<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 December 31, 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 January 30, 1996 was 54,470,377.
<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
December 31, 1995 and March 31, 1995 4
Condensed Consolidated Statement of Income
Three Months Ended and Nine Months Ended
December 31, 1995 and December 31, 1994 6
Condensed Consolidated Statement of Cash Flows
Nine Months Ended December 31, 1995 and December 31, 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 29
SIGNATURES 30
Exhibit 11 - Calculation of Earnings 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
DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
12/31/95 3/31/95
-------- -------
(Unaudited)
(In thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 115,083 $ 85,909
Short-term investments 63,789 132,691
Accounts receivable - trade 505,701 475,861
Accounts receivable - unconsolidated affiliates 95,778 75,709
Accounts receivable - other 104,728 104,155
Insurance recoverable - current 114,600 111,188
Contracts in progress 424,337 279,016
Inventories 70,884 64,044
Deferred income taxes 57,347 76,863
Other current assets 33,285 45,131
- ---------------------------------------------------------------------------------------------------------------
Total Current Assets 1,585,532 1,450,567
- ---------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment, at Cost: 2,181,086 2,237,018
Less accumulated depreciation and amortization 1,350,114 1,337,341
- ---------------------------------------------------------------------------------------------------------------
Net Property, Plant and Equipment 830,972 899,677
- ---------------------------------------------------------------------------------------------------------------
Investments:
Government obligations 166,187 383,023
Other investments 138,861 199,379
- ---------------------------------------------------------------------------------------------------------------
Total Investments 305,048 582,402
- ---------------------------------------------------------------------------------------------------------------
Insurance Recoverable 642,469 750,219
- ---------------------------------------------------------------------------------------------------------------
Excess of Cost Over Fair Value of Net Assets
of Purchased Businesses Less Accumulated
Amortization of $118,746,000 at December 31, 1995
and $96,405,000 at March 31, 1995 452,016 381,491
- ---------------------------------------------------------------------------------------------------------------
Prepaid Pension Costs 295,053 277,814
- ---------------------------------------------------------------------------------------------------------------
Other Assets 440,648 409,500
- ---------------------------------------------------------------------------------------------------------------
TOTAL $ 4,551,738 $ 4,751,670
===============================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
12/31/95 3/31/95
-------- -------
(Unaudited)
(In thousands)
<S> <C> <C>
Current Liabilities:
Notes payable and current
maturities of long-term debt $ 411,954 $ 407,586
Accounts payable 272,188 286,219
Environmental and products liabilities - current 157,768 133,280
Accrued employee benefits 97,091 104,883
Accrued liabilities - other 318,046 326,688
Advance billings on contracts 182,239 180,018
U.S. and foreign income taxes 34,574 52,683
- ---------------------------------------------------------------------------------------------------------------
Total Current Liabilities 1,473,860 1,491,357
- ---------------------------------------------------------------------------------------------------------------
Long-Term Debt 585,276 579,101
- ---------------------------------------------------------------------------------------------------------------
Accumulated Postretirement Benefit Obligation 399,293 393,744
- ---------------------------------------------------------------------------------------------------------------
Environmental and Products Liabilities 766,997 913,939
- ---------------------------------------------------------------------------------------------------------------
Other Liabilities 270,098 310,989
- ---------------------------------------------------------------------------------------------------------------
Contingencies
- ---------------------------------------------------------------------------------------------------------------
Minority Interest:
Subsidiary's preferred stocks 173,301 179,251
Other minority interest 171,277 172,710
- ---------------------------------------------------------------------------------------------------------------
Total Minority Interest 344,578 351,961
- ---------------------------------------------------------------------------------------------------------------
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
54,370,377 at December 31, 1995 and
53,959,597 at March 31, 1995 54,370 53,960
Capital in excess of par value 942,862 936,134
Deficit (271,432) (249,061)
Minimum pension liability (391) (391)
Net unrealized gain (loss) on investments 2,195 (8,050)
Currency translation adjustments (18,843) (24,888)
- ---------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 711,636 710,579
- ---------------------------------------------------------------------------------------------------------------
TOTAL $ 4,551,738 $ 4,751,670
===============================================================================================================
</TABLE>
5
<PAGE> 6
McDERMOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
DECEMBER 31, 1995
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
12/31/95 12/31/94 12/31/95 12/31/94
-------- -------- -------- --------
(Unaudited)
(In thousands)
<S> <C> <C> <C> <C>
Revenues $ 766,538 $ 715,525 $ 2,389,768 $ 2,199,398
- -------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of operations (excluding
