Mcdermott International (MDRIQ) 8-K Unaudited Pro Forma Condensed Consolidated Financial Statements

Exhibit 99.1

McDermott International, Inc.

Unaudited Pro Forma Condensed Consolidated Financial Statements

The following unaudited pro forma condensed consolidated statements of income for the three months ended March 31, 2010, March 31, 2009, June 30, 2009, September 30, 2009 and December 31, 2009, and condensed consolidated statements of income for the years ended December 31, 2009, 2008 and 2007, have been derived from the historical financial statements of McDermott International, Inc. (“we”, “us” or “our”) as if the disposal of our Power Generation Systems and Government Operations segments via the spin-off of The Babcock & Wilcox Company (“B&W”) occurred as of January 1, 2007. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2010 has been prepared as if the spin-off occurred as of March 31, 2010.

Due to the spin-off of B&W, when we issue financial statements for the period ending September 30, 2010 and for the year ending December 31, 2010, the historical results of B&W will be reclassified as discontinued operations in accordance with Financial Accounting Standards Board Codification Topic 205-20,Presentation of Financial Statements – Discontinued Operations.

The pro forma adjustments include assumptions that management believes are reasonable. The pro forma adjustments may differ from the adjustments that will be calculated to report the B&W business as discontinued operations in our future filings.

These unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results or the financial position that would have been achieved had the spin-off of B&W been completed as of the dates indicated or of the results that may be obtained in the future. These unaudited pro forma condensed consolidated financial statements and the accompanying unaudited notes should be read together with our annual report on Form 10-K for the year ended December 31, 2009 and our quarterly report on Form 10-Q for the quarter ended March 31, 2010.

1

McDERMOTT INTERNATIONAL, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of March 31, 2010

	As Reported		Pro Forma Adjustments			Pro Forma
	(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	775,980	$	301,124	(a)	$	474,856
Restricted cash and cash equivalents		96,040		17,821	(a)		78,219
Accounts receivable – trade, net		550,275		302,506	(a)		247,769
Accounts and notes receivable – unconsolidated affiliates		9,614		7,156	(a)		2,458
Accounts receivable – other		66,211		35,340	(a)		30,871
Contracts in progress		408,479		299,166	(a)		109,313
Inventories		97,874		95,009	(a)		2,865
Deferred income taxes		107,236		99,109	(a)		8,127
Other current assets		72,144		24,785	(a)		47,359
Total Current Assets		2,183,853		1,182,016			1,001,837
Property, Plant and Equipment		2,655,474		929,123	(a)		1,726,351
Less accumulated depreciation		1,295,906		517,332	(a)		778,574
Net Property, Plant and Equipment		1,359,568		411,791	(a)		947,777
Investments		178,566		69,104	(a)		109,462
Goodwill		325,760		269,950	(a)		55,810
Deferred Income Taxes		265,971		254,646	(a)(c)		11,325
Investments in Unconsolidated Affiliates		93,139		77,965	(a)		15,174
Other Assets		268,103		147,347	(a)		120,756
TOTAL	$	4,674,960	$	2,412,819		$	2,262,141

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

2

McDERMOTT INTERNATIONAL, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of March 31, 2010

	As Reported			Pro Forma Adjustments			Pro Forma
	(In thousands)
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable and current maturities of long-term debt	$	13,558		$	4,993	(a)	$	8,565
Accounts payable		366,355			175,966	(a)		190,389
Accrued contract costs		96,858			445	(a)		96,413
Accrued employee benefits		339,289			212,416	(a)		126,873
Accrued liabilities – other		176,882			74,039	(a)		102,843
Advance billings on contracts		578,538			494,579	(a)		83,959
Accrued warranty expense		122,164			119,531	(a)		2,633
Income taxes payable		71,128			4,020	(a)		67,108
Total Current Liabilities		1,764,772			1,085,989			678,783
Long-Term Debt		55,092			5,343	(a)		49,749
Accumulated Postretirement Benefit Obligation		106,461			106,329	(a)		132
Self-Insurance		89,044			57,162	(a)		31,882
Pension Liability		573,311			521,756	(a)		51,555
Other Liabilities		148,091			88,243	(a)		59,848
Commitments and Contingencies
Equity
Common stock par value		237,801			—			237,801
Capital in excess of par value		1,323,712			—			1,323,712
Retained earnings		1,011,588			981,367	(a)(c)		30,221
Treasury stock		(73,725	)		—			(73,725	)
Accumulated other comprehensive loss		(596,845	)		(433,889	)(a)		(162,956	)
Stockholders’ Equity – McDermott International, Inc.		1,902,531			547,478			1,355,053
Noncontrolling interest		35,658			519	(a)		35,139
Total Equity		1,938,189			547,997			1,390,192
TOTAL	$	4,674,960		$	2,412,819		$	2,262,141
									��

