<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 1 0 - K/A-1
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from to
--------------------- --------------------
Commission File Number 1-13570
J. RAY McDERMOTT, S.A.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
REPUBLIC OF PANAMA 72-1278896
- --------------------------------------------------------------------------------
(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) 587-5300
Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each Exchange
Title of each class on which registered
------------------- -------------------
<S> <C>
Common Stock, $0.01 par value New York Stock Exchange
Series B $2.25 Cumulative Convertible
Exchangeable Preferred Stock, $0.01 par value New York Stock Exchange
</TABLE>
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.
/X/
The aggregate market value of voting stock held by non-affiliates of the
registrant was $318,706,293 as of April 26, 1995.
The number of shares outstanding of the Company's Common Stock at April 26,
1995 was 38,649,474.
DOCUMENTS INCORPORATED BY REFERENCE
The Proxy Statement for the 1995 Annual Meeting of Stockholders is incorporated
by reference into Part III of this report.
<PAGE> 2
J. RAY McDERMOTT, S.A
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Signature 3
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K 4
3. EXHIBIT INDEX
</TABLE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
23 Consent of Independent Auditors
(1) KPMG Accountants N.V.
(2) Ernst & Young LLP
99 McDermott-ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott
International Inc. Joint Venture Combined Financial Statements for the Years Ended March
31, 1995, 1994 and 1993
</TABLE>
-2-
<PAGE> 3
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.
J. RAY McDERMOTT, S.A.
s/ Richard R. Foreman
Richard R. Foreman
Executive Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
June 28, 1995
-3-
<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
23 Consent of Independent Auditors
(1) KPMG Accountants N.V.
(2) Ernst & Young LLP
99 McDermott-ETPM West, Inc. and Heerema Offshore Construction Group Inc. - McDermott International
Inc. Joint Venture Combined Financial Statements for the Years Ended March 31, 1995, 1994 and 1993
</TABLE>
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.
-4-
<PAGE> 1
EXHIBIT 23(1)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements on
Forms S-8 (No. 33-87592, No. 33-60369, No. 33-60371 and No. 33-60373) of J. Ray
McDermott, S.A. of our report dated April 28, 1995 with respect to the
combined financial statements of McDermott-ETPM West, Inc. and Heerema Offshore
Construction Group Inc. - McDermott International, Inc. Joint Venture included
in this Annual Report (Form 10-K/A-1) for the fiscal year ended March 31, 1995.
The Hague, June 26, 1995
KPMG Accountants N.V.
<PAGE> 1
EXHIBIT 23(2)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No.33-87592, No.33-60369, No.33-60371, and No.33-60373) of J. Ray
McDermott, S.A. of our report dated April 28, 1995 with respect to the combined
financial statements of McDermott-ETPM West, Inc. (not presented separately
herein) included in this Annual Report (Form 10-K/A-1) for the year ended March
31, 1995.
ERNST & YOUNG LLP
New Orleans, Louisiana
June 23, 1995
<PAGE> 1
EXHIBIT 99
McDermott-ETPM West, Inc.
and Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture
Combined Financial Statements
for the Years Ended March 31, 1995, 1994 and 1993
<PAGE> 2
CONTENTS
<TABLE>
<S> <C>
Auditors' Report 2
Combined Balance Sheet, March 31, 1995 and 1994 4
Combined Statements of Income for the Three Years
ended March 31, 1995 6
Combined Statements of Owners' Equity for the Three Years
ended March 31, 1995 7
Combined Statements of Cash Flows for the Three Years
ended March 31, 1995 8
Notes to the Combined Financial Statements 9
</TABLE>
-1-
<PAGE> 3
Auditors' Report
To the Board of Directors
of J. Ray McDermott, S.A.
