SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant of Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report: March 31, 1995
McDERMOTT INTERNATIONAL, INC.
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
REPUBLIC OF PANAMA 1-8430 No. 72-0593134
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
1450 Poydras Street, New Orleans, Louisiana 70112-6050
Post Office Box 61961, New Orleans, Louisiana 70161-1961
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (504) 587-5400
<page 2>
Item 7. PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following pro forma financial information and exhibits are filed as a part
of this report.
(a) Offshore Pipelines, Inc.'s Annual Report on Form 10-K for the year ended
July 31, 1994 filed with the Securities and Exchange Commission ("SEC")
on October 13, 1994 and Quarterly Report on Form 10-Q for the quarter
ended October 31, 1994 filed with the SEC on December 8, 1994 are
incorporated herein by reference.
(b) Pro forma financial information required pursuant to Article II of
Regulation S-X:
Item Page
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McDermott International, Inc. Pro Forma Consolidated
Financial Statements (Unaudited)
Pro Forma Consolidated Balance Sheet -
December 31, 1994 4
Notes to the Pro Forma Consolidated Balance
Sheet 6
Pro Forma Consolidated Statement of Income
Before Cumulative Effect of Accounting Change
- Fiscal Year Ended March 31, 1994 8
Pro Forma Consolidated Statement of Income
Before Cumulative Effect of Accounting Change
- Nine Months Ended December 31, 1994 10
Notes to the Pro Forma Consolidated Income
Statements 12
On January 31, 1995, McDermott International, Inc. ("MII") contributed
substantially all of its marine construction services business to J. Ray
McDermott, S.A. ("JRM") and JRM acquired Offshore Pipelines, Inc. (the
"Merger"), pursuant to an Agreement and Plan of Merger dated as of June 2,
1994, as amended (the "Merger Agreement"). MII received as consideration for
its contribution to JRM: 3,200,000 shares of its Series A $2.25 Cumulative
Convertible Preferred Stock (liquidation preference $160,000,000), $231,000,000
aggregate principal amount of JRM's 9% Senior Subordinated Notes due September
15, 2001, 24,668,297 shares of JRM's common stock and other consideration.
As consideration for their approval and adoption of the Merger Agreement,
stockholders of Offshore Pipelines, Inc. ("OPI") received 13,197,946 shares of
JRM's common stock, 897,818 options to acquire the same number of shares of
JRM's common stock and 458,632 shares of JRM's Series B Cumulative Convertible
Exchangeable Preferred Stock (liquidation preference $11,465,800) in exchange
for their shares of OPI common stock, options to acquire OPI common stock and
OPI preferred stock outstanding at the date of the Merger. As a result on
January 31, 1995 JRM had a total of 38,586,243 shares of Common Stock
outstanding.
<page 3>
The unaudited pro forma consolidated balance sheet as of December 31, 1994
combines the unaudited December 31, 1994 consolidated balance sheet of MII and
the unaudited October 31, 1994 consolidated balance sheet of OPI and assumes
that the contribution and Merger were completed as of December 31, 1994.
OPI's assets and liabilities have been accounted for at estimated fair values in
accordance with the purchase method of accounting. MII is presently in the
process of obtaining appraisals of existing OPI property, plant and equipment
and their remaining useful lives, and reviewing the fair value of OPI's other
assets and liabilities. The adjustments to OPI's property, plant and equipment
have been based on preliminary opinions of the appraiser's value of such
assets. Further work is proceeding on such appraisals and, accordingly, the
allocation of the purchase price is subject to revision as a result of the
final determination of such values.
The audited pro forma consolidated statements of income combine the audited
results of MII for the year ended March 31, 1994 with the unaudited results of
operations of OPI for the twelve months ended April 30, 1994; and the unaudited
results of operations of MII for the nine months ended December 31, 1994 with
the unaudited results of OPI for the nine months ended October 31, 1994. These
pro forma statements of MII give effect to the contribution by MII of
substantially all of its marine construction services business to JRM, and the
acquisition of OPI and assumes such transactions were completed effective April
1, 1993. The acquisition of OPI will be accounted for under the purchase
method of accounting and goodwill will be amortized over a period of 10 years.
