Mcdermott International (MDRIQ) 8-K McDermott Reports Net Income from Continuing Operations of $68.8 Million, $0.29 Per Fully Diluted Share for the 2011 First Quarter

Exhibit 99.1

McDermott Reports Net Income from Continuing Operations of $68.8 Million, $0.29 Per Fully Diluted Share for the 2011 First Quarter

Significant Increase in Revenues and Operating Income Highlight the Quarter

Backlog Remains Strong at $4.8 Billion

HOUSTON--(BUSINESS WIRE)--May 10, 2011--McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today reported income from continuing operations of $68.8 million, or $0.29 per diluted share, for the 2011 first quarter. The results of the 2011 first quarter compare to income from continuing operations of $51.6 million, or $0.22 per diluted share, in the corresponding period of 2010. The results of McDermott’s charter fleet business and The Babcock & Wilcox Company (“B&W”), which was spun-off to McDermott shareholders on July 30, 2010, are excluded from both periods and are classified as discontinued operations. Weighted average common shares outstanding on a fully diluted basis were approximately 236.7 million and 234.8 million in the quarters ended March 31, 2011 and March 31, 2010, respectively.

McDermott’s revenues for the 2011 first quarter were $899.2 million, an increase of 78 percent, compared to $504.9 million in the corresponding period of 2010. The year-over-year increase was primarily due to significant increases in the Asia Pacific and Middle East segments as a result of higher marine activity on large engineering, procurement, construction and installation (“EPCI”) projects, partially offset by lower revenues in the Atlantic segment.

The Company’s operating income was $100.3 million in the 2011 first quarter, compared to $73.2 million in the 2010 first quarter. The year-over-year increase was due to a 148 percent increase in the Middle East segment, partially offset by reduced levels of operating income in the Asia Pacific and Atlantic segments. Although higher revenues provided an overall increase in operating income, the improvement was moderated as McDermott recognized significantly less income from change orders, settlements and close-outs in the first quarter of 2011 as compared to the 2010 period.

“McDermott delivered solid results in the 2011 first quarter which represents a positive start to the year,” said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott. “The offshore EPCI markets we serve continue to be robust, our backlog remains strong, we’ve executed well and our healthy balance sheet provides a firm foundation to pursue growth.”

The Company’s other expense for the first quarter of 2011 increased to $5.0 million, from $1.1 million in the first quarter of 2010, primarily due to non-cash foreign currency expense.

At March 31, 2011, the Company’s backlog was $4.8 billion, compared to $4.1 billion and $5.0 billion at March 31, 2010 and December 31, 2010, respectively.

Balance Sheet Summary

As of March 31, 2011, McDermott reported total assets of almost $2.6 billion. Included in this amount was approximately $741.4 million of cash, restricted cash and investments. Net working capital, calculated as current assets less current liabilities, was $483.8 million. Additionally, total equity was over $1.6 billion, or 62% of total assets, with total debt of $65.1 million.

Discontinued Operations

For the first quarter of 2011, McDermott recorded net income from discontinued operations of $1.7 million, or $0.01 per diluted share, derived from its charter fleet business which is held for sale. Including the results of discontinued operations, total net income attributable to McDermott was $70.4 million, or $0.30 per diluted share, for the 2011 first quarter.

OTHER INFORMATION

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 and major energy companies. Operating in approximately 20 countries across the Atlantic, Middle East and Asia Pacific, the Company’s integrated resources include more than 15,000 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, the conditions of the EPCI markets and future growth. 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 and changes in the scope or timing of contracts. 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, 2010 and 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.

Conference Call to Discuss First Quarter 2011 Earnings Release

Date: Wednesday, May 11, 2011, at 10:00 a.m. ET (9:00 a.m. CT)

Live Webcast: Investor Relations section of Web site at www.mcdermott.com

Replay: Available for 2 weeks in the investor relations section of www.mcdermott.com

McDERMOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	Three Months Ended March 31,
		2011			2010
	(Unaudited)
	(In thousands, except share and per share amounts)
Revenues	$	899,240		$	504,882
Costs and Expenses:
Cost of operations		747,225			379,206
Gain on asset disposals and impairments – net		(225	)		(2,080	)
Selling, general and administrative expenses		55,369			51,138
Total costs and expenses		802,369			428,264
Equity in Income (Loss) of Unconsolidated Affiliates		3,427			(3,431	)
Operating Income		100,298			73,187
Other Income (Expense):
Interest income		449			490
Interest expense		—			(162	)
Other expense – net		(5,403	)		(1,450	)
Total other expense – net		(4,954	)		(1,122	)
Income from continuing operations before provision for income taxes and    noncontrolling interest		95,344			72,065
Provision for Income Taxes		22,579			12,239
Income from continuing operations before noncontrolling interest		72,765			59,826
Loss on disposal of discontinued operations		—			(24,202	)
Income from discontinued operations, net of tax		1,662			32,581
Total income from discontinued operations, net of tax		1,662			8,379
Net Income		74,427			68,205
Less net income attributable to noncontrolling interest		(4,007	)		(8,264	)
Net Income Attributable to McDermott International, Inc.	$	70,420		$	59,941

