Exhibit 99
McDermott reports Fourth Quarter 2003 Loss from
Continuing Operations of $81.4 million, $1.26 per diluted share
NEW ORLEANS, La.--(BUSINESS WIRE)--March 11, 2004--
Includes B&W Settlement Revaluation Expense of $9.7 Million
After-Tax and $64.7 Million in Losses from Three J. Ray Projects
Expected to Be Completed in 2004
McDermott International, Inc. (NYSE:MDR) ("McDermott" or the
"Company") today reported a loss from continuing operations of $81.4
million, or $1.26 per diluted share, for the fourth quarter of 2003,
compared to a loss from continuing operations of $185.6 million, or
$2.96 per diluted share, for the corresponding period in 2002.
Including a loss of $1.3 million from discontinued operations, net
loss for the 2003 fourth quarter was $82.7 million, or $1.28 per
diluted share. Net loss for the fourth quarter of 2002 was $184.5
million, or $2.94 per diluted share, which included income from
discontinued operations of $1.1 million. Weighted average common
shares outstanding on a fully diluted basis were 64.6 million and 62.7
million for December 31, 2003 and December 31, 2002, respectively.
Revenues in the fourth quarter of 2003 increased 31.5 percent, to
$581.8 million, compared to the corresponding period in 2002. The
growth in revenues is due to increased activity among J. Ray
McDermott, S.A. and its subsidiaries ("J. Ray"), which comprise
McDermott's Marine Construction Services segment, partially offset by
lower revenues at BWX Technologies, Inc. ("BWXT"), the principle
subsidiary in McDermott's Government Operations segment.
The fourth quarter 2003 operating loss was $61.1 million, which
included $64.7 million of losses on three J. Ray projects, including a
$10.9 million increase in the estimated costs necessary to complete
the Front Runner EPIC spar, a $24.6 million increase in the expected
loss associated with the Carina Aries project in Argentina, and a
$29.2 million loss on the Belanak FPSO project at J. Ray's Batam
Island facility. Also included in the operating loss was an increase
in an insurance charge to J. Ray of $5.4 million, and $18.9 million of
corporate, non-cash qualified pension plan expense. Partially
offsetting these items was a $4.5 million benefit at BWXT associated
with a reimbursable corporate expense. As indicated in its March 1,
2004 press release, the Company is seeking to recover up to $25
million of the losses J. Ray recorded during 2003 through change
orders, negotiated settlements or legal proceedings.
The 2002 fourth quarter operating loss of $70.5 million included
an increase of $47.2 million in expenses related to J. Ray's three
EPIC spar contracts.
"The fourth quarter 2003 was a step backwards in the turnaround
process at J. Ray due to additional charges on the three projects, but
I continue to believe that we will be successful in our efforts,
particularly as we see the end in sight to these troubled projects,"
said Bruce W. Wilkinson, chairman of the board and chief executive
officer of McDermott. "We have now substantially completed two of the
EPIC spar projects that have plagued J. Ray, and these three remaining
projects that are in loss positions will be behind us during 2004."
The Company's other expense for the fourth quarter of 2003 was
$15.8 million, compared to $91.0 million in the fourth quarter of
2002. The year-over-year improvement is primarily due to the $86.4
million establishment of the estimated costs related to The Babcock &
Wilcox Company ("B&W") Chapter 11 settlement in the 2002 fourth
quarter, compared to the $8.9 million revaluation of that expense in
the 2003 fourth quarter. This revaluation will continue to fluctuate
on a quarterly basis and is largely dependent on the quarterly price
movement in McDermott's stock price.
RESULTS OF OPERATIONS
2003 Fourth Quarter Compared to 2002 Fourth Quarter
Marine Construction Services Segment
Revenues from the Marine Construction Services segment increased
54 percent to $428.6 million in the 2003 fourth quarter. The revenue
growth resulted from increased activity on fabrication and marine
installation projects in all geographic areas where J. Ray operates,
other than the Gulf of Mexico.
Segment loss for the 2003 fourth quarter was $61.3 million
compared to a segment loss in the fourth quarter 2002 of $81.9
million. Major projects contributing to the 2003 fourth quarter loss
were the $64.7 million of aggregate charges on the projects referred
to above (Carina Aries, Front Runner and Belanak), partially offset by
$2.8 million of gains on sales of assets. Selling, general and
administrative expenses were $17.4 million, $1.5 million lower in the
2003 fourth quarter compared to the 2002 fourth quarter.
