<PAGE>
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 quarterly period ended September 30, 1996
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 No. 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 (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) 587-5300
--------------
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 $.01 per share, outstanding as
of October 28, 1996 was 40,344,285.
<PAGE>
J. RAY McDERMOTT, S.A.
I N D E X - F O R M 10 - Q
--------------------------
PAGE
----
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1 - Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheet
September 30, 1996 and March 31, 1996 4
Condensed Consolidated Statement of Income
Three and Six Months Ended September 30, 1996 and 1995 6
Condensed Consolidated Statement of Cash Flows
Six Months Ended September 30, 1996 and 1995 7
Notes to Condensed Consolidated Financial Statements 9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II - OTHER INFORMATION
- ------------------------------
Item 4 - Submission of Matters to Vote of Security Holders 19
Item 6 - Exhibits and Reports on Form 8-K 20
SIGNATURES 21
Exhibit 3.2 - Amended and Restated Bylaws 23
Exhibit 11 - Calculation of Earnings Per Common
and Common Equivalent Share 39
Exhibit 27 - Financial Data Schedule 40
2
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PART I
J. RAY McDERMOTT, S.A.
FINANCIAL INFORMATION
---------------------
Item 1. Condensed Consolidated Financial Statements
3
<PAGE>
J. RAY McDERMOTT, S.A.
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
ASSETS
9/30/96 3/31/96
-------- --------
(Unaudited)
(In thousands)
Current Assets:
Cash and cash equivalents $137,842 $166,408
Accounts receivable-trade 277,833 193,643
Accounts receivable-unconsolidated
affiliates 27,047 46,209
Accounts receivable-other 30,335 57,421
Contracts in progress 189,552 181,375
Other current assets 28,164 57,291
- ----------------------------------------------------------------
Total Current Assets 690,773 702,347
- ----------------------------------------------------------------
Property, Plant and Equipment, at Cost: 1,230,314 1,186,233
Less accumulated depreciation 824,265 793,833
- ----------------------------------------------------------------
Net Property, Plant and Equipment 406,049 392,400
- ----------------------------------------------------------------
Excess of Cost Over Fair Value of Net Assets
of Purchased Businesses Less Accumulated
Amortization of $40,576,000 at September 30, 1996
and $28,799,000 at March 31, 1996 311,338 316,863
- ----------------------------------------------------------------
Investment in Unconsolidated Affiliates 110,695 72,806
- ----------------------------------------------------------------
Other Assets 46,988 53,329
- ----------------------------------------------------------------
TOTAL $1,565,843 $1,537,745
================================================================
See accompanying notes to condensed consolidated financial statements.
4
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<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
9/30/96 3/31/96
------- -------
(Unaudited)
(In thousands)
<S> <C> <C>
Current Liabilities:
Notes payable and current
maturities of long-term debt $ 203,302 $ 96,130
Accounts payable 131,406 103,473
Accounts payable to International and affiliates 7,095 47,695
Accrued contract costs 84,525 69,827
Accrued liabilities - other 90,277 120,515
Deposit on equipment sale - 30,000
Advance billings on contracts 46,781 36,581
U.S. and foreign income taxes 31,612 28,717
- -----------------------------------------------------------------------------------
Total Current Liabilities 594,998 532,938
- -----------------------------------------------------------------------------------
Long-Term Debt 279,160 114,532
- -----------------------------------------------------------------------------------
Note Payable to International - 231,000
- -----------------------------------------------------------------------------------
Deferred and Non-Current Income Taxes 51,086 50,016
- -----------------------------------------------------------------------------------
Other Liabilities 68,231 55,362
- -----------------------------------------------------------------------------------
Contingencies
- -----------------------------------------------------------------------------------
Stockholders' Equity:
Preferred stock, authorized 10,000,000 shares;
outstanding 3,200,000 Series A $2.25 cumulative
convertible, par value $0.01 per share,
(liquidation preference $160,000,000) 32 32
Common stock, par value $0.01 per share,
authorized 60,000,000 shares; outstanding
40,344,285 at September 30, 1996 and
40,197,946 at March 31, 1996 403 402
Capital in excess of par value 582,514 581,609
Retained earnings (deficit) 7,070 (14,576)
Currency translation adjustments (17,651) (13,570)
- -----------------------------------------------------------------------------------
Total Stockholders' Equity 572,368 553,897
- -----------------------------------------------------------------------------------
TOTAL $1,565,843 $1,537,745
===================================================================================
</TABLE>
5
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J. RAY McDERMOTT, S.A.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
<S> <C> <C> <C> <C>
9/30/96 9/30/95 9/30/96 9/30/95
-------- -------- -------- --------
(Unaudited)
(In thousands)
Revenues $ 368,708 $ 359,503 $ 758,305 $ 671,662
- --------------------------------------------------------------------------------------
Costs and Expenses:
Cost of operations (excluding
depreciation and amortization) 314,148 286,650 632,575 533,352
Depreciation and amortization 23,255 23,624 44,402 45,756
Selling, general and
administrative expenses 27,429 27,766 58,790 58,321
-------------------------------------------------------------------------------------
364,832 338,040 735,767 637,429
-------------------------------------------------------------------------------------
Operating Income before Equity in
Income (Loss) of Investees 3,876 21,463 22,538 34,233
Equity in Income (Loss) of Investees 22,853 (1,903) 24,151 (2,801)
- --------------------------------------------------------------------------------------
Operating Income 26,729 19,560 46,689 31,432
-------------------------------------------------------------------------------------
Other Income (Expense):
Interest income 3,379 1,154 7,099 1,747
Interest expense (10,891) (12,334) (21,064) (21,682)
Other-net 7,113 1,858 7,904 5,254
-------------------------------------------------------------------------------------
(399) (9,322) (6,061) (14,681)
-------------------------------------------------------------------------------------
Income before Provision for
Income Taxes 26,330 10,238 40,628 16,751
Provision for Income Taxes 13,659 1,139 15,524 4,385
- --------------------------------------------------------------------------------------
Net Income $ 12,671 $ 9,099 $ 25,104 $ 12,366
======================================================================================
Net Income Applicable to Common
Stock (after Preferred Stock