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

3

McDERMOTT INTERNATIONAL, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Three Months Ended March 31, 2010

	As Reported			Pro Forma Adjustments			Pro Forma
	(In thousands)
Revenues	$	1,181,930		$	(662,388	)(b)	$	519,542
Costs and Expenses:
Cost of operations		934,851			(544,951	)(b)		389,900
Gains on asset disposals and impairments – net		(2,093	)		13	(b)		(2,080	)
Costs to spin-off B&W		24,202			(24,202	)(d)		—
Selling, general and administrative expenses		143,750			(91,465	)(b)		52,285
Total Costs and Expenses		1,100,710			(660,605	)		440,105
Equity in Income (Loss) of Investees		10,588			(14,019	)(b)		(3,431	)
Operating Income		91,808			(15,802	)		76,006
Other Income (Expense):
Interest income (expense) – net		299			29	(b)		328
Other expense – net		(4,217	)		3,090	(b)		(1,127	)
Total Other Income (Expense)		(3,918	)		3,119			(799	)
Income before Provision for Income Taxes		87,890			(12,683	)		75,207
Provision for Income Taxes		19,672			(6,321	)(b)(c)		13,351
Net Income		68,218			(6,362	)		61,856
Less: Net Income Attributable to Noncontrolling Interest		(8,277	)		13	(b)		(8,264	)
Net Income Attributable to McDermott International, Inc.	$	59,941		$	(6,349	)	$	53,592
Pro Forma Earnings per Share:
Basic	$	0.26					$	0.23
Diluted	$	0.26					$	0.23
Shares used in Calculating Pro Forma Earnings per Share:
Basic		230,824,301						230,824,301
Diluted		234,753,035						234,753,035

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

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McDERMOTT INTERNATIONAL, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Three Months Ended March 31, 2009

	As Reported			Pro Forma Adjustments			Pro Forma
	(In thousands)
Revenues	$	1,493,263		$	(785,053	)(b)	$	708,210
Costs and Expenses:
Cost of operations		1,228,622			(610,914	)(b)		617,708
Losses on asset disposals and impairments – net		1,241			(207	)(b)		1,034
Selling, general and administrative expenses		141,394			(87,667	)(b)		53,727
Total Costs and Expenses		1,371,257			(698,788	)		672,469
Equity in Income (Loss) of Investees		9,200			(10,345	)(b)		(1,145	)
Operating Income		131,206			(96,610	)		34,596
Other Income (Expense):
Interest income (expense) – net		1,857			(677	)(b)		1,180
Other expense – net		(10,770	)		2,040	(b)		(8,730	)
Total Other Income (Expense)		(8,913	)		1,363			(7,550	)
Income before Provision for Income Taxes		122,293			(95,247	)		27,046
Provision for Income Taxes		43,878			(35,210	)(b)(c)		8,668
Net Income		78,415			(60,037	)		18,378
Less: Net Income Attributable to Noncontrolling Interest		(723	)		52	(b)		(671	)
Net Income Attributable to McDermott International, Inc.	$	77,692		$	(59,985	)	$	17,707
Pro Forma Earnings per Share:
Basic	$	0.34					$	0.08
Diluted	$	0.33					$	0.08
Shares used in Calculating Pro Forma Earnings per Share:
Basic		228,314,785						228,314,785
Diluted		232,586,245						232,586,245

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

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McDERMOTT INTERNATIONAL, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Three Months Ended June 30, 2009

	As Reported			Pro Forma Adjustments			Pro Forma
	(In thousands)
Revenues	$	1,564,999		$	(732,069	)(b)	$	832,930
Costs and Expenses:
Cost of operations		1,275,058			(553,489	)(b)		721,569
Gains on asset disposals and impairments – net		(1,897	)		30	(b)		(1,867	)
Selling, general and administrative expenses		153,195			(96,745	)(b)		56,450
Total Costs and Expenses		1,426,356			(650,204	)		776,152
Equity in Income (Loss) of Investees		9,097			(10,153	)(b)		(1,056	)
Operating Income		147,740			(92,018	)		55,722
Other Income (Expense):
Interest income (expense) – net		4,987			(112	)(b)		4,875
Other expense – net		(10,201	)		7,503	(b)		(2,698	)
Total Other Income (Expense)		(5,214	)		7,391			2,177
Income before Provision for Income Taxes		142,526			(84,627	)		57,899
Provision for Income Taxes		44,645			(26,408	)(b)(c)		18,237
Net Income		97,881			(58,219	)		39,662
Less: Net Income Attributable to Noncontrolling Interest		(5,326	)		43	(b)		(5,283	)
Net Income Attributable to McDermott International, Inc.	$	92,555		$	(58,176	)	$	34,379
Pro Forma Earnings per Share:
Basic	$	0.40					$	0.15
Diluted	$	0.40					$	0.15
Shares used in Calculating Pro Forma Earnings per Share:
Basic		229,273,441						229,273,441
Diluted		233,105,949						233,105,949

