority interest (5,516) (1,151) (9,146) (5,008)
Other-net 7,988 (15,917) 5,564 (19,936)
- --------------------------------------------------------------------------------------------------------------
(10,473) (15,425) (26,806) (25,742)
- --------------------------------------------------------------------------------------------------------------
Income before Provision for (Benefit
from) Income Taxes and Cumulative
Effect of Accounting Change 4,980 4,344 26,689 9,858
Provision for (Benefit from)
Income Taxes (4,074) 7,606 8,803 10,002
- --------------------------------------------------------------------------------------------------------------
Income (Loss) before Cumulative Effect
of Accounting Change 9,054 (3,262) 17,886 (144)
Cumulative Effect of Accounting
Change - - - (1,765)
- --------------------------------------------------------------------------------------------------------------
Net Income (Loss) $ 9,054 $ (3,262) $ 17,886 $ (1,909)
==============================================================================================================
</TABLE>
6
<PAGE> 7
CONTINUED
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
9/30/95 9/30/94 9/30/95 9/30/94
------- ------- ------- -------
(Unaudited)
(In thousands, except shares and per share amounts)
<S> <C> <C> <C> <C>
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCK (AFTER PREFERRED
STOCK DIVIDENDS) $ 6,987 $ (5,329) $ 13,753 $ (6,042)
- --------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE (PRIMARY AND FULLY
DILUTED):
Income (loss) before cumulative
effect of accounting change $ 0.13 $ (0.10) $ 0.25 $ (0.08)
Accounting change - - - (0.03)
- --------------------------------------------------------------------------------------------------------------
Net income (loss) $ 0.13 $ (0.10) $ 0.25 $ (0.11)
==============================================================================================================
Weighted average number of
common and common
equivalent shares 54,359,639 53,568,530 54,386,373 53,523,543
CASH DIVIDENDS:
Per common share $ 0.25 $ 0.25 $ 0.50 $ 0.50
Per preferred share $ 0.72 $ 0.72 $ 1.44 $ 1.44
==============================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE> 8
McDERMOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
SEPTEMBER 30, 1995
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
9/30/95 9/30/94
------- -------
(Unaudited)
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 17,886 $ (1,909)
- --------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization 70,772 61,983
Gain on sale and disposal of assets (7,337) (579)
Equity in income of investees,
less dividends 15,431 19,179
Provision for (benefit from) deferred taxes (1,719) 44,488
Other 2,438 5,500
Changes in assets and liabilities:
Accounts receivable (103,538) (11,864)
Net contracts in progress and advance billings (89,911) (55,184)
Accounts payable (6,089) (79,192)
Accrued liabilities (45,526) (17,252)
Income taxes (12,464) (51,657)
Other, net (28,110) (14,693)
Proceeds from insurance for products liabilities claims 49,305 53,823
Payments of products liabilities claims (74,112) (61,557)
- --------------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (212,974) (108,914)
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of minority interest in Delta Catalytic Corporation (6,527) -
Proceeds from the sale and disposal of assets 17,908 889
Purchases of property, plant and equipment (38,666) (47,149)
Investment in asset held for lease (9,802) -
Purchases of short and long-term investments (304,920) (322,510)
Sales of short and long-term investments 652,904 325,190
Investments in equity investees (4,609) (4,933)
- --------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 306,288 (48,513)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
CONTINUED
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
9/30/95 9/30/94
------- -------
(Unaudited)
(In thousands)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt $ (163,047) $ (9,587)
Issuance of long-term debt 13,240 -
Increase in short-term borrowing 108,304 172,217
Dividends paid (31,142) (30,863)
Repurchase of subsidiary's preferred stock - (16,753)
Other 979 (538)
- -------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (71,666) 114,476
- -------------------------------------------------------------------------------------------------------------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH (3) 1,271
- -------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 21,645 (41,680)
- -------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 85,909 133,809
- -------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 107,554 $ 92,129
=============================================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 47,175 $ 35,040
Income taxes (net of refunds) $ 29,934 $ 25,844
=============================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
9
<PAGE> 10
McDERMOTT INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements are
presented in U.S. Dollars and have been prepared in accordance with accounting
principles generally accepted in the United States for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. Such adjustments are of a normal,
recurring nature except for a favorable insurance adjustment ($12,000,000 or
$0.22 per share) in the three and six months ended September 30, 1995; a gain
resulting from the sale of two power purchase contracts ($20,047,000 net of tax
of $10,565,000, or $0.37 per share) included in the six months ended September
30, 1995; a loss related to the reduction of estimated products liability claim
recoveries from insurers ($14,478,000 or $0.27 per share) included in the three
and six months ended September 30, 1994; a reduction in accrued interest
expense ($5,600,000 and $11,300,000, or $0.10 and $0.21 per share,
respectively) due to the settlement of outstanding tax issues included in the
three and six months ended September 30, 1994; and accelerated depreciation on
certain marine equipment ($4,314,000 or $0.08 per share), a reduction in
accrued interest expense ($3,705,000 net of tax of $1,995,000, or $0.07 per
share) due to settlement of an outstanding tax issue with the IRS, and the
cumulative effect of the accounting change for the adoption of Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" included in the six months ended September 30, 1994.