depreciation and amortization) 645,048 585,506 2,042,156 1,858,549
Depreciation and amortization 33,027 23,275 103,799 85,258
Selling, general and
administrative expenses 65,831 66,877 200,850 201,072
- -------------------------------------------------------------------------------------------------------------
743,906 675,658 2,346,805 2,144,879
- -------------------------------------------------------------------------------------------------------------
Operating Income before Equity
in Income of Investees 22,632 39,867 42,963 54,519
Equity in Income of Investees 14,798 13,701 47,962 34,649
- -------------------------------------------------------------------------------------------------------------
Operating Income 37,430 53,568 90,925 89,168
- -------------------------------------------------------------------------------------------------------------
Other Income (Expense):
Interest income 8,155 13,657 27,845 39,799
Interest expense (20,993) (16,619) (63,907) (43,559)
Minority interest (6,656) (4,530) (15,802) (9,538)
Other-net (3,833) (5,446) 1,731 (25,382)
- -------------------------------------------------------------------------------------------------------------
(23,327) (12,938) (50,133) (38,680)
- -------------------------------------------------------------------------------------------------------------
Income before Provision for Income
Taxes and Cumulative Effect
of Accounting Change 14,103 40,630 40,792 50,488
Provision for Income Taxes 7,497 10,816 16,300 20,818
- -------------------------------------------------------------------------------------------------------------
Income before Cumulative Effect
of Accounting Change 6,606 29,814 24,492 29,670
Cumulative Effect of Accounting
Change - - - (1,765)
- -------------------------------------------------------------------------------------------------------------
Net Income $ 6,606 $ 29,814 $ 24,492 $ 27,905
=============================================================================================================
</TABLE>
6
<PAGE> 7
CONTINUED
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
12/31/95 12/31/94 12/31/95 12/31/94
-------- -------- -------- --------
(Unaudited)
(In thousands, except shares and per share amounts)
<S> <C> <C> <C>
NET INCOME APPLICABLE TO
COMMON STOCK (AFTER
PREFERRED STOCK DIVIDENDS) $ 4,540 $ 27,748 $ 18,293 $ 21,706
- -------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE (PRIMARY AND FULLY DILUTED):
Income before cumulative
effect of accounting change $ 0.08 $ 0.51 $ 0.34 $ 0.43
Accounting change - - - (0.03)
- -------------------------------------------------------------------------------------------------------------
Net income $ 0.08 $ 0.51 $ 0.34 $ 0.40
=============================================================================================================
Weighted average number of
common and common
equivalent shares 54,328,182 53,974,434 54,366,976 53,722,217
CASH DIVIDENDS:
Per common share $ 0.25 $ 0.25 $ 0.75 $ 0.75
Per preferred share $ 0.72 $ 0.72 $ 2.16 $ 2.16
=============================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE> 8
McDERMOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
DECEMBER 31, 1995
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
12/31/95 12/31/94
-------- --------
(Unaudited)
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 24,492 $ 27,905
- --------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 103,799 85,258
Gain on sale and disposal of assets (5,133) (1,464)
Equity in income of investees,
less dividends 6,053 26,444
Provision for deferred taxes 7,199 42,200
Other 4,732 10,546
Changes in assets and liabilities:
Accounts receivable (100,704) 18,567
Net contracts in progress and advance billings (138,845) (140,861)
Accounts payable (31,658) (28,063)
Accrued liabilities (24,273) (45,286)
Income taxes (12,702) (24,077)
Other, net (43,728) (18,157)
Proceeds from insurance for products liabilities claims 84,127 80,550
Payments of products liabilities claims (114,396) (94,213)
- -------------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (241,037) (60,651)
- -------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses (19,610) -
Proceeds from the sale and disposal of assets 41,495 10,398
Purchases of property, plant and equipment (52,503) (68,317)
Investment in asset held for lease (26,518) -
Purchases of short and long-term investments (308,121) (356,399)
Sales of short and long-term investments 667,792 351,133
Other 6,148 (9,996)
- -------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 308,683 (73,181)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
CONTINUED
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
12/31/95 12/31/94
-------- --------
(Unaudited)
(In thousands)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt $ (173,272) $ (18,256)
Issuance of long-term debt 32,291 -
Increase in short-term borrowing 154,323 181,522
Dividends paid (46,764) (46,341)
Repurchase of subsidiary's preferred stock (5,743) (17,185)
Other 1,228 (531)
- --------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (37,937) 99,209
- --------------------------------------------------------------------------------------------------------------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH (535) 687
- --------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 29,174 (33,936)
- --------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 85,909 133,809
- --------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 115,083 $ 99,873
==============================================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 64,840 $ 58,422
Income taxes (net of refunds) $ 34,422 $ 5,798
==============================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
9
<PAGE> 10
McDERMOTT INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 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 an adjustment to the Offshore Pipelines, Inc.
