McDermott Reports Third Quarter 2012 Financial Results

  McDermott Reports Third Quarter 2012 Financial Results

         Earnings per share of 21 cents; Strong $5.3 Billion Backlog

Business Wire

HOUSTON -- November 05, 2012

McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today
reported income of $50.6 million, or $0.21 per diluted share, for the 2012
third quarter. The results of the 2012 third quarter compare to income from
continuing operations of $9.8 million, or $0.04 per diluted share, in the
corresponding period of 2011. Weighted average common shares outstanding on a
fully diluted basis were approximately 237.9 million and 236.9 million in the
quarters ended September 30, 2012 and September 30, 2011, respectively.

McDermott’s revenues were $1,028.7 million for the 2012 third quarter compared
to $879.9 million in the corresponding period of 2011. The year-over-year
increase was attributable to the Middle East and Atlantic segments, primarily
due to increased fabrication and marine activity. The increase from these
segments was partially offset by lower revenues in the Asia Pacific segment
due to lower marine activity.

The Company’s operating income in the 2012 third quarter was $82.5 million
compared to $35.2 million in the 2011 third quarter. The increase in operating
income was primarily due to approximately $50 million in project losses
recognized in the 2011 third quarter, in addition to higher fabrication and
marine activity in the Middle East and Atlantic segments and additional change
order activity in the Asia Pacific segment in the 2012 third quarter.

“The positive results of our 2012 third quarter keep us on track for a solid
2012 financial performance,” said Stephen M. Johnson, Chairman of the Board,
President and Chief Executive Officer of McDermott. “We see continued strength
in our end markets and are encouraged by the significant level of bids and
targeted market opportunities.”

The Company’s other income for the third quarter of 2012 was $1.7 million,
which represents an improvement of $1.3 million as compared to other income of
$0.4 million in the third quarter of 2011 primarily attributable to increased
interest income.

At September 30, 2012, the Company’s backlog was approximately $5.3 billion,
compared to $5.7 billion and $4.3 billion at June 30, 2012 and September 30,
2011, respectively.

Balance Sheet Summary

As of September 30, 2012, McDermott reported total assets of approximately
$3.4 billion. Included in this amount was $720.7 million of cash and cash
equivalents, restricted cash and investments. Net working capital, calculated
as current assets less current liabilities, was $679.4 million. Additionally,
total equity was over $1.9 billion, or approximately 57% of total assets, with
total debt of $108.3 million.

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 approximately 13,500 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, McDermott remaining on track for a solid 2012 financial
performance and the continued strength in McDermott’s end markets. 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, changes in project
design or schedules, changes in the scope or timing of contracts, and contract
cancellations, change orders and other modifications. 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, 2011 and subsequent
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.

                                                           
McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME
                                                                 
                   Three Months Ended            Nine Months Ended
                   September 30,                 September 30,
                   2012            2011          2012            2011
                   (In thousands, except share and per share amounts)
                                                                 
Revenues           $ 1,028,745    $ 879,894    $ 2,645,671    $ 2,628,935 
                                                                 
Costs and
Expenses:
Cost of              889,823         802,951       2,246,961       2,253,981
operations
Selling,
general and          51,834          48,046        145,927         163,827
administrative
expenses
Gain on asset       (85       )    (7,811  )    (282      )    (8,107    )
disposals
                                                                 
Total costs         941,572       843,186     2,392,606     2,409,701 
and expenses
                                                                 
                                                                 
Equity in
Income (Loss)
of                  (4,692    )    (1,492  )    (11,026   )    59        
Unconsolidated
Affiliates
                                                                 
Operating           82,481        35,216      242,039       219,293   
Income
                                                                 
Other Income
(Expense):
Interest             996             319           4,215           1,060
income
Interest             -               (152    )     -               (415      )
expense
Gain (loss) on
foreign              488             504           11,185          (2,356    )
currency--net
Other income        242           (298    )    (288      )    (1,586    )
(expense)--net
                                                                 
Total other
income              1,726         373         15,112        (3,297    )
(expense)
                                                                 