Dividends) $ 10,871 $ 7,041 $ 21,504 $ 8,252
======================================================================================
Net Income per Common and Common
Equivalent Share (Primary and
Fully Diluted) $ 0.27 $ 0.18 $ 0.53 $ 0.21
======================================================================================
Weighted Average Number of
Common and Common
Equivalent Shares Outstanding 40,777,615 39,569,889 40,730,984 39,459,142
======================================================================================
Cash Dividends:
Per preferred share $0.5625 $ 0.5625 $1.125 $1.125
======================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
J. RAY McDERMOTT, S.A.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
SEPTEMBER 30, 1996
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
9/30/96 9/30/95
-------- --------
(Unaudited)
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 25,104 $ 12,366
- ----------------------------------------------------------------------------------
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 44,402 45,756
Equity in income or loss of investees,
less dividends (24,151) 11,083
Other 2,213 418
Changes in assets and liabilities:
Accounts receivable (46,989) (34,738)
Net contracts in progress and advance billings 5,850 (99,964)
Accounts payable (16,794) 30,794
Accrued contract costs 14,698 (6,288)
Accrued liabilities (32,021) (12,629)
Income taxes 2,950 (1,243)
Other, net 2,242 (9,203)
---------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (22,496) (63,648)
- ----------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (39,803) (21,205)
Proceeds from sale and disposal of assets 2,314 8,810
Investment in asset held for lease - (9,802)
Investments in equity investees (3,908) (6,824)
Other 141 (224)
- ----------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (41,256) (29,245)
- ----------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
CONTINUED
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
SIX MONTHS ENDED
9/30/96 9/30/95
--------- --------
(Unaudited)
(In thousands)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt $ (5,932) $ (5,330)
Issuance of long-term debt 244,375 13,240
Increase in short-term borrowing 33,109 102,775
Payment of note payable to International (231,000) -
Issuance of common stock 390 1,572
Preferred dividends paid (3,600) (4,073)
Other (2,225) 276
- -----------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 35,117 108,460
- -----------------------------------------------------------------------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH 69 243
- -----------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (28,566) 15,810
- -----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 166,408 52,224
- -----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 137,842 $ 68,034
=======================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 16,929 $ 21,035
Income taxes (net of refunds) $ 11,596 $ 4,126
=======================================================================
See accompanying notes to condensed consolidated financial statements.
8
<PAGE>
J. RAY McDERMOTT, S.A.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
NOTE 1 - BASIS OF PRESENTATION
J. Ray McDermott, S.A. ("JRM") is a majority owned subsidiary of McDermott
International, Inc. ("International").
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 (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Certain amounts previously reported have been reclassified to conform
with the presentation at September 30, 1996. Operating results for the three
and six months ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the fiscal year ending March 31, 1997. For
further information, refer to the consolidated financial statements and
footnotes thereto included in JRM's annual report on Form 10-K for the fiscal
year ended March 31, 1996.
9
<PAGE>
NOTE 2 - SUMMARIZED INCOME STATEMENT INFORMATION OF UNCONSOLIDATED AFFILIATES
The combined financial results of two of JRM's joint ventures, HeereMac and
McDermott-ETPM West, Inc., which are accounted for using the equity method, are
summarized below. These ventures were significant (as defined by applicable
Securities and Exchange Commission regulations) in fiscal year 1996.
THREE SIX
MONTHS ENDED MONTHS ENDED
9/30/96 9/30/95 9/30/96 9/30/95
--------- --------- --------- ---------
(Unaudited)
(In thousands)
Revenues $ 214,404 $ 126,104 $ 385,757 $318,023
- -------------------------------------------------------------------------------
Operating Income (Loss) $ 42,141 $ (1,274) $ 64,860 $ 4,338
- -------------------------------------------------------------------------------
Income (Loss) before Income Taxes $ 45,542 $ (200) $ 46,255 $ 10,011
Provision for (Benefit from) Income
Taxes 2,439 (1,355) 4,413 318
- -------------------------------------------------------------------------------
Net Income $ 43,103 $ 1,155 $ 41,842 $ 9,693
===============================================================================
Equity in Net Income $ 20,561 $ 891 $ 19,356 $ 4,873
===============================================================================
10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
J. Ray McDermott, S.A. ("JRM") is a majority owned subsidiary of McDermott
International, Inc. ("International"). A significant portion of JRM's revenues
and operating results are derived from its foreign operations. As a result,
JRM's operations and financial results are affected by international factors,
such as changes in foreign currency exchange rates. JRM attempts to minimize
its exposure to changes in foreign currency exchange rates by attempting to
match foreign currency contract receipts with like foreign currency
disbursements. To the extent that JRM is unable to match the foreign currency
receipts and disbursements related to its contracts, it enters into forward
exchange contracts to hedge foreign currency transactions, which reduce the
impact of foreign exchange rate movements on operating results.
In general, JRM's performance is a function of the level of oil and gas
development activity in the world's major hydrocarbon producing regions. As a
result, JRM's revenues and profitability reflect some variability associated
with the timing of the completion of significant development projects and the
commencement of others as to which JRM has contracts, as well as the worldwide
volume of projects and their geographic distribution.
Management's discussion of revenues and operating income is discussed by the
geographic areas presented in the tables below. Other geographic area revenues
include eliminations between geographic areas; and Other geographic area
operating loss includes the amortization of goodwill and covenants-not-to-
compete resulting from JRM's acquisition of Offshore Pipelines, Inc. during
fiscal year 1995. The three and six months ended September 30, 1995 have been
restated to reflect the allocation of certain expenses from geographic area
operating income (loss) to Corporate General & Administrative Expense and to
include gains and losses on asset sales and disposals to conform with the
presentation at September 30, 1996.
