Document and Entity Information
Document and Entity Information | ||
3 Months Ended
Mar. 31, 2010 | Apr. 30, 2010
| |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | 2010-03-31 | |
Document Fiscal Year Focus | 2,010 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | MDR | |
Entity Registrant Name | MCDERMOTT INTERNATIONAL INC | |
Entity Central Index Key | 0000708819 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 231,122,597 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 |
Current Assets: | ||
Cash and cash equivalents | $775,980 | $899,270 |
Restricted cash and cash equivalents (Note 1) | 96,040 | 69,920 |
Investments | 12 | 12 |
Accounts receivable - trade, net | 550,275 | 642,995 |
Accounts and notes receivable - unconsolidated affiliates | 9,614 | 5,806 |
Accounts receivable - other | 66,211 | 68,035 |
Contracts in progress | 408,479 | 400,831 |
Inventories (Note 1) | 97,874 | 101,494 |
Deferred income taxes | 107,236 | 100,828 |
Other current assets | 72,132 | 68,730 |
Total Current Assets | 2,183,853 | 2,357,921 |
Property, Plant and Equipment | 2,655,474 | 2,608,740 |
Less accumulated depreciation | 1,295,906 | 1,271,135 |
Net Property, Plant and Equipment | 1,359,568 | 1,337,605 |
Investments | 178,566 | 228,706 |
Goodwill | 325,760 | 306,497 |
Deferred Income Taxes | 265,971 | 275,567 |
Investments in Unconsolidated Affiliates | 93,139 | 86,932 |
Other Assets | 268,103 | 255,882 |
TOTAL | 4,674,960 | 4,849,110 |
Current Liabilities: | ||
Notes payable and current maturities of long-term debt | 13,558 | 16,270 |
Accounts payable | 366,355 | 471,858 |
Accrued employee benefits | 126,101 | 217,178 |
Accrued pension liability - current portion | 213,188 | 173,271 |
Accrued contract cost | 96,858 | 103,041 |
Advance billings on contracts | 578,538 | 689,334 |
Accrued warranty expense | 122,164 | 118,278 |
Income taxes payable | 71,128 | 64,029 |
Accrued liabilities - other | 176,882 | 155,773 |
Total Current Liabilities | 1,764,772 | 2,009,032 |
Long-Term Debt | 55,092 | 56,714 |
Accumulated Postretirement Benefit Obligation | 106,461 | 105,605 |
Self-Insurance | 89,044 | 87,222 |
Pension Liability | 573,311 | 610,166 |
Other Liabilities | 148,091 | 147,271 |
Contingencies and Commitments (Note 3) | ||
Stockholders' Equity: | ||
Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 237,800,603 and 236,919,404 shares at March 31, 2010 and December 31, 2009, respectively | 237,801 | 236,919 |
Capital in excess of par value | 1,323,712 | 1,300,998 |
Retained earnings | 1,011,588 | 951,647 |
Treasury stock at cost, 6,435,903 and 6,168,705 shares at March 31, 2010 and December 31, 2009, respectively | (73,725) | (69,370) |
Accumulated other comprehensive loss (Note 1) | (596,845) | (612,997) |
Stockholders' Equity - McDermott International, Inc. | 1,902,531 | 1,807,197 |
Noncontrolling interest | 35,658 | 25,903 |
Total Stockholders' Equity | 1,938,189 | 1,833,100 |
TOTAL | $4,674,960 | $4,849,110 |
1_CONDENSED CONSOLIDATED BALANC
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
Mar. 31, 2010
| Dec. 31, 2009
| |
Common stock, par value | $1 | $1 |
Common stock, authorized | 400,000,000 | 400,000,000 |
Common stock, issued | 237,800,603 | 236,919,404 |
Treasury stock, shares | 6,435,903 | 6,168,705 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) | ||
In Thousands, except Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Revenues | $1,181,930 | $1,493,263 |
Costs and Expenses: | ||
Cost of operations | 934,851 | 1,228,622 |
(Gains) losses on asset disposals and impairments - net | (2,093) | 1,241 |
Selling, general and administrative expenses | 167,952 | 141,394 |
Total Costs and Expenses | 1,100,710 | 1,371,257 |
Equity in Income of Investees | 10,588 | 9,200 |
Operating Income | 91,808 | 131,206 |
Other Income (Expense): | ||
Interest income | 680 | 2,813 |
Interest expense | (381) | (956) |