Income from
continuing
operations
before
provision for       84,207        35,589      257,151       215,996   
income taxes
and
noncontrolling
interests
                                                                 
Provision for       29,916        20,535      87,004        60,351    
Income Taxes
                                                                 
Income from
continuing
operations          54,291        15,054      170,147       155,645   
before
noncontrolling
interests
                                                                 
Total income
from
discontinued        -             1,187       3,497         6,459     
operations,
net of tax
                                                                 
Net Income          54,291        16,241      173,644       162,104   
                                                                 
Less: Net
Income
Attributable        3,679         5,290       7,535         13,405    
to
Noncontrolling
Interests
                                                                 
Net Income
Attributable
to McDermott       $ 50,612       $ 10,951     $ 166,109      $ 148,699   
International,
Inc.

                                                             
McDERMOTT INTERNATIONAL, INC.

EARNINGS PER SHARE COMPUTATION
                                                                   
                   Three Months Ended              Nine Months Ended
                   September 30,
                                                   September 30,
                   2012            2011            2012            2011
                   (In thousands, except share and per share amounts)
                                                                   
Income from
continuing
operations         $ 50,612        $ 9,764         $ 162,612       $ 142,240
less
noncontrolling
interests
Income from
discontinued        -              1,187          3,497          6,459
operations,
net of tax
                                                                   
Net income
attributable
to McDermott       $ 50,612        $ 10,951        $ 166,109       $ 148,699
International,
Inc.
                                                                   
                                                                   
Weighted
average common       235,817,203     234,940,184     235,568,889     234,451,430
shares (basic)
Effect of
dilutive
securities:
Stock options,
restricted
stock and           2,049,797      2,007,479      1,984,574      2,627,875
restricted
stock units
                                                                   
Adjusted
weighted
average common
shares and
assumed             237,867,000    236,947,663    237,553,463    237,079,305
exercises of
stock options
and vesting of
stock awards
(diluted)
                                                                   
                                                                   
Basic earnings
per share:
Income from
continuing
operations           0.21            0.04            0.69            0.61
less
noncontrolling
interests
Income from
discontinued         -               0.01            0.01            0.03
operations,
net of tax
Net income
attributable
to McDermott         0.21            0.05            0.70            0.63
International,
Inc.
                                                                   
Diluted
earnings per
share:
Income from
continuing
operations           0.21            0.04            0.68            0.60
less
noncontrolling
interests
Income from
discontinued         -               0.01            0.01            0.03
operations,
net of tax
Net income
attributable
to McDermott         0.21            0.05            0.69            0.63
International,
Inc.

                                                  
SUPPLEMENTARY DATA
                                                             
                         Three Months Ended                  Nine Months Ended
                         September 30,
                                                             September 30,
                         2012          2011                2012          2011
                         (In thousands)
Depreciation
and                      $ 20,082        $ 19,801            $ 65,956        $ 59,900
amortization
Drydock                  $ 7,999         $ 6,037             $ 21,606        $ 18,336
amortization
Capital                  $ 47,623        $ 90,190            $ 179,284       $ 231,872
expenditures
Backlog                  $ 5,339,755     $ 4,255,432         $ 5,339,755     $ 4,255,432

                                                       
McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS
                                                              
                                     September 30,            December 31,
                                     2012                     2011
                                     (In thousands, except share and per share
                                     amounts)
Assets
Current Assets:
Cash and cash equivalents            $   638,794              $  570,854
Restricted cash and cash                 23,074                  21,962
equivalents
Investments                              28,737                  109,522
Accounts receivable--trade,              548,068                 445,808
net
Accounts receivable--other               63,774                  53,386
Contracts in progress                    499,339                 287,390
Deferred income taxes                    11,580                  11,931
Other current assets                    41,155                36,332     
                                                              
Total Current Assets                    1,854,521             1,537,185  
                                                              
Property, Plant and Equipment            2,018,481               1,958,877
Less accumulated depreciation           (819,645    )          (857,012   )
                                                              