The pro forma information is not necessarily indicative of the actual financial
position of MII at any date or the results which would have actually occurred
had the transactions occurred on such dates or which may occur in the future.
The pro forma consolidated financial statements should be read in conjunction
with MII's and OPI's historical consolidated financial statements and notes
thereto contained in the respective Annual Report (Form 10-K) for the fiscal
year ended March 31, 1994 and July 31, 1994 and the respective Quarterly Report
(Form 10-Q) for the quarter ended December 31, 1994 and October 31, 1994.
The pro forma adjustments do not reflect estimates of cost savings that may be
realized from the Merger. MII intends to dispose of surplus marine vessels and
support equipment, close duplicative support facilities and fabrication yards,
and to consolidate corporate functions.
<page 4>
<TABLE>
<CAPTION>
McDERMOTT INTERNATIONAL, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
MII OPI
December 31, October 31, Pro Forma
1994 1994 Adjustments Combined
------------ ----------- ----------- ------------
(In thousands)
ASSETS
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 99,873 $ 12,439 $ (16,032) (1,2,8) $ 96,280
Accounts and notes receivable 461,260 82,787 533 (2) 544,580
Contracts in progress 316,360 78,028 (8,271) (2) 386,117
Other current assets 439,711 54,995 (38,363) (2,3,9) 456,343
- ------------------------------------------------------------------------------------------------
Total Current Assets 1,317,204 228,249 (62,133) 1,483,320
- -------------------------------------------------------------------------------------------------
Property, Plant and Equipment,
at Cost 2,175,564 201,195 (8,499) (2,3) 2,368,260
Less accumulated depreciation 1,411,660 48,710 (48,710) (2,3) 1,411,660
- ------------------------------------------------------------------------------------------------
Net Property, Plant and
Equipment 763,904 152,485 40,211 956,600
- ------------------------------------------------------------------------------------------------
Investments:
Government obligations 391,841 - - 391,841
Other investments 181,081 - - 181,081
- ------------------------------------------------------------------------------------------------
Total Investments 572,922 - - 572,922
- ------------------------------------------------------------------------------------------------
Insurance Recoverable 777,327 - - 777,327
- ------------------------------------------------------------------------------------------------
Intangibles and Other Assets 660,688 43,108 225,880 (2,3,5,6,9) 929,676
- ------------------------------------------------------------------------------------------------
TOTAL $4,092,045 $ 423,842 $ 203,958 $ 4,719,845
=================================================================================================
</TABLE>
<page 5>
<TABLE>
<CAPTION>
MII OPI
December 31, October 31, Pro Forma
1994 1994 Adjustments Combined
------------ ----------- ----------- ----------
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C>
Current Liabilities:
Notes and accounts payable
and current maturities of
long-term debt $ 623,137 $ 52,194 $ (13,538) (2) $ 661,793
Advance billings on contracts 122,993 15,652 (758) (2) 137,887
U.S. and foreign income taxes 47,998 3,433 23,074 (2,9) 74,505
Other current liabilities 495,354 71,838 12,664 (2,3,4) 579,856
- -------------------------------------------------------------------------------------------------
Total Current Liabilities 1,289,482 143,117 21,442 1,454,041
- -------------------------------------------------------------------------------------------------
Long-Term Debt 487,405 85,832 10,136 (3) 583,373
- -------------------------------------------------------------------------------------------------
Accumulated Postretirement Benefit
Obligation 390,458 - - 390,458
- -------------------------------------------------------------------------------------------------
Environmental and Products
Liabilities 907,884 - - 907,884
- --------------------------------------------------------------------------------------------------
Other Liabilities 298,084 30,079 8,160 (3,4,9) 336,323
- --------------------------------------------------------------------------------------------------
Minority Interest 193,444 - 143,611 (8) 337,055
- --------------------------------------------------------------------------------------------------
Stockholders' Equity:
Preferred stock 2,875 14 (14) (7) 2,875
Common Stock 53,759 113 (113) (7) 53,759
Other Stockholders' Equity 468,654 164,687 20,736 (7,8) 654,077
- --------------------------------------------------------------------------------------------------
Total Stockholders' Equity 525,288 164,814 20,609 710,711
- --------------------------------------------------------------------------------------------------
TOTAL $4,092,045 $ 423,842 $ 203,958 $ 4,719,845
=================================================================================================
</TABLE>
(page 6)
<TABLE>
<CAPTION>
Notes to Pro Forma Combined Balance Sheet
The following is a summary of the adjustments required to reflect the acquisition
of OPI and estimated purchase price allocation.