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

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McDERMOTT INTERNATIONAL, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Three Months Ended September 30, 2009

	As Reported			Pro Forma Adjustments			Pro Forma
	(In thousands)
Revenues	$	1,675,678		$	(648,997	)(b)	$	1,026,681
Costs and Expenses:
Cost of operations		1,383,046			(513,802	)(b)		869,244
(Gains) losses on asset disposals and impairments – net		323			(443	)(b)		(120	)
Selling, general and administrative expenses		160,565			(100,410	)(b)		60,155
Total Costs and Expenses		1,543,934			(614,655	)		929,279
Equity in Income (Loss) of Investees		13,050			(13,645	)(b)		(595	)
Operating Income		144,794			(47,987	)		96,807
Other Income (Expense):
Interest income (expense) – net		2,179			(952	)(b)		1,227
Other income (expense) – net		(3,127	)		3,168	(b)		41
Total Other Income (Expense)		(948	)		2,216			1,268
Income before Provision for Income Taxes		143,846			(45,771	)		98,075
Provision for Income Taxes		23,793			(5,606	)(b)(c)		18,187
Net Income		120,053			(40,165	)		79,888
Less: Net Income Attributable to Noncontrolling Interest		(1,946	)		36	(b)		(1,910	)
Net Income Attributable to McDermott International, Inc.	$	118,107		$	(40,129	)	$	77,978
Pro Forma Earnings per Share:
Basic	$	0.51					$	0.34
Diluted	$	0.50					$	0.33
Shares used in Calculating Pro Forma Earnings per Share:
Basic		229,989,368						229,989,368
Diluted		234,314,619						234,314,619

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

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McDERMOTT INTERNATIONAL, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Three Months Ended December 31, 2009

	As Reported			Pro Forma Adjustments			Pro Forma
	(In thousands)
Revenues	$	1,459,137		$	(688,513	)(b)	$	770,624
Costs and Expenses:
Cost of operations		1,183,710			(557,172	)(b)		626,538
Losses on asset disposals and impairments – net		1,655			(606	)(b)		1,049
Costs to spin-off B&W		7,118			(7,118	)(d)		—
Selling, general and administrative expenses		164,088			(112,419	)(b)		51,669
Total Costs and Expenses		1,356,571			(677,315	)		679,256
Equity in Income (Loss) of Investees		20,190			(20,951	)(b)		(761	)
Operating Income		122,756			(32,149	)		90,607
Other Income (Expense):
Interest income (expense) – net		(1,780	)		519	(b)		(1,261	)
Other expense – net		(7,187	)		3,401	(b)		(3,786	)
Total Other Income (Expense)		(8,967	)		3,920			(5,047	)
Income before Provision for Income Taxes		113,789			(28,229	)		85,560
Provision for Income Taxes		19,530			(228	)(b)(c)		19,302
Net Income		94,259			(28,001	)		66,258
Add: Net Loss Attributable to Noncontrolling Interest		4,443			25	(b)		4,468
Net Income Attributable to McDermott International, Inc.	$	98,702		$	(27,976	)	$	70,726
Pro Forma Earnings per Share:
Basic	$	0.43					$	0.31
Diluted	$	0.42					$	0.30
Shares used in Calculating Pro Forma Earnings per Share:
Basic		230,306,488						230,306,488
Diluted		234,500,686						234,500,686

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

8

McDERMOTT INTERNATIONAL, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Year Ended December 31, 2009

	As Reported			Pro Forma Adjustments			Pro Forma
	(In thousands)
Revenues	$	6,193,077		$	(2,854,632	)(b)	$	3,338,445
Costs and Expenses:
Cost of operations		5,070,436			(2,235,377	)(b)		2,835,059
Losses on asset disposals and impairments – net		1,322			(1,226	)(b)		96
Costs to spin-off B&W		7,118			(7,118	)(d)		—
Selling, general and administrative expenses		619,242			(397,241	)(b)		222,001
Total Costs and Expenses		5,698,118			(2,640,962	)		3,057,156
Equity in Income (Loss) of Investees		51,537			(55,094	)(b)		(3,557	)
Operating Income		546,496			(268,764	)		277,732
Other Income (Expense):
Interest income		7,281			(2,222	)(b)		5,059
Interest expense		(38	)		1,000	(b)		962
Other expense – net		(31,285	)		16,112	(b)		(15,173	)
Total Other Income (Expense)		(24,042	)		14,890			(9,152	)
Income before Provision for Income Taxes		522,454			(253,874	)		268,580
Provision for Income Taxes		131,846			(67,452	)(b)(c)		64,394
Net Income		390,608			(186,422	)		204,186
Less: Net Income Attributable to Noncontrolling Interest		(3,552	)		156	(b)		(3,396	)
Net Income Attributable to McDermott International, Inc.	$	387,056		$	(186,266	)	$	200,790
Pro Forma Earnings per Share:
Basic	$	1.69					$	0.88
Diluted	$	1.66					$	0.86
Shares used in Calculating Pro Forma Earnings per Share:
Basic		229,471,020						229,471,020
Diluted		233,626,876						233,626,876

