Mcdermott International (MDRIQ) 10-Q 10 Nov 09 2009 Q3 Quarterly report Financial data

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands	Sep. 30, 2009	Dec. 31, 2008
Current Assets:
Cash And Cash Equivalents At CarryingValue	$784,463	$586,649
Restricted cash and cash equivalents (Note 1)	64,050	50,536
Investments	16	131,515
Accounts receivable - trade, net	650,350	712,055
Due From Related Parties Current	4,461	1,504
Accounts receivable - other	86,241	139,062
Contracts in progress	503,420	311,713
Inventories (Note 1)	116,195	128,383
Deferred income taxes	90,824	97,069
Other current assets	62,932	58,499
Total Current Assets	2,362,952	2,216,985
Property, Plant and Equipment	2,440,113	2,234,050
Less accumulated depreciation	1,250,990	1,155,191
Net Property, Plant and Equipment	1,189,123	1,078,859
Investments	241,908	319,170
Goodwill	292,369	298,265
Deferred Income Taxes	278,563	335,877
Investments in Unconsolidated Affiliates	86,031	70,304
Other Assets	284,698	282,233
TOTAL	4,735,644	4,601,693
Current Liabilities:
Notes payable and current maturities of long-term debt	5,288	9,021
Accounts payable	531,398	551,435
Accrued employee benefits	237,054	205,521
Accrued liabilities - other	194,667	217,486
Accrued contract cost	127,857	97,041
Advance billings on contracts	708,086	951,895
Accrued warranty expense	122,904	120,237
Income taxes payable	69,855	55,709
Total Current Liabilities	1,997,109	2,208,345
Long-Term Debt	5,828	6,109
Accumulated Postretirement Benefit Obligation	106,255	107,567
Self-Insurance	84,465	88,312
Pension Liability	674,047	682,624
Other Liabilities	142,842	192,223
Stockholders' Equity:
Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 236,495,637 and 234,174,088 shares at September 30, 2009 and December 31, 2008, respectively	236,496	234,174
Capital in excess of par value	1,287,764	1,252,848
Retained earnings	852,945	564,591
Treasury stock at cost, 6,103,951 and 5,840,314 shares at September 30, 2009 and December 31, 2008, respectively	(67,773)	(63,026)
Accumulated other comprehensive loss	(590,565)	(672,415)
Stockholders' Equity - McDermott International, Inc.	1,718,867	1,316,172
Noncontrolling interest	6,231	341
Total Stockholders' Equity	1,725,098	1,316,513
TOTAL	$4,735,644	$4,601,693

PARANTHETICAL DATA TO THE CONSO

PARANTHETICAL DATA TO THE CONSOLIDATED BALANCE SHEETS (USD $)
	Sep. 30, 2009	Dec. 31, 2008
Stockholders' Equity:
Common Stock, par value	1	1
Common Stock,authorized shares	400,000,000	400,000,000
Common Stock, issued	236,495,637	234,174,088
Treasury Stock, shares	6,103,951	5,840,314

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Thousands, except Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Revenues	$1,675,678	$1,664,851	$4,733,940	$4,907,923
Costs and Expenses:
Cost of operations	1,383,046	1,445,749	3,886,726	4,067,181
Gains on asset disposals - net	323	138	(333)	(11,322)
Selling General And Administrative Expense	160,565	139,512	455,154	404,298
Total Costs and Expenses	1,543,934	1,585,399	4,341,547	4,460,157
Equity in Income of Investees	13,050	12,521	31,347	32,443
Operating Income	144,794	91,973	423,740	480,209
Other Income (Expense):
Interest income - net	2,179	5,151	9,023	23,792
Other income (expense) - net	(3,127)	2,945	(24,098)	848
Total Other Income (Expense)	(948)	8,096	(15,075)	24,640
Income before Provision for Income Taxes	143,846	100,069	408,665	504,849
Provision for Income Taxes	23,793	14,271	112,316	118,253
Net Income	120,053	85,798	296,349	386,596
Less: Net Income Attributable to Noncontrolling Interest	1,946	227	7,995	296
Net Income Attributable to McDermott International, Inc.	$118,107	$85,571	$288,354	$386,300
Earnings per Common Share:
Basic	0.51	0.38	1.26	1.7
Diluted	0.5	0.37	1.24	1.68
Shares used in the computation of earnings per share
Basic	229,989,368	227,440,858	229,192,531	226,645,175
Diluted	234,314,619	230,463,651	233,335,605	230,328,423