("OPI") acquisition preliminary purchase price allocation (see Note 6);
favorable worker's compensation cost adjustments ($8,869,000 net of tax of
$3,771,000, or $0.16 per share) included in the three and nine months ended
December 31, 1995; a favorable insurance adjustment ($12,000,000 or $0.22 per
share) and 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
nine months ended December 31, 1995; favorable worker's compensation cost
adjustments ($14,886,000, or $0.28 per share) and a reduction in accrued
interest expense ($5,000,000 and $16,300,000, or $0.09 and $0.30 per share,
respectively) due to the settlement of outstanding tax issues included in the
three and nine months ended December 31, 1994; a loss related to the reduction
of estimated products liability claim recoveries from insurers ($14,478,000 or
$0.27 per share), accelerated depreciation on certain marine equipment
($4,314,000 or $0.08 per share) 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 nine months
ended December 31, 1994. Operating results for the three and nine months ended
December 31, 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 December 31, 1995, the estimated liability for pending and future
non-employee products liability asbestos claims was $881,552,000 (of which
approximately $200,000,000 had been asserted) and estimated insurance
recoveries were $757,069,000. 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.
11
<PAGE> 12
NOTE 3 - INVENTORIES
Consolidated inventories at December 31, 1995 and March 31, 1995 are summarized
below:
<TABLE>
<CAPTION>
December 31, March 31,
1995 1995
------------ --------
(In thousands)
<S> <C> <C>
Raw Materials and Supplies $ 47,443 $ 38,570
Work in Progress 16,013 15,341
Finished Goods 7,428 10,133
- --------------------------------------------------------------------------------------------------------
$ 70,884 $ 64,044
========================================================================================================
</TABLE>
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 NINE
MONTHS ENDED MONTHS ENDED
12/31/95 12/31/94 12/31/95 12/31/94
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
Revenues $ 117,465 $ 136,026 $ 435,488 $ 560,171
Operating Income $ 2,084 $ 17,400 $ 6,422 $ 37,169
Income before Income Taxes $ 7,534 $ 22,103 $ 17,545 $ 50,459
Provision for Income Taxes 888 5,070 1,206 4,178
- ------------------------------------------------------------------------------------------------------------------------
Net Income $ 6,646 $ 17,033 $ 16,339 $ 46,281
========================================================================================================================
Equity in Net Income $ 3,833 $ 8,438 $ 8,706 $ 22,993
========================================================================================================================
</TABLE>
12
<PAGE> 13
NOTE 5 - SALE OF POWER PURCHASE CONTRACTS
During the June 1995 quarter, McDermott International'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 $18,000 and $32,883,000 (including its share of the gain) for
the three and nine months ended December 31, 1995.
NOTE 6 - ACQUISITIONS
During the December quarter of fiscal 1996, McDermott International recorded
adjustments to the OPI preliminary purchase price allocation resulting in an
increase of $95,000,000 in excess of cost over fair value of net assets
acquired. These adjustments resulted from the completion of certain asset and
liability valuations related primarily to joint ventures, property, plant and
equipment, and preacquisition contingencies. Additionally, during the December
quarter, management completed its assessment of the amortization period for
excess of cost over fair value of net assets acquired and determined the
amortization period should be 15 years.