At December 31, 2003, J. Ray's backlog of $1.4 billion included
$78.5 million related to uncompleted work on the Front Runner spar,
$38.7 million on the Belanak project and $56.4 million related to the
Carina Aries project. J. Ray's backlog was $1.5 billion and $2.1
billion at September 30, 2003 and December 31, 2002, respectively.
Government Operations Segment
Revenues from the Government Operations segment decreased $11.4
million to $153.3 million in the 2003 fourth quarter primarily due to
lower revenues from a management and operations contract in Ohio,
partially offset by higher volumes from the manufacture of nuclear
components for certain U.S. government programs.
Segment income increased 45 percent to $21.1 million in the 2003
fourth quarter, primarily due to the following:
-- higher volumes and margins from the manufacture of nuclear
components for certain U.S. government programs;
-- the reimbursement of $4.5 million of a corporate expense;
-- better margins from the commercial nuclear environmental
services; and
-- reduced spending on fuel cell research and development
projects, and lower other G&A expenses.
These items were partially offset by lower volumes from other
commercial work.
At December 31, 2003, BWXT's backlog was $1.8 billion, compared to
backlog of $1.4 billion and $1.7 billion at September 30, 2003 and
December 31, 2002, respectively.
Corporate
Corporate expenses were $21.0 million in the 2003 fourth quarter,
an increase of $17.6 million over the 2002 fourth quarter, primarily
due to an increase of $17.3 million in non-cash qualified pension plan
expense as a result of year-end 2002 changes in the discount rate and
plan asset performance.
Other Income and Expense
Net interest expense was $6.7 million in the 2003 fourth quarter
compared to $0.9 million in the 2002 fourth quarter, due to higher
interest rates associated with the Company's borrowings, and lower
interest income due to a decrease in the amount of, and average
interest rates earned on, investments.
During the 2003 fourth quarter, revaluation of certain components
of the estimated settlement cost related to the Chapter 11 proceedings
involving B&W resulted in an increase in the estimated cost of the
settlement to $127.9 million, resulting in the recognition of other
expense of $8.9 million ($9.7 million after tax). The consideration to
be provided in the proposed settlement includes, among other things,
McDermott common stock, a related share price guaranty obligation and
a promissory note. The increase in the fourth quarter 2003 estimated
settlement cost is due primarily to an increase in the price of
McDermott's common stock from $5.71 per share at September 30, 2003 to
$11.95 per share at December 31, 2003. The Company is required to
revalue certain components of the estimated settlement cost quarterly
and at the time the securities are issued, assuming the settlement is
finalized. Assuming issuance of the debt and equity securities, the
Company will record such amounts as either liabilities or
stockholders' equity based on the nature of the individual securities.
Thereafter, only the three-year share price guaranty will be required
to be revalued on an ongoing quarterly basis.
The Company reported other expense of $0.2 million in the 2003
fourth quarter, compared to $3.7 million in the 2002 fourth quarter,
due to minority interest income associated with a J. Ray joint
venture, partially offset by an increase in foreign currency
transaction losses.
Provision for income taxes during the fourth quarter of 2003 was
$4.5 million, compared to $24.1 million during the fourth quarter of
2002. The $19.6 million variance was due to the fourth quarter 2002
increase in provision for income taxes associated with the B&W Chapter
11 settlement.
DISCONTINUED OPERATIONS
In August 2003, the Company completed the sale of Menck GmbH
("Menck"), formerly a component of the Marine Construction Services
segment. Accordingly, the Company has reported the results of
operations for Menck as discontinued operations. In the fourth quarter
2003, the Company recorded a loss of $1.3 million associated with the
resolution of open issues related to the sale of Menck.
Hudson Products Corporation ("HPC") was sold in July 2002.
Accordingly, the Company has reported the results of operations for
HPC as discontinued operations during the year 2002.
THE BABCOCK & WILCOX COMPANY
The Company wrote off its remaining investment in B&W of $224.7
million during the second quarter of 2002 and has not consolidated B&W
with McDermott's financial results since B&W's Chapter 11 bankruptcy
filing in February 2000. B&W's revenues decreased $40.0 million,
compared to the fourth quarter of 2002, to $356.3 million in the
fourth quarter of 2003. B&W's net income for the 2003 fourth quarter
was $24.1 million, an increase of $274.9 million versus the
corresponding period in 2002, due to a $286.5 million expense in the
fourth quarter 2002 related to an increase in B&W's expected asbestos
liability.
