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McDermott Reports Second Quarter 2013 Financial Results

OTHER INFORMATION

Conference Call

McDermott has scheduled a conference call and webcast related to its second quarter 2013 results on Tuesday, August 6, 2013, at 9:00 a.m. U.S. Central Daylight Time. Interested parties may listen over the Internet and download supplemental slides through a link posted in the Investor Relations section of the Company's website. The replay will also be available on the Company's website following the end of the live call.

About the Company

McDermott is a leading engineering, procurement, construction and installation (“EPCI”) company focused on executing complex offshore oil and gas projects worldwide. Providing fully integrated EPCI services for upstream field developments, the Company delivers fixed and floating production facilities, pipelines and subsea systems from concept to commissioning. McDermott’s customers include national, major integrated and other energy companies. Operating in approximately 20 countries across the Atlantic, Middle East and Asia Pacific, the Company’s integrated resources include approximately 14,000 employees and a diversified fleet of marine vessels, fabrication facilities and engineering offices. McDermott has served the energy industry since 1923. To learn more, please visit McDermott’s website on the Internet at www.mcdermott.com.

Forward-Looking Statements

In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott cautions that statements in this press release, which are forward-looking and provide other than historical information, involve risks and uncertainties that may impact McDermott's actual results of operations. These forward-looking statements include statements about backlog, to the extent backlog may be viewed as an indicator of future revenues, expectations on the timing of the execution and completion of existing projects, expectations relating to project profitability, expectations relating to operating leadership changes, the expected costs associated with the Atlantic restructuring, including the expected range of and timing for the recognition of such costs, McDermott’s belief that the Subsea Division will be a source of future profitable growth and an area in which McDermott can solidify a meaningful market presence, and McDermott’s renewed focus on certain markets. Although we believe that the expectations reflected in those forward-looking statements are reasonable, we can give no assurance that those expectations will prove to have been correct. Those statements are made by using various underlying assumptions and are subject to numerous uncertainties and risks, including adverse changes in the markets in which we operate or credit markets, our inability to successfully execute on contracts in backlog, changes in project design or schedules, the availability of qualified personnel, changes in the scope or timing of contracts, and contract cancellations, change orders and other modifications. If one or more of these risks materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected. For a more complete discussion of these and other risk factors, please see McDermott's annual and quarterly filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2012 and subsequent quarterly reports on Form 10-Q. This news release reflects management's views as of the date hereof. Except to the extent required by applicable law, McDermott undertakes no obligation to update or revise any forward-looking statement.

         

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

 
Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
(In thousands, except share and per share amounts)
 
Revenues $ 647,250   $ 889,248   $ 1,454,738   $ 1,616,926  
Costs and Expenses:
Cost of operations 723,259 759,704 1,436,073 1,357,138
Selling, general and administrative expenses 52,617 47,482 104,843 94,093
(Gain) loss on asset disposals (13 ) 29 (14,729 ) (197 )
Restructuring expenses   15,462    

-

    15,462    

-

 
Total costs and expenses   791,325     807,215     1,541,649     1,451,034  
Equity in Loss of Unconsolidated Affiliates   (5,461 )   (2,651 )   (9,592 )   (6,334 )
Operating Income (Loss)   (149,536 )   79,382     (96,503 )   159,558  
Other Income (Expense):
Interest income, net 428 1,585 770 3,219
Gain on foreign currency, net 8,904 1,256 6,378 10,697
Other income (expense), net   (31 )   51     751     (530 )
Total other income (expense)   9,301     2,892     7,899     13,386  
Income (loss) from continuing operations before provision for income taxes and noncontrolling interests   (140,235 )   82,274     (88,604 )   172,944  
Provision for Income Taxes   5,902     28,345     33,215     57,088  
Income (loss) from continuing operations before noncontrolling interests   (146,137 )   53,929     (121,819 )   115,856  
Total income from discontinued operations, net of tax  

-

   

-

   

-

    3,497  
Net Income (Loss)   (146,137 )   53,929     (121,819 )   119,353  

Less: Net Income Attributable to Noncontrolling Interests

  3,286     1,190     7,051     3,856  
Net Income (Loss) Attributable to McDermott International, Inc.   (149,423 )   52,739     (128,870 )   115,497  

               

McDERMOTT INTERNATIONAL, INC.

EARNINGS PER SHARE COMPUTATION

 
Three Months Ended June 30, Six Months Ended

June 30,

2013 2012 2013 2012
(In thousands, except share and per share amounts)

 

Income (loss) from continuing operations less noncontrollinginterests

$ (149,423 ) $ 52,739 $ (128,870 ) $ 112,000
Total income from discontinued operations, net of tax  

-

   

-

 

-

    3,497
Net income (loss)

attributable to McDermott International, Inc.

$ (149,423 ) $ 52,739 $ (128,870 ) $ 115,497
 
Weighted average common shares (basic) 236,199,438 235,681,213 236,070,311 235,444,733
Effect of dilutive securities:
Stock options, restricted stock and restricted stock units  

-

    1,779,552  

-

    1,951,964
Adjusted weighted average common shares and assumed exercises of

stock options and vesting of stock awards (diluted)

  236,199,438     237,460,765   236,070,311     237,396,697
 
 
Basic earnings per share:
Income (loss) from continuing operations less noncontrolling interests (0.63 ) 0.22 (0.55 ) 0.48
Income from discontinued operations, net of tax

-

-

-

0.01
Net income (loss) attributable to McDermott International, Inc. (0.63 ) 0.22 (0.55 ) 0.49
 
Diluted earnings per share:
Income (loss) from continuing operations less noncontrolling interests (0.63 ) 0.22 (0.55 ) 0.47
Income from discontinued operations, net of tax