11
<PAGE>
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
9/30/96 9/30/95 9/30/96 9/30/95
------- -------- ------- --------
(Unaudited)
(In thousands)
<S> <C> <C> <C> <C>
REVENUES
North and South America $188,144 $116,552 $344,242 $198,653
North Sea and West Africa 111,775 179,082 209,501 293,577
Middle East 22,858 23,350 70,840 66,781
Far East 48,223 35,224 137,691 120,415
Other (including Transfer Eliminations) (2,292) 5,295 (3,969) (7,764)
- -------------------------------------------------------------------------------------------------
TOTAL REVENUES $368,708 $359,503 $758,305 $671,662
=================================================================================================
OPERATING INCOME
Operating Income (Loss) by Geographic Area:
North and South America $24,305 $20,616 $ 37,344 $ 25,519
North Sea and West Africa (9,249) 10,644 (4,029) 19,325
Middle East (4,570) (2,347) (1,808) (2,141)
Far East 2,459 37 9,216 9,384
Other (5,093) (3,342) (11,223) (10,535)
- -------------------------------------------------------------------------------------------------
TOTAL OPERATING INCOME BY
GEOGRAPHIC AREA 7,852 25,608 29,500 41,552
- -------------------------------------------------------------------------------------------------
Equity in Income (Loss) of Investees:
North and South America 452 (1,011) (219) (4,061)
North Sea and West Africa 22,968 (874) 25,153 2,693
Far East (567) (18) (783) (1,433)
- ------------------------------------------------------------------------------------------------
TOTAL EQUITY IN INCOME (LOSS)
OF INVESTEES 22,853 (1,903) 24,151 (2,801)
- ------------------------------------------------------------------------------------------------
Corporate General & Administrative
Expense (3,976) (4,145) (6,962) (7,319)
- ------------------------------------------------------------------------------------------------
TOTAL OPERATING INCOME $26,729 $19,560 $46,689 $31,432
================================================================================================
</TABLE>
12
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1996 VS. THREE MONTHS
ENDED SEPTEMBER 30, 1995
Revenues increased $9,205,000 to $368,708,000, primarily due to higher volume in
North America, partially offset by lower activities in the North Sea and lower
leasing activities due to the sale of the DB101 and DB102 to the HeereMac joint
venture.
Operating income decreased $17,756,000 to $7,852,000, primarily due to lower
volume and margins on the Foinaven project, the completion of profitable
Offshore Pipelines, Inc. contracts in West Africa last year, lower leasing
activities due to the sale of the DB101 and DB102, and lower margins in the
Middle East. These decreases were partially offset by higher volume in North
America and improved margins in the Far East.
Equity in income (loss) of investees increased $24,756,000 from a loss of
$1,903,000 to income of $22,853,000, primarily due to the improved operating
results from the HeereMac joint venture. The revenues of the HeereMac and
McDermott-ETPM West, Inc. joint ventures increased from $126,104,000 to
$214,404,000 primarily due to increased volume in the North Sea and North
America, partially offset by decreased volume in the Far East and West Africa.
Equity in income of investees from these two joint ventures increased from
$891,000 to $20,561,000 primarily as a result of higher volume and margins and
foreign currency transaction gains. There was also higher interest expense as
a result of debt issued by the HeereMac joint venture to finance the purchase of
major marine vessels it had been chartering, including JRM's DB101 and DB102.
Equity in income of investees in the current period also includes income of
$2,168,000 from the amortization of the deferred gain resulting from the sale of
the DB101 and DB102.
Interest income increased $2,225,000 to $3,379,000, primarily due to interest on
the promissory note of $105,000,000 received as part of the consideration from
the sale of the DB101 and DB102.
Interest expense decreased $1,443,000 to $10,891,000, primarily due to changes
in debt obligations and interest rates prevailing thereon.
13
<PAGE>
Other-net income increased $5,255,000 to $7,113,000, primarily due to increases
in certain reimbursed financing costs and foreign currency transaction gains in
the current period compared to foreign currency transaction losses in the prior
period.
The provision for income taxes increased $12,520,000 to $13,659,000 while income
before the provision for income taxes increased $16,092,000 to $26,330,000. The
increase in income taxes is due primarily to the increase in income and also, in
part, due to a reduction in the provision in the prior period resulting from
the reappraisal of tax liabilities in certain foreign tax jurisdictions. In
addition, JRM operates in many different tax jurisdictions. Within these
jurisdictions, tax provisions vary because of nominal rates, allowability of
deductions, credits and other benefits, and tax basis (for example, revenue
versus income). These variances, along with variances in the mix of income
within jurisdictions, are often responsible for shifts in the effective tax
rate. As a result of these factors, the provision for income taxes was 52% of
pretax income for the three months ended September 30, 1996 compared to a
provision for income taxes of 11% of pretax income for the three months ended
September 30, 1995.
RESULTS OF OPERATIONS - SIX MONTHS ENDED SEPTEMBER 30, 1996 VS. SIX MONTHS ENDED
SEPTEMBER 30, 1995
Revenues increased $86,643,000 to $758,305,000, primarily due to higher volume
in North America, partially offset by lower activities in the North Sea and
lower leasing activities due to the sale of the DB101 and DB102.
Operating income decreased $12,052,000 to $29,500,000, primarily due to lower
volume and margins on the Foinaven project, the completion of profitable
Offshore Pipelines, Inc. contracts in West Africa last year and lower leasing
activities due to the sale of the DB101 and DB102. These decreases were
partially offset by higher volume in North America and improved margins in the
Far East.
Equity in income (loss) of investees increased $26,952,000 from a loss of
$2,801,000 to income of $24,151,000, primarily due to the improved operating
results from the HeereMac joint venture. The revenues of the HeereMac and
McDermott-ETPM West, Inc. joint ventures increased from $318,023,000 to
$387,757,000 primarily due to increased volume in the
14
<PAGE>
North Sea and North America, partially offset by decreased volume in the Far
East and West Africa. Equity in income of investees from these two joint
ventures increased from $4,873,000 to $19,356,000 primarily as a result of
higher volume and margins. There was also higher interest expense as a result
of debt issued by the HeereMac joint venture to finance the purchase of major
marine vessels it had been chartering, including JRM's DB101 and DB102. Equity
in income of investees in the current period also includes income of $4,313,000
from the amortization of the deferred gain resulting from the sale of the DB101
and DB102.
Interest income increased $5,352,000 to $7,099,000, primarily due to interest on
the promissory note of $105,000,000 received as part of the consideration from
the sale of the DB101 and DB102.
Interest expense decreased $618,000 to $21,064,000, primarily due to changes in
debt obligations and interest rates prevailing thereon.
Other-net income increased $2,650,000 to $7,904,000, primarily due to increases
in certain reimbursed financing costs in the current period, partially offset by
a reduction in minority interest income due to minority shareholder
participation in the improved operating results of the McDermott-ETPM joint
venture.