Other expense - net | (4,217) | (10,770) |
Total Other Expense | (3,918) | (8,913) |
Income before Provision for Income Taxes | 87,890 | 122,293 |
Provision for Income Taxes | 19,672 | 43,878 |
Net Income | 68,218 | 78,415 |
Less: Net Income attributable to Noncontrolling Interest | (8,277) | (723) |
Net Income Attributable to McDermott International, Inc. | $59,941 | $77,692 |
Basic: | ||
Net Income Attributable to McDermott International, Inc. | 0.26 | 0.34 |
Diluted: | ||
Net Income Attributable to McDermott International, Inc. | 0.26 | 0.33 |
Shares used in the computation of earnings per share (Note 8): | ||
Basic | 230,824,301 | 228,314,785 |
Diluted | 234,753,035 | 232,586,245 |
2_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Net Income | $68,218 | $78,415 |
Currency translation adjustments: | ||
Foreign currency translation adjustments | 3,499 | (5,372) |
Unrealized (losses) gains on derivative financial instruments: | ||
Unrealized losses on derivative financial instruments | (4,006) | (1,854) |
Realized gains on derivative financial instruments | 871 | 1,922 |
Amortization of benefit plan costs | 14,738 | 14,155 |
Unrealized gains (losses) on investments: | ||
Unrealized gains (losses) arising during the period | 915 | (1,872) |
Realized gains (losses) recognized during the period | 138 | (50) |
Other Comprehensive Income | 16,155 | 6,929 |
Total Comprehensive Income | 84,373 | 85,344 |
Comprehensive Income Attributable to Noncontrolling Interest | (8,280) | (714) |
Comprehensive Income Attributable to McDermott International, Inc. | $76,093 | $84,630 |
3_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | ||||||||
In Thousands, except Share data | Common Stock
| Capital In Excess of Par Value
| Retained Earnings
| Accumulated Other Comprehensive Income (Loss)
| Treasury Stock
| Stockholders' Equity MII
| Non- Controlling Interest
| Total
|
Beginning Balance at Dec. 31, 2008 | $234,174 | $1,252,848 | $564,591 | ($672,415) | ($63,026) | $1,316,172 | $341 | $1,316,513 |
Beginning Balance (in shares) at Dec. 31, 2008 | 234,174,088 | |||||||
Net Income | 77,692 | 77,692 | 723 | 78,415 | ||||
Amortization of benefit plan costs | 14,155 | 14,155 | 14,155 | |||||
Unrealized gain (loss) on investments | (1,922) | (1,922) | (1,922) | |||||
Translation adjustments | (5,363) | (5,363) | (9) | (5,372) | ||||
Unrealized (loss) gain on derivatives | 68 | 68 | 68 | |||||
Exercise of stock options (in shares) | 43,110 | |||||||
Exercise of stock options | 43 | 70 | 113 | 113 | ||||
Excess tax benefits on stock options | 134 | 134 | 134 | |||||
Contributions to thrift plan (in shares) | 326,997 | |||||||
Contributions to thrift plan | 327 | 3,113 | 3,440 | 3,440 | ||||
Purchase of treasury shares | (140) | (140) | (140) | |||||
Stock-based compensation charges | 8,391 | 8,391 | 8,391 | |||||
Ending Balance (in shares) at Mar. 31, 2009 | 234,544,195 | |||||||
Ending Balance at Mar. 31, 2009 | 234,544 | 1,264,556 | 642,283 | (665,477) | (63,166) | 1,412,740 | 1,055 | 1,413,795 |
Beginning Balance at Dec. 31, 2009 | 236,919 | 1,300,998 | 951,647 | (612,997) | (69,370) | 1,807,197 | 25,903 | 1,833,100 |
Beginning Balance (in shares) at Dec. 31, 2009 | 236,919,404 | |||||||
Net Income | 59,941 | 59,941 | 8,277 | 68,218 | ||||
Amortization of benefit plan costs | 14,738 | 14,738 | 14,738 | |||||
Unrealized gain (loss) on investments | 1,053 | 1,053 | 1,053 | |||||
Translation adjustments | 3,496 | 3,496 | 3 | 3,499 | ||||
Unrealized (loss) gain on derivatives | (3,135) | (3,135) | (3,135) | |||||
Exercise of stock options (in shares) | 242,081 | |||||||
Exercise of stock options | 242 | (426) | (184) | (184) | ||||
Excess tax benefits on stock options | 2,556 | 2,556 | 2,556 | |||||
Contributions to thrift plan (in shares) | 150,912 | |||||||
Contributions to thrift plan | 151 | 3,505 | 3,656 | 3,656 | ||||
Purchase of treasury shares | (4,355) | (4,355) | (4,355) | |||||