We have audited the accompanying combined balance sheet of the McDermott-ETPM
West, Inc. and Heerema Offshore Construction Group Inc. - McDermott
International, Inc. Joint Venture as of March 31, 1995 and 1994 and the related
combined statements of income, owners' equity and cash flows for each of the
three years in the period ended March 31, 1995. These combined financial
statements are the responsibility of the Joint Ventures' management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits. We did not audit the combined financial statements of
McDermott-ETPM West, Inc., which reflect total assets constituting 37% in 1995
and 39% in 1994, and total revenues constituting 49%, 43%, and 49% in 1995,
1994, and 1993 of the related combined totals. Those statements were audited
by other auditors, whose report has been furnished to us, and our opinion,
insofar as it relates to the amounts included for McDermott-ETPM West, Inc., is
based solely on the report of other auditors.
We conducted our audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits and the report of other auditors, provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the report of other auditors, the
combined financial statements, referred to above, present fairly, in all
material respects, the combined financial position of McDermott-ETPM West, Inc.
and Heerema Offshore Construction Group Inc. - McDermott International, Inc.
Joint Venture at March 31, 1995 and 1994 and the combined results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1995, in conformity with generally accepted accounting principles
in the United States of America.
The Hague, April 28, 1995
KPMG Accountants N.V.
-2-
<PAGE> 4
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
J. Ray McDermott, S. A.
We have audited the combined balance sheet of McDermott-ETPM West, Inc. as of
March 31, 1995 and 1994, and the related combined statements of income, common
stock and other equity, and cash flows for each of the three years in the
period ended March 31, 1995 (not presented separately herein). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of McDermott-ETPM West,
Inc. at March 31, 1995 and 1994, and the combined results of its operations and
its cash flows for each of the three years in the period ended March 31, 1995,
in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New Orleans, Louisiana
April 28, 1995
-3-
<PAGE> 5
McDermott - ETPM West, Inc.
and
Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture
Combined Balance Sheet as of March 31, 1995 and 1994
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Assets 1995 1994
- -----------------------------------------------------------------------------------------------------------------
(In thousands of U.S. Dollars)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 232,244 $ 242,474
Accounts receivable - trade 52,563 46,827
Accounts receivable - related parties 20,841 47,572
Accounts receivable - other 5,596 3,355
Contracts in progress 3,658 21,089
Other current assets 10,507 9,992
- -----------------------------------------------------------------------------------------------------------------
Total current assets 325,409 371,309
- -----------------------------------------------------------------------------------------------------------------
Fixed assets at cost 178,698 149,445
Less accumulated depreciation (107,821) (71,032)
- -----------------------------------------------------------------------------------------------------------------
Net fixed assets 70,877 78,413
- -----------------------------------------------------------------------------------------------------------------
Other assets 130 109
- -----------------------------------------------------------------------------------------------------------------
TOTAL $ 396,416 $ 449,831
=================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 6
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Liabilities and Owners' Equity 1995 1994
- -----------------------------------------------------------------------------------------------------------------
(In thousands of U.S. Dollars)
<S> <C> <C>
Current liabilities:
Notes payable and current maturities
of long-term debt $ 18,110 $ 27,747
Accounts payable 46,222 81,074
Accounts payable - related parties 35,663 15,953
Advance billings on contracts 65,456 58,306
Accrued drydocking and refurbishment costs 35,872 25,298
Income taxes payable 9,392 4,047
Accrued liabilities - other 28,123 42,525
- -----------------------------------------------------------------------------------------------------------------
Total current liabilities 238,838 254,950
- -----------------------------------------------------------------------------------------------------------------
Other liabilities 7,671 8,362
- -----------------------------------------------------------------------------------------------------------------
Pension liability 1,958 1,843
- -----------------------------------------------------------------------------------------------------------------
Long-term debt 28,441 31,887
- -----------------------------------------------------------------------------------------------------------------
Owners' equity:
Common stock and capital contributions 53,888 53,883
Retained earnings 69,096 128,098
Currency translation adjustments (3,476) (29,192)
- -----------------------------------------------------------------------------------------------------------------
Total owners' equity 119,508 152,789
- -----------------------------------------------------------------------------------------------------------------
TOTAL $ 396,416 $ 449,831
=================================================================================================================
</TABLE>
-5-
<PAGE> 7
McDermott - ETPM West, Inc.