Operating results for the three and six months ended September 30, 1995 are not
necessarily indicative of the results that may be expected for the year ended
March 31, 1996. For further information, refer to the consolidated financial
statements and footnotes thereto included in McDermott International, Inc.'s
annual report on Form 10-K for the year ended March 31, 1995.
10
<PAGE> 11
Unless the context otherwise requires, hereinafter "International" will be used
to mean McDermott International, Inc., a Panamanian corporation; "JRM" will be
used to mean J. Ray McDermott, S.A., a Panamanian corporation, which is a
majority-owned subsidiary of International, and its consolidated subsidiaries;
and 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.
NOTE 2 - PRODUCTS LIABILITY
At September 30, 1995, the estimated liability for pending and future
non-employee products liability asbestos claims was $921,836,000 (of which less
than $240,000,000 had been asserted) and estimated insurance recoveries were
$795,516,000. Estimated liabilities for pending and future non-employee
products liability asbestos claims are derived from McDermott International's
claims history and constitute management's best estimate of such future costs.
Estimated insurance recoveries are based upon analysis of insurers providing
coverage of the estimated liabilities. Inherent in the estimate of such
liabilities and recoveries are expected trends in claim severity and frequency
and other factors, including recoverability from insurers, which may vary
significantly as claims are filed and settled. Accordingly, the ultimate loss
may differ materially from amounts provided in the consolidated financial
statements.
NOTE 3 - INVENTORIES
Consolidated inventories at September 30, 1995 and March 31, 1995 are
summarized below:
<TABLE>
<CAPTION>
September 30, March 31,
1995 1995
------------- ---------
(In thousands)
<S> <C> <C>
Raw Materials and Supplies $ 44,332 $ 38,570
Work in Progress 15,787 15,341
Finished Goods 9,927 10,133
- --------------------------------------------------------------------------------------------------------
$ 70,046 $ 64,044
========================================================================================================
</TABLE>
11
<PAGE> 12
NOTE 4 - SUMMARIZED INCOME STATEMENT INFORMATION OF AFFILIATES
The combined financial results of McDermott International's equity investments
in HeereMac and McDermott-ETPM West, Inc. are summarized below. These
ventures were significant as defined by applicable SEC regulations in fiscal
year 1995. The following summarizes the combined income statements:
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
9/30/95 9/30/94 9/30/95 9/30/94
------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C>
Revenues $ 126,104 $ 186,860 $ 318,023 $ 424,145
- ------------------------------------------------------------------------------------------------------------------------
Operating Income (Loss) $ (1,274) $ 18,913 $ 4,338 $ 19,769
- ------------------------------------------------------------------------------------------------------------------------
Income (Loss) before Income Taxes $ (200) $ 22,768 $ 10,011 $ 28,356
Provision for (Benefit from) Income Taxes (1,355) (342) 318 (892)
- ------------------------------------------------------------------------------------------------------------------------
Net Income $ 1,155 $ 23,110 $ 9,693 $ 29,248
========================================================================================================================
Equity in Net Income $ 891 $ 11,504 $ 4,873 $ 14,555
========================================================================================================================
</TABLE>
NOTE 5 - SALE OF POWER PURCHASE CONTRACTS
During the June 1995 quarter, McDermott International, Inc.'s
Babcock-Ultrapower West Enfield and Babcock-Ultrapower Jonesboro 50% owned
partnerships sold power purchase contracts back to the local utility which had
previously entered into agreements with the partnerships to purchase power, and
recognized a gain of $61,324,000. McDermott International's equity in earnings
of these partnerships was $25,000 and $32,865,000 [including its share of the
gain] for the three and six months ended September 30, 1995.
NOTE 6 - ACQUISITION OF OFFSHORE PIPELINES, INC.
On January 31, 1995, McDermott International contributed substantially all of
its marine construction services business to JRM and JRM acquired Offshore
Pipelines, Inc. The acquisition was accounted for by the purchase method and,
accordingly, the purchase price was allocated to the underlying assets and
liabilities based upon preliminary fair values at the date of
12
<PAGE> 13
acquisition. The preliminary purchase price allocation is subject to change
when additional information concerning asset and liability valuations is
obtained.