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. During
November 1995, DCC changed its name to McDermott Engineers & Constructors
(Canada) Ltd. ("McDermott Engineers & Constructors"). McDermott Engineers &
Constructors provides engineering, procurement, construction and maintenance
services to industries worldwide; including oil, gas, marine construction and
hydrocarbon processing. 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 nine months ended December 31, 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 December 31, 1995 presentation.
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
12/31/95 12/31/94 12/31/95 12/31/94
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
REVENUES
J. Ray McDermott, S.A. $ 272,236 $ 247,190 $ 939,996 $ 805,558
B&W Operations 337,848 327,419 968,827 938,136
Engineering, Construction and
Industrial Operations 181,606 179,214 549,952 565,344
Other (including Transfer Eliminations) (25,152) (38,298) (69,007) (109,640)
- ---------------------------------------------------------------------------------------------------------------
TOTAL REVENUES $ 766,538 $ 715,525 $ 2,389,768 $ 2,199,398
===============================================================================================================
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
THREE NINE
MONTHS ENDED MONTHS ENDED
12/31/95 12/31/94 12/31/95 12/31/94
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
OPERATING INCOME
Business Unit Income (Loss):
J. Ray McDermott, S.A. $ 7,398 $ 25,818 $ 42,769 $ 67,108
B&W Operations 30,704 20,920 42,655 37,613
Engineering, Construction and
Industrial Operations (3,661) (5,063) (19,822) (20,997)
Other (2,788) 8,038 760 (3,082)
- -----------------------------------------------------------------------------------------------------------------
TOTAL BUSINESS UNIT INCOME 31,653 49,713 66,362 80,642
- -----------------------------------------------------------------------------------------------------------------
Equity in Income (Loss) of Investees:
J. Ray McDermott, S.A. 12,646 8,414 9,845 22,844
B&W Operations 1,754 3,479 37,595 7,415
Engineering, Construction and
Industrial Operations 398 (1,128) 522 (40)
Other - 2,936 - 4,430
- -----------------------------------------------------------------------------------------------------------------
TOTAL EQUITY IN INCOME
OF INVESTEES 14,798 13,701 47,962 34,649
- -----------------------------------------------------------------------------------------------------------------
Corporate G&A Expense (9,021) (9,846) (23,399) (26,123)
- -----------------------------------------------------------------------------------------------------------------
TOTAL OPERATING INCOME $ 37,430 $ 53,568 $ 90,925 $ 89,168
=================================================================================================================
</TABLE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 1995 VS. THREE MONTHS
ENDED DECEMBER 31, 1994
JRM's revenues increased $25,046,000 to $272,236,000 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 offshore and fabrication activities
in North America.
15
<PAGE> 16
B&W Operations' revenues increased $10,429,000 to $337,848,000 primarily due to
higher revenues from the Power Generations Group's contracts for replacement
nuclear steam generators for domestic customers manufactured 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 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 increased
$2,392,000 to $181,606,000 primarily due to higher revenues from Engineering
and Construction Group's engineering activities in Canada and the U. S. In
addition, there were higher revenues from the Shipbuilding and Industrial
Group's air-cooled heat exchangers. These increases were partially offset by
lower revenues from the Engineering and Construction Group's repair and
alteration of utility and industrial boilers in the U.S. and the Shipbuilding
and Industrial Group's shipyard operations.
JRM's business unit income decreased $18,420,000 to $7,398,000 primarily due
the completion of higher profit margin contracts in the Far East and Middle
East in the prior period, and lower operating income on marine activities in
North America due to weather downtime and margins on certain contracts. These
decreases were partially offset by higher volume and margins on North American
fabrication activities.
B&W Operations' business unit income increased $9,784,000 to $30,704,000
primarily due to the Power Generation Group's improved margins on its fossil
fuel steam and environmental control systems (including a license buyout
agreement of $8,574,000), and on its replacement parts. In addition, there
were higher volume and margins from the Government Group's defense and
space-related products (other than nuclear fuel assemblies and reactor
components).