LIQUIDITY
On a consolidated basis, the Company incurred negative cash flows
for the fourth quarter and full-year 2003. J. Ray expects to incur
negative cash flows from operations during three of four quarters in
2004, due to the cash outflow on the three spar projects, the Carina
Aries project and the Belanak project, for which substantial income
statement expenses have already been recorded. The Company expects
negative cash flows on a consolidated basis for two of the four
quarters in 2004, reflecting J. Ray's negative cash flows.
Completion of these projects has and will continue to put a strain
on J. Ray's current liquidity. J. Ray intends to fund its negative
cash flow in 2004 with cash on hand, including cash expected to be
made available when it obtains a new letter-of-credit facility, as
well as through sales of non-strategic assets.
In December 2003, J. Ray issued $200 million of 11 percent, senior
secured notes due 2013. In addition, J. Ray is currently negotiating a
$75 million secured letter-of-credit facility which is expected to be
completed in the first half of 2004. Completion of this facility would
enable J. Ray to replace most of the approximately $80 million of
existing letters of credit which are currently cash collateralized.
Also in December, BWXT completed a $135 million, three-year working
capital facility with a syndicate of banks.
J. Ray's ability to obtain a new letter-of-credit facility will
depend on numerous factors, including market conditions, J. Ray's
performance and the negotiation of acceptable terms and conditions. In
addition, J. Ray's ability to use the proceeds from sales of assets to
fund its working capital requirements is limited under the terms of
the indenture governing its senior secured notes. If J. Ray is unable
to obtain a new letter of credit facility or a sufficient amount of
available proceeds from sales of non-strategic assets, J. Ray's
ability to pursue additional projects, which often require letters of
credit, and its liquidity will be adversely impacted. These factors
continue to cause substantial doubt about J. Ray's ability to continue
as a going concern.
OTHER INFORMATION
About the Company
McDermott International, Inc. is a leading worldwide energy
services company. The Company's subsidiaries provide engineering,
fabrication, installation, procurement, research, manufacturing,
environmental systems, project management and facility management
services to a variety of customers in the energy and power industries,
including the U.S. Department of Energy.
In accordance with the Safe Harbor provisions of the Private
Securities Litigation Reform Act of 1995, McDermott International,
Inc. cautions that statements in this press release, which are
forward-looking and provide other than historical information, involve
risks and uncertainties that may impact the Company's actual results
of operations. These forward-looking statements include our
expectations regarding completion of the three remaining contracts in
loss positions, the backlog of our Marine Construction Services and
Government Operations segments, statements relating to the proposed
settlement of the B&W Chapter 11 proceedings, and statements relating
to our liquidity and J. Ray's financing plans. 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. 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 risk factors,
please see McDermott's annual report for the year ended December 31,
2002 and its 2003 quarterly reports filed with the Securities and
Exchange Commission.
Conference Call to Discuss 2003 Fourth Quarter Earnings Release
Date: Friday, March 12, 2004 at 10:00 a.m. EDT (9:00 a.m. CDT)
Live Webcast: Investor Relations section of website at
www.mcdermott.com
Replay: Available for two weeks in the investor relations section
of www.mcdermott.com
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF LOSS
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
--------- ---------- ----------- -----------
(Unaudited)
(In thousands, except per share amounts)
Revenues $581,818 $ 442,398 $2,335,364 $1,733,821
- ----------------------------------------------------------------------
Costs and Expenses:
Cost of operations 608,404 477,503 2,252,842 1,734,580
Loss on write-off of
investment in
The Babcock & Wilcox
Company - - - 224,664
Impairment of JRM
goodwill - - 313,008
(Gains) losses on Asset
Disposals and
Impairments - net (2,765) 8,062 (6,171) 7,855
Selling, general and
administrative expenses 46,071 40,649 169,764 157,845
- ----------------------------------------------------------------------
651,710 526,214 2,416,435 2,437,952
- ----------------------------------------------------------------------
Equity in Income of
Investees 8,800 13,271 28,382 27,692
- ----------------------------------------------------------------------
Operating Loss (61,092) (70,545) (52,689) (676,439)
- ----------------------------------------------------------------------
Other Income (Expense):
Interest income 632 1,676 3,230 8,553
Interest expense (7,362) (2,607) (18,993) (15,123)
Increase in estimated
cost of The Babcock
