<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) FORM 10-K/A
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
-----------------
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from April 1, 1999 to December 31, 1999
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 (I.R.S. Employer
of 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 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 the registrant's common stock held by
non-affiliates of the registrant was $549,583,228 as of February 8, 2000.
The number of shares outstanding of the Company's Common Stock at April 29, 1999
was 59,822,285.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 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 1999 Annual Meeting of Stockholders are
incorporated by reference into Part III hereof.
<PAGE> 2
McDERMOTT INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENT SCHEDULES AND EXHIBITS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of PricewaterhouseCoopers LLP 3
Report of Ernst & Young LLP 4
Financial Statement Schedule Covered by Reports of Independent Accountants:
I Condensed Financial Information of Registrant 5
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 12
</TABLE>
Exhibit Index
- -------------
99 Supplementary Financial Information on Panamanian
Securities Regulations
2
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Stockholders
of McDermott International, Inc.
We have audited the consolidated financial statements of McDermott
International, Inc. ("the Company") as of December 31, 1999 and March 31, 1999
and for the nine-month period ended December 31, 1999 and the year ended March
31, 1999, and have issued our report thereon dated February 22, 2000. Our report
includes an emphasis of a matter paragraph referring to Notes 11 and 20 of the
consolidated financial statements which discuss certain asbestos-related claims
against the Company's subsidiary, The Babcock & Wilcox Company ("B&W"), B&W's
related voluntary petition with the U.S. Bankruptcy Court to reorganize under
Chapter 11 of the U.S. Bankruptcy Code, and certain liquidity matters resulting
from the filing. Our audit also included Schedule I - Condensed Financial
Information of Registrant as of December 31, 1999 and March 31, 1999 and for the
nine-month period ended December 31, 1999 and the year ended March 31, 1999. In
our opinion, this financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.
PricewaterhouseCoopers LLP
New Orleans, Louisiana
February 22, 2000
3
<PAGE> 4
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
McDermott International, Inc.
We have audited the consolidated statements of income, comprehensive income
(loss) and cash flows of McDermott International, Inc. for the year ended March
31, 1998, and have issued our report thereon dated May 19, 1998. Our audit also
included the financial statement schedule for the year ended March 31, 1998
listed in the Index to Financial Statement Schedules and Exhibits in the Form
10-K/A. This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audit.
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
4
<PAGE> 5
Schedule I
McDERMOTT INTERNATIONAL, INC.
(PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
----------- ----------
(In thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 8,991 $ 9,374
Accounts receivable - trade, net 338 357
Accounts receivable - other 1,811 2,244
Accounts receivable from subsidiaries 84,527 95,236
Other current assets 808 677
---------- ----------
Total Current Assets 96,475 107,888
---------- ----------
Investments in Subsidiaries and
Other Investees, at Equity 1,727,139 1,626,555
---------- ----------
Note Receivable from Subsidiaries 139,869 350
---------- ----------
Property, Plant and Equipment, at Cost:
Buildings 3,328 3,328
Machinery and equipment 6,710 6,741
---------- ----------
10,038 10,069
Less accumulated depreciation 10,038 10,069
---------- ----------
Net Property, Plant and Equipment -- --
---------- ----------
Investments in Debt Securities 29,230 29,801
---------- ----------
Other Assets 38,631 83,967
---------- ----------
TOTAL $2,031,344 $1,848,561
========== ==========
</TABLE>
See accompanying notes to condensed financial information.
5
<PAGE> 6
Continued
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
------------ -----------
(In thousands)
<S> <C> <C>
Current Liabilities:
Accounts payable $ 399 $ 478
Accounts payable to subsidiaries 1,207,038 1,041,941
Accrued liabilities - other 26,315 7,237
Income taxes 1,660 1,661
----------- -----------
Total Current Liabilities 1,235,412 1,051,317
----------- -----------
Other Liabilities 4,074 3,510
----------- -----------
Commitments and Contingencies
Stockholders' Equity:
Common stock 61,625 61,148
Capital in excess of par value 1,048,848 1,028,393
Accumulated deficit (208,904) (200,432)
Treasury stock (62,731) (62,731)
Accumulated other comprehensive loss (46,980) (32,644)
----------- -----------
Total Stockholders' Equity 791,858 793,734
----------- -----------
TOTAL $ 2,031,344 $ 1,848,561
=========== ===========
</TABLE>
6
<PAGE> 7
Schedule I
McDERMOTT INTERNATIONAL, INC.