The provision for income taxes increased $11,139,000 to $15,524,000 while income
before the provision for income taxes increased $23,877,000 to $40,628,000. The
increase in income taxes is due primarily to the increase in income and also, in
part, due to a reduction in the provision in the prior period resulting from
the reappraisal of tax liabilities in certain foreign tax jurisdictions. In
addition, JRM operates in many tax jurisdictions. Within these jurisdictions,
tax provisions vary because of nominal rates, allowability of deductions,
credits and other benefits, and tax basis (for example, revenue versus income).
These variances, along with variances in the mix of income within jurisdictions,
are often responsible for shifts in the effective tax rate. As a result of these
factors, the provision for income taxes was 38% of pretax income for the six
months ended September 30, 1996 compared to a provision for income taxes of 26%
of pretax income for the six months ended September 30, 1995.
15
<PAGE>
Backlog 9/30/96 3/31/96
- ------- ------- -------
(Unaudited)
(In thousands)
North and South America $ 571,940 $313,643
North Sea and West Africa 233,796 195,293
Middle East 463,276 345,764
Far East 180,991 123,196
- -------------------------------------------------------------------
TOTAL BACKLOG $1,450,003 $977,896
===================================================================
In general, JRM's business is capital intensive and relies on large contracts
for a substantial amount of their revenues.
JRM's consolidated backlog increased to $1,450,003,000 at September 30, 1996
from $977,896,000 at March 31, 1996, and backlog relating to contracts to be
performed by its unconsolidated joint ventures (not included above) increased to
$1,474,000,000 at September 30, 1996 from $1,374,000,000 at March 31, 1996. JRM
believes its markets are beginning to emerge from the difficult competitive
environment that has put pressure on margins in recent years. It also believes
that these strong markets and increased backlog suggest improving financial
results over the longer term. However, in this historically seasonal business,
JRM does not expect second half results to be as profitable as in the first
half. JRM does expect asset sales in the second half to partially offset the
seasonal results.
Liquidity and Capital Resources
- -------------------------------
During the six months ended September 30, 1996, JRM's cash and cash equivalents
decreased $28,566,000 to $137,842,000 and total debt increased $40,800,000 to
$482,462,000, due to the issuance of JRM's 9.375% Senior Subordinated Notes
(primarily used to repay indebtedness to International) and an increase in
short-term borrowings of $33,109,000 (primarily due to specific financing on the
Foinaven project). During this period, JRM used cash of $22,496,000 in
operating activities; $39,803,000 for additions to property, plant and
equipment; and $3,600,000 for cash dividends on preferred stock.
Expenditures for property, plant and equipment increased $18,598,000 to
$39,803,000 for the six months ended September 30, 1996, as compared with the
same period last year. In addition to maintaining existing facilities and
equipment, these expenditures included $4,887,000 for the purchase of a cable
lay vessel and modifications thereon which operates
16
<PAGE>
in the North Sea; $4,167,000 for cable lay equipment, which includes a deep bury
plow used in the installation of fiber optic cable; and $9,613,000 to upgrade a
marine barge operating in the Gulf of Mexico.
JRM had an unsecured and committed revolving credit facility which contains a
debt to capitalization covenant which limits its incremental borrowing capacity
to $2,600,000 at September 30, 1996. There were no borrowings outstanding on
this facility at September 30 or March 31, 1996. At September 30 and March 31,
1996, JRM also had available to it various uncommitted short-term lines of
credit from banks with borrowings against them at September 30 and March 31,
1996 of $118,360,000 and $85,251,000, respectively. Of the $118,360,000
outstanding at September 30, 1996, approximately $108,000,000 relates to
specific financing on the Foinaven project and will be repaid upon project
completion. While these various uncommitted short-term lines of credit have
limits in excess of the $118,360,000 outstanding at September 30, 1996,
borrowings against these short-term lines is also limited to an additional
$2,600,000. This limitation is not expected to impact the liquidity of JRM,
primarily because of the availability of $137,842,000 in cash and cash
equivalents. In addition, JRM is restricted, as a result of the consolidated
tangible net worth covenant in this agreement, in its ability to pay cash
dividends to its public shareholders or to transfer funds to International and
its subsidiaries through cash dividends (including its annual preferred stock
dividends of $7,200,000 on its Series A Preferred Stock) or through unsecured
loans or investments. As of September 30, 1996, approximately $23,000,000 of
JRM's net assets were not subject to this restriction.
Working capital decreased $73,635,000 to $95,774,000 at September 30, 1996 from
$169,409,000 at March 31, 1996 primarily due to the current classification of
the 12.875% Guaranteed Senior Notes as JRM plans to call the Notes for
redemption in the second quarter of fiscal year 1998. During the September
quarter, JRM issued $250,000,000 principal amount of 9.375% Senior Subordinated
Notes due 2006 and received net proceeds of $244,375,000 which were used
primarily to repay indebtedness (including interest) of approximately
$239,000,000 to International. The remaining net proceeds were used for general
corporate purposes. During the remainder of fiscal year 1997, JRM expects to
obtain funds to meet working capital, capital expenditure and debt maturity
requirements from operating activities, sales of non-strategic assets and from
cash and cash equivalents. Leasing
17
<PAGE>
agreements for equipment, which are short-term in nature, are not expected to
impact JRM's liquidity or capital resources. Also during the September quarter,
the sale of certain equipment to the HeereMac joint venture was completed. Prior
to this sale, JRM had received $30,000,000 as a deposit in March 1996.
New Accounting Standard
- -----------------------
In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," effective for
transactions occurring after December 31, 1996. SFAS No. 125 established
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities. This statement also provides
consistent standards for distinguishing transfers of financial assets that are
sales from transfers that are secured borrowings. JRM 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.
18
<PAGE>
PART II
J. RAY McDERMOTT, S.A.
OTHER INFORMATION
-------------------------
No information is applicable to Part II for the current quarter, except as noted
below:
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders held on August 2, 1996, the
following matters were submitted to J. Ray McDermott, S.A.'s ("JRM")
stockholders with voting as follows:
(a) The election of four directors:
Class II Votes Votes
(For a three year term) For Withheld
------------------------ ----------- ---------
James J. Wildasin 42,309,321 121,367
J. Howard Macdonald 40,940,144 1,490,544
Rick L. Burdick 42,339,899 90,789
Class I Votes Votes
(For a two year term) For Withheld
------------------------ ---------- ---------
Lodwrick M. Cook 42,332,849 90,839
Messrs. Robert E. Howson, Mike H. Lam, Brock A. Hattox, John Bookout,
Cedric E. Ritchie and Thomas P. Tatham also continued as directors
immediately after the meeting, subsequent to which Messrs. Howson and
Hattox resigned as directors and the Board appointed James L. Dutt and
Thomas D. Barrow (both effective September 1, 1996) as directors.