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Net Income	$120,053	$85,798	$296,349	$386,596
Currency translation adjustments:
Foreign currency translation adjustments	8,927	(15,036)	24,878	(8,832)
Unrealized gains (losses) on derivative financial instruments:
Unrealized gains (losses) on derivative financial instruments	8,673	(18,923)	13,438	(15,709)
Reclassification adjustment for gains included in net income	(1,306)	1,058	(1,930)	(2,692)
Amortization of benefit plan costs	15,918	5,275	44,340	18,304
Unrealized gains (losses) on investments:
Unrealized gains (losses) arising during the period	1,737	(1,989)	1,099	(7,611)
Reclassification adjustment for net gains included in net income	147	(358)	61	(1,460)
Other Comprehensive Income	34,096	(29,973)	81,886	(18,000)
Total Comprehensive Income	154,149	55,825	378,235	368,596
Comprehensive Income Attributable to Noncontrolling Interest	(1,947)	(207)	(8,031)	(313)
McDermott International, Inc.	$152,202	$55,618	$370,204	$368,283

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)
In Thousands, except Share data	Common Stock [Member]	Additional Paid In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Treasury Stock [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Beginning Balance (in shares) at Dec. 31, 2007	231,722,659
Beginning Balance at Dec. 31, 2007	$231,723	$1,145,829	$135,289	($281,933)	($63,903)	$1,167,005	$373	$1,167,378
Net Income	0	0	386,300	0	0	386,300	296	386,596
Amortization of benefit plan costs	0	0	0	18,304	0	18,304	0	18,304
Unrealized gain/(loss) on investments	0	0	0	(9,071)	0	(9,071)	0	(9,071)
Translation adjustments	0	0	0	(8,849)	0	(8,849)	17	(8,832)
Unrealized loss on derivatives	0	0	0	(18,401)	0	(18,401)	0	(18,401)
Exercise of stock options	1,436	(459)	0	0	7,092	8,069	0	8,069
Exercise of stock options (in shares)	1,435,135
Excess tax benefits on stock options	0	6,404	0	0	0	6,404	0	6,404
Contributions to thrift plan	202	9,647	0	0	0	9,849	0	9,849
Contributions to thrift plan (in shares)	202,619
Restricted stock issuances - net	259	(259)	0	0	0	0	0	0
Restricted stock issuances - net (in shares)	259,666
Purchase of treasury shares	0	0	0	0	(6,234)	(6,234)	0	(6,234)
Stock-based compensation charges	0	30,550	0	0	0	30,550	0	30,550
Distributions to non-controlling interests	0	0	0	0	0	0	(310)	(310)
Ending Balance at Sep. 30, 2008	233,620	1,191,712	521,589	(299,950)	(63,045)	1,583,926	376	1,584,302
Beginning Balance (in shares) at Dec. 31, 2008	234,174,088
Beginning Balance at Dec. 31, 2008	234,174	1,252,848	564,591	(672,415)	(63,026)	1,316,172	341	1,316,513
Net Income	0	0	288,354	0	0	288,354	7,995	296,349
Amortization of benefit plan costs	0	0	0	44,340	0	44,340	0	44,340
Unrealized gain/(loss) on investments	0	0	0	1,160	0	1,160	0	1,160
Translation adjustments	0	0	0	24,842	0	24,842	36	24,878
Unrealized loss on derivatives	0	0	0	11,508	0	11,508	0	11,508
Exercise of stock options	184	372	0	0	157	713	0	713
Exercise of stock options (in shares)	184,158
Excess tax benefits on stock options	0	(2,458)	0	0	0	(2,458)	0	(2,458)
Contributions to thrift plan	773	10,590	0	0	0	11,363	0	11,363
Contributions to thrift plan (in shares)	773,101
Shares returned to treasury	0	0	0	0	(4,904)	(4,904)	0	(4,904)
Accelerated Vesting	1,365	(1,365)	0	0	0	0	0	0
Accelerated Vesting, shares	1,364,290
Stock-based compensation charges	0	25,691	0	0	0	25,691	0	25,691
Minority Interest Increase From Stock Issuance	0	2,086	0	0	0	2,086	(2,086)	0
Distributions to non-controlling interests	0	0	0	0	0	0	(55)	(55)
Ending Balance at Sep. 30, 2009	$236,496	$1,287,764	$852,945	($590,565)	($67,773)	$1,718,867	$6,231	$1,725,098