Engineering, Construction and Industrial Operations' business unit loss
decreased $1,402,000 to $3,661,000 primarily due to improved margins from the
Shipbuilding and Industrial Group's shipyard operations and higher volume and
margins on air-cooled heat
16
<PAGE> 17
exchangers. In addition, there was higher volume from the Engineering and
Construction Group's engineering activities in Canada and the U.S. These
increases were partially offset by lower volume and margins from the
Engineering and Construction Group's repair and alteration of utility and
industrial boilers in the U. S.
Other business unit income decreased $10,826,000 from income of $8,038,000 to a
loss of $2,788,000 primarily due to lower favorable workers' compensation cost
adjustments and higher employee benefit expenses.
JRM's equity in income of investees increased $4,232,000 to $12,646,000. This
increase was primarily due to including the results of the CMM Mexican joint
venture which was not a part of JRM's marine construction services business in
the prior period and higher operating activity from the Brown and Root
McDermott Fabricators Limited joint venture which was formed in the last
quarter of the prior year. These increases were partially offset by lower
results from both the HeereMac and McDermott-ETPM West, Inc. joint ventures.
The revenues of these two joint ventures declined from $136,026,000 to
$117,465,000, primarily in the U. S. Gulf, the Far East and in the North Sea,
partially offset by increased volume in West Africa. The equity income from
these two joint ventures declined from $8,438,000 to $3,833,000 but the decline
was not as severe due to a reduction to an anticipated loss on a joint venture
contract. While both joint ventures performed at low levels during fiscal
1996, worldwide demand for offshore drilling rigs has increased and has
resulted in an increase in these joint venture's backlog.
B&W Operations' equity in income of investees decreased $1,725,000 to
$1,754,000 primarily due to the lower operating results in a domestic joint
venture.
Engineering, Construction and Industrial Operations equity in income of
investees increased $1,526,000 from a loss of $1,128,000 to income of $398,000
primarily due to improved results from a domestic fabrication joint venture and
several Canadian joint ventures.
17
<PAGE> 18
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 $5,502,000 to $8,155,000 primarily due to decreases
in investments in government obligations and other investments in the current
period and income recognized due to the settlement of claims for interest
relating to foreign tax refunds and contract claims in the prior period.
Interest expense increased $4,374,000 to $20,993,000 primarily due to a
reduction in accrued interest of $5,000,000 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 $2,126,000 to $6,656,000 primarily due to
minority shareholder participation in the results of JRM in the current period
and income recognized in the prior period due to McDermott Engineers &
Constructors (formerly Delta Catalytic Corporation) losses.
Other-net expense decreased $1,613,000 to $3,833,000. This decrease was
primarily due to lower foreign currency transactions losses in the current
period and higher bank fees and discounts on the sale of certain accounts
receivable in the prior period.
The provision for income taxes decreased $3,319,000 to $7,497,000, while income
before provision for income taxes decreased $26,527,000 to $14,103,000. The
decrease in the provision for income taxes is primarily due to a decrease in
income. 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 tax was 53% of pretax income for the three months ended December 31,
1995 compared to a provision for income taxes of 27% of pretax income for the
three months ended December 31, 1994.
18
<PAGE> 19
RESULTS OF OPERATIONS - NINE MONTHS ENDED DECEMBER 31, 1995 VS. NINE MONTHS
ENDED DECEMBER 31, 1994
JRM's revenues increased $134,438,000 to $939,996,000 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.
B&W Operations' revenues increased $30,691,000 to $968,827,000 primarily due to
higher revenues from the Power Generation Group's contracts for replacement
nuclear steam generators for domestic customers manufactured 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
$15,392,000 to $549,952,000 primarily due to lower revenues from the
Engineering and Construction Group's activities relating to the construction,
repair and alteration of utility and industrial boilers in the U. S., and from
the Shipbuilding and Industrial Group's shipyard operations. These decreases
were partially offset by higher revenues from the Engineering and Construction
Group's maintenance, construction, and engineering activities in Canada and
domestic engineering activities. In addition, there were higher revenues from
the Shipbuilding and Industrial Group's air-cooled heat exchangers.