NOTE 7 - OTHER AGREEMENTS
During June 1995, McDermott International and Delta Catalytic Corporation
("DCC") of Calgary, Alberta, concluded an agreement which accelerated McDermott
International's purchase of the remaining portion of DCC from fiscal year 1997
to June 1995. During June 1993, McDermott International had acquired a
controlling interest in DCC in the first step of a two step transaction. DCC
provides engineering, procurement, construction and maintenance services to
industries worldwide; including oil, gas, marine construction and hydrocarbon
processing. Also during the June 1995 quarter, substantially all of the
agreements required to restructure the JRM and ETPM joint venture were
finalized, but are still subject to any necessary government approvals or
authorizations. The agreements expand the joint venture into the Far East, the
Mediterranean Sea, and all of Africa, give ETPM S.A. a minority interest in a
new JRM subsea company, and give JRM a minority interest in a new ETPM company.
Neither of these transactions are significant as defined by applicable SEC
regulations.
13
<PAGE> 14
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Beginning with the June 1995 quarter, management's discussion of revenues and
operating income is presented on a business unit basis as follows: J. Ray
McDermott, S.A. ("JRM") business unit (includes the results of operations of
the marine construction services business); B&W Operations business unit
(includes the operations of the Babcock & Wilcox Power Generation and
Government Groups); and Engineering, Construction and Industrial Operations
business unit (includes the Engineering and Construction Group, and
Shipbuilding and Industrial Group). Other business unit revenues includes
eliminations between business units; and Other business unit loss includes
certain expenses, primarily employee benefit and insurance programs, and
marketing and legal costs, that are not allocated to the business units. For
the three and six months ended September 30, 1994, the results of businesses
disposed of during the fiscal year 1995 are included in Other revenues and
business unit loss. Prior year information has been reclassified to conform
with the September 30, 1995 presentation.
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
9/30/95 9/30/94 9/30/95 9/30/94
------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C>
REVENUES
J. Ray McDermott, S.A. $ 355,957 $ 279,322 $ 667,760 $ 558,368
B&W Operations 313,341 320,092 630,979 610,717
Engineering, Construction and
Industrial Operations 162,825 172,885 368,346 386,130
Other (including Transfer Eliminations) (25,367) (48,234) (43,855) (71,342)
- ---------------------------------------------------------------------------------------------------------------
TOTAL REVENUES $ 806,756 $ 724,065 $ 1,623,230 $ 1,483,873
===============================================================================================================
</TABLE>
14
<PAGE> 15
OPERATING INCOME (CONTINUED)
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
9/30/95 9/30/94 9/30/95 9/30/94
------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C>
OPERATING INCOME
Business Unit Income (Loss):
J. Ray McDermott, S.A. $ 20,729 $ 24,463 $ 35,371 $ 41,290
B&W Operations 6,680 6,390 11,951 16,693
Engineering, Construction and
Industrial Operations (11,579) (10,595) (16,161) (15,934)
Other 6,683 (6,585) 3,548 (11,120)
- --------------------------------------------------------------------------------------------------------------
TOTAL BUSINESS UNIT INCOME 22,513 13,673 34,709 30,929
- --------------------------------------------------------------------------------------------------------------
Equity in Income (Loss) of Investees:
J. Ray McDermott, S.A. (1,903) 11,463 (2,801) 14,430
B&W Operations 1,758 1,116 35,841 3,936
Engineering, Construction and
Industrial Operations 130 573 124 1,088
Other - 1,494 - 1,494
- --------------------------------------------------------------------------------------------------------------
TOTAL EQUITY IN INCOME (LOSS)
OF INVESTEES (15) 14,646 33,164 20,948
- --------------------------------------------------------------------------------------------------------------
Corporate G&A Expense (7,045) (8,550) (14,378) (16,277)
- --------------------------------------------------------------------------------------------------------------
TOTAL OPERATING INCOME $ 15,453 $ 19,769 $ 53,495 $ 35,600
==============================================================================================================
</TABLE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1995 VS. THREE MONTHS
ENDED SEPTEMBER 30, 1994
JRM's revenues increased $76,635,000 to $355,957,000 primarily due to higher
purchased engineered equipment and subcontract activities in the North Sea
related to the B.P. Exploration Foinaven Development program west of the
Shetlands in the North Atlantic, and higher revenues in North America. These
increases were partially offset by lower revenues in the Far East.
15
<PAGE> 16
B&W Operations' revenues decreased $6,751,000 to $313,341,000 primarily due to
lower revenues from the Power Generation Group's fabrication of fossil fuel
steam and environmental control systems, and industrial boilers in the U.S.
These decreases were partially offset by higher revenues from replacement
nuclear steam generators and Canadian nuclear services. In addition, the
Government Group's defense and space-related products (other than nuclear fuel
assemblies and reactor components) had higher revenues.