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$296,349	$386,596
Non-cash items included in net income:
Depreciation and amortization	118,871	95,059
Income of investees, less dividends	(11,458)	(12,592)
Gains on asset disposals - net	(333)	(11,322)
Provision for deferred taxes	43,264	87,512
Amortization of pension and postretirement costs	68,877	28,424
Excess tax benefits from FAS 123(R) stock-based compensation	2,458	(6,404)
Other, net	36,736	34,922
Changes in assets and liabilities, net of effects from acquisition and divestitures:
Accounts receivable	62,932	21,412
Income tax receivable	57,169	10,666
Net contracts in progress and advance billings on contracts	(442,373)	(516,623)
Accounts payable	(22,099)	19,544
Income taxes	10,571	(5,335)
Accrued and other current liabilities	(1,461)	57,586
Pension liability, accumulated postretirement benefit obligation and accrued employee benefits	13,961	(201,109)
Other, net	(36,056)	(95,421)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	197,408	(107,085)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in restricted cash and cash equivalents	(13,514)	(3,731)
Purchases of property, plant and equipment	(190,207)	(189,384)
Acquisition of businesses, net of cash acquired	(8,497)	(33,731)
Net (increase) decrease in available-for-sale securities	208,435	(70,992)
Proceeds from asset disposals	2,724	12,023
Other, net	(2,676)	(2,029)
NET CASH USED IN INVESTING ACTIVITIES	(3,735)	(287,844)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term debt	(5,652)	(4,660)
Increase in short-term borrowing	1,606	2,920
Issuance of common stock	713	8,069
Payment of debt issuance costs	(56)	(1,611)
Excess tax benefits from FAS 123(R) stock-based compensation	(2,458)	6,404
Other, net	(109)	0
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(5,956)	11,122
EFFECTS OF EXCHANGE RATE CHANGES ON CASH	10,097	(3,239)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	197,814	(387,046)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	586,649	1,001,394
CASH AND CASH EQUIVLENTS AT END OF PERIOD	784,463	614,348
Cash paid during the period for
Interest (net of amount capitalized)	1,855	5,967
Income Taxes Paid Net	$93	$49,193

BASIS OF PRESENTATION AND SIGNI

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
	9 Months Ended Sep. 30, 2009 USD / shares
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	McDERMOTT INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2009 (UNAUDITED) NOTE 1 BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES We have presented our condensed consolidated financial statements in U.S. Dollars in accordance with the interim reporting requirements of Form 10-Q and Rule10-01 of RegulationS-X. Financial information and disclosures normally included in our financial statements prepared annually in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted. Readers of these financial statements should, therefore, refer to the consolidated financial statements and the notes in our annual report on Form 10-K for the year ended December 31, 2008. We have included all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation.These condensed consolidated financial statements include the accounts of McDermott International, Inc. and its subsidiaries and controlled entities consistent with the Financial Accounting Standards Board (the FASB) Topic Consolidation. We use the equity method to account for investments in entities that we do not control, but over which we have significant influence. We generally refer to these entities as joint ventures.We have eliminated all significant intercompany transactions and accounts.We have reclassified certain amounts previously reported to conform to the presentation at September 30, 2009 and for the three and nine months ended September 30, 2009.We have evaluated subsequent events through November 9, 2009, the date of issuance of this report.We present the notes to our condensed consolidated financial statements on the basis of continuing operations, unless otherwise stated. McDermott International, Inc. (MII), incorporated under the laws of the Republic of Panama in 1959, is an engineering and construction company with specialty manufacturing and service capabilities and is the parent company of the McDermott group of companies, including J. Ray McDermott, S.A. (JRMSA) and The Babcock Wilcox Company (BW).In this quarterly report on Form 10-Q, unless the context otherwise indicates, we, us and our mean MII and its consolidated subsidiaries. We operate in three business segments: Offshore Oil and Gas Construction, Government Operations and Power Generation Systems, further described as follows: Our Offshore Oil and Gas Construction segment includes the business and operations of JRMSA, J. Ray McDermott Holdings, LLC and their respective subsidiaries.This segment supplies services primarily to offshore oil and gas field developments worldwide, including the front-end design and detailed engineering, fabrication and installation of offshore drilling and production facilities and installation of marine pipelines and subsea production systems.It also provides comprehensive project management and procurement services.This segment operates in most major offshore oil and gas producing regions, including the United States, Mexico, Canada, the Middle East, India, the Caspian Sea and Asia Pacific. Our Government Operations segment in