and
Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture
Combined Statement of Income for the Three Years ended
March 31, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------
(In thousands of U.S. Dollars)
<S> <C> <C> <C>
Revenues $ 704,316 $ 890,866 $ 1,082,992
- -----------------------------------------------------------------------------------------------------------------
Costs and expenses:
Costs of operations (before depreciation) 538,973 617,764 790,809
Depreciation 27,849 30,879 43,001
Selling, general and administrative expenses 65,123 66,447 69,404
- -----------------------------------------------------------------------------------------------------------------
631,945 715,090 903,214
- -----------------------------------------------------------------------------------------------------------------
Operating income 72,371 175,776 179,778
- -----------------------------------------------------------------------------------------------------------------
Other income (expenses):
Interest income 13,305 12,886 10,209
Interest expense (2,866) (3,865) (13,614)
Foreign currency transaction gains (losses) (2,537) 1,507 15,486
- -----------------------------------------------------------------------------------------------------------------
7,902 10,528 12,081
- -----------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 80,273 186,304 191,859
Provision for income taxes (7,226) (6,284) (3,003)
- -----------------------------------------------------------------------------------------------------------------
Net Income $ 73,047 $ 180,020 $ 188,856
=================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE> 8
McDermott - ETPM West, Inc.
and
Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture
Combined Statement of Owners' Equity for the Three Years ended
March 31, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Common
Stock and Currency
Capital Retained Translation
Contributions Earnings Adjustments Total
- -----------------------------------------------------------------------------------------------------------------
(In thousands of U. S. Dollars)
<S> <C> <C> <C> <C>
Balance April 1, 1992 $ 164,636 $ (186,988) $ 3,610 $ (18,742)
- -----------------------------------------------------------------------------------------------------------------
Net Income 188,856 188,856
Repayment of capital (26,882) (26,882)
Currency translation adjustments (20,964) (20,964)
- -----------------------------------------------------------------------------------------------------------------
Balance March 31, 1993 137,754 1,868 (17,354) 122,268
- -----------------------------------------------------------------------------------------------------------------
Net Income 180,020 180,020
Repayment of capital (83,871) (83,871)
Distribution of profits (53,790) (53,790)
Currency translation adjustments (11,838) (11,838)
- -----------------------------------------------------------------------------------------------------------------
Balance March 31, 1994 53,883 128,098 (29,192) 152,789
- -----------------------------------------------------------------------------------------------------------------
Net Income 73,047 73,047
Contribution of capital 5 5
Distribution of profits (132,049) (132,049)
Currency translation adjustments 25,716 25,716
- -----------------------------------------------------------------------------------------------------------------
Balance March 31, 1995 $ 53,888 $ 69,096 $ (3,476) $ 119,508
=================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE> 9
McDermott - ETPM West, Inc.
and
Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture
Combined Statement of Cash Flows for the Three Years ended
March 31, 1995
Increase (decrease) in cash and cash equivalents
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------
(In thousands of U. S. Dollars)
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income $ 73,047 $ 180,020 $ 188,856
- -----------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to
net cash provided (used in) operating
activities:
Depreciation 27,849 30,879 43,001
Changes in assets and liabilities:
Accounts receivable 24,054 70,416 5,107
Net contracts in progress and
advance billings 21,846 (664) 17,451
Accounts payable (18,880) (50,943) 7,517
Other, net (3,518) 17,044 26,399
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 124,398 246,752 288,331
- -----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Investment in fixed assets (12,448) (9,499) (21,809)
- -----------------------------------------------------------------------------------------------------------------
Total cash used in investing activities (12,448) (9,499) (21,809)
- -----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Capital (repayments) contributions 5 (83,871) (26,882)
Distribution of profits to owners (132,049) (53,790) -
Repayment of long-term debt (19,244) (34,096) (44,887)
Increase of long-term debt - 14,910 28,149
Increase (decrease) in short-term
borrowing 183 (5,084) (45,534)
- -----------------------------------------------------------------------------------------------------------------
Total cash used in financing activities (151,105) (161,931) (89,154)
- -----------------------------------------------------------------------------------------------------------------
Effects of exchange rate changes on cash 28,925 (12,719) (28,899)
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents (10,230) 62,603 148,469
- -----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning
of year 242,474 179,871 31,402
- -----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 232,244 $ 242,474 $ 179,871
=================================================================================================================
Supplemental disclosures of cash flow information:
Interest paid during the year $ 2,866 $ 6,025 $ 12,917
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-8-
<PAGE> 10
McDermott - ETPM West, Inc.