& Wilcox Company
bankruptcy settlement (8,897) (86,377) (14,539) (86,377)
Other-net (163) (3,668) 2,123 (4,174)
- ----------------------------------------------------------------------
(15,790) (90,976) (28,179) (97,121)
- ----------------------------------------------------------------------
Loss from Continuing
Operations before
Provision for Income
Taxes and Cumulative
Effect of Accounting
Change (76,882) (161,521) (80,868) (773,560)
Provision for Income
Taxes 4,489 24,082 21,290 14,406
- ----------------------------------------------------------------------
Loss from Continuing
Operations before
Cumulative Effect of
Accounting Change (81,371) (185,603) (102,158) (787,966)
- ----------------------------------------------------------------------
Income (Loss) from
Discontinued Operations (1,336) 1,074 3,219 11,572
Loss before Cumulative
Effect of Accounting
Change (82,707) (184,529) (98,939) (776,394)
Cumulative Effect of
Accounting Change - - 3,710 -
- ----------------------------------------------------------------------
Net Loss $(82,707) $(184,529) $ (95,229) $ (776,394)
======================================================================
Loss per Common Share:
Basic:
Loss from Continuing
Operations before
Cumulative Effect of
Accounting Change $ (1.26) $ (2.96) $ (1.59) $ (12.74)
Income (Loss) from
Discontinued
Operations $ (0.02) $ 0.02 $ 0.05 $ 0.19
Cumulative Effect of
Accounting Change $ 0.00 $ 0.00 $ 0.05 $ 0.00
Net Loss $ (1.28) $ (2.94) $ (1.49) $ (12.55)
Diluted:
Loss from Continuing
Operations before
Cumulative Effect of
Accounting Change $ (1.26) $ (2.96) $ (1.59) $ (12.74)
Income (Loss) from
Discontinued
Operations $ (0.02) $ 0.02 $ 0.05 $ 0.19
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF LOSS (cont'd)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
------------ ----------- ------------ ------------
(Unaudited)
(In thousands, except per share amounts)
Diluted: (cont'd)
Cumulative Effect
of Accounting
Change $ 0.00 $ 0.00 $ 0.05 $ 0.00
Net Loss $ (1.28) $ (2.94) $ (1.49) $ (12.55)
======================================================================
Weighted Average
Shares
Basic 64,603,716 62,682,376 64,108,274 61,860,585
Diluted 64,603,716 62,682,376 64,108,274 61,860,585
======================================================================
McDERMOTT INTERNATIONAL, INC.
SELECTED SEGMENT INFORMATION
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
----------- ----------- ----------- -----------
(Unaudited)
(In thousands)
REVENUES:
Marine Construction
Services $ 428,565 $ 277,744 $1,803,924 $1,133,181
Government
Operations 153,260 164,666 531,522 553,827
Power Generation
Systems - - - 46,881
Adjustments and
Eliminations (7) (12) (82) (68)
- ----------------------------------------------------------------------
TOTAL $ 581,818 $ 442,398 $2,335,364 $1,733,821
======================================================================
SEGMENT INCOME (LOSS):
Marine Construction
Services $ (61,286) $ (81,926) $ (45,882) $ (480,939)
Government
Operations 21,147 14,547 86,656 59,333
Power Generation
Systems 10 159 127 (5,089)
- ----------------------------------------------------------------------
(40,129) (67,220) 40,901 (426,695)
Write-off of
investment in B&W - - - (224,664)
Other unallocated - - - (1,452)
Corporate (20,963) (3,325) (93,590) (23,628)
- ----------------------------------------------------------------------
OPERATING LOSS $ (61,092) $ (70,545) $ (52,689) $ (676,439)
======================================================================
EQUITY IN INCOME
(LOSS) OF INVESTEES:
Marine Construction
Services $ (101) $ 4,065 $ (534) $ 5,311
Government Operations 8,686 8,819 28,018 24,645
Power Generation
Systems 215 387 898 (2,264)
- ----------------------------------------------------------------------
TOTAL $ 8,800 $ 13,271 $ 28,382 $ 27,692
======================================================================
DEPRECIATION &
AMORTIZATION:
Marine Construction
Services $ 7,423 $ 5,951 $ 28,253 $ 24,793
Government
Operations 3,722 3,249 13,174 11,388
Power Generation
Systems 1 7 11 550
Corporate 777 1,179 3,066 3,889
- ----------------------------------------------------------------------
TOTAL $ 11,923 $ 10,386 $ 44,504 $ 40,620
======================================================================
CAPITAL EXPENDITURES:
Marine Construction
Services $ 1,724 $ 18,078 $ 15,520 $ 44,541
Government
Operations 8,357 8,312 19,645 23,761
Power Generation
Systems - 110 - 356
Corporate 485 106 2,932 106
- ----------------------------------------------------------------------
TOTAL $ 10,566 $ 26,606 $ 38,097 $ 68,764
======================================================================
BACKLOG:
Marine Construction
Services $1,443,615 $2,091,459 $1,443,615 $2,091,459
Government
Operations 1,819,027 1,680,559 1,819,027 1,680,559
Power Generation
Systems - - - -
- ----------------------------------------------------------------------
TOTAL $3,262,642 $3,772,018 $3,262,642 $3,772,018
======================================================================
McDERMOTT INTERNATIONAL, INC.