PENSION PLANS AND POSTRETIREMEN

PENSION PLANS AND POSTRETIREMENT BENEFITS
	9 Months Ended Sep. 30, 2009 USD / shares
PENSION PLANS AND POSTRETIREMENT BENEFITS
PENSION PLANS AND POSTRETIREMENT BENEFITS	NOTE 2 PENSION PLANS AND POSTRETIREMENT BENEFITS Components of net periodic benefit cost included in net income are as follows: Pension Benefits Other Benefits Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended 2009 2008 2009 2008 2009 2008 2009 2008 (Unaudited) (In thousands) Service cost $ 9,824 $ 9,105 $ 29,000 $ 28,645 $ 234 $ 81 $ 696 $ 246 Interest cost 40,475 37,856 120,662 115,506 2,169 1,416 6,492 4,259 Expected return on plan assets (37,334 ) (46,859 ) (111,259 ) (138,479 ) (377 ) - (1,130 ) - Amortization of prior service cost 955 517 2,342 2,054 17 18 49 56 Amortization of transition obligation - - - - 66 71 188 218 Recognized net actuarial loss 23,339 7,193 65,088 25,008 405 363 1,214 1,091 Net periodic benefit cost $ 37,259 $ 7,812 $ 105,833 $ 32,734 $ 2,514 $ 1,949 $ 7,509 $ 5,870

CONTINGENCIES AND COMMITMENTS

CONTINGENCIES AND COMMITMENTS
	9 Months Ended Sep. 30, 2009 USD / shares
CONTINGENCIES AND COMMITMENTS
CONTINGENCIES AND COMMITMENTS	NOTE 3 COMMITMENTS AND CONTINGENCIES Other than as noted below, there have been no material changes during the period covered by this Form 10-Q in the status of the legal proceedings disclosed in Note 11 to the consolidated financial statements in Part II of our annual report on Form 10-K for the year ended December 31, 2008. Investigations and Litigation With regard to the matter of Donald F. Hall and Mary Ann Hall, et al., v. Babcock Wilcox Company, et al. (the Hall Litigation), the parties entered into the final settlement agreement described in our annual report on Form 10-K for the year ended December 31, 2008 (our 2008 10-K), and that settlement was approved by the United States District Court for the Western District of Pennsylvania (the District Court) in April 2009.In May 2009, BW PGG paid approximately $52.5 million pursuant to the terms of the final settlement agreement, which is within the amount we have accrued for these claims. Additionally, BW PGG and Atlantic Richfield Company (ARCO), a former defendant in the Hall Litigation, entered into the final settlement agreement described in our 2008 10-K, relating to BW PGGs indemnity action against ARCO for any liability as a result of the Hall Litigation.The indemnity settlement was also approved by the District Court in April 2009.BW PGG and Babcock Wilcox Technical Services Group, Inc., formerly known as BW Nuclear Environmental Services, Inc., have retained all insurance rights and are pursuing recovery from American Nuclear Insurers and Mutual Atomic Energy Liability Underwriters (ANI) of the amounts paid in settlement of the Hall Litigation in the matter of The Babcock Wilcox Company et al. v. American Nuclear Insurers et al. (the ANI Litigation), which is pending before the Court of Common Pleas of Allegheny County, Pennsylvania.On September 14, 2009, the Court of Common Pleas held a hearing to determine the legal standard to be applied in determining ANIs insurance coverage obligations with respect to the settlement of the Hall Litigation.The Court has not yet issued its ruling. The three separate purported class action complaints against MII, Bruce W. Wilkinson (MIIs former Chief Executive Officer and Chairman of the Board), and Michael S. Taff (the Chief Financial Officer of MII) described in our 2008 10-K have been consolidated. In April 2009, our motion to transfer the consolidated cases to the Southern District of Texas was granted. On May 22, 2009, the plaintiffs filed an amended consolidated complaint, which, among other things, added Robert A. Deason (JRMSAs President and Chief Executive Officer) as a defendant in the proceedings. On July 1, 2009, MII and the other defendants filed a motion to dismiss the complaint. The plaintiffs filed two responses to the motion to dismiss: (1) a motion to convert the motion to dismiss to a motion for summary judgment and granting the plaintiffs leave to conduct discovery, which was filed on July 10, 2009; and (2) an opposition to the motion to dismiss, which was filed on August 3, 2009.MII and the other defendants filed: (1) a response to the plaintiffs motion to convert on July 30, 2009; and (2) a reply in suppor