and
Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture
Notes to combined financial statements for the three years ended March 31, 1995
1. GENERAL
The McDermott-ETPM West, Inc. and Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture is comprised of the Joint Ventures
between J. Ray McDermott, S.A. ("JRM") and ETPM, S.A., respectively 49.9% and
50.1% owners and the Joint Venture between Heerema Offshore Construction Group
Inc. ("HOCG") and McDermott International, Inc. ("MII"), 50% owner each.
The Joint Ventures provide general marine construction services to the
petroleum industry. To this purpose the Joint Ventures charter one
semi-submersible lay barge, one combination derrick-pipelaying barge and two
semi-submersible derrick barges from JRM, two combination derrick-pipelaying
barges from ETPM, S.A. and two semi-submersible derrick barges from HOCG. In
addition, the Joint Ventures own a fleet of anchor handling tugs and cargo
barges. JRM and ETPM S.A., also provide fabrication facilities located in
Warri, Nigeria and Tchengue, Gabon, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of presentation
The combined financial statements are presented in U. S. Dollars in accordance
with accounting principles generally accepted in the United States of America.
These statements combine financial information of McDermott-ETPM West, Inc., a
company incorporated in Panama, and its wholly owned subsidiaries and other
entities of both JRM and ETPM, S.A. which perform contracts on behalf of
McDermott-ETPM West, Inc. and of HOCG - MII Joint Venture. HOCG - MII Joint
Venture combines HeereMac v.o.f., a Dutch partnership and its wholly owned
subsidiaries and other entities of both HOCG and MII which perform contracts on
behalf of HeereMac v.o.f., Panama Offshore Chartering Company Inc. and its
wholly owned subsidiaries, all incorporated in Panama and Offshore Marine
Chartering N.V., a company incorporated in the Netherlands Antilles.
Unless the context otherwise requires, hereinafter "Joint Ventures" will be
used to mean the combined enterprises.
2.2 Foreign currency translation
Assets and liabilities are translated into U.S. Dollars at current exchange
rates and income statement items are translated at average rate for the year.
Adjustments resulting from the translation of foreign currency financial
statements are recorded in a separate component of equity. Foreign currency
transaction adjustments are recorded in income.
-9-
<PAGE> 11
McDermott - ETPM West, Inc.
and
Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture
2.3 Contracts and revenue recognition
Revenues on long-term contracts are recognized on a percentage of completion
method. Under this method, revenues and costs are recognized based on the
percentage that costs to date bear to total estimated costs. Revenues that
exceed amounts invoiced to customers under the terms of the contracts are
included in Contracts in Progress. Billings that exceed revenues recognized
under percentage of completion are included in Advance Billings on Contracts.
Most long-term contracts have provisions for progress payments. Contract price
and cost estimates are reviewed periodically as the work progresses and
adjustments proportionate to the percentage of completion are reflected in
income in the period when such estimates are revised. There are no unbilled
revenues which will not be billed. Provisions are currently made for all known
or anticipated losses. Claims for extra work of changes in scope of work are
included in contract revenues when collection is probable.
