<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) FORM 10-K/A-1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission File Number 1-8430
McDERMOTT INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
REPUBLIC OF PANAMA 72-0593134
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1450 POYDRAS STREET
NEW ORLEANS, LOUISIANA 70112-6050
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (504) 587-5400
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of each class on which registered
Common Stock, $1.00 par value New York Stock Exchange
Rights to Purchase Preferred Stock New York Stock Exchange
(Currently Traded with Common Stock)
Securities registered pursuant to Section 12(g) of the Act: None
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 and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of voting Common stock held by non-affiliates of the
registrant was $2,628,588,072 as of May 14, 1998.
The number of shares outstanding of the Company's Common Stock at May 14, 1998
was 60,710,803.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934
in connection with the Company's 1998 Annual Meeting of Stockholders are
incorporated by reference into Part III hereof.
<PAGE>
McDERMOTT INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENT SCHEDULES AND EXHIBITS
Page
Report of Independent Auditors 2
Financial Statement Schedule Covered by Report of Independent Auditors:
I Condensed Financial Information of Registrant 3
All schedules other than the above have been omitted because
they are not required or the information is included in the
Consolidated Financial Statements or Notes thereto.
Signature of Registrant 9
Exhibit Index
- -------------
21 Significant Subsidiares of the Registrant
27 Financial Data Schedule
27 Financial Data Schedule
99 Supplementary Financial Information on Panamanian
Securities Regulations
-1-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
McDermott International, Inc.
We have audited the consolidated financial statements of McDermott
International, Inc. as of March 31, 1998 and 1997, and for each of the three
years in the period ended March 31, 1998, and have issued our report thereon
dated May 19, 1998, except for the fifth and sixth paragraphs of Note 11, as to
which the date is June 1, 1998. Our audits also included the financial
statement schedule listed in the Index to Financial Statement Schedules and
Exhibits in this Form 10-K/A-1. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
New Orleans, Louisiana
May 19, 1998
-2-
<PAGE>
SCHEDULE I
MCDERMOTT INTERNATIONAL, INC.
(PARENT COMPANY ONLY)
BALANCE SHEET
MARCH 31, 1998 AND 1997
ASSETS
- ------
1998 1997
---- ----
(In thousands)
Current Assets:
Cash and cash equivalents $ 10,272 $ 43
Accounts receivable - trade 561 337
Accounts receivable - other 1,993 1,164
Accounts receivable from subsidiaries 107,305 179,399
Other current assets 3,474 3,228
- ------------------------------------------------------------------
Total Current Assets 123,605 184,171
- ------------------------------------------------------------------
Investments in Subsidiaries and
Other Investees, at Equity 1,320,178 1,102,496
- ------------------------------------------------------------------
Property, Plant and Equipment, at Cost:
Buildings 3,328 3,328
Machinery and equipment 6,745 6,834
- ------------------------------------------------------------------
10,073 10,162
Less accumulated depreciation 10,066 10,116
- ------------------------------------------------------------------
Net Property, Plant and Equipment 7 46
- ------------------------------------------------------------------
Investments in Debt Securities 38,730 -
- ------------------------------------------------------------------
Other Assets 54,641 39,634
- ------------------------------------------------------------------
TOTAL $1,537,161 $1,326,347
==================================================================
See accompanying notes to condensed financial information.
-3-
<PAGE>
Continued
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
1998 1997
---- ----
(In thousands)
Current Liabilities:
Current maturities of long-term debt $ 12,200 $ 22,600
Accounts payable 632 1,500
Accounts payable to subsidiaries 819,254 813,804
Accrued liabilities - other 11,551 24,486
Income taxes 2,888 2,362
- --------------------------------------------------------------------
Total Current Liabilities 846,525 864,752
- --------------------------------------------------------------------
Long-Term Debt - 12,200
- --------------------------------------------------------------------
Other Liabilities 10,863 12,394
- --------------------------------------------------------------------
Contingencies
- --------------------------------------------------------------------
Stockholders' Equity:
Preferred stock 2,875 2,875
Common stock 56,608 54,937
Capital in excess of par value 1,012,338 962,445
Deficit (341,916) (538,163)
Minimum pension liability (4,730) (2,148)
Net unrealized loss on investments 675 (4,132)
Currency translation adjustments (42,502) (38,813)
Treasury stock (3,575) -
- --------------------------------------------------------------------
Total Stockholders' Equity 679,773 437,001
- --------------------------------------------------------------------
TOTAL $ 1,537,161 $ 1,326,347
====================================================================
-4-
<PAGE>
SCHEDULE I
MCDERMOTT INTERNATIONAL, INC.