DERIVATIVE FINANCIAL INSTRUMENT

DERIVATIVE FINANCIAL INSTRUMENTS
	9 Months Ended Sep. 30, 2009 USD / shares
DERIVATIVE FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS	NOTE 4 DERIVATIVE FINANCIAL INSTRUMENTS Our worldwide operations give rise to exposure to market risks from changes in foreign exchange rates.We use derivative financial instruments (primarily foreign currency forward-exchange contracts) to reduce the impact of changes in foreign exchange rates on our operating results.We use these instruments primarily to hedge our exposure associated with revenues or costs on our long-term contracts and other cash flow exposures that are denominated in currencies other than our operating entities functional currencies.We do not hold or issue financial instruments for trading or other speculative purposes. We enter into derivative financial instruments primarily as hedges of certain firm purchase and sale commitments denominated in foreign currencies.We record these contracts at fair value on our consolidated balance sheets.Depending on the hedge designation at the inception of the contract, the related gains and losses on these contracts are either deferred in stockholders equity (deficit) as a component of accumulated other comprehensive loss, until the hedged item is recognized in earnings, or offset against the change in fair value of the hedged firm commitment through earnings.The ineffective portion of a derivatives change in fair value and any portion excluded from the assessment of effectiveness are immediately recognized in earnings.The gain or loss on a derivative instrument not designated as a hedging instrument is also immediately recognized in earnings.Gains and losses on derivative financial instruments that require immediate recognition are included as a component of other income (expense) net in our consolidated statements of income. We have designated all of our forward contracts as cash flow hedges. The hedged risk is the risk of changes in functional-currency-equivalent cash flows attributable to changes in spot exchange rates of forecasted transactions related to long-term contracts and certain capital expenditures.We exclude from our assessment of effectiveness the portion of the fair value of the forward contracts attributable to the difference between spot exchange rates and forward exchange rates.Ineffective portions of our forward contracts are recorded in other income (expense) net on our Condensed Consolidated Statements of Income. At September 30, 2009, we had deferred approximately $1.7 million of net losses on these derivative financial instruments in accumulated other comprehensive loss. We expect to recognize substantially all of this amount in the next 12 months. At September 30, 2009, all of our derivative financial instruments consisted of foreign currency forward-exchange contracts. The notional value of our forward contracts totaled $330.3 million at September 30, 2009, with maturities extending to December 2011. These instruments consist primarily of contracts to purchase or sell Euros or Canadian Dollars. The fair value of these contracts totaled $1.5 million, all of which are Level 2 in nature (See Note 5). We are exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. However, when possib