2.4 Depreciation, Maintenance and Repair and Drydocking Expenses
Fixed assets are stated at cost and are depreciated on the straight-line
method, using estimated useful lives of three to eight years. Maintenance,
repairs and renewals which do not materially prolong the useful life of an
asset are expensed as incurred except for drydocking and refurbishment costs
for the marine fleet.
Drydocking costs are estimated and accrued over the period of time between
drydockings and are charged to operations currently. Refurbishment costs for
the main work barges are estimated and accrued during working periods and
charged to operations currently.
2.5 Cash and cash equivalents
Cash equivalents are highly liquid investments, with maturities of three months
or less when purchased. The carrying amounts reported in the balance sheet for
cash and cash equivalents approximate their fair value.
2.6 Accounts Receivable
Accounts receivable are stated at net realizable value after deduction of a
provision for uncollectability.
2.7 Derivative financial instruments and credit risk concentration
The Joint Ventures enter into forward exchange contracts with international
financial institutions primarily relating to identifiable foreign currency
exposures with respect to operations. These financial instruments are designed
to minimize exposure and reduce risk from exchange rate fluctuations in the
regular course of business. Gains and losses on forward exchange contracts
which hedge exposure on firm foreign currency commitments are deferred and
recognized as adjustments of the bases of those assets.
-10-
<PAGE> 12
McDermott - ETPM West, Inc.
and
Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture
Gains and losses on forward exchange contracts which hedge foreign currency
assets and liabilities are recognized in income as incurred. The Joint
Ventures risk in the forward exchange transactions is the cost of replacing at
current market rates, these contracts in the events of default by the financial
institution. The Joint Ventures believe that risk of such losses is remote.
3. INCOME TAXES
The Joint Ventures operate through various entities in various countries under
different tax jurisdictions. Substantially all income taxes provided are based
on the deemed profits of contracts performed in various taxing jurisdictions.
In the countries in which the Joint Ventures' operations are conducted through
a registered partnership the respective partners are responsible for taxes
based on their proportionate share of contract revenues and costs, therefore no
taxes are reflected in these financial statements. Therefore there is no
expected relationship between the provision for income taxes and income before
provision for income taxes. Panama Offshore Chartering Company Inc. and its
subsidiaries as well as McDermott-ETPM West, Inc. and its subsidiaries are not
subject to income taxes in the three year period ended March 31, 1995.
Offshore Marine Chartering N.V. incurred no income tax in 1995.
4. RELATED PARTY TRANSACTIONS
The Joint Ventures have material transactions with JRM, ETPM, S.A., MII and
HOCG and their subsidiaries, occurring the normal course of operations. Under
the various joint venture agreements, marine equipment and fabrication
facilities are chartered into the Joint Ventures by the respective partners.
The charter expenses for the years 1995, 1994 and 1993 were US$ 86 million, US$
88 million and US$ 92 million, respectively. In addition, ETPM, S.A. provides
general and administrative services to one of the Joint Ventures. In 1995,
1994 and 1993 the amount of these services were approximately US$ 29 million,
US$ 36 million and US$ 44 million, respectively.
5. LONG-TERM DEBT AND SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
1995 1994
- -----------------------------------------------------------------------------------------------------------------
(In thousands of U.S. Dollars)
<S> <C> <C>
Third Party Loans $ 35,552 $ 49,940
Less: amounts due within one year (7,111) (18,053)
- -----------------------------------------------------------------------------------------------------------------
Total long-term debt $ 28,441 $ 31,887
=================================================================================================================
</TABLE>
These are roll over loans at prevailing market rates maturing 1999. The
installments are US$ 7,111 in each of the following four years.
-11-
<PAGE> 13
McDermott - ETPM West, Inc.
and
Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture
In 1994 an interest-swap agreement was entered into which effectively fixes the
interest at 6.7% until maturity. The loans are secured by the right of first
and second mortgages on the anchor handling tugs and most of the cargo barges.
Short-term borrowings are denominated in foreign currencies and carry interest
at prevailing market rates. In general these short-term borrowings mature
within a month.