Engineering, Construction and Industrial Operations' revenues decreased
$10,060,000 to $162,825,000 primarily due to lower revenues from the
Engineering and Construction Group's construction, repair and alteration of
utility and industrial boilers in the U.S. and the Shipbuilding and Industrial
Group's shipyard operations. These decreases were partially offset by higher
revenues from the Engineering and Construction Group's maintenance and
engineering activities in Canada.
JRM's business unit income decreased $3,734,000 to $20,729,000 primarily due to
lower volume in the Far East this year and the completion of higher profit
margin contracts in both the Far East and Middle East in the prior period.
These decreases were partially offset by higher volume and margins on North
American fabrication activities and higher volume and margins on North Sea
engineering and offshore activities.
B&W Operations' business unit income increased $290,000 to $6,680,000. Improved
margins from the Power Generation Group's fabrication of fossil fuel steam and
environmental control systems were offset by lower volume and margins from the
fabrication of industrial boilers in the U.S. In addition, there was higher
volume and margins from the Government Group's defense and space-related
products (other than nuclear fuel assemblies and reactor components). These
were partially offset by lower volume and margins from nuclear fuel assemblies
and reactor components for the U.S. Government.
Engineering, Construction and Industrial Operations' business unit loss
increased $984,000 to $11,579,000 primarily due to lower volume and margins
from the Engineering and Constructions Group's construction, repair and
alteration of utility and industrial boilers in
16
<PAGE> 17
the U.S., including cost overruns on the completion of a contract for one U.S.
customer. This increase was partially offset by improved margins from the
Shipbuilding and Industrial Group's shipyard operations.
Other business unit income increased $13,268,000 from a loss of $6,585,000 to
income of $6,683,000 primarily due to a favorable insurance adjustment of
$12,000,000 in the current year and the inclusion of losses in the prior year
of businesses that were disposed of during fiscal 1995.
JRM's equity in income (loss) of investees decreased $13,366,000 from income of
$11,463,000 to a loss of $1,903,000. Both the HeereMac and McDermott-ETPM
West, Inc. joint ventures performed at lower levels than in the previous year.
The revenues of these two joint ventures declined from $186,860,000 to
$126,104,000. HeereMac declined primarily in the U.S. Gulf and the Far East.
McDermott-ETPM West, Inc. declined in the North Sea, partially offset by
increased volume in West Africa. The equity income from these two joint
ventures declined from $11,504,000 to $891,000. HeereMac's equity income
decreased as a result of reduced volume and reduced margins. McDermott-ETPM
West, Inc.'s equity income also decreased as a result of reduced volume and
reduced margins, but the decrease was not as severe. Both joint ventures are
expected to remain at low levels through 1997. The remaining decrease in
equity in income (loss) of investees is due to losses incurred by several
foreign joint ventures which were acquired as part of the merger with Offshore
Pipelines, Inc.
B&W Operations' equity in income of investees increased $642,000 to $1,758,000
primarily due to the Power Generations Group's provision for loss on
discontinuing a domestic joint venture in the prior year, partially offset by
lower operating results in two foreign joint ventures this year.
Other business unit equity in income of investees includes the results of the
CMM Mexican joint venture which was not a part of JRM's marine construction
business in the prior period.
Interest income decreased $7,313,000 to $8,431,000, primarily due to decreases
in investments in government obligations and other investments in the current
period and
17
<PAGE> 18
income recognized in the prior period on a receivable from an equity investee
and settlement of an interest claim on certain foreign tax refunds.
Interest expense increased $7,275,000 to $21,376,000, primarily due to a
reduction in accrued interest of $5,600,000 on proposed tax deficiencies that
was recorded in the prior period and changes in debt obligations and interest
rates prevailing thereon.
Minority interest expense increased $4,365,000 to $5,516,000 primarily due to
minority shareholder participation in the results of JRM in the current period
and in improved operating results of the McDermott-ETPM East joint venture.
Other-net increased $23,905,000 to income of $7,988,000 from expense of
$15,917,000. This increase was primarily due to a loss related to the
reduction of estimated products liability asbestos claim recoveries of
$14,478,000 from insurers and higher bank fees and discounts on the sale of
certain accounts receivable in the prior period, and gains of $6,551,000 on the
disposal of assets in the current period.
The provision for income taxes decreased $11,680,000 from a provision of
$7,606,000 to a benefit of $4,074,000, while income before provision for income
taxes increased $636,000 to $4,980,000. The decrease in the provision for
income taxes was in part due to a reappraisal of liabilities in certain foreign
tax jurisdictions and the ability to recognize income tax benefits on losses in
the U. S. in the current period which were limited in the prior period. In
addition, McDermott International operates in many different tax jurisdictions.
Within these jurisdictions, tax provisions vary because of nominal rates,
allowability of deductions, credits and other benefits, and even tax basis (for
example, revenues versus income). These variances, along with variances in the
mix of income within jurisdictions, are responsible for shifts in the effective
tax rate. As a result of these factors, the income tax benefit was 82% of
pretax income for the three months ended September 30, 1995 compared to a
provision for income taxes of 175% of pretax income for the three months ended
September 30, 1994.