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS
	9 Months Ended Sep. 30, 2009 USD / shares
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	NOTE 5 FAIR VALUE MEASUREMENTS The following is a summary of our available-for-sale securities measured at fair value at September 30, 2009 (in thousands) (unaudited): 9/30/09 Level 1 Level 2 Level 3 Mutual funds $ 4,778 $ - $ 4,778 $ - Certificates of deposit 2,524 - 2,524 - U.S. Government and agency securities 171,863 156,963 14,900 - Asset-backed securities and collateralized mortgage obligations 10,214 - 3,076 7,138 Corporate notes and bonds 52,545 - 52,545 - Total $ 241,924 $ 156,963 $ 77,823 $ 7,138 The following is a summary of our available-for-sale securities measured at fair value at December 31, 2008 (in thousands) (unaudited): 12/31/08 Level 1 Level 2 Level 3 Mutual funds $ 4,253 $ - $ 4,253 $ - Commercial paper 19,080 - 19,080 - Certificates of deposit 36,014 - 36,014 - U.S. Government and agency securities 285,420 242,204 43,216 - Foreign government bonds 5,000 - 5,000 - Asset-backed securities and collateralized mortgage obligations 11,375 - 3,919 7,456 Corporate notes and bonds 52,545 - 89,543 - Total $ 450,685 $ 242,204 $ 201,025 $ 7,456 Changes in Level 3 Instrument The following is a summary of the changes in our Level 3 instrument measured on a recurring basis for the period ended September 30, 2009 (in thousands): Balance, beginning of the year $ 7,456 Total realized and unrealized gains (losses): Included in other income (expense) (1 ) Included in other comprehensive income 1,476 Purchases, issuances and settlements - Principal repayments (1,793 ) Balance, end of period $ 7,138 Other Financial Instruments We used the following methods and assumptions in estimating our fair value disclosures for our other financial instruments, as follows: Cash and cash equivalents and restricted cash and cash equivalents.The carrying amounts that we have reported in the accompanying consolidated balance sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values. Long-term and short-term debt.We base the fair values of debt instruments on quoted market prices.Where quoted prices are not available, we base the fair values on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms. The estimated fair values of our financial instruments are as follows: September 30, 2009 December 31, 2008 Carrying Amount Fair Value Carrying Amount Fair Value (Unaudited) (In thousands) Balance Sheet Instruments Cash and cash equivalents $ 784,463 $ 784,463 $ 586,649 $

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION
	9 Months Ended Sep. 30, 2009 USD / shares
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION	NOTE 6 STOCK-BASED COMPENSATION Total stock-based compensation expense recognized for the three and nine months ended September 30, 2009 and 2008 was as follows: Compensation Tax Net Expense Benefit Impact (Unaudited) (In thousands) Three Months Ended September 30, 2009 Stock Options $ 900 $ (303 ) $ 597 Restricted Stock 1,160 (370 ) 790 Performance Shares 3,945 (1,309 ) 2,636 Performance and Deferred Stock Units 2,469 (817 ) 1,652 Total $ 8,474 $ (2,799 ) $ 5,675 Three Months Ended September 30, 2008 Stock Options $ 14 $ (5 ) $ 9 Restricted Stock 1,127 (305 ) 822 Performance Shares 8,084 (2,578 ) 5,506 Performance and Deferred Stock Units (37 ) 14 (23 ) Total $ 9,188 $ (2,874 ) $ 6,314 Nine Months Ended September 30, 2009 Stock Options $ 1,959 $ (658 ) $ 1,301 Restricted Stock 4,538 (1,098 ) 3,440 Performance Shares 15,341 (5,203 ) 10,138 Performance and Deferred Stock Units 6,347 (2,106 ) 4,241 Total $ 28,185 $ (9,065 ) $ 19,120 Nine Months Ended September 30, 2008 Stock Options $ 780 $ (239 ) $ 541 Restricted Stock 3,343 (691 ) 2,652 Performance Shares 26,429 (8,488 ) 17,941 Performance and Deferred Stock Units 3,060 (1,006 ) 2,054 Total $ 33,612 $ (10,424 ) $ 23,188