(PARENT COMPANY ONLY)
STATEMENT OF INCOME (LOSS)
FOR THE THREE FISCAL YEARS ENDED MARCH 31, 1998
1998 1997 1996
---- ---- ----
(In thousands)
Revenues $ - $ - $ 840
- -----------------------------------------------------------------------------
Costs and Expenses:
Cost of operations (excluding depreciation
and amortization) 640 16,072 2
Depreciation and amortization 2,495 761 3,067
Selling, general and administrative expenses 1,246 3,284 2,949
- -----------------------------------------------------------------------------
4,381 20,117 6,018
Gain (Loss) on Asset Disposals-net 2 (24) -
- -----------------------------------------------------------------------------
Operating Loss before Equity in
Income (Loss) of Investees (4,379) (20,141) (5,178)
Equity in Income (Loss) of Subsidiaries
and Other Investees 221,974 (190,569) 16,314
- -----------------------------------------------------------------------------
Operating Income (Loss) 217,595 (210,710) 11,136
- -----------------------------------------------------------------------------
Other Income (Expense):
Interest income 1,870 6,729 21,913
Interest expense (4,728) (5,225) (12,801)
Other - net 953 1,871 377
- -----------------------------------------------------------------------------
(1,905) 3,375 9,489
- -----------------------------------------------------------------------------
Income (Loss) before Provision for
(Benefit from) Income Taxes 215,690 (207,335) 20,625
Benefit from Income Taxes - (1,230) -
- -----------------------------------------------------------------------------
Net Income (Loss) $215,690 $(206,105) $20,625
=============================================================================
See accompanying notes to condensed financial information.
-5-
<PAGE>
Schedule I
McDERMOTT INTERNATIONAL, INC.
(PARENT COMPANY ONLY)
STATEMENT OF CASH FLOWS
FOR THE THREE FISCAL YEARS ENDED MARCH 31, 1998
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
1998 1997 1996
---- ---- ----
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 215,690 $(206,105) $20,625
- -------------------------------------------------------------------------------
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization 2,495 761 3,067
Equity in income or loss of subsidiaries
and other investees, less dividends (214,774) 207,769 4,936
(Gain) loss on asset disposals-net (2) 24 -
Benefit from deferred taxes - (1,230) -
Other 10,419 7,385 8,349
Changes in assets and liabilities:
Accounts and notes receivable 27,398 153,023 300,318
Accounts payable 4,582 (196,099) (249,706)
Income taxes 526 (4,212) (195)
Other, net (26,909) (6,897) (5,953)
- -------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 19,425 (45,581) 81,441
- -------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from asset disposals 2 6 -
Purchases of property, plant and equipment - 2 -
Investments in subsidiaries - (68,162) (100)
Maturities of debt securities 5,000 - -
Decrease in loans to subsidiaries - 231,000 -
- -------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 5,002 162,846 (100)
- -------------------------------------------------------------------------------
-6-
<PAGE>
CONTINUED
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
1998 1997 1996
---- ---- ----
(In thousands)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt $ (22,600) $ (20,500) $ (18,500)
Issuance of common stock 31,431 565 1,802
Decrease in loans from subsidiaries - (45,455) (2,329)
Dividends paid (19,367) (51,947) (62,411)
Purchase of McDermott International, Inc.
stock (3,662) - -
- -------------------------------------------------------------------------------
NET CASH USED IN FINANCING ACTIVITIES (14,198) (117,337) (81,438)
- -------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 10,229 (72) (97)
- -------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 43 115 212
- -------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END
OF YEAR $ 10,272 $ 43 $ 115
===============================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, including intercompany
interest (net of amount capitalized) $ 5,317 $ 5,778 $ 13,267
Income taxes, net of refunds $ - $ - $ 199
===============================================================================
See accompanying notes to condensed financial information.
-7-
<PAGE>
SCHEDULE I
McDERMOTT INTERNATIONAL, INC.
(PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL INFORMATION
FOR THE THREE FISCAL YEARS ENDED MARCH 31, 1998
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared to present the
unconsolidated financial position, results of operations and cash flows of
McDermott International, Inc. (Parent Company Only). Investments in subsidiaries
and other investees are stated at cost plus equity in undistributed earnings
from date of acquisition. These Parent Company Only financial statements should
be read in conjunction with McDermott International, Inc.'s consolidated
financial statements.
NOTE 2 - LONG-TERM DEBT
Long-term debt consists of:
1998 1997
---- ----
(In thousands)
10.375% Note payable due 1998 (Secured) $12,200 $34,800
Less: Amounts due within one year 12,200 22,600
------- -------
$ - $12,200
======= =======
NOTE 3 - CONTINGENCIES
McDermott International, Inc. has guaranteed the indebtedness of certain of its
subsidiaries and other investees. At March 31, 1998, these guarantees included
$16,869,000 of loans to and $5,289,000 of standby letters of credit issued by
certain subsidiaries and other investees.
At March 31, 1998, McDermott International, Inc. had pledged all of the fair
value of its investments in debt securities to secure payments under and in
connection with certain reinsurance agreements.
NOTE 4 - DIVIDENDS RECEIVED
McDermott International, Inc. received dividends from its consolidated
subsidiaries of $7,200,000, $17,200,000, and $21,250,000 for the years ended
March 31, 1998, 1997 and 1996, respectively.
-8-
<PAGE>
SIGNATURE OF THE REGISTRANT
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
McDERMOTT INTERNATONAL, INC.
s/Daniel R. Gaubert
----------------------
By: Daniel R. Gaubert
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
June 24, 1998
-9-
<PAGE>
EXHIBIT INDEX
Exhibit
Number
- -------
21 Significant Subsidiares of the Registrant
27 Financial Data Schedule
27.1 Financial Data Schedule - 1st Quarter
27.2 Financial Data Schedule - 2nd Quarter
99 Supplementary Financial Information on Panamanian Securities Regulations
-10-
<PAGE>
EXHIBIT 21
McDERMOTT INTERNATIONAL, INC.
SIGNIFICANT SUBSIDIARIES OF THE REGISTRANT
FISCAL YEAR ENDED MARCH 31, 1998
JURISDICTION PERCENTAGE
OF OF OWNERSHIP
NAME OF COMPANY ORGANIZATION INTEREST
McDermott International Investments Co., Inc. Panama 100
McDermott International Project Management, Inc. Panama 100
McDermott Sakhalin, Inc. Panama 100
J. Ray McDermott, S.A. Panama 63
J. Ray McDermott Holdings, Inc. Delaware 100
J. Ray McDermott, Inc. Delaware 100
J. Ray McDermott International, Inc. Panama 100
Varsy International N.V. Netherlands Antilles 100
McDermott Incorporated Delaware 94
Babcock & Wilcox Investment Company Delaware 100
The Babcock & Wilcox Company Delaware 100
The subsidiaries omitted from the foregoing list do not, considered in the
aggregate as a single subsidiary, constitute a significant subsidiary.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MCDERMOTT
INTERNATIONAL'S JUNE 30, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 289,330
<SECURITIES> 76,393
<RECEIVABLES> 652,523
<ALLOWANCES> 99,650
<INVENTORY> 389,871
<CURRENT-ASSETS> 1,819,434
<PP&E> 1,774,193
<DEPRECIATION> 1,190,500
<TOTAL-ASSETS> 4,527,722
<CURRENT-LIABILITIES> 1,509,217
<BONDS> 625,702
0
2,875
<COMMON> 55,258
<OTHER-SE> 488,988
<TOTAL-LIABILITY-AND-EQUITY> 4,527,722
<SALES> 928,087
<TOTAL-REVENUES> 928,087
<CGS> 880,744
<TOTAL-COSTS> 880,744
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,205
<INCOME-PRETAX> 127,038
<INCOME-TAX> 17,178
<INCOME-CONTINUING> 109,860
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 109,860
<EPS-PRIMARY> 1.97
<EPS-DILUTED> 1.79
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MCDERMOTT
INTERNATIONAL'S SEPTEMBER 30, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 442,714
<SECURITIES> 98
<RECEIVABLES> 623,892
<ALLOWANCES> 97,914
<INVENTORY> 370,009
<CURRENT-ASSETS> 1,885,775
<PP&E> 1,765,920
<DEPRECIATION> 1,201,851
<TOTAL-ASSETS> 4,543,500
<CURRENT-LIABILITIES> 1,502,906
<BONDS> 623,754
0
2,875
<COMMON> 55,801
<OTHER-SE> 555,815
<TOTAL-LIABILITY-AND-EQUITY> 4,543,500
<SALES> 1,848,138
<TOTAL-REVENUES> 1,848,138
<CGS> 1,746,639
<TOTAL-COSTS> 1,746,639
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,393
<INCOME-PRETAX> 199,159
<INCOME-TAX> 51,138
<INCOME-CONTINUING> 148,021
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 148,021
<EPS-PRIMARY> 2.62
<EPS-DILUTED> 2.40
</TABLE>
<PAGE>
EXHIBIT 99
McDERMOTT INTERNATIONAL, INC. ADDITIONAL EXHIBITS
SUPPLEMENTARY FINANCIAL INFORMATION
PREPARED IN ACCORDANCE WITH AND SOLELY FOR THE PURPOSE OF
COMPLYING WITH CERTAIN PANAMANIAN SECURITIES REGULATIONS
F.Y.E.