18
<PAGE> 19
RESULTS OF OPERATIONS - SIX MONTHS ENDED SEPTEMBER 30, 1995 VS. SIX MONTHS
ENDED SEPTEMBER 30, 1994
JRM's revenues increased $109,392,000 to $667,760,000 primarily due to higher
purchased engineered equipment and subcontract activities in the North Sea
related to the B.P. Exploration Foinaven Development program west of the
Shetlands in the North Atlantic, and higher revenues in North America and the
Middle East. These increases were partially offset by lower revenues in the
Far East.
B&W Operations' revenues increased $20,262,000 to $630,979,000 primarily due to
higher revenues from the Power Generation Group's contracts on replacement
nuclear steam generators for domestic customers at its Cambridge, Ontario
location and on plant enhancement projects. These increases were partially
offset by lower revenues from fabrication of fossil fuel steam and
environmental control systems in the U.S. In addition, the Government
Group's defense and space-related products (other than nuclear fuel assemblies
and reactor components) had higher revenues. These were partially offset by
lower revenues from nuclear fuel assemblies and reactor components for the U.S.
Government.
Engineering, Construction and Industrial Operations' revenues decreased
$17,784,000 to $368,346,000 primarily due to lower revenues from the
Engineering and Construction Group's construction, repair and alteration of
utility and industrial boilers in the U.S., and the Shipbuilding and
Industrial Group's shipyard operations. These decreases were partially offset
by higher revenues from the Engineering and Construction Group's maintenance
and engineering activities in Canada.
JRM's business unit income decreased $5,919,000 to $35,371,000 primarily due to
lower volume and margins in the Far East this year and the completion of higher
profit margin contracts in both the Far East and Middle East in the prior
period. These decreases were partially offset by higher volume and margins on
North American fabrication activities, higher volume and margins on North Sea
engineering and offshore activities, and the accelerated depreciation of
$4,134,000 on certain marine equipment in the Far East in the prior period.
19
<PAGE> 20
B&W Operations' business unit income decreased $4,742,000 to $11,951,000
primarily due to lower margins from the Power Generation Group's fabrication of
industrial boilers in the U.S. This decrease was partially offset by higher
volume and margins from replacement nuclear steam generators and plant
enhancement projects. In addition, there was higher volume from the Government
Group's defense and space-related products (other than nuclear fuel assemblies
and reactor components). This was partially offset by lower volume and margins
from nuclear fuel assemblies and reactor components for the U.S. Government.
Engineering, Construction and Industrial Operations' business unit loss
increased $227,000 to $16,161,000 primarily due to lower volume and margins
from the Engineering and Construction Group's construction, repair and
alteration of utility and industrial boilers in the U.S., including cost
overruns on the completion of a contract for one U.S. customer, partially
offset by improved margins from the Shipbuilding and Industrial Group's shipyard
operations.
Other business unit income increased $14,668,000 from a loss of $11,120,000 to
income of $3,548,000 primarily due to a favorable insurance adjustment of
$12,000,000 in the current year and the inclusion of losses in the prior year
of businesses that were disposed of during fiscal 1995.
JRM's equity in income (loss) of investees decreased $17,231,000 from income of
$14,430,000 to a loss of $2,801,000. Both the HeereMac and McDermott-ETPM
West, Inc. joint ventures performed at lower levels than in the previous year.
The revenues of these two joint ventures declined from $424,145,000 to
$318,023,000. HeereMac declined primarily in the U.S. Gulf and Australia.
McDermott-ETPM West, Inc. declined in the North Sea, partially offset by
increased volume in West Africa. The equity income from these two joint
ventures declined from $14,555,000 to $4,873,000. McDermott-ETPM West, Inc.'s
equity income decreased as a result of reduced volume and reduced margins.
HeereMac's equity income also decreased as a result of reduced volume and
reduced margins, but the decrease was not as severe. Both joint ventures are
expected to remain at low levels through 1997. Equity in income (loss)
of investees also decreased due to foreign currency transaction losses of the
CMM Mexican joint venture (which was not a part of JRM's marine construction
business in the prior year) and losses
20
<PAGE> 21
incurred by several foreign joint ventures which were acquired as part of the
merger with Offshore Pipelines, Inc.
B&W Operations' equity in income of investees increased $31,905,000 to
$35,841,000 primarily due to the Power Generation Group's sale of power
purchase contracts back to a local utility this year and a provision for a loss
on discontinuing a domestic joint venture in the prior period.
Other business unit equity in income of investees includes the results of the
CMM Mexican joint venture which was not a part of JRM's marine construction
business in the prior year.