JRM's business unit income decreased $24,339,000 to $42,769,000 primarily due
to lower margins because of the completion of higher profit margin contracts in
the Far East and the Middle East in the prior period, and lower operating
income on marine activities in North America due to weather downtime and
margins on certain contracts. These
19
<PAGE> 20
decreases were partially offset by higher volume and margins on North American
fabrication activities, higher volume and margins on North Sea offshore
activities and improved margins from engineering activities in the current
period, and operating losses associated with the fabrication yard in Scotland
(which is now operated by the Brown and Root McDermott Fabricators Limited
joint venture, which was formed in the last quarter of the prior year and is
now reported on the equity method) and the accelerated depreciation of
$4,314,000 on certain marine equipment in the Far East in the prior period.
B&W Operations' business unit income increased $5,042,000 to $42,655,000
primarily due to higher volume and margins from the Power Generation Group's
replacement nuclear steam generators and plant enhancement projects and
improved margins from fabrication of fossil fuel steam and environmental
control systems (including a license buyout agreement of $8,574,000). These
increases were partially offset by lower margins from the fabrication of
industrial boilers in the U. S. In addition, there were higher volume and
margins 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
decreased $1,175,000 to $19,822,000 primarily due to improved margins from the
Shipbuilding and Industrial Group's shipyard operations and higher volume and
margins from air-cooled heat exchangers. These increases were partially offset
by 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.
Other business unit income increased $3,842,000 from a loss of $3,082,000 to
income of $760,000 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.
20
<PAGE> 21
JRM's equity in income of investees decreased $12,999,000 to $9,845,000. 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 $560,171,000 to $435,488,000 primarily in the U.S. Gulf, the Far
East and in the North Sea, partially offset by increased volume in West Africa.
The equity income from these two joint ventures declined from $22,993,000 to
$8,706,000 as a result of reduced volume and reduced margins. While both
joint ventures performed at low levels during fiscal 1996, worldwide demand for
offshore drilling rigs has increased and has resulted in an increase in these
joint venture's backlog. Equity in income of investees also increased due to
income from the Brown and Root McDermott Fabricators Limited joint venture.
B&W Operations' equity in income of investees increased $30,180,000 to
$37,595,000 primarily due to the Power Generation Group's sale of power
purchase contracts back to a local utility in the current period 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 $11,954,000 to $27,845,000 primarily due to decreases
in investments in government obligations and other investments in the current
year and income recognized on a receivable from an equity investee and
settlement of claims for interest relating to foreign tax refunds and contract
claims in the prior year.
Interest expense increased $20,348,000 to $63,907,000 primarily due to a
reduction in accrued interest of $16,300,000 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 $6,264,000 to $15,802,000 primarily due to
minority shareholder participation in the results of JRM in the current year
and income recognized in the prior period due to McDermott Engineers &
Constructors losses.
21
<PAGE> 22
Other-net increased $27,113,000 to income of $1,731,000 from expense of
$25,382,000. 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, losses on the sale of investments and higher bank
fees and discounts on the sale of certain accounts receivable, all in the prior
period, and gains of $5,133,000 on the disposal of assets in the current
period.
The provision for income taxes decreased $4,518,000 to $16,300,000, while
income before provision for income taxes and cumulative effect of accounting
change decreased $9,696,000 to $40,792,000. The decrease in the provision for
income taxes was in part due to a decrease in income and a reappraisal of
liabilities in certain foreign tax jurisdictions. 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 40% of
pretax income for the nine months ended December 31, 1995 compared to a
provision for income taxes of 41% of pretax income for the nine months ended
December 31, 1994.
Net income decreased $3,413,000 to $24,492,000 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.