SEGMENT REPORTING

SEGMENT REPORTING
	9 Months Ended Sep. 30, 2009 USD / shares
SEGMENT REPORTING
SEGMENT REPORTING	NOTE 7 SEGMENT REPORTING An analysis of our operations by segment is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 (Unaudited) (In thousands) REVENUES: Offshore Oil and Gas Construction $ 1,026,700 $ 814,701 $ 2,567,924 $ 2,332,918 Government Operations 259,752 222,434 778,254 638,792 Power Generation Systems 389,638 630,955 1,389,802 1,945,324 Adjustments and Eliminations(1) (412 ) (3,239 ) (2,040 ) (9,111 ) $ 1,675,678 $ 1,664,851 $ 4,733,940 $ 4,907,923 (1)Segment revenues are net of the following intersegment transfers and other adjustments: Offshore Oil and Gas Construction Transfers $ 19 $ 3,007 $ 693 $ 8,400 Government Operations Transfers 393 232 1,347 656 Power Generation Systems Transfers - - - 55 $ 412 $ 3,239 $ 2,040 $ 9,111 OPERATING INCOME: Segment Operating Income: Offshore Oil and Gas Construction $ 107,001 $ (18,655 ) $ 221,209 $ 132,187 Government Operations 10,818 26,585 96,689 87,491 Power Generation Systems 29,980 78,998 128,818 249,498 $ 147,799 $ 86,928 $ 446,716 $ 469,176 Gains (Losses) on Asset Disposals Net: Offshore Oil and Gas Construction $ 120 $ (110 ) $ 953 $ 1,732 Government Operations (101 ) - (101 ) - Power Generation Systems (342 ) (25 ) (300 ) 9,593 $ (323 ) $ (135 ) $ 552 $ 11,325 Equity in Income (Loss) of Investees: Offshore Oil and Gas Construction $ (596 ) $ (921 ) $ (2,797 ) $ (2,671 ) Government Operations 9,081 7,966 26,435 27,513 Power Generation Systems 4,565 5,476 7,709 7,601 $ 13,050 $ 12,521 $ 31,347 $ 32,443 Segment Income: Offshore Oil and Gas Construction $ 106,525 $ (19,686 ) $ 219,365 $ 131,248 Government Operations 19,798 34,551 123,023 115,004 Power Generation Systems 34,203 84,449 136,227 266,692 160,526 99,314 478,615 512,944 Corporate (15,732 ) (7,341 ) (54,875 ) (32,735 ) Total Operating Income $ 144,794 $ 91,973 $ 423,740 $ 480,209

EARNINGS PER SHARE

EARNINGS PER SHARE
	9 Months Ended Sep. 30, 2009 USD / shares
EARNINGS PER SHARE [Abstract]
EARNINGS PER SHARE	NOTE 8 EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 (Unaudited) (In thousands, except share and per share amounts) Basic: Net income for basic computation $ 118,107 $ 85,571 $ 288,354 $ 386,300 Weighted average common shares 229,989,368 227,440,858 229,192,531 226,645,175 Basic earnings per common share $ 0.51 $ 0.38 $ 1.26 $ 1.70 Diluted: Net income for diluted computation $ 118,107 $ 85,571 $ 288,354 $ 386,300 Weighted average common shares (basic) 229,989,368 227,440,858 229,192,531 226,645,175 Effect of dilutive securities: Stock options, restricted stock and performance shares 4,325,251 3,022,793 4,143,074 3,683,248 Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards 234,314,619 230,463,651 233,335,605 230,328,423 Diluted earnings per common share $ 0.50 $ 0.37 $ 1.24 $ 1.68

Document Information

Document Information
	9 Months Ended Sep. 30, 2009 USD / shares
Document Information [Line Items]
Document Type	10-Q
Document Period End Date	2009-09-30
Amendment Flag	false

Entity Information

Entity Information (USD $)
	9 Months Ended Sep. 30, 2009	Oct. 30, 2009	Jun. 30, 2008
Entity Information [Line Items]
Entity Registrant Name	MCDERMOTT INTERNATIONAL INC
Entity Central Index Key	0000708819
Current Fiscal Year End Date	--12-31
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$14,200,000,000
Entity Common Stock Shares Outstanding		230,171,481