-

-

-

0.01
Net income (loss) attributable to McDermott International, Inc. (0.63 ) 0.22 (0.55 ) 0.49
 

SUPPLEMENTARY DATA

 
    Three Months Ended June 30,     Six Months Ended

June 30,

2013     2012 2013     2012
(In thousands)
Depreciation & amortization expense $ 19,096 $ 22,598 $ 39,318 $ 45,874
Drydock amortization $ 4,381 $ 6,495 $ 9,931 $ 13,607
Capital expenditures $ 106,826 $ 86,910 $ 144,475 $ 131,661
Backlog $ 5,090,868 $ 5,746,699 $ 5,090,868 $ 5,746,699

 

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

 

       

June 30, 2013

December 31, 2012

(In thousands, except share and per share amounts)

Assets
Current Assets:
Cash and cash equivalents $ 427,711 $ 640,147
Restricted cash and cash equivalents 24,486 18,116

Accounts receivable--trade, net

318,725 428,800

Accounts receivable--other

65,627 75,461
Contracts in progress 623,930 560,154
Deferred income taxes 7,722 9,765
Assets held for sale 1,396 2,679
Other current assets 39,716 54,667
 
Total Current Assets 1,509,313 1,789,789
 
Property, Plant and Equipment 2,231,319 2,115,176
Less accumulated depreciation (845,362)

(833,385)

 
Net Property, Plant and Equipment 1,385,957 1,281,791
Investments 21,044 26,750
Goodwill 41,202 41,202
Investments in Unconsolidated Affiliates 28,675 37,435
Assets Held for Sale 12,243 26,758
Other Assets 197,513 129,902
 
Total Assets $ 3,195,947 $ 3,333,627
 
Liabilities and Equity
Current Liabilities:
Notes payable and current maturities of long-term debt $ 42,531 $ 14,146
Accounts payable 434,783 400,007
Accrued liabilities 328,168 369,418
Advance billings on contracts 301,426 241,696
Deferred income taxes 15,526 10,758
Income taxes payable 37,112 76,986
 
Total Current Liabilities 1,159,546 1,113,011
 
Long-Term Debt 53,104 88,562
Self-Insurance 25,413 22,641
Pension Liability 24,350 25,069
Other Liabilities 167,635 132,239
Commitments and Contingencies
Stockholders’ Equity:

Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 243,928,572 and

243,442,156 shares at June 30, 2013 and December 31, 2012, respectively

243,929 243,442
Capital in excess of par value 1,400,386 1,391,271
Retained earnings 316,886 445,756

Treasury stock, at cost, 7,364,866 and 7,574,903 shares at June 30, 2013 and December 31, 2012,

respectively

(99,184)

(98,725)

Accumulated other comprehensive loss

(156,673)

(94,413)

Stockholders’ Equity--McDermott International, Inc.

1,705,344 1,887,331
Noncontrolling Interests 60,555 64,774
Total Equity 1,765,899 1,952,105
Total Liabilities and Equity $ 3,195,947 $ 3,333,627

       

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
Six Months Ended June 30,
2013 2012
(In thousands)
Cash Flows From Operating Activities:
Net income (loss) $ (121,819 ) $ 119,353
Less: Income from discontinued operations, net of tax  

-

    3,497  
 
Income (loss) from continuing operations $ (121,819 ) $ 115,856
Non-cash items included in net income:
Depreciation and amortization 39,318 45,874
Drydock amortization 9,931 13,607
Equity in (income) loss of unconsolidated affiliates 9,592 6,334

Gain on asset disposals and impairments--net

(14,729 ) (197 )
Restructuring charges 12,104

-

Provision (benefit) from deferred taxes (4,314 ) 1,194
Other non-cash items 9,790 10,858
Changes in assets and liabilities, net of effects from dispositions:
Accounts receivable 117,307 36,237
Net contracts in progress and advance billings on contracts (4,051 ) (150,712 )
Accounts payable 24,413 4,074
Accrued and other current liabilities (23,299 ) 10,145
Pension liability and accrued postretirement and employee benefits (25,973 ) 15,426
Derivative instruments and hedging activities (71,013 ) (24,204 )
Other assets and liabilities   (53,739 )   6,695  
 

Net Cash Provided By (Used In) Operating Activities--Continuing Operations

  (96,482 )   91,187  
 
Cash Flows From Investing Activities:
Purchases of property, plant and equipment (144,475 ) (131,661 )
Increase in restricted cash and cash equivalents (6,370 ) (2,062 )
Purchases of available-for-sale securities (8,637 ) (66,266 )
Sales and maturities of available-for-sale securities 34,031 125,895
Proceeds from the sale and disposal of assets 35,672 221
Other investing activities, net   (6,939 )   (2,292 )
 

Net Cash Used In Investing Activities--Continuing Operations

(96,718 ) (76,165 )

Net Cash Provided By Investing Activities--Discontinued Operations

 

-

    60,671  
 
Total Cash Used In Investing Activities   (96,718 )   (15,494 )
 
Cash Flows From Financing Activities:
Increase in debt

-

19,033
Payment of debt (7,073 ) (2,988 )
Noncontrolling interests distributions and other (11,243 ) (15,726 )
Other financing activities, net   (1,038 )   (2,638 )
 

Net Cash Used In Financing Activities--Continuing Operations

  (19,354 )   (2,319 )
 
Effects of exchange rate changes on cash and cash equivalents   118     (168 )
 
Net increase (decrease) in cash and cash equivalents (212,436 ) 73,206
Cash and cash equivalents at beginning of period   640,147     570,854  
 

Cash and cash equivalents at end of period--Continuing Operations

$ 427,711   $ 644,060  




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