Accelerated vesting, net of forfeitures (in shares) | 488,206 | |||||||
Accelerated vesting, net of forfeitures | 489 | (489) | ||||||
Stock-based compensation charges | 17,568 | 17,568 | 17,568 | |||||
Acquisition of noncontrolling interest | 1,475 | 1,475 | ||||||
Ending Balance (in shares) at Mar. 31, 2010 | 237,800,603 | |||||||
Ending Balance at Mar. 31, 2010 | $237,801 | $1,323,712 | $1,011,588 | ($596,845) | ($73,725) | $1,902,531 | $35,658 | $1,938,189 |
4_CONDENSED CONSOLIDATED STATEM
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Income | $68,218 | $78,415 |
Non-cash items included in net income: | ||
Depreciation and amortization | 36,862 | 36,022 |
Income of investees, less dividends | (5,327) | (1,142) |
(Gains) losses on asset disposals and impairments - net | (2,093) | 1,241 |
Provision for deferred taxes | 4,903 | 38,407 |
Amortization of pension and postretirement costs | 22,859 | 21,970 |
Excess tax benefits from FAS 123(R) stock-based compensation | (2,556) | (134) |
Other, net | 14,236 | 13,159 |
Changes in assets and liabilities, net of effects of acquisitions and divestitures: | ||
Accounts receivable | 79,095 | 90,367 |
Net contracts in progress and advance billings on contracts | (122,333) | (208,063) |
Accounts payable | (98,651) | (85,830) |
Income taxes | 8,591 | (16,717) |
Accrued and other current liabilities | 11,486 | 29,767 |
Pension liability, accumulated postretirement benefit obligation and accrued employee benefits | (89,091) | (43,281) |
Other, net | (4,794) | 18,906 |
NET CASH USED IN OPERATING ACTIVITIES | (78,595) | (26,913) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Increase in restricted cash and cash equivalents | (26,120) | (8,490) |
Purchases of property, plant and equipment | (66,526) | (61,388) |
Net decrease in available-for-sale securities | 51,147 | 49,007 |
Acquisition of businesses, net of cash acquired | (9,612) | |
Proceeds from asset disposals | 3,985 | 279 |
Other, net | (1,055) | |
NET CASH USED IN INVESTING ACTIVITIES | (47,126) | (21,647) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payment of long-term debt | (2,325) | (4,825) |
Issuance of common stock | 620 | 160 |
Payment of debt issuance costs | (683) | (19) |
Excess tax benefits from FAS 123(R) stock-based compensation | 2,556 | 134 |
Other | 943 | |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 168 | (3,607) |
EFFECTS OF EXCHANGE RATE CHANGES ON CASH | 2,263 | (5,858) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (123,290) | (58,025) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 899,270 | 586,649 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 775,980 | 528,624 |
Cash paid during the period for: | ||
Interest (net of amount capitalized) | 398 | 1,124 |
Income taxes (net of refunds) | $15,099 | $19,786 |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |
3 Months Ended
Mar. 31, 2010 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 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 December31, 2009. 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 Financial Accounting Standards Board (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 March31, 2010 and for the three months ended March31, 2010. We have evaluated subsequent events through 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 Babcock Wilcox Investment Company (BWICO). In this quarterly report on Form 10-Q, unless the context otherwise indicates, we, us and our mean MII and its consolidated subsidiaries. On December7, 2009, we announced plans to separate our Government Operations segment and our Power Generation Systems segment into an independent publicly traded company to be named The Babcock Wilcox Company. We plan to effect the separation through a spin-off transaction that is intended to be tax free to our shareholders. In the three months ended March31, 2010, we incurred approximately $24.0 million of costs directly related to the spin-off, consisting of severance and costs for professional services. 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 facil |