22
<PAGE> 23
Backlog
<TABLE>
<CAPTION>
12/31/95 3/31/95
-------- -------
(In thousands)
<S> <C> <C>
Business Unit Backlog:
J. Ray McDermott, S.A. $ 734,254 $ 1,002,968
B&W Operations 2,150,747 1,952,580
Engineering, Construction
and Industrial Operations 484,095 623,719
Other (including Transfer Eliminations) (88,049) (105,435)
- -------------------------------------------------------------------------------------------------------------
TOTAL BACKLOG $ 3,281,047 $ 3,473,832
=============================================================================================================
</TABLE>
JRM's backlog at December 31, 1995 and March 31, 1995 was $734,254,000 and
$1,002,968,000, respectively. Fiscal 1996 revenues are expected to be about 20%
below what JRM anticipated at the beginning of the fiscal year. This lower
market activity is reflected in the decrease in JRM's backlog at December 31,
1995 and in the low level of performance of JRM's unconsolidated joint ventures
expected through the remainder of fiscal 1996. However, worldwide demand for
offshore drilling rigs has increased and this, historically, has been a leading
indicator for an increase in JRM's operations. This is already reflected in the
increase in backlog relating to contracts to be performed by JRM's
unconsolidated joint ventures to approximately $1,240,000,000 at December 31,
1995 from $922,000,000 at March 31, 1995.
B&W Operations' backlog at December 31, 1995 was $2,150,747,000 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 December 31, 1995 this business unit's backlog with the U.S.
Government was $807,844,000 (of which $89,411,000 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 December 31,
1995 was $484,095,000 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 December 31, 1995 this business unit's
backlog with the U.S. Government was $56,321,000 (of which $6,603,000 had not
been funded).
23
<PAGE> 24
Liquidity and Capital Resources
During the nine months ended December 31, 1995, McDermott International's cash
and cash equivalents increased $29,174,000 to $115,083,000 and total debt
increased $10,543,000 to $997,230,000. During this period, McDermott
International used cash of $241,037,000 in operating activities; $173,272,000
for repayment of long-term debt; $52,503,000 for additions to property, plant
and equipment; $26,518,000 for the conversion of a barge to a floating
production unit; and $46,764,000 for dividends on International's common and
preferred stock. During the nine months ended December 31, 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 and the timing of the collection of contract
billings by North American fabrication and marine operations. 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.
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 nine months 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 $5,300 per claim over the
last three years) has continued to rise. Claims paid during the nine months
ended December 31, 1995 were $114,396,000, of which $101,952,000 has been
recovered or is due from insurers. At December 31, 1995, receivables of
$52,750,000 were due from insurers for
24
<PAGE> 25
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 $15,814,000 to $52,503,000 for the nine months ended December 31,
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 $26,518,000 in the nine months ended December 31, 1995
for the conversion of a barge to a floating production unit which is now
leased to a third party. The barge conversion is financed by $21,700,000 in
loan facilities, of which $20,674,000 was outstanding at December 31, 1995.
At December 31, 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 July 1995 from
$225,000,000 to $175,000,00 and during December 1995 to $140,000,000. During
November 1995, The Babcock & Wilcox Company and the bank amended the agreement
to provide for an annual renewal of the program.
25
<PAGE> 26
At December 31, and March 31, 1995, International and its subsidiaries, had
available to them various uncommitted short- term lines of credit totaling
$418,319,000 and $373,867,000, respectively. Borrowings by McDermott
International against these lines of credit at December 31 and March 31, 1995
were $210,715,000 and $63,025,000, respectively. In addition, The Babcock &
Wilcox Company had available to it an unsecured and committed revolving credit
facility. During September 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.
Borrowings outstanding against this facility at December 31, 1995 were
$35,000,000, while there were none outstanding at March 31, 1995. McDermott
Engineers & Constructors (Canada) Ltd., formerly Delta Catalytic Corporation,
had available from a certain Canadian bank an unsecured and committed revolving
credit facility of $14,925,000. At March 31, 1995, borrowings outstanding
against this facility were $7,420,000. In October 1995, this facility was
repaid and cancelled. JRM had available to it a $150,000,000 unsecured and
committed revolving credit facility of which $60,000,000 was outstanding at
December 31, 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.
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 December 31,
1995 was $368,837,000 (amortized cost $367,249,000). Subsequent to December 31,
1995, $48,726,000 (amortized cost) of short-term investments was used to repay
short-term debt. At December 31, 1995, approximately $136,786,000 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 $79,222,000 under short-term repurchase
agreements which were secured by government obligations with a fair value of
$81,052,000 at December 31, 1995.