Adjustments
Debit/(Credit)
<S> <C> <C>
Acquisition of OPI
1. Adjustment to reflect extraordinary dividend and redemption
of preferred stock purchase rights. . . . . . . . . . . . . . $ (5,749)
2. Adjustments to reflect the change in OPI's accounting for
its investment in certain joint ventures from proportionate
consolidation method to the equity method:
Cash and cash equivalents. . . . . . . . . . . $ (1,283)
Accounts and notes receivable. . . . . . . . . 533
Contracts in progress. . . . . . . . . . . . . (8,271)
Other current assets . . . . . . . . . . . . . (685)
Property, plant and equipment. . . . . . . . . (5,389)
Accumulated depreciation . . . . . . . . . . . 336
Intangibles and other assets . . . . . . . . . (2,512)
Notes and accounts payable and current maturities
on long-term debt 13,538
Advance billings on contracts. . . . . . . . . 758
U. S. and foreign income taxes . . . . . . . . 552
Other current liabilities. . . . . . . . . . . 2,423
-
-------
3. Adjustments to reflect other changes in accounting policies
and purchase accounting of OPI's assets and liabilities:
Other current assets . . . . . . . . . . . . . $ (2,899)
Property, plant and equipment. . . . . . . . . (3,110)
Accumulated depreciation . . . . . . . . . . . 48,374
Intangibles and other assets . . . . . . . . . 1,584
Other current liabilities. . . . . . . . . . . 4,184
Long-term debt . . . . . . . . . . . . . . . . (10,136)
Other liabilities. . . . . . . . . . . . . . . (2,976) 35,021
--------
4. Accrual of estimated additional direct merger costs
(covenants-not-to-compete, financial advisor, legal,
accounting, appraisal and other fees):
Other current liabilities. . . . . . . . . . . $ (19,271)
Other liabilities. . . . . . . . . . . . . . . (5,198) (24,469)
---------
5. Intangibles and other assets (covenants-not-to-compete). 16,407
6. Intangibles and other assets (excess of cost over net
assets acquired) 152,010
7. Elimination of OPI stockholders' equity:
Preferred B, par value . . . . . . . . . . . . . $ 14
Common stock, par value. . . . . . . . . . . . . 113
Other stockholders' equity . . . . . . . . . . . 164,687 164,814
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$ 338,034
</TABLE>
(page 7)
<TABLE>
<CAPTION>
Notes to Pro Forma Combined Balance Sheet (continued)
<S> <C> <C>
8. Payments for covenants not to compete at effective time
of the acquisition of OPI, issuance of JRM securities to
minority owners and adjustment of minority interest
and other stockholders' equity to reflect respective
ownership percentages in JRM:
Cash . . . . . . . . . . . . . . . . . . . . . . $ (9,000)
Minority interest. . . . . . . . . . . . . . . . (143,611)
Other stockholders' equity . . . . . . . . . . . (185,423) $(338,034)
--------- =========
9. Adjustments to tax assets and liabilities to reflect the
sale of marine construction services' assets from McDermott
Incorporated to MII:
Other current assets . . . . . . . . . . . . . . $ (34,779)
Intangibles and other assets . . . . . . . . . . 58,391
U.S. and foreign income taxes. . . . . . . . . . (23,626)
Other liabilities. . . . . . . . . . . . . . . . 14 $ -
--------- ---------
</TABLE>
(PAGE 8)
<TABLE>
<CAPTION>
McDERMOTT INTERNATIONAL, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (UNAUDITED)
MII OPI Pro Forma
Year ended Year ended Combined
March 31, 1994 April 30, 1994 Adjustments (9) Year Ended
-------------- -------------- ----------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues $ 3,059,912 $ 383,645 $ (11,522) (1) $3,432,035
- -----------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of operations 2,657,712 300,759 (19,076) (1) 2,944,855
4,939 (2)
521 (4)
Depreciation and
amortization 99,393 17,189 (4,767) (2) 134,822