Richard E. Woolbert was appointed as director effective September 30,
1996 to replace James J. Wildasin.
(b) A proposal to approve JRM's Restated Short-Term Incentive Compensation
Plan: 41,973,058 votes for, 265,522 votes against and 118,375
abstentions, with broker non-votes not applicable.
(c) A proposal to approve JRM's Restated Executive Long-Term Incentive
Compensation Plan: 40,535,817 votes for, 1,759,516 votes against, and
61,622 abstentions, with broker non-votes not applicable.
(d) A proposal to retain Ernst & Young LLP as JRM's independent auditors
for the fiscal year ending March 31, 1997: 40,955,231 votes for,
1,411,947 votes against and 63,510 abstentions, with broker non-votes
not applicable.
19
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.2 Amended and Restated Bylaws
4.1 Indenture dated July 15, 1996 between J. Ray McDermott, S.A. and
Citibank, N.A. as Trustee, relating to $250 million principal amount
of 9.375% Senior Subordinated Notes due 2006 (incorporated by
reference to Exhibit 4.1 to J. Ray McDermott, S.A.'s Registration
Statement on Form S-3, Registration No. 333-01971)
11 Calculation of Earnings Per Common and Common Equivalent Share
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no current reports on Form 8-K filed during the three
months ended September 30, 1996.
Signatures
20
<PAGE>
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.
J. RAY McDERMOTT, S.A.
By: /s/ Daniel R. Gaubert
-------------------------
Daniel R. Gaubert
Vice President, Finance
(Principal Accounting Officer
and Duly Authorized Representative)
November 11, 1996
21
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
3.2 Amended and Restated Bylaws
11 Calculation of Earnings per Common and Common Equivalent Share
27 Financial Data Schedule
22
<PAGE>
AMENDED AND RESTATED EXHIBIT 3.2
BY-LAWS
OF
J. RAY McDERMOTT, S.A.
(as amended through 8/2/96)
ARTICLE I
Meetings of Stockholders
------------------------
SECTION 1. The annual and any special meetings of the stockholders
shall be held on the date and at the time and place, either within or without
the Republic of Panama, designated in the notice of such meetings or in a duly
executed waiver of notice thereof.
SECTION 2. A special meeting of the stockholders may be held at any
time upon the call of the Chief Executive Officer or by order of the Board of
Directors. Such request shall state the purpose or purposes of the proposed
meeting.
SECTION 3. Whether or not a quorum is present at any stockholders'
meeting, the meeting may be adjourned from time to time by the vote of the
holders of a majority of the voting power of the shares of the outstanding
capital stock of the Corporation present in person or represented by proxy at
the meeting, as they shall determine. If the adjournment is for more than
thirty (30) days, or, if after the adjournment a new record date is fixed for
the adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 4. Holders of a majority of the voting power of the shares of
the outstanding capital stock of the Corporation entitled to vote generally in
the election of directors, present in person or represented by proxy, shall
constitute a quorum for the transaction of all business at any meeting of the
stockholders.
23
<PAGE>
SECTION 5. In all matters arising at stockholders' meetings, a majority
of the voting power of the shares of the outstanding capital stock of the
Corporation entitled to vote generally in the election of directors present in
person or represented by proxy at the meeting shall be necessary and sufficient
for the transaction of any business, except where some larger percentage is
affirmatively required by law or by the Articles of Incorporation. Shares of
the outstanding capital stock of the Corporation held in the treasury of the
corporation or held by any subsidiary of the Corporation shall not be deemed to
be outstanding shares for the purpose of voting or determining the presence of
a quorum or the total number of shares entitled to vote on any matter or for any
other purpose.
SECTION 6. At any meeting of stockholders, the chairman of the meeting
may appoint two inspectors who shall subscribe an oath or affirmation to execute
faithfully the duties of inspectors with strict impartiality and according to
the best of their ability, to canvass the votes on any matter and make and sign
a certificate of the result thereof. No candidate for the office of director
shall be appointed as such inspector with respect to the election of directors.
If the chairman of the meeting does not appoint any inspectors, such inspectors
shall be appointed upon the request of the holders of ten percent (10%) or more
of the voting power of the shares of the outstanding capital stock of the
Corporation present in person or by proxy and entitled to vote on such matter.
SECTION 7. All elections of directors shall be by ballot. The chairman
of the meeting may cause a vote by ballot to be taken upon any other matter, and
such vote by ballot shall be taken upon the request of the holders of ten
percent (10%) or more of the voting power of the shares of the outstanding
capital stock of the Corporation present in person or by proxy and entitled to
vote on such matter.
SECTION 8. The meetings of the stockholders shall be presided over by
the Chief Executive Officer, or if he is absent or unable to preside, by the
Chairman and if neither the
24
<PAGE>
Chief Executive Officer nor the Chairman is present or able to preside, then by
a Vice Chairman; if more than one Vice Chairman is present and able to preside
the Vice Chairman who shall have held such office for the longest period of time
shall preside; if neither the Chief Executive Officer nor the Chairman nor a
Vice Chairman is present and able to preside, then the President shall preside;
if none of the above is present and able to preside, then a person shall be
elected at the meeting to preside thereover. The Secretary of the Corporation,
if present, shall act as secretary of such meetings or, if he is not present, an
Assistant Secretary shall so act; if neither the Secretary nor an Assistant
Secretary is present, then a secretary shall be appointed by the person
presiding over the meeting.
The order of business shall be as follows:
(a) Calling of meeting to order
(b) Election of chairman and the appointment of a secretary, if
necessary
(c) Presentation of proof of the due calling of the meeting
(d) Presentation and examination of proxies
(e) Settlement of the minutes of the previous meeting
(f) Reports of officers and committees
(g) The election of directors, if an annual meeting, or a meeting called
for that purpose
(h) Unfinished business
(i) New business
(j) Adjournment.