McDERMOTT INTERNATIONAL, INC.
EARNINGS PER SHARE COMPUTATION
	Three Months Ended March 31,
	2011		2010
	(Unaudited) (In thousands, except shares and per share amounts)
Basic:
Income from continuing operations less noncontrolling interest	$	68,758	$	51,562
Income from discontinued operations, net of tax		1,662		8,379
Net income attributable to McDermott International, Inc.	$	70,420	$	59,941
Weighted average common shares		233,841,075		230,824,301
Basic earnings per common share:
Income from continuing operations less noncontrolling interest	$	0.29	$	0.22
Income from discontinued operations, net of tax	$	0.01	$	0.04
Net income attributable to McDermott International, Inc.	$	0.30	$	0.26
Diluted:
Weighted average common shares (basic)		233,841,075		230,824,301
Effect of dilutive securities:
Stock options, restricted stock and performance shares		2,904,503		3,928,734
Adjusted weighted average common shares		236,745,578		234,753,035
Diluted earnings per common share:
Income from continuing operations less noncontrolling interest	$	0.29	$	0.22
Income from discontinued operations, net of tax	$	0.01	$	0.04
Net income attributable to McDermott International, Inc.	$	0.30	$	0.26

SUPPLEMENTARY DATA
	Three Months Ended March 31,
		2011		2010
	(Unaudited) (In thousands)
Pension expense	$	6,153	$	6,473
Depreciation & amortization expense		20,525		18,787
Capital expenditures		63,986		48,412
Backlog	$	4,764,005	$	4,092,566

McDERMOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
	March 31,			December 31,
		2011			2010
	(Unaudited)
	(In thousands)
Assets
Current Assets:
Cash and cash equivalents	$	209,207		$	403,463
Restricted cash and cash equivalents		206,354			197,861
Investments		257,584			209,463
Accounts receivable—trade, net		297,269			323,497
Accounts receivable—other		37,607			28,447
Contracts in progress		122,198			65,853
Deferred income taxes		12,426			10,323
Assets held for sale		14,220			10,161
Other current assets		47,972			36,570
Total Current Assets		1,204,837			1,285,638
Property, Plant and Equipment		1,789,093			1,720,040
Less accumulated depreciation		824,107			804,471
Net Property, Plant and Equipment		964,986			915,569
Assets Held for Sale		78,148			77,150
Investments		68,211			75,742
Goodwill		41,202			41,202
Investments in Unconsolidated Affiliates		48,459			45,016
Other Assets		164,508			158,371
Total Assets	$	2,570,351		$	2,598,688
Liabilities and Equity
Current Liabilities:
Notes payable and current maturities of long-term debt	$	8,001		$	8,547
Accounts payable		281,331			252,974
Accrued liabilities		280,956			286,831
Advance billings on contracts		62,336			250,053
Deferred income taxes		14,971			12,849
Income taxes payable		50,370			32,851
Liabilities associated with assets held for sale		23,028			20,902
Total Current Liabilities		720,993			865,007
Long-Term Debt		57,091			46,748
Self-Insurance		36,179			35,655
Pension Liability		54,598			52,831
Other Liabilities		97,862			86,180
Commitments and Contingencies
Stockholders’ Equity:
Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 241,912,337 and 240,791,473 shares at March 31, 2011 and December 31, 2010, respectively		241,912			240,791
Capital in excess of par value		1,363,335			1,357,316
Retained earnings		170,793			100,373
Treasury stock, at cost, 7,159,192 and 6,906,262 shares at March 31, 2011 and December 31, 2010, respectively		(92,218	)		(85,735	)
Accumulated other comprehensive loss		(148,559	)		(163,717	)
Stockholders’ Equity—McDermott International, Inc.		1,535,263			1,449,028
Noncontrolling interest		68,365			63,239
Total Equity		1,603,628			1,512,267
Total Liabilities and Equity	$	2,570,351		$	2,598,688

McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended March 31,
	2011			2010
	(Unaudited)
	(In thousands)
Cash Flows From Operating Activities:
Net income	$	74,427		$	68,205
Income from discontinued operations, net of tax		(1,662	)		(8,379	)
Income from continuing operations		72,765			59,826
Non-cash items included in net income:
Depreciation and amortization		20,525			18,787
Equity in (income) loss of unconsolidated affiliates		(3,427	)		3,431
Gains on asset disposals and impairments—net		(225	)		(2,080	)
Benefit from deferred taxes		(6,929	)		(2,497	)
Pension costs		6,153			6,473
Other non-cash items		4,368			13,084
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable		17,045			62,206
Net contracts in progress and advance billings on contracts		(244,062	)		(25,758	)
Accounts payable		23,947			(104,169	)
Accrued and other current liabilities		39,311			3,863
Pension liability and accrued postretirement and employee benefits		(41,546	)		(55,295	)
Other		20,038			(16,590	)
Net Cash Used In Operating Activities—Continuing Operations		(92,037	)		(38,719	)
Cash Flows From Investing Activities:
Increase in restricted cash and cash equivalents		(8,493	)		(23,498	)
Purchases of property, plant and equipment		(63,986	)		(48,412	)
Net (increase) decrease in available-for-sale securities		(39,808	)		48,408
Other investing activities, net		218			2,459
Net Cash Used In Investing Activities—Continuing Operations		(112,069	)		(21,043	)
Cash Flows From Financing Activities:
Payment of debt		(2,158	)		(2,176	)
Increase in debt		11,837			-
Other financing activities, net		57			1,246
Net Cash Provided By (Used In) Financing Activities—Continuing Operations		9,736			(930	)
Effects of exchange rate changes on cash and cash equivalents		114			435
Net decrease in cash and cash equivalents		(194,256	)		(60,257	)
Cash and cash equivalents at beginning of period		403,463			428,298
Cash and cash equivalents at end of period—Continuing Operations	$	209,207		$	368,041

CONTACT:
McDermott International, Inc.
Investors, Analysts and Financial Media:
Jay Roueche, 281-870-5462
Vice President
jroueche@mcdermott.com
or
Robby Bellamy, 281-870-5165
Director
rbellamy@mcdermott.com
or
Trade and General Media:
Louise Denly, 281-870-5025
Director, Corporate Communications
ldenly@mcdermott.com