ITEMS INCLUDED IN LOSS FROM CONTINUING OPERATIONS
Three Months Twelve Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
------- -------- -------- --------
(Unaudited)
(In millions)
ITEMS INCLUDED IN OPERATING
INCOME (LOSS) BY SEGMENT:
Marine Construction Services
Losses on Spar projects $ (8.1) $ (47.2) $ (27.9) $(149.2)
Impairment of JRM goodwill - - - (313.0)
J. Ray insurance charge (5.4) - (5.4) -
Losses on Argentina (Carina
Aries) project (24.6) (9.6) (66.5) (9.3)
Losses on Belanak project (29.2) - (25.3) -
- ----------------------------------------------------------------------
TOTAL $(67.3) $ (56.8) $(125.1) $(471.5)
======================================================================
Government Operations
Reimbursement of Corporate
Expense $ 4.5 $ - $ 4.5 $ -
Favorable resolution of contract
dispute - - 8.7 -
- ----------------------------------------------------------------------
TOTAL $ 4.5 $ - $ 13.2 $ -
======================================================================
Corporate
Write-off of investment in B&W $ - $ - $ - $(224.7)
Qualified pension plan (expense)
income (18.9) (1.6) (75.7) (11.1)
- ----------------------------------------------------------------------
TOTAL $(18.9) $ (1.6) $ (75.7) $(235.8)
======================================================================
OTHER ITEMS:
Change in estimated cost of B&W
bankruptcy settlement before tax $ (8.9) $ (86.4) $ (14.6) $ (86.4)
Tax impact on B&W settlement 0.9 23.6 3.4 23.6
- ----------------------------------------------------------------------
TOTAL $ (9.8) $(110.0) $ (18.0) $(110.0)
======================================================================
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
2003 2002
----------- -----------
(In thousands)
Current Assets:
Cash and cash equivalents $ 174,790 $ 129,517
Restricted cash and cash equivalents
(See Note 21) 180,480 44,824
Investments - 108,269
Accounts receivable - trade, net 195,073 177,347
Accounts receivable from The Babcock &
Wilcox Company 6,192 12,273
Accounts and notes receivable -
unconsolidated affiliates 14,024 17,695
Accounts receivable - other 38,296 63,270
Contracts in progress 69,485 147,336
Deferred income taxes 4,168 3,350
Other current assets 16,019 45,403
- ----------------------------------------------------------------------
Total Current Assets 698,527 749,284
- ----------------------------------------------------------------------
Property, Plant and Equipment:
Land 12,609 12,520
Buildings 137,823 132,538
Machinery and equipment 1,067,665 1,030,764
Property under construction 26,125 62,625
- ----------------------------------------------------------------------
1,244,222 1,238,447
Less accumulated depreciation 880,460 885,051
- ----------------------------------------------------------------------
Net Property, Plant and Equipment 363,762 353,396
- ----------------------------------------------------------------------
Investments:
Government obligations 17,824 48,681
Other investments 24,976 16,277
- ----------------------------------------------------------------------
Total Investments 42,800 64,958
- ----------------------------------------------------------------------
Goodwill 12,926 12,926
- ----------------------------------------------------------------------
Prepaid Pension Costs 18,722 19,311
- ----------------------------------------------------------------------
Other Assets 112,137 78,296
- ----------------------------------------------------------------------
TOTAL $1,248,874 $1,278,171
======================================================================
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIT
December 31,
2003 2002
------------ ------------
(In thousands)
Current Liabilities:
Notes payable and current maturities of
long-term debt $ 37,217 $ 55,577
Accounts payable 146,665 163,811
Accounts payable to The Babcock & Wilcox
Company 42,137 32,379
Accrued employee benefits 69,923 60,897
Accrued liabilities - other 166,129 190,843
Accrued contract cost 69,928 53,335
Advance billings on contracts 176,105 329,031
U.S. and foreign income taxes payable 14,727 31,176
- ----------------------------------------------------------------------
Total Current Liabilities 722,831 917,049
- ----------------------------------------------------------------------
Long-Term Debt 279,682 86,104
- ----------------------------------------------------------------------
Accumulated Postretirement Benefit
Obligation 26,861 26,898