Interest income decreased $6,452,000 to $19,690,000, primarily due to decreases
in investments in government obligations and other investments in the current
year and income recognized in the prior year on a receivable from an equity
investee and settlement of an interest claim on certain foreign tax refunds.
Interest expense increased $15,974,000 to $42,914,000, primarily due to a
reduction in accrued interest of $11,300,000 on proposed tax deficiencies that
was recorded in the prior year and changes in debt obligations and interest
rates prevailing thereon.
Minority interest expense increased $4,138,000 to $9,146,000 primarily due to
minority shareholder participation in the operating results of JRM in the
current year.
Other-net increased $25,000,000 to income of $5,564,000 from expense of
$19,936,000. This increase was primarily due a loss related to the reduction
of estimated products liability asbestos claim recoveries of $14,478,000 from
insurers and losses on the sale of investments in the prior period, and gains
of $7,337,000 on the disposal of assets in the current year.
The provision for income taxes decreased $1,199,000 to $8,803,000, while income
before provision for income taxes and cumulative effect of accounting change
increased $16,831,000 to $26,689,000. The decrease in the provision for income
taxes was in part due to a reappraisal of liabilities in certain foreign tax
jurisdictions and the ability to
21
<PAGE> 22
recognize income tax benefits on losses in the U.S. in the current period
which were limited in the prior period. In addition, McDermott International
operates in many different tax jurisdictions. Within these jurisdictions, tax
provisions vary because of nominal rates, allowability of deductions, credits
and other benefits, and even tax basis (for example, revenues versus income).
These variances, along with variances in the mix of income within
jurisdictions, are responsible for shifts in the effective tax rate. As a
result of these factors, the provision for income taxes was 33% of pretax
income for the six months ended September 30, 1995 compared to a provision for
income taxes of 101% of pretax income for the six months ended September 30,
1994.
Net income increased $19,795,000 from a net loss of $1,909,000 to income of
$17,886,000 reflecting the cumulative effect of the adoption of Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits," of $1,765,000 in the prior year, in addition to the
other items mentioned above.
Backlog
<TABLE>
<CAPTION>
9/30/95 3/31/95
------- -------
(In thousands)
<S> <C> <C>
Business Unit Backlog:
J. Ray McDermott, S.A. $ 834,934 $ 1,002,968
B&W Operations 1,890,932 1,952,580
Engineering, Construction
and Industrial Operations 512,610 623,719
Other (including Transfer Eliminations) (104,165) (105,435)
- ------------------------------------------------------------------------------------------------------------
TOTAL BACKLOG $ 3,134,311 $ 3,473,832
============================================================================================================
</TABLE>
JRM's backlog at September 30, 1995 and March 31, 1995 was $834,934,000 and
$1,002,968,000, respectively. Not included in JRM's backlog at September 30,
1995 and March 31, 1995 was backlog relating to contracts to be performed by
unconsolidated joint ventures of approximately $1,208,000,000 and $922,000,000,
respectively. JRM's markets are expected to be at low levels during fiscal
1996. The overcapacity of marine equipment worldwide will continue to result
in a competitive environment and put pressure on profit margins.
22
<PAGE> 23
B&W Operations' backlog at September 30, 1995 was $1,890,932,000 compared to
$1,952,580,000 at March 31, 1995. B&W Operations' foreign markets for
industrial and utility boilers are expected to remain strong as well as the
U.S. market for replacement nuclear steam generators. Domestic utility markets
remain weak. At September 30, 1995 this business unit's backlog with the U.S.
Government was $703,943,000 (of which $105,876,000 had not been funded). U.S.
Government budget reductions have negatively affected this business unit's
government operations.
Engineering, Construction and Industrial Operations' backlog at September 30,
1995 was $512,610,000 compared to $623,719,000 at March 31, 1995. The current
competitive economic environment in the U.S. has negatively affected demand
for its construction activities. At September 30, 1995 this business unit's
backlog with the U.S. Government was $60,074,000 (of which $5,717,000 had not
been funded).
Liquidity and Capital Resources
During the six months ended September 30, 1995, McDermott International's cash
and cash equivalents increased $21,645,000 to $107,554,000 and total debt
decreased $43,230,000 to $943,457,000. During this period, McDermott
International used cash of $212,974,000 in operating activities; $163,047,000
for repayment of long-term debt; $38,666,000 for additions to property, plant
and equipment; and $31,142,000 for dividends on International's common and
preferred stock. During the six months ended September 30, 1995, McDermott
International sold approximately $348,000,000 of its investments to repay
outstanding short-term debt obligations.
Increases in accounts receivable are primarily due to a reduction of
approximately $53,000,000 of qualified accounts receivable sold under the terms
of an agreement with a U.S. bank. Increases in net contracts in progress and
advance billings were primarily due to the timing of billings in contracts
performed on the Foinaven Development program and in the Far East. The
reduction in accrued liabilities included settlement of liabilities assumed
during the acquisition of Offshore Pipelines, Inc.