SECTION 9. At every meeting of the stockholders, all proxies shall be
received and taken in charge of and all ballots shall be received and canvassed
by the secretary of the meeting who shall decide all questions touching the
qualification of voters, the validity of the proxies, and the acceptance or
rejection of votes, unless inspectors shall have been appointed,
25
<PAGE>
in which event such inspectors shall perform such duties and decide such
questions with respect to the matter for which they have been appointed.
SECTION 10. Any action required or permitted to be taken at any annual
or special meeting of stockholders may be taken only upon the vote of
stockholders at an annual or special meeting duly noticed and called in
accordance with the laws of the Republic of Panama, as amended from time to
time, and any corporate action taken by written consent of stockholders shall be
unanimous.
ARTICLE II
Directors
---------
SECTION 1. The business and affairs of the Corporation shall be managed
by its Board of Directors in accordance with the provisions of the Articles of
Incorporation. The number of Directors shall be as provided in the Articles of
Incorporation.
SECTION 2. The Board of Directors shall meet for the purpose of
organization, the election of officers and the transaction of other business,
as soon as practicable after each annual meeting of stockholders, on the same
day and at the same place where such annual meeting shall be held. Notice of
such meeting need not be given. In the event such annual meeting is not so held
at such time, the annual meeting of the Board of Directors may be held at such
place either with within or without the Republic of Panama, on such date and at
such time as shall be specified in a notice thereof given as hereinafter
provided in Section 4 of this Article II or in a waiver of notice thereof signed
by any director who chooses to waive the requirement of notice.
SECTION 3. After the place and time of regular meetings of the Board of
Directors shall have been determined and notice thereof shall have been once
given to each member of the Board of Directors, regular meetings may be held
without further notice being given.
26
<PAGE>
SECTION 4. Meetings of the Board of Directors may be called by the
Chairman of the Board or the Chief Executive Officer or by a majority of the
directors by giving notice to each director at least five days before the date
of the meeting in such manner as is determined by the Board of Directors.
SECTION 5. Meetings of the Board of Directors shall be presided over by
the Chairman, or if the Chairman so requests or is absent or unable to preside
by a Vice Chairman; if more than one Vice Chairman is present and able to
preside, the Vice Chairman who shall have held such office for the longest
period of time shall preside; if neither the Chairman nor a Vice Chairman is
present and able to preside, then the President shall preside; if none of the
above is present and able to preside, then one of the Directors shall be elected
at the meeting to preside over same.
SECTION 6. Whether or not a quorum is present at any meeting of the
Board of Directors, a majority of the directors present may adjourn the meeting
from time to time as they may determine. Two days notice of any such adjourned
meeting shall be given to any directors not present at the meeting at which the
adjournment is taken. Any business may be transacted at the adjourned meeting
which might have been transacted at the original meeting.
SECTION 7. Any committee of the Board of Directors shall have any may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation to the extent provided in the resolution by which
such committee is designated, except that no such committee shall have the power
or authority to amend the Articles of Incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the Board of Directors, fix the
designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
corporation or the conversion into,
27
<PAGE>
or the exchange of such shares for, shares of any other class or classes or any
other series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopting an agreement of
merger or consolidation recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, amending the bylaws of the Corporation, or fill
vacancies on either the Board of Directors or its own membership; and, unless
the resolution, bylaws, or Articles of Incorporation expressly so provides, no
such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock or to adopt a certificate of ownership and
merger. Each such committee shall meet at stated times or on notice to all by
any of its own number. It shall fix its own rules of procedure. A majority
shall constitute a quorum and the affirmative vote of a majority of those
present at a meeting at which a quorum is present shall be the act of such
committee. Each such committee shall keep minutes of its proceedings and report
to the Board of Directors at each of its regular meetings.
SECTION 8. Except for any director elected by the holders of a series
of the Corporation's preferred stock, voting as a class, any director may be
removed from office by the stockholders at a meeting duly called to consider
such removal.
SECTION 9. Directors shall receive as compensation for their services
an amount in addition to actual expenses incident to the attending of meetings
to be fixed by resolution of the Board of Directors. Nothing in this section
shall be construed to preclude a Director from serving the Corporation in any
other capacity and receiving compensation therefor.
SECTION 10. No person who has attained the age of seventy (70) years
shall be initially elected a Director of the Company, but any person, who has
been so elected prior to attaining such age, and who attains such age while
serving as a Director, shall continue to
28
<PAGE>
serve as a Director until the third succeeding annual meeting of the
stockholders following the annual meeting of stockholders at which he was last
elected a Director of the Company, as of which annual meeting of stockholders
such person shall retire from the Board of Directors and shall not again be
elected to or serve on the Board of Directors, unless otherwise specifically
authorized by a majority vote of the Board of Directors. However, in no event
shall a Director serve past his attaining age 76, and any such Director who
attains age 76 during a term to which he was elected shall immediately resign
and retire from the Board of Directors.
No person shall be nominated for election or serve as a Director who has
served as a Director of the Company, together with its parent and subsidiary
companies, for a cumulative period of twenty (20) years and any such person
whose service as a Director totals twenty (20) years during a term to which he
is elected shall resign and retire from the Board of Directors as of the next
annual meeting of stockholders.
SECTION 11. A director of this Corporation who is, under Section 411(a)
of the Employee Retirement Income Security Act of 1974 of the United States of
America, under a disability to serve as a fiduciary of an employee benefit plan,
as that term is defined in Section 3(3) of said Act, shall not serve as a
fiduciary of any such employee benefit plan with respect to which the
Corporation or any of its subsidiaries is an employer as defined in Section
3(5) of said Act; and, during this period of such disability, such director
shall be precluded from acting in any manner with respect to such plan. Any
director who is disabled from serving as a fiduciary of an employee benefit
plan under Section 411(a) of said Act shall be requested to consent, in writing,
to the applicability of this By-Law to him.
SECTION 12. Unless otherwise restricted by the Articles of
Incorporation or these bylaws and subject to applicable law, any action required
or permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a
29
<PAGE>
meeting, if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
SECTION 13. Unless otherwise restricted by the Articles of
Incorporation or these bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at the meeting.