- ----------------------------------------------------------------------
Self-Insurance 60,737 71,918
- ----------------------------------------------------------------------
Pension Liability 311,393 392,072
- ----------------------------------------------------------------------
Accrued Cost of The Babcock & Wilcox Company
Bankruptcy Settlement 100,916 86,377
- ----------------------------------------------------------------------
Other Liabilities 109,631 114,510
- ----------------------------------------------------------------------
Commitments and Contingencies. (Note 10)
Stockholders' Deficit:
Common stock, par value $1.00 per share,
authorized 150,000,000 shares; issued
68,129,390 and 66,351,478 shares at
December 31, 2003 and 2002, respectively 68,129 66,351
Capital in excess of par value 1,105,828 1,093,428
Accumulated deficit (1,122,547) (1,027,318)
Treasury stock at cost, 2,061,407 shares at
December 31, 2003 and 2002 (62,792) (62,792)
Accumulated other comprehensive loss (351,795) (486,426)
- ----------------------------------------------------------------------
Total Stockholders' Deficit (363,177) (416,757)
- ----------------------------------------------------------------------
TOTAL $ 1,248,874 $ 1,278,171
======================================================================
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2003 2002 2001
(In thousands)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (95,229) $ (776,394) $ (20,022)
Depreciation and amortization 44,504 40,620 62,264
Income or loss of investees,
less dividends 5,477 7,156 2,616
Loss (gain) on asset disposals
and impairments - net (6,171) 7,856 3,733
Provision for (benefit from)
deferred taxes (13,221) 38,041 9,269
Gain on sale of businesses (1,029) (15,044) (27,996)
Impairment of J. Ray McDermott,
S.A. goodwill - 313,008 -
Loss on write-off of investment
in The Babcock & Wilcox Company - 224,664 -
Estimated loss on The Babcock &
Wilcox bankruptcy settlement 14,539 86,377 -
Cumulative effect of accounting
change (3,710) - -
Other 4,638 11,568 277
Changes in assets and liabilities,
net of effects from acquisitions
and divestitures:
Accounts receivable 18,770 (62,860) (29,231)
Accounts payable (14,682) 51,654 28,911
Net contracts in progress and
advance billings (74,926) 106,176 81,851
Income taxes (16,488) (91,387) 94,985
Accrued liabilities (2,632) 20,445 (32,615)
Pension liability 53,819 20,490 (11,388)
Other, net (11,205) 7,824 13,957
- ----------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (97,546) (9,806) 176,611
- ----------------------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
(Increase) decrease in restricted
cash and cash equivalents (135,656) (8,090) (30,491)
Acquisitions - - (644)
Purchases of property, plant and
equipment (36,057) (64,852) (45,008)
Purchases of available-for-sale
securities (285,896) (1,361,752) (1,360,280)
Maturities of available-for-sale
securities 281,684 744,538 161,901
Sales of available-for-sale
securities 135,472 775,441 1,229,087
Proceeds from asset disposals 24,097 41,095 53,056
Investments in equity investees - - (800)
Other (405) 49 4,872
- ----------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (16,761) 126,429 11,693
- ----------------------------------------------------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of long-term debt 194,129 - -
Payment of long-term debt (9,500) (208,416) (15,110)
Payment of debt issuance costs (18,577) - -
Increase (decrease) in short-term
borrowing (8,850) 60,056 (96,062)
Issuance of common stock - 1,394 1,000
Other 2,376 (334) 4,500
- ----------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 159,578 (147,300) (105,672)
- ----------------------------------------------------------------------
EFFECTS OF EXCHANGE RATE CHANGES
ON CASH 2 119 (35)
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2003 2002 2001
--------- --------- ---------
(In thousands)
- ----------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 45,273 (30,558) 82,597
- ----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 129,517 160,075 77,478
- ----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $174,790 $129,517 $160,075
======================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 17,693 $ 20,518 $ 38,166
Income taxes (net of refunds) $ 35,797 $119,962 $ (2,057)
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CONTACT: McDermott International, Inc.
Jay Roueche, 281-870-5462
jroueche@mcdermott.com