26
<PAGE> 27
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, 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 $152,462,000 from a deficit of $40,790,000 at
March 31, 1995 to $111,672,000 at December 31, 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. McDermott International's
financial strategy is to rebuild its investment portfolio and maintain a level
of cash and investments equal to or greater than its total debt. It intends to
achieve this balance from improved operating performance and the disposition of
unused, surplus and non- strategic assets which have been identified and placed
in a program for their disposal.
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
27
<PAGE> 28
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.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," effective for fiscal years beginning after December 15, 1995.
SFAS No. 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. McDermott International has not yet
finalized its review of the provisions of this statement, and accordingly, has
not yet determined whether it will adopt SFAS No. 123 for expense recognition
purposes, or continue to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and make the pro forma information
disclosures required under the new standard.
28
<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 Per Common and Common
Equivalent Share - Page 31
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
Report on Form 8-K, Item 5 was filed on December 15, 1995.
Signatures
29
<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.
/s/ Daniel R. Gaubert
--------------------------------
By: Daniel R. Gaubert
Vice President, Finance
and Controller
(Principal Accounting Officer)
February 12, 1996
30
<PAGE> 31
EXHIBIT INDEX
Exhibit Description
- ------- -----------
Exhibit 11 - Calculation of Earnings Per Common and Common Equivalent Share -
Page 31
Exhibit 27 - Financial Data Schedule
<PAGE> 1
EXHIBIT 11
MCDERMOTT INTERNATIONAL, INC.
CALCULATION OF EARNINGS
PER COMMON AND COMMON EQUIVALENT SHARE
(In thousands, except shares and per share amounts)
PRIMARY AND FULLY DILUTED
<TABLE>
<CAPTION>
THREE NINE
----- ----
MONTHS ENDED MONTHS ENDED
------------ ------------
12/31/95 12/31/94 12/31/95 12/31/94
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income before cumulative effect of
accounting change $ 6,606 $ 29,814 $ 24,492 $ 29,670
Less dividend requirements of preferred
stock, Series C 2,066 2,066 6,199 6,199
- --------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of
accounting change applicable to
common stock 4,540 27,748 18,293 23,471
Cumulative effect of accounting change - - - (1,765)
- --------------------------------------------------------------------------------------------------------------------
Net income for primary computation $ 4,540 $ 27,748 $ 18,293 $ 21,706
====================================================================================================================
Weighted average number of common
shares outstanding during the period 54,289,682 53,707,031 54,168,265 53,584,706
Common stock equivalents of stock options
and stock appreciation rights based on
"treasury stock" method 38,500 267,403 198,711 137,511
- --------------------------------------------------------------------------------------------------------------------
Weighted average number of common
and common equivalent shares
outstanding during the period 54,328,182 53,974,434 54,366,976 53,722,217
====================================================================================================================
Earnings (loss) per common and
common equivalent share: (1)
Income before cumulative effect
of accounting change $ 0.08 $ 0.51 $ 0.34 $ 0.43
Accounting change - - - (0.03)
- --------------------------------------------------------------------------------------------------------------------
Net income $ 0.08 $ 0.51 $ 0.34 $ 0.40
====================================================================================================================
</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 DECEMBER 31, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 115,083
<SECURITIES> 63,789
<RECEIVABLES> 589,334
<ALLOWANCES> 83,633
<INVENTORY> 495,221
<CURRENT-ASSETS> 1,585,532
<PP&E> 2,181,086
<DEPRECIATION> 1,350,114
<TOTAL-ASSETS> 4,551,738
<CURRENT-LIABILITIES> 1,473,860
<BONDS> 585,276
<COMMON> 54,370
0
2,875
<OTHER-SE> 654,391
<TOTAL-LIABILITY-AND-EQUITY> 4,551,738
<SALES> 2,389,768
<TOTAL-REVENUES> 2,389,768
<CGS> 2,346,805
<TOTAL-COSTS> 2,346,805
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,907
<INCOME-PRETAX> 40,792
<INCOME-TAX> 16,300
<INCOME-CONTINUING> 24,492
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,492
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
</TABLE>