SECTION 14. Any director may resign at any time by giving written
notice to the Board of Directors or to the Secretary of the Corporation. The
resignation of any director shall take effect upon receipt of notice thereof or
at such later time as shall be specified in such notice; and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
ARTICLE III
Officers
--------
SECTION 1. The officers of this Corporation shall be elected annually
by the Board of Directors at its first meeting following the annual meeting of
stockholders or from time to time and shall hold office until their successors
are elected and qualify, or until their earlier death, resignation or removal.
Such officers shall consist of a Chairman of the Board of Directors, a Chief
Executive Officer, one or more Vice Chairmen of the Board of Directors, a
President, one or more Vice Presidents, a Secretary, a Treasurer and one or more
Controllers. In these By-Laws, the Chairman of the Board of Directors is
sometimes referred to as "Chairman", and the Vice Chairman or Vice Chairmen of
the Board of Directors are sometimes
30
<PAGE>
referred to as "Vice Chairman" or "Vice Chairmen", respectively. The Board of
Directors may in addition elect at such meeting or from time to time one or more
Assistant Secretaries and one or more Assistant Treasurers and one or more
Assistant Controllers. The Corporation may also have such other principal
officers, including a Chief Financial Officer, as the Board may in its
discretion appoint. Any number of offices may be held by the same person.
SECTION 2. The officers shall have such powers and duties as may be
provided in these By-Laws and as may be conferred upon or assigned to them by
the Board of Directors from time to time. The remuneration of all officers of
the Corporation shall be fixed by the Board of Directors. Any vacancy in any
office shall be filled in such manner as the Board of Directors shall determine.
SECTION 3. The Chairman shall preside over meetings of the Board of
Directors, as stated elsewhere in these By-Laws.
SECTION 4. The Chief Executive Officer shall preside over meetings of
the shareholders, as stated elsewhere in these By-Laws; subject to the direction
of the Board of Directors, he shall have and exercise direct charge of and
general supervision over all business and affairs of the Corporation and shall
perform all duties incident to the office of the Chief Executive Officer of a
corporation, and such other duties as may be assigned to him by the Board of
Directors.
SECTION 5. Each Vice Chairman of the Board of Directors shall have and
exercise such powers and perform such duties as may be conferred upon or
assigned to him by the Board of Directors.
SECTION 6. The President shall be the Chief Operating Officer of the
Corporation and shall have and exercise such powers and perform such duties as
may be conferred upon or assigned to him by the Board of Directors or by the
Chief Executive Officer.
31
<PAGE>
SECTION 7. Each Vice President shall have and exercise such powers and
perform such duties as may be conferred upon or assigned to him by the Board of
Directors or by the Chief Executive Officer.
SECTION 8. Each Controller shall have and exercise such powers and
perform such duties as may be conferred upon or assigned to him by the Board of
Directors or by the Chief Executive Officer.
SECTION 9. The Secretary shall give proper notice of meetings of
stockholders and directors, shall be custodian of the book in which the minutes
of such meetings are kept, and shall perform such other duties as shall be
assigned to him by the Board of Directors or by the Chief Executive Officer.
SECTION 10. The Treasurer shall keep or cause to be kept accounts of
all monies of the Corporation received or disbursed, shall deposit or cause to
be deposited all monies and other valuables in the name of and to the credit of
the Corporation in such banks and depositories as the Board of Directors shall
designate, and shall perform such other duties as shall be assigned to him by
the Board of Directors or by the Chief Executive Officer. All checks or other
instruments for the payment of money shall be signed in such a manner as the
Board of Directors may from time to time determine.
SECTION 11. Any officers of the corporation may be removed, with or
without cause, by resolution adopted by the Board of Directors at a meeting
called for that purpose.
SECTION 12. Any officer may resign at any time by giving written notice
to the Board of Directors (or to a principal officer if the Board of Directors
has delegated to such principal officer the power to appoint and to remove such
officer). The resignation of any officer shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice; and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
32
<PAGE>
ARTICLE IV
Seal
----
The corporate seal of this Corporation shall be a circular seal with the
name of the Corporation around the border and the work "SEAL" in the center.
ARTICLE V
General Provisions
------------------
SECTION 1. Subject to limitations contained in the laws of the Republic
of Panama and the Articles of Incorporation, the Board of Directors may declare
and pay dividends upon the shares of capital stock of the Corporation, which
dividends may be paid either in cash, in property or in shares of the capital
stock of the Corporation.
SECTION 2. The fiscal year of the Corporation shall commence on April 1
and end on March 31 of each year.
SECTION 3. The Board of Directors may authorize any person, on behalf
of the Corporation, to attend, vote at and grant proxies to be used at any
meeting of stockholders of any corporation (except this Corporation) in which
the Corporation may hold stock.
ARTICLE VI
Amendment
---------
Any of these By-Laws may be amended, altered or repealed and additional By-Laws
may be adopted by the Board of Directors by the affirmative vote of a majority
of the whole Board cast at a meeting duly held, except that the vote of two-
thirds of the outstanding shares of the Corporation entitled to vote shall be
required to amend, alter or repeal Section 1 and Section 9 of Article II or this
Article VI (as it applies to said Section 1 and 9 of Article II) of these By-
Laws.
33
<PAGE>
ARTICLE VII
Indemnification
---------------
SECTION 1. Each person (and the heirs, executors and administrators of
such person) who is or was a director or officer of the Corporation and any
other person designated in a resolution of the Board of Directors, shall in
accordance with Section 2 of this Article VII be indemnified by the Corporation
against any and all liability and reasonable expense that may be paid or
incurred by him in connection with or resulting from any actual or threatened
claim, action, suit or proceeding (whether brought by or in the right of the
Corporation or otherwise), civil, criminal, administrative or investigative, or
in connection with an appeal relating thereto, in which he may become involved,
as a party or otherwise, by reason of his being or having been a director or
officer of the Corporation or otherwise acting for or on behalf of the
Corporation or, if he shall be serving or shall have served in such capacity at
the request of the Corporation, a director, officer, employee or agent of
another corporation or any partnership, joint venture, trust or other entity
whether or not he continues to be such at the time such liability or expense
shall have been paid or incurred, provided such person acted, in good faith, in
a manner he reasonably believed to be in or not opposed to the best interest of
the Corporation and in addition, in criminal actions or proceedings, had not
reasonable cause to believe that his conduct was unlawful. As used in this
Article VII, the terms, "liability" and "expense" shall include but shall not be
limited to, counsel fees and disbursements and amounts of judgments, fines or
penalties against, and amounts paid in settlement by, such director or officer.