15,201 (3)
4,526 (4)
3,280 (5)
Selling, general and
administrative expenses 262,873 31,273 (536) (1) 293,147
(463) (4)
- -----------------------------------------------------------------------------------------------
3,019,978 349,221 3,625 3,372,824
- -----------------------------------------------------------------------------------------------
39,934 34,424 (15,147) 59,211
Equity in Income of
Investees 119,860 1,475 (8,754) (1) 112,581
- -----------------------------------------------------------------------------------------------
Operating Income 159,794 35,899 (23,901) 171,792
- -----------------------------------------------------------------------------------------------
Other Income (Expense):
Interest income 38,751 1,587 (17) (1) 40,321
Interest expense (63,975) (10,567) (4) (1) (73,617)
(379) (5)
1,308 (6)
Minority interest (15,251) - (3,105) (7) (48,367)
(30,011) (8)
Other-net (4,365) 169 10 (1) (5,172)
(986) (4)
- -----------------------------------------------------------------------------------------------
(44,840) (8,811) (33,184) (86,835)
- ------------------------------------------------------------------------------------------------
Income before Provision for
Income Taxes and Cumulative
Effect of Accounting Change 114,954 27,088 (57,085) 84,957
Provision for Income Taxes 24,998 8,486 (675) (1) 31,257
(60) (2)
(1,950) (4)
458 (6)
- -----------------------------------------------------------------------------------------------
Income before Cumulative
Effect of Accounting Change 89,956 18,602 (54,858) 53,700
- -----------------------------------------------------------------------------------------------
Preferred Stock Dividends 6,084 3,105 (3,105) (7) 6,084
- -----------------------------------------------------------------------------------------------
Income before Cumulative
Effect of Accounting Change
Applicable to Common Stock $ 83,872 $ 15,497 $ (51,753) $ 47,616
===============================================================================================
</TABLE>
(PAGE 9)
<TABLE>
<CAPTION>
CONTINUED
MII
Pro Forma
MII Combined
Year Ended Year Ended
March 31, 1994 March 31, 1994
-------------- --------------
<S> <C> <C>
EARNINGS PER COMMON AND COMMMON
EQUIVALENT SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE (AFTER
PREFERRED STOCK DIVIDENDS):
Primary and Fully Diluted $ 1.57 $ 0.89
- ------------------------------------------------------------------------------------------
Weighted average number of common and
common equivalent shares 53,467,933 53,467,933
==========================================================================================
</TABLE>
(PAGE 10)
<TABLE>
<CAPTION>
McDERMOTT INTERNATIONAL, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (UNAUDITED)
MII OPI Pro Forma
Nine Months Nine Months Combined
ended ended Nine Months
12/31/94 10/31/94 Adjustments (9) Ended
---------- ------------ ----------- -----------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues $ 2,199,398 $ 328,332 $ (33,138) (1) $ 2,494,592
- ----------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of operations 1,858,549 264,179 (35,497) (1) 2,092,301
2,728 (2)
2,342 (4)
Depreciation and amortization 85,258 13,469 (3,029) (2) 112,954
11,401 (3)
3,395 (4)
2,460 (5)
Selling, general and
administrative expenses 201,072 26,003 (953) (1) 225,887
(235) (4)
- ----------------------------------------------------------------------------------------------
2,144,879 303,651 (17,388) 2,431,142
- ----------------------------------------------------------------------------------------------
54,519 24,681 (15,750) 63,450
Equity in Income of Investees 34,649 5,616 (4,692) (1) 35,573
- ----------------------------------------------------------------------------------------------