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Nine-Month Fiscal Year
Period Ended Ended
December 31, March 31,
1999 1999 1998
------------ --------- -----------
(In thousands)
<S> <C> <C> <C>
Costs and Expenses:
Cost of operations (excluding depreciation
and amortization) $ 1,233 $ 201 $ 640
Depreciation and amortization 1,131 1,479 2,495
Selling, general and administrative expenses 2,650 647 1,246
--------- --------- ---------
5,014 2,327 4,381
--------- --------- ---------
Gain on Asset Disposals-net 1 -- 2
--------- --------- ---------
Operating Loss before Equity in
Income of Investees (5,013) (2,327) (4,379)
--------- --------- ---------
Equity in Income of Subsidiaries
and Other Investees 43,027 149,448 221,974
--------- --------- ---------
Operating Income 38,014 147,121 217,595
--------- --------- ---------
Other Income (Expense):
Interest income 2,192 2,841 1,870
Interest expense (9,932) (2,908) (4,728)
Other - net (29,834) 18,693 953
--------- --------- ---------
(37,574) 18,626 (1,905)
--------- --------- ---------
Income before Benefit from Income
Taxes and Extraordinary Item 440 165,747 215,690
Benefit from Income Taxes -- (12,067) --
--------- --------- ---------
Income before Extraordinary Item 440 177,814 215,690
Extraordinary Item -- (24,452) --
--------- --------- ---------
Net Income $ 440 $ 153,362 $ 215,690
========= ========= =========
</TABLE>
See accompanying notes to condensed financial information.
7
<PAGE> 8
Schedule I
MCDERMOTT INTERNATIONAL, INC
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
<TABLE>
<CAPTION>
Nine-Month Fiscal Year
Period Ended Ended
December 31, March 31,
1999 1999 1998
------------ --------- -----------
(In thousands)
<S> <C> <C> <C>
Net Income $ 440 $ 153,362 $ 215,690
--------- --------- ---------
Other Comprehensive Income (Loss):
Equity in other comprehensive income (loss) of
subsidiaries and other investees (13,928) 14,078 (1,879)
Foreign currency translation adjustments -- (79) --
Minimum pension liability adjustments 63 15 284
Unrealized gains (losses) on investments:
Unrealized gains arising during the period,
net of reclassification adjustments 131
Reclassification adjustment for losses
included in net income (470) (101)
--------- --------- ---------
Other Comprehensive Income (Loss) (14,335) 13,913 (1,464)
--------- --------- ---------
Comprehensive Income (Loss) (13,895) 167,275 214,226
--------- --------- ---------
</TABLE>
See accompanying notes to condensed financial information.
8
<PAGE> 9
Schedule I
McDERMOTT INTERNATIONAL, INC.
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine-Month Fiscal Year
Period Ended Ended
December 31, March 31,
1999 1999 1998
------------ --------- -----------
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 440 $ 153,362 $ 215,690
--------- --------- ---------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 1,131 1,479 2,495
Equity in income or loss of subsidiaries
and other investees, less dividends (32,227) (105,796) (214,774)
Gain on asset disposals-net (1) -- (2)
Benefit from deferred taxes -- (1,437) --
Other 4,986 10,217 10,419
Changes in assets and liabilities:
Accounts and notes receivable 11,161 12,022 27,398
Accounts payable 77,747 222,533 4,582
Income taxes (1) (1,236) 526
Other, net 31,348 (62,803) (26,909)
--------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 94,584 228,341 19,425
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from asset disposals 1 3 2
Investments in subsidiaries -- (158,000) --
Purchases of available-for-sale securities (6,493) (16,010) --
Maturities of available-for-sale securities 6,600 7,000 5,000
Sales of available-for-sale securities -- 17,834 --
Decrease in loans to subsidiaries (87,248) (300) --
--------- --------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (87,140) (149,473) 5,002
--------- --------- ---------
</TABLE>
9
<PAGE> 10
Continued
<TABLE>
<CAPTION>
Nine-Month Fiscal Year
Period Ended Ended
December 31, March 31,
1999 1999 1998
------------ ------ -----------
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt $ -- $(12,200) $(22,600)
Issuance of common stock 1,538 4,173 31,431
Dividends paid (8,889) (13,810) (19,367)
Purchase of McDermott International, Inc. stock -- (59,156) (3,662)
Other (476) 1,227 --
-------- -------- --------
NET CASH USED IN FINANCING ACTIVITIES (7,827) (79,766) (14,198)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (383) (898) 10,229
-------- -------- --------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 9,374 10,272 43
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 8,991 $ 9,374 $ 10,272
-------- -------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, including intercompany
interest (net of amount capitalized) $ 9,865 $ 3,182 $ 5,317
Income taxes, net of refunds $ 1 $ 1 $ --
-------- -------- --------
</TABLE>
See accompanying notes to condensed financial information.