PENSION PLANS AND POSTRETIREMEN
PENSION PLANS AND POSTRETIREMENT BENEFITS | |
3 Months Ended
Mar. 31, 2010 | |
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 March31, ThreeMonths Ended March31, 2010 2009 2010 2009 (Unaudited) (In thousands) Service cost $ 10,203 $ 9,565 $ 267 $ 231 Interest cost 40,937 40,101 1,964 2,170 Expected return on plan assets (39,224 ) (36,909 ) (411 ) (377 ) Amortization of prior service cost 898 690 18 15 Amortization of transition obligation 70 59 Recognized net actuarial loss 21,533 20,801 340 405 Net periodic benefit cost $ 34,347 $ 34,248 $ 2,248 $ 2,503 |
CONTINGENCIES AND COMMITMENTS
CONTINGENCIES AND COMMITMENTS | |
3 Months Ended
Mar. 31, 2010 | |
CONTINGENCIES AND COMMITMENTS | NOTE 3 CONTINGENCIES AND COMMITMENTS 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 10 to the consolidated financial statements in Part II of our annual report on Form 10-K for the year ended December31, 2009 (our 2009 10-K). Investigations and Litigation On March19, 2010, Jessi Ann Casella, William E. Uhing and Kenneth B. Cyphert filed suit against BW PGG, Babcock Wilcox Technical Services Group, Inc., formerly known as BW Nuclear Environmental Services, Inc. and Atlantic Richfield Company in the United States District Court for the Western District of Pennsylvania (the Casella Litigation). The plaintiffs in the Casella Litigation allege, among other things, that they suffered personal injuries and property damage as a result of alleged radioactive and non-radioactive releases relating to the operation, remediation and/or decommissioning of the same two former nuclear fuel processing facilities located in Apollo and Parks Township, Pennsylvania involved in the McMunn Litigation described in our 2009 10-K. On November17, 2008,December5, 2008 and January20, 2009, three separate alleged purchasers of our common stock during the period from February27, 2008 through November5, 2008 filed purported class action complaints against MII, Bruce Wilkinson (MIIs former Chief Executive Officer and Chairman of the Board), and Michael S. Taff (the Chief Financial Officer of MII) in the United States District Court for the Southern District of New York. Each of the complaints alleges that the defendants violated federal securities laws by disseminating materially false and misleading information and/or concealing material adverse information relating to the operational and financial status of three ongoing construction contracts in our Offshore Oil and Gas Construction segment for the installation of pipelines off the coast of Qatar. Each complaint seeks relief, including unspecified compensatory damages and an award for costs and expenses. The three cases were consolidated and transferred to the United States District Court for the Southern District of Texas. In May 2009, the plaintiffs filed an amended consolidated complaint, which, among other things, added Robert A. Deason (JRMSAs former President and Chief Executive Officer) as a defendant in the proceedings. In July 2009, MII and the other defendants filed a motion to dismiss the complaint, which was referred to a Magistrate Judge. On February23, 2010, the Magistrate Judge entered a Memorandum and Recommendation on the motion, finding that the plaintiffs had failed to state a claim for relief under the securities laws and therefore recommended to the District Court that motion to dismiss be granted. On March26, 2010, the Court issued an order adopting the Magistrate Judges recommendations in full and dismissing the case. However, the order granted the plaintiffs leave to request to amend their complaint and, on April30, 2010, the plaintiffs filed a motion with the District Court for leave to amend the complaint. The defendants have until May21 to file their opposition to |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | |
3 Months Ended
Mar. 31, 2010 | |
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 hedging instruments. 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. At March31, 2010, we had deferred approximately $6.8 million of net losses on these derivative financial instruments in accumulated other comprehensive loss. We expect to recognize all of this amount in the next 12 months. At March31, 2010, all of our derivative financial instruments consisted of foreign currency forward-exchange contracts and foreign currency options. The notional value of our forward contracts totaled $297.9 million at March31, 2010, with maturities extending to June 2013. These instruments consist primarily of contracts to purchase or sell Euros or Canadian Dollars. The fair value of these contracts was in a net liability position totaling $4.0 million at March31, 2010 and all of the contracts were Level 2 in nature. The fair value of our foreign currency options totaled $4.8 million at March31, 2010, all of which were Level 2 in nature, and are included in other current assets on our condensed consolidated balance sheets. We are expo |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | |
3 Months Ended
Mar. 31, 2010 | |
FAIR VALUE MEASUREMENTS | NOTE 5 FAIR VALUE MEASUREMENTS The following is a summary of our available-for-sale securities measured at fair value at March31, 2010 (in thousands): 3/31/10 Level 1 Level 2 Level 3 Mutual funds $ 5,053 $ $ 5,053 $ Certificates of deposit 2,516 2,516 U.S. Government and agency securities 141,112 137,100 4,012 Asset-backed securities and collateralized mortgage obligations 10,792 3,069 7,723 Corporate notes and bonds 19,105 19,105 Total $ 178,578 $ 137,100 $ 33,755 $ 7,723 The following is a summary of our available-for-sale securities measured at fair value at December31, 2009 (in thousands): 12/31/09 Level 1 Level 2 Level 3 Mutual funds $ 4,944 $ $ 4,944 $ Certificates of deposit 2,522 2,522 U.S. Government and agency securities 163,466 148,683 14,783 Asset-backed securities and collateralized mortgage obligations 10,555 3,061 7,494 Corporate notes and bonds 47,231 47,231 Total $ 228,718 $ 148,683 $ 72,541 $ 7,494 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 March31, 2010 (in thousands): Balance, beginning of the year $ 7,494 Total realized and unrealized gains (losses): 880 Included in other income (expense) Included in other comprehensive income 880 Purchases, issuances and settlements (111 ) Principal repayments (540 ) Balance, end of period $ 7,723 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 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: March31, 2010 December31, 2009 Carrying Amount Fair Value Carrying Amount Fair Value (In thousands) Balance Sheet Instruments Cash and cash equivalents $ 775,980 $ 775,980 $ 899,270 $ 899,270 Restricted cash and cash equivalents $ 96,040 $ 96,040 $ 69,920 $ 69,920 Investments $ 178,578 $ 178,578 $ 228,718 $ 228,718 Debt |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | |
3 Months Ended
Mar. 31, 2010 | |
STOCK-BASED COMPENSATION | NOTE 6 STOCK-BASED COMPENSATION Total stock-based compensation expense recognized for the three months ended March31, 2010 and 2009 was as follows: Compensation Tax Net Expense Benefit Impact (Unaudited) (In thousands) Three Months Ended March31, 2010 Stock Options $ 3,740 $ (263 ) $ 3,477 Restricted Stock 1,309 (284 ) 1,025 Performance Shares 7,774 (1,181 ) 6,593 Performance and Deferred Stock Units 5,634 (862 ) 4,772 Total $ 18,457 $ (2,590 ) $ 15,867 ThreeMonthsEndedMarch31,2009 Stock Options $ 228 $ (76 ) $ 152 Restricted Stock 1,162 (362 ) 800 Performance Shares 6,525 (2,182 ) 4,343 Performance and Deferred Stock Units 1,109 (365 ) 744 Total $ 9,024 $ (2,985 ) $ 6,039 |