6. PENSION LIABILITY
One of the Joint Ventures' entities, HeereMac v.o.f., has pension plans
covering the majority of its permanent staff. These plans are fully insured by
a third party life insurance company in the Netherlands. Premiums charged by
the insurance company and expensed by the Joint Ventures relate to a calendar
year and are calculated by determining the actuarial present value of future
benefits to be provided based upon current compensation levels. Further, at
the time of granting compensation increases, the Joint Ventures accrue as
pension provision the increase in its actuarial present value of future
benefits. Such amounts will be funded through enhanced future premiums. The
discount rate used to calculate the actuarial present value of future benefits
was 6% in 1995, 5% in 1994 and 7% in 1993. Pension cost paid by the Joint
Ventures amounted to US$ 2.1 million in 1995, US$ 1.8 million in 1994 and US$
1.6 million in 1993.
7. CONTINGENCIES AND COMMITMENTS
The Joint Ventures have the usual liability of a contractor for completion of
contracts and the warranty of its work. In relation to this liability, bank
guarantees, performance bonds and standby letters of credit are issued in the
normal line of business. Bank guarantees outstanding at year end amounted to
US$ 115 million. Due to the short term nature of the guarantees, the fair
value is considered to be nil. Management is not aware of any material
exposure related thereto which has not been provided for in the accompanying
statements. Certain marine equipment (primarily anchor handling tugs and cargo
barges) have been pledged as collateral to secure certain long-term debt (See
note 5).
The Joint Ventures are defendant in various legal proceedings. Management
believes that the outcome of these proceedings will not have a material adverse
effect on the combined financial position of the Joint Ventures.
-12-
<PAGE> 14
McDermott - ETPM West, Inc.
and
Heerema Offshore Construction Group Inc. -
McDermott International, Inc. Joint Venture
8. FIXED ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------------------------------------------------------
(In thousands of U.S. Dollars)
<S> <C> <C>
At cost:
Machinery and equipment $ 141,736 $ 112,866
Cargo barges 30,856 30,856
Onshore office equipment 6,106 5,723
- ------------------------------------------------------------------------------------------------------------------
178,698 149,445
Less accumulated depreciation (107,821) (71,032)
- ------------------------------------------------------------------------------------------------------------------
Net fixed assets $ 70,877 $ 78,413
==================================================================================================================
</TABLE>
9. FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATION
The Joint Ventures' entities HeereMac v.o.f. and McDermott - ETPM West, Inc.,
had forward exchange contracts at the 1995 and 1994 year end to sell US$ 47.5
million and US$ 35 million, respectively, for Dutch Guilders, to purchase US$
18 million and US$ 32 million respectively, in foreign currency (primarily
Dutch Guilders) with French Francs and to sell US$ 23 million and US$ 106
million, respectively, in foreign currencies (primarily U.S. Dollars, British
Pounds, and Dutch Guilders) for French Francs. The 1995 year end forward
exchange contracts have varying maturities, all of which occur before the end
of next fiscal year.
The fair values of forward exchange contracts are estimated by obtaining quotes
from brokers. At year end, the net fair value of the contracts approximates
the notional amounts.
Financial instruments which potentially subject the Joint Ventures to
concentrations of credit risk are primarily cash and cash equivalents and
accounts receivable. The Joint Ventures have not experienced any significant
losses related to any of the short-term instruments it has used for excess cash
balances, nor from receivables for individual customers or groups of customers.
The Joint Ventures' customers are primarily in the petroleum industry. This
customer base is diversified between both public and private industry
customers, in numerous countries. The management of the Joint Ventures
believes this diversification minimizes any potential credit risk. Receivables
are generally not collateralized.
10. SUBSEQUENT EVENT
Subsequent to the year end, five launch barges and one derrick barge were
contributed to the HOCG-MII Joint Venture. This Joint Venture also purchased
one derrick barge from related parties for US$ 9 million.
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