23
<PAGE> 24
Pursuant to an agreement with a 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. As a result
of collection delays inherent in this process, reimbursement is usually delayed
for three months or more. The number of claims had declined moderately since
fiscal year 1990, but has increased during the second half of fiscal year 1995
and the first half of fiscal year 1996. Management believes, based on
information currently available, that the recent increase represents an
acceleration in the timing of the receipt of these claims, but does not
represent an increase in its total estimated liability. The average amount of
these claims (historical average of approximately $5,000 per claim over the last
three years) has continued to rise. Claims paid during the six months ended
September 30, 1995 were $74,112,000, of which $65,891,000 has been recovered or
is due from insurers. At September 30, 1995, receivables of $51,511,000 were due
from insurers for reimbursement of settled claims. Estimated liabilities for
pending and future non-employee products liability asbestos claims are derived
from McDermott International's claims history and constitute management's best
estimate of such future costs. Estimated insurance recoveries are based upon
analysis of insurers providing coverage of the estimated liabilities. Inherent
in the estimate of such liabilities and recoveries are expected trends in claim
severity and frequency and other factors, including recoverability from
insurers, which may vary significantly as claims are filed and settled.
Accordingly, the ultimate loss may differ materially from amounts provided in
the consolidated financial statements. Settlement of the liability is expected
to occur over approximately the next 25 years. The collection delays, and the
amount of claims paid for which insurance recovery is not probable, 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
decreased $8,483,000 to $38,666,000 for the six months ended September 30, 1995
compared with the same period last year. These expenditures included $8,669,000
for installation of a new pipe reel system on a marine barge. In addition to
expenditures for property, plant and equipment, McDermott International expended
$9,802,000 in the six months ended September 30, 1995 for the conversion of a
barge to a floating production unit
24
<PAGE> 25
which upon completion will be leased to a third party. The barge conversion is
financed by a $16,700,000 note, payable in 30 monthly installments beginning
with the completion of the conversion. Interest is at Libor plus 2%. There
were no borrowings against this facility at September 30, 1995. In November
1995, the outstanding borrowings against this facility were $10,724,000.
At September 30, and March 31, 1995, The Babcock & Wilcox Company had sold,
with limited recourse, an undivided interest in a designated pool of qualified
accounts receivable of approximately $122,000,000 and $175,000,000,
respectively, under the terms of an agreement with a U.S. bank. The maximum
sales limit available under the agreement was reduced during the period from
$225,000,000 to $175,000,000. During November 1995, The Babcock & Wilcox
Company and the bank amended the agreement to provide for an annual renewal of
the program.
At September 30, and March 31, 1995, International and its subsidiaries, had
available to them various uncommitted short-term lines of credit totaling
$401,854,000 and $373,867,000, respectively. Borrowings by McDermott
International against these lines of credit at September 30 and March 31, 1995
were $198,347,000 and $63,025,000, respectively. In addition, The Babcock &
Wilcox Company had available to it an unsecured and committed revolving credit
facility. During the quarter ended September 30, 1995, the facility was
amended to increase the commitment to $150,000,000 and to extend the agreement
to March 31, 1999. It is a condition to borrowing under this revolving credit
facility that the borrower's tangible net worth, debt to capitalization, and
interest coverage as defined in the agreement meet or exceed certain covenant
requirements. There were no borrowings outstanding against this facility at
September 30 and March 31, 1995. Delta Catalytic Corporation had available
from a certain Canadian bank an unsecured and committed revolving credit
facility of $14,925,000 which expires on May 31, 1997. At September 30 and
March 31, 1995, borrowings outstanding against this facility were $14,925,000
and $7,420,000, respectively. In October 1995, Delta Catalytic repaid and
cancelled this facility and replaced it with two unsecured and uncommitted
short-term line of credit facilities aggregating $29,851,000, which are subject
to annual renewal. JRM had available to it a $150,000,000 unsecured and
25
<PAGE> 26
committed revolving credit facility of which $80,000,000 was outstanding at
September 30, 1995. JRM is restricted, as a result of the consolidated
tangible net worth covenant in this agreement, in its ability to transfer funds
to International and its subsidiaries through cash dividends or through
unsecured loans or investments. As approximately $59,000,000 of its net assets
were not subject to this restriction, it is not expected to impact JRM's
ability to make preferred dividend payments.
McDermott International maintains an investment portfolio of government
obligations which is classified as available for sale under SFAS No. 115. The
fair value of short-term investments and the long-term portfolio at September
30, 1995 was $375,207,000 (amortized cost $376,098,000). At September 30,
1995, approximately $136,281,000 fair value of these obligations were pledged
to secure a letter of credit in connection with a long-term loan and certain
reinsurance agreements. In addition, McDermott International had obligations
of $45,651,000 under short-term repurchase agreements which were secured by
government obligations with a fair value of $47,332,000 at September 30, 1995.