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

9

McDERMOTT INTERNATIONAL, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Year Ended December 31, 2008

	As Reported			Pro Forma Adjustments			Pro Forma
	(In thousands)
Revenues	$	6,572,423		$	(3,398,574	)(b)	$	3,173,849
Costs and Expenses:
Cost of operations		5,519,827			(2,677,935	)(b)		2,841,892
Gains on asset disposals and impairments – net		(12,202	)		9,603	(b)		(2,599	)
Selling, general and administrative expenses		543,047			(337,376	)(b)		205,671
Total Costs and Expenses		6,050,672			(3,005,708	)		3,044,964
Equity in Income (Loss) of Investees		48,131			(51,792	)(b)		(3,661	)
Operating Income		569,882			(444,658	)		125,224
Other Income (Expense):
Interest income		34,353			(12,681	)(b)		21,672
Interest expense		(7,380	)		3,095	(b)		(4,285	)
Other expense – net		(9,454	)		4,290	(b)		(5,164	)
Total Other Income (Expense)		17,519			(5,296	)		12,223
Income before Provision for Income Taxes		587,401			(449,954	)		137,447
Provision for Income Taxes		157,812			(91,414	)(b)(c)		66,398
Net Income		429,589			(358,540	)		71,049
Less: Net Income Attributable to Noncontrolling Interest		(287	)		88	(b)		(199	)
Net Income Attributable to McDermott International, Inc.	$	429,302		$	(358,452	)	$	70,850
Pro Forma Earnings per Share:
Basic	$	1.89					$	0.31
Diluted	$	1.86					$	0.31
Shares used in Calculating Pro Forma Earnings per Share:
Basic		226,918,776						226,918,776
Diluted		230,393,782						230,393,782

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

10

McDERMOTT INTERNATIONAL, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Year Ended December 31, 2007

	As Reported			Pro Forma Adjustments			Pro Forma
	(In thousands)
Revenues	$	5,631,610		$	(3,199,939	)(b)	$	2,431,671
Costs and Expenses:
Cost of operations		4,500,897			(2,620,013	)(b)		1,880,884
Gains on asset disposals and impairments – net		(8,371	)		1,606	(b)		(6,765	)
Selling, general and administrative expenses		464,611			(288,455	)(b)		176,156
Total Costs and Expenses		4,957,137			(2,906,862	)		2,050,275
Equity in Income (Loss) of Investees		41,724			(45,647	)(b)		(3,923	)
Operating Income		716,197			(338,724	)		377,473
Other Income (Expense):
Interest income		61,980			(19,194	)(b)		42,786
Interest expense		(22,520	)		14,106	(b)		(8,414	)
Other expense – net		(10,099	)		10,411	(b)		312
Total Other Income (Expense)		29,361			5,323			34,684
Income before Provision for Income Taxes		745,558			(333,401	)		412,157
Provision for Income Taxes		137,637			(94,981	)(b)(c)		42,656
Net Income		607,921			(238,420	)		369,501
Less: Net Income Attributable to Noncontrolling Interest		(93	)		80	(b)		(13	)
Net Income Attributable to McDermott International, Inc.	$	607,828		$	(238,340	)	$	369,488
Pro Forma Earnings per Share:
Basic	$	2.72					$	1.65
Diluted	$	2.66					$	1.62
Shares used in Calculating Pro Forma Earnings per Share:
Basic		223,511,880						223,511,880
Diluted		228,742,522						228,742,522

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

11

McDermott International, Inc.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

(a) Reflects the pro forma elimination of the assets, liabilities and equity associated with The Babcock & Wilcox Operations of McDermott International, Inc., which are included in our historical condensed consolidated balance sheet.

(b) Reflects the pro forma elimination of the operating results of The Babcock & Wilcox Operations of McDermott International, Inc.

(c) Reflects the pro forma elimination of certain income tax benefits that are not expected to be realized in future periods, as a result of the spin-off of The Babcock & Wilcox Operations.

(d) Reflects the pro forma elimination, from continuing operations, of costs consisting primarily of severance and professional services directly attributable to the spin-off.

12