3/31/98
-------
(Unaudited)
(In thousands)
ARTICLE 29
----------
RULE #9 - INVESTMENTS IN SUBSIDIARIES AND OTHER
INVESTEES AT EQUITY
- -------------------
Head Office (Parent Company) $ 1,320,178
Subsidiaries and Affiliates -
Eliminations/Other (1,247,789)
-----------
McDERMOTT INTERNATIONAL, INC. $ 72,389
===========
RULE #25C - PARENT COMPANY ACCOUNTS AND NOTES
PAYABLE TO SUBSIDIARIES
- -------------------------
Head Office (Parent Company) $ 819,254
Eliminations/Other (819,254)
-----------
McDERMOTT INTERNATIONAL, INC. $ -
===========
ARTICLE 30
----------
(c) - OPERATING EXPENSES BY SEGMENT
- -----------------------------------
Power Generation Systems $ 1,060,290
Marine Construction Services 1,748,364
Government Operations 334,703
Other Operations 333,108
Eliminations (31,878)
-----------
McDERMOTT INTERNATIONAL, INC. $ 3,444,587
===========
RULE #40 - OPERATING REVENUES
- -----------------------------
Head Office (Parent Company) $ -
Subsidiaries and Affiliates 3,674,635
Eliminations/Other -
-----------
McDERMOTT INTERNATIONAL, INC. $ 3,674,635
===========
<PAGE>
Continued
F.Y.E.
3/31/98
-------
(Unaudited)
(In thousands)
ARTICLE 30 - Continued
----------
[CAPTION]
RULE #41 - OPERATING EXPENSES
- -----------------------------
Head Office (Parent Company) $ 4,381
Subsidiaries and Affiliates 3,479,244
----------
McDERMOTT INTERNATIONAL, INC. $3,483,625
==========
RULE #43 - DIVIDENDS RECEIVED
- -----------------------------
Head Office (Parent Company)
from Subsidiaries and Affiliates $ 7,200
Subsidiaries and Affiliates
from Other Corporations 9,832
Eliminations/Other (7,200)
----------
McDERMOTT INTERNATIONAL, INC. $ 9,832
==========
RULE #44 - INTEREST INCOME
- --------------------------
Head Office (Parent Company):
from Subsidiaries and Affiliates $ 3
from Other Corporations 1,867
Subsidiaries and Affiliates
from Other Corporations 60,668
Eliminations (3)
----------
McDERMOTT INTERNATIONAL, INC. $ 62,535
==========
RULE #46 - OTHER MISCELLANEOUS REVENUES
- ---------------------------------------
Foreign Currency Transaction Gains - Net 5,200
Other Items - Net (1,947)
----------
McDERMOTT INTERNATIONAL, INC. $ 3,253
==========
RULE #51 - INVESTMENTS IN UNCONSOLIDATED AFFILIATES AT EQUITY
- -------------------------------------------------------------
Balance at 3/31/97 $ 61,017
Additional Investments 4,380
Return of Investment 2,124
Equity Income 24,006
Dividends Received (9,832)
Other Changes (5,058)
----------
Balance at 3/31/98 $ 72,389
==========