10
<PAGE> 11
Schedule I
McDERMOTT INTERNATIONAL, INC.
(PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL INFORMATION
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 and independent accountants' reports thereon.
NOTE 2 - CONTINGENCIES
McDermott International, Inc. is contingently liable under standby letters of
credit totaling $129,399,000 at December 31, 1999, all of which were issued in
the normal course of business. McDermott International, Inc. has guaranteed the
indebtedness of certain of its subsidiaries and other investees. At December 31,
1999, these guarantees included $10,800,000 of loans to and $44,588,000 of
standby letters of credit issued by certain subsidiaries and other investees.
At December 31, 1999, 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 3 - DIVIDENDS RECEIVED
McDermott International, Inc. received dividends from its consolidated
subsidiaries of $10,800,000, $19,200,000, and $7,200,000 for the nine-month
period ended December 31, 1999 and the fiscal years ended March 31, 1999 and
1998, respectively.
11
<PAGE> 12
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 INTERNATIONAL, INC.
/s/ Daniel R. Gaubert
----------------------------------------
By: Daniel R. Gaubert
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
April 14, 2000
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
- ------
<S> <C>
99 Supplementary Financial Information on Panamanian Securities Regulations
</TABLE>
13
<PAGE> 1
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
<TABLE>
<CAPTION>
Nine-Month
Period Ending
December 31,
1999
----
(Unaudited)
(In thousands)
ARTICLE 29
<S> <C>
RULE #9 - INVESTMENTS IN SUBSIDIARIES AND OTHER
INVESTEES AT EQUITY
Head Office (Parent Company) $ 1,727,139
Subsidiaries and Affiliates --
Eliminations/Other (1,663,533)
-----------
McDERMOTT INTERNATIONAL, INC $ 63,606
===========
RULE #25C - PARENT-COMPANY ACCOUNTS AND NOTES
PAYABLE TO SUBSIDIARIES
Head Office (Parent Company) $ 1,207,038
Eliminations/Other (1,207,038)
-----------
McDERMOTT INTERNATIONAL, INC $ --
===========
ARTICLE 30
(c) - OPERATING EXPENSES BY SEGMENT
Power Generation Systems $ 677,874
Marine Construction Services 459,641
Government Operations 277,701
Other Operations 358,069
Eliminations (2,464)
-----------
McDERMOTT INTERNATIONAL, INC $ 1,770,821
===========
RULE #40 - OPERATING REVENUES
Head Office (Parent Company) $ --
Subsidiaries and Affiliates 1,891,088
Eliminations/Other --
-----------
McDERMOTT INTERNATIONAL, INC $ 1,891,088
===========
</TABLE>
14
<PAGE> 2
Continued
<TABLE>
<CAPTION>
Nine-Month
Period Ending
December 31,
1999
----
(Unaudited)
(In thousands)
ARTICLE 30 - Continued
<S> <C>
RULE #41 - OPERATING EXPENSES
Head Office (Parent Company) $ 5,014
Subsidiaries and Affiliates 1,798,665
-----------
McDERMOTT INTERNATIONAL, INC $ 1,803,679
===========
RULE #43 - DIVIDENDS RECEIVED
Head Office (Parent Company)
from Subsidiaries and Affiliates $ 10,800
Subsidiaries and Affiliates
from Other Corporations 4,206
Eliminations/Other (10,800)
-----------
McDERMOTT INTERNATIONAL, INC $ 4,206
===========
RULE #44 - INTEREST INCOME
Head Office (Parent Company):
from Subsidiaries and Affiliates $ 548
from Other Corporations 1,644
Subsidiaries and Affiliates
from Other Corporations 30,482
Eliminations (548)
-----------
McDERMOTT INTERNATIONAL, INC $ 32,126
===========
RULE #46 - OTHER MISCELLANEOUS REVENUES
Bad Debt Recoveries $ 3,824
Loss on Curtailment of Employee Benefit Plans (37,028)
Other Items - Net 2,891
-----------
McDERMOTT INTERNATIONAL, INC $ (30,313)
===========
RULE #51 - INVESTMENTS IN UNCONSOLIDATED AFFILIATES AT EQUITY
Balance at March 31, 1999 $ 61,393
Equity Income 8,591
Dividends Received (4,206)
Other Changes (2,172)
-----------
Balance at December 31, 1999 $ 63,606
===========
</TABLE>
15