The termination of any actual or threatened claim, action, suit or proceeding,
civil, criminal, administrative, or investigative, by judgment, settlement
(whether with or without court approval), conviction or upon a plea of guilty or
nolo contendere, or its equivalent, shall not create a presumption that such
director or officer did not meet the standards of conduct set forth in this
Section 1.
34
<PAGE>
SECTION 2. Every such director, officer or other person shall be
entitled to indemnification under Section 1 of this Article VII with respect to
any claim, action, suit or proceeding of the character described in such Section
1 in which he may become in any way involved as set forth in such Section 1, if
(i) he has been wholly successfully on the merits or otherwise in respect
thereof, or (ii) the Board of Directors acting by a majority vote of a quorum
consisting of directors who are not parties to (or who have been wholly
successful with respect to) such claim, action, suit or proceeding, finds that
such director of officer has met the standards of conduct set forth in such
Section 1 with respect thereto, or (iii) a court determines that he has met such
standards with respect thereto, or (iv) independent legal counsel (who may be
the regular counsel of the Corporation) deliver to the Corporation their written
advice that, in their opinion, he has met such standards with respect thereto.
SECTION 3. Expenses incurred with respect to any claim, action, suit or
proceeding of the character described in Section 1 of this Article VII may be
advanced by the Corporation prior to the final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount unless
it is ultimately determined that he is entitled to indemnification under this
Article VII in which case no such repayment shall be required.
SECTION 4. The rights of indemnification under this article VII shall
be in addition to any rights to which any such director or officer or any other
person may otherwise be entitled by contract or as a matter of law.
ARTICLE VIII
Certificates of Stock
---------------------
SECTION 1. The shares of capital stock of the Corporation shall be
represented by certificates signed in the name of the Corporation by the
Chairman of the Board and by the Secretary of the Corporation. Upon the face or
back of each stock certificate issued to
35
<PAGE>
represent any partly paid shares shall be set forth the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
In addition, there shall be set forth a statement that the Corporation will
furnish without charge to each stockholder who so requests, the powers,
designations, or preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and any qualifications,
limitations or restrictions on such preferences and rights.
SECTION 2. Any or all of the signatures on a certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar on the date of issue.
SECTION 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. The Board of
Directors may, in connection therewith, require the owner of such lost, stolen
or destroyed certificate or certificates, or his legal representative, to give
the Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
SECTION 4. Upon surrender to the Corporation or the transfer agent of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
36
<PAGE>
SECTION 5. Except as otherwise provided by law, the Corporation, and
its directors, officers, and agents, may recognize and treat a person registered
on its records as the owner of shares, as the owners in fact thereof for all
purposes; and the person exclusively entitled to have and to exercise all the
rights and privileges instant to the ownership of such shares and the rights
under this Section 5 shall not be affected by any actual or constructive notice
of the Corporation, or any of its directors, officers, or agents to the
contrary.
ARTICLE IX
General Provisions
------------------
SECTION 1. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution of or allotment of any rights, or entitled to exercise any rights
in respect to any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix in advance a record date
in accordance with the laws of the Republic of Panama. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholder shall apply to any adjournment of the meeting, provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 2. Dividends upon the capital stock of the Corporation, subject
to the provisions of the Articles of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting. Dividends may be paid
in cash, in property, or in shares of capital stock, subject to the provisions
of the Articles of Incorporation.
SECTION 3. Before payment of any dividend, there may be set aside out
of any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet
37
<PAGE>
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purposes as the directors shall
think conducive to the interest of the Corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
SECTION 4. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
38
<PAGE>
EXHIBIT 11
J. RAY MCDERMOTT, S.A.
CALCULATION OF EARNINGS
PER COMMON AND COMMON EQUIVALENT SHARE
(Unaudited)
(In thousands, except shares and per share amounts)
PRIMARY AND FULLY DILUTED
<TABLE>
<CAPTION>
THREE SIX
MONTHS ENDED MONTHS ENDED
9/30/96 9/30/95 9/30/96 9/30/95
------- ------- ------- --------
<S> <C> <C> <C> <C>
Net income $ 12,671 $ 9,099 $ 25,104 $ 12,366
Less dividend requirements of
preferred stocks (1,800) (2,058) (3,600) (4,114)
- ---------------------------------------------------------------------------------------------
Net income for primary computation $ 10,871 $ 7,041 $ 21,504 $ 8,252
=============================================================================================
Weighted average number of
common shares outstanding
during the period 40,302,554 39,043,457 40,260,653 38,910,595
Common stock equivalents of
stock options based on
"treasury stock" method 475,061 526,432 470,331 548,547
- ---------------------------------------------------------------------------------------------
Weighted average number of common
and common equivalent shares
outstanding during the period 40,777,615 39,569,889 40,730,984 39,459,142
=============================================================================================
Net income per common and
common equivalent share: /(1) / $ 0.27 $ 0.18 $ 0.53 $ 0.21
=============================================================================================
/(1)/ Net income per common and common equivalent share assuming full dilution
are the same for the periods presented.
</TABLE>
39
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM J. RAY
MCDERMOTT'S SEPTEMBER 30, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 137,842
<SECURITIES> 1,854
<RECEIVABLES> 302,997
<ALLOWANCES> 25,163
<INVENTORY> 193,399
<CURRENT-ASSETS> 690,773
<PP&E> 1,250,207
<DEPRECIATION> 844,158
<TOTAL-ASSETS> 1,565,843
<CURRENT-LIABILITIES> 594,998
<BONDS> 0
0
32
<COMMON> 403
<OTHER-SE> 571,933
<TOTAL-LIABILITY-AND-EQUITY> 1,565,843
<SALES> 758,305
<TOTAL-REVENUES> 758,305
<CGS> 735,767
<TOTAL-COSTS> 735,767
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,064
<INCOME-PRETAX> 40,628
<INCOME-TAX> 15,524
<INCOME-CONTINUING> 25,104
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,104
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0.53
</TABLE>