Operating Income 89,168 30,297 (20,442) 99,023
- ----------------------------------------------------------------------------------------------
Other Income (Expense):
Interest income 39,799 851 (20) (1) 40,630
Interest expense (43,559) (7,981) 315 (1) (50,434)
(190) (5)
981 (6)
Minority interest (9,538) - (2,328) (7) (25,701)
(13,835) (8)
Other-net (25,382) 2,828 79 (1) (23,369)
(894) (4)
- -----------------------------------------------------------------------------------------------
(38,680) (4,302) (15,892) (58,874)
- -----------------------------------------------------------------------------------------------
Income before Provision for Income
Taxes and Cumulative Effect of
Accounting Change 50,488 25,995 (36,334) 40,149
Provision for Income Taxes 20,818 7,346 (1,006) (1) 25,367
105 (2)
(2,239) (4)
343 (6)
- -----------------------------------------------------------------------------------------------
Income before Cumulative Effect
of Accounting Change 29,670 18,649 (33,537) 14,782
Preferred Stock Dividends 6,199 2,328 (2,328) (7) 6,199
- -----------------------------------------------------------------------------------------------
Income before Cumulative Effect
of Accounting Change Applicable
to Common Stock $ 23,471 $ 16,321 $ (31,209) $ 8,583
================================================================================================
</TABLE>
(PAGE 11)
<TABLE>
<CAPTION>
CONTINUED
MII
Pro Forma
MII Combined
Nine Months Ended Nine Months Ended
December 31, 1994 December 31, 1994
----------------- --------------------
<S> <C> <C>
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE (AFTER
PREFERRED STOCK DIVIDENDS):
Primary and Fully Diluted $ 0.43 $ 0.16
- ---------------------------------------------------------------------------------------
Weighted average number of common
and common equivalent shares 53,722,217 53,722,217
=======================================================================================
</TABLE>
(PAGE 12)
McDERMOTT INTERNATIONAL, INC.
NOTES TO THE PRO FORMA CONSOLIDATED
INCOME STATEMENTS (UNAUDITED)
Income Statement:
The pro forma consolidated statements of income give effect to the following
adjustments:
1. Adjustment to conform OPI's proportionate consolidation method to MII's
accounting policy.
2. Adjustments to conform OPI's drydock and depreciation method to MII's
accounting policies.
Adjustments to reflect the acquisition of OPI:
3. To amortize over ten years the costs in excess of net assets acquired.
4. To record additional depreciation on write-up of OPI's property, plant and
equipment based on the estimated remaining life thereof, which is assumed
to be ten years, and to reflect the impact of other purchase accounting
adjustments.
5. To amortize covenants-not-to-compete over a period of five years per the
terms of the agreements.
6. To amortize premium recognized on write-up of OPI debt.
7. To reclassify to Minority Interest Expense dividends paid (to third parties)
on OPI Series B Stock.
8. To recognize Minority Interest Expense on OPI and MII's earnings available to
minority owners.
9. The pro forma consolidated statements of income do not include pro forma
adjustments reflecting additional income tax provision due to the movement
of a portion of the long-term investment portfolio to McDermott
Incorporated in consideration for the marine construction services
business purchased by MII in connection with the merger of OPI into JRM.
(page 13)
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
(REGISTRANT)
Date:03/31/95 By: s/ Daniel R. Gaubert
-------- ------------------------
(SIGNATURE)
Daniel R. Gaubert
Vice President, Finance,
on behalf of the Registrant