SEGMENT REPORTING
SEGMENT REPORTING | |
3 Months Ended
Mar. 31, 2010 | |
SEGMENT REPORTING | NOTE 7 SEGMENT REPORTING An analysis of our operations by segment is as follows: Three Months Ended March31, 2010 2009 (Unaudited) (In thousands) REVENUES: Offshore Oil and Gas Construction $ 519,545 $ 708,524 Government Operations 253,251 257,105 Power Generation Systems 409,731 528,573 Adjustments and Eliminations(1) (597 ) (939 ) $ 1,181,930 $ 1,493,263 (1) Segment revenues are net of the following intersegment transfers and other adjustments: Offshore Oil and Gas Construction Transfers $ 3 $ 315 Government Operations Transfers 590 624 Power Generation Systems Transfers 4 $ 597 $ 939 OPERATING INCOME: Segment Operating Income: Offshore Oil and Gas Construction $ 84,136 $ 47,217 Government Operations 26,450 37,050 Power Generation Systems 4,771 56,504 $ 115,357 $ 140,771 Gains (Losses) on Asset Disposals and Impairments Net: Offshore Oil and Gas Construction $ 2,079 $ (1,034 ) Government Operations 25 Power Generation Systems (11 ) 12 $ 2,093 $ (1,022 ) Equity in Income (Loss) of Investees: Offshore Oil and Gas Construction $ (3,431 ) $ (1,145 ) Government Operations 9,478 8,702 Power Generation Systems 4,541 1,643 $ 10,588 $ 9,200 Segment Income: Offshore Oil and Gas Construction $ 82,784 $ 45,038 Government Operations 35,953 45,752 Power Generation Systems 9,301 58,159 128,038 148,949 Corporate (36,230 ) (17,743 ) Total Operating Income $ 91,808 $ 131,206 |
EARNINGS PER SHARE
EARNINGS PER SHARE | |
3 Months Ended
Mar. 31, 2010 | |
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 March31, 2010 2009 (Unaudited) (In thousands, except per share amounts) Basic: Net income attributable to McDermott International, Inc. $ 59,941 $ 77,692 Weighted average common shares 230,824 228,315 Basic earnings per common share $ 0.26 $ 0.34 Diluted: Net income attributable to McDermott International, Inc. $ 59,941 $ 77,692 Weighted average common shares (basic) 230,824 228,315 Effect of dilutive securities: Stock options, restricted stock and performance shares 3,929 4,271 Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards 234,753 232,586 Diluted earnings per common share $ 0.26 $ 0.33 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | |
3 Months Ended
Mar. 31, 2010 | |
SUBSEQUENT EVENT | NOTE 9 SUBSEQUENT EVENT On April2, 2010, a subsidiary of BWICO acquired the electrostatic precipitator aftermarket and emissions monitoring business units of GE Energy, a division of General Electric Company, for approximately $22.0 million. This acquisition includes GE Energys electrostatic precipitator replacement parts and mechanical components product lines, performance-enhancing hardware, controls and software, remote diagnostics equipment and emissions monitoring products and services. These products and services are used by a wide variety of power generation and industrial customers to monitor and control particulates and other emissions from power plants, factories and other facilities. These business units maintain offices in the United States in Kansas City, Missouri, Folkston, Georgia, Newport News, Virginia and Hatfield, Pennsylvania, as well as locations in Germany, India, Russia and China. On May 3, 2010 we, together with JRMSA, entered into a credit agreement with a syndicate of lenders and credit issuers. This facility provides for revolving credit borrowings and issuances of letters of credit, in the aggregate, of up to $900 million outstanding and expires on May 3, 2014. Also on May 3, 2010, BWICO entered into a similar credit agreement with a syndicate of lenders and credit issuers, this facility providing an aggregate outstanding amount of up to $700 million for revolving credit borrowings and issuances of letters of credit. This facility also expires on May 3, 2014. These facilities replace the existing facilities of JRMSA and BWICO respectively. |