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 September 30, 1995, 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.
Working capital increased by $228,070,000 from a deficit of $40,790,000 at
March 31, 1995 to $187,280,000 at September 30, 1995 reflecting the use of
$278,000,000 of long-term investments to repay short-term debt. During the
remainder of fiscal year 1996, McDermott International expects to obtain funds
to meet capital expenditure, working capital and debt maturity requirements
from operating activities, its short-term investment portfolio and additional
borrowings from existing 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.
26
<PAGE> 27
McDermott International has provided a valuation allowance for deferred tax
assets which cannot be realized through carrybacks and future reversals of
existing taxable temporary differences. Management believes that remaining
deferred tax assets in all other tax jurisdictions are realizable through
carrybacks and future reversals of existing taxable temporary differences, and,
if necessary, the implementation of tax planning strategies involving sales and
sale/leasebacks of appreciated assets. A major uncertainty that affects the
ultimate realization of deferred tax assets is the possibility of declines in
value of appreciated assets involved in identified tax planning strategies.
This factor has been considered in determining the valuation allowance.
Management will continue to assess the adequacy of the valuation allowance on a
quarterly basis.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
effective for fiscal years beginning after December 15, 1995. SFAS No. 121
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. SFAS No.121 also applies to similar assets that are held for
disposal, except for the assets of a discontinued operation. McDermott
International has not yet finalized its review of the impact of this statement,
but it is not expected to have a material impact on the consolidated financial
statements.
27
<PAGE> 28
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 31
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
There were no current reports on Form 8-K filed during the
three months ended September 30, 1995.
Signatures
28
<PAGE> 29
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: 11/10/95 By: s/ Daniel R. Gaubert
-------- -----------------------------------
(SIGNATURE)
Daniel R. Gaubert
Vice President, Finance
and Controller
29
<PAGE> 30
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
11 - Calculation of Earnings (Loss) Per Common and
Common Equivalent Share
27 - Financial Data Schedule
</TABLE>
30
<PAGE> 1
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
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
---------------------- ------------------------
9/30/95 9/30/94 9/30/95 9/30/94
------- ------- ------- -------
<S> <C> <C> <C> <C>
Income (loss) before cumulative effect of
accounting change $ 9,054 $ (3,262) $ 17,886 $ (144)
Less dividend requirements of preferred
stock, Series C 2,067 2,067 4,133 4,133
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of
accounting change applicable to
common stock 6,987 (5,329) 13,753 (4,277)
Cumulative effect of accounting change - - - (1,765)
- ---------------------------------------------------------------------------------------------------------------------
Net income (loss) for primary computation $ 6,987 $ (5,329) $ 13,753 $ (6,042)
=====================================================================================================================
Weighted average number of common
shares outstanding during the period 54,197,329 53,568,530 54,107,556 53,523,543
Common stock equivalents of stock options
and stock appreciation rights based on
"treasury stock" method 162,310 - 278,817 -
- ---------------------------------------------------------------------------------------------------------------------
Weighted average number of common
and common equivalent shares
outstanding during the period 54,359,639 53,568,530 54,386,373 53,523,543
=====================================================================================================================
Earnings (loss) per common and
common equivalent share: (1)
Income (loss) before cumulative effect
of accounting change $ 0.13 $ (0.10) $ 0.25 $ (0.08)
Accounting change - - - (0.03)
- ---------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 0.13 $ (0.10) $ 0.25 $ (0.11)
=====================================================================================================================
</TABLE>
(1) Earnings (loss) per common and common equivalent share assuming full
dilution are the same for the periods presented.
31
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MCDERMOTT
INTERNATIONAL'S SEPTEMBER 30, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 107,554
<SECURITIES> 70,606
<RECEIVABLES> 592,772
<ALLOWANCES> 49,014
<INVENTORY> 413,868
<CURRENT-ASSETS> 1,557,429
<PP&E> 2,252,559
<DEPRECIATION> 1,363,394
<TOTAL-ASSETS> 4,528,690
<CURRENT-LIABILITIES> 1,374,853
<BONDS> 579,672
<COMMON> 0
2,875
54,251
<OTHER-SE> 659,587
<TOTAL-LIABILITY-AND-EQUITY> 4,528,690
<SALES> 1,623,230
<TOTAL-REVENUES> 1,623,230
<CGS> 1,602,899
<TOTAL-COSTS> 1,602,899
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,914
<INCOME-PRETAX> 26,689
<INCOME-TAX> 8,803
<INCOME-CONTINUING> 17,886
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,886
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