Net Property, Plant and                  1,198,836               1,101,865
Equipment
Assets Held for Sale                     28,724                  55,571
Investments                              30,097                  29,484
Goodwill                                 41,202                  41,202
Investments in Unconsolidated            35,430                  42,659
Affiliates
Other Assets                            175,233               184,848    
                                                              
Total Assets                         $   3,364,043           $  2,992,814  
                                                              
Liabilities and Equity
Current Liabilities:
Notes payable and current            $   14,146               $  8,941
maturities of long-term debt
Accounts payable                         375,954                 315,514
Accrued liabilities                      395,234                 309,515
Advance billings on contracts            307,144                 320,438
Deferred income taxes                    13,213                  13,187
Income taxes payable                    69,383                54,181     
                                                              
Total Current Liabilities               1,175,074             1,021,776  
                                                              
Long-Term Debt                           94,140                  84,794
Self-Insurance                           27,867                  23,585
Pension Liability                        19,292                  21,295
Other Liabilities                        124,979                 107,652
Commitments and Contingencies
Stockholders’ Equity:
Common stock, par value $1.00
per share, authorized
400,000,000 shares; issued
243,419,194 and 242,416,424              243,419                 242,416
shares at September 30, 2012
and December 31, 2011,
respectively
Capital in excess of par value           1,387,311               1,375,976
Retained earnings                        405,212                 239,103
Treasury stock, at cost,
7,574,903 and 7,359,983 shares
at September 30, 2012 and                (98,725     )           (95,827    )
December 31, 2011,
respectively
Accumulated other                       (80,508     )          (102,030   )
comprehensive loss
                                                              
Stockholders’
Equity--McDermott                        1,856,709               1,659,638
International, Inc.
Noncontrolling Interests                65,982                74,074     
                                                              
Total Equity                            1,922,691             1,733,712  
                                                              
Total Liabilities and Equity         $   3,364,043           $  2,992,814  

                                                              
McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                   
                                                  Nine Months Ended
                                                  September 30,
                                                  2012             2011
                                                  (In thousands)
Cash Flows From Operating Activities:
Net income                                        $ 173,644        $ 162,104
Less: Income from discontinued operations,         3,497         6,459     
net of tax
                                                                   
Income from continuing operations                 $ 170,147        $ 155,645
Non-cash items included in net income:
Depreciation and amortization                       65,956         59,900
Drydock amortization                                21,606         18,336
Equity in (income) loss of unconsolidated           11,026         (59       )
affiliates
Gain on asset disposals and impairments--net        (282     )     (8,107    )
Provision (benefit) from deferred taxes             3,929          (2,910    )
Stock-based compensation charges                    11,449         8,340
Pension costs                                       1,152          15,367
Other non-cash items                                5,178          5,909
Changes in assets and liabilities, net of
effects from dispositions:
Accounts receivable                                 (113,460 )     26,238
Net contracts in progress and advance               (225,340 )     (380,635  )
billings on contracts
Accounts payable                                    58,675         44,667
Accrued and other current liabilities               66,125         71,148
Pension liability and accrued postretirement        17,322         (51,041   )
and employee benefits
Other assets and liabilities                       16,166        (33,663   )
                                                                   
Net Cash Provided By (Used In) Operating            109,649        (70,865   )
Activities--Continuing Operations
Net Cash Used In Operating                         -             (211      )
Activities--Discontinued Operations
                                                                   
Total Cash Provided By (Used In) Operating         109,649        (71,076 )
Activities
                                                                   
Cash Flows From Investing Activities:
Purchases of property, plant and equipment          (179,284 )     (231,872  )
(Increase) decrease in restricted cash and          (1,112   )     183,564
cash equivalents
Purchases of available-for-sale securities          (82,735  )     (516,628  )
Sales and maturities of available-for-sale          164,807        601,128
securities
Proceeds from asset disposals                       405            8,483
Other investing activities, net                    (2,305   )     (16       )
                                                                   
Net Cash Provided By (Used In) Investing            (100,224 )     44,659
Activities--Continuing Operations
Net Cash Provided By Investing                     60,671        -         
Activities--Discontinued Operations
                                                                   
Total Cash Provided By (Used In) Investing         (39,553  )     44,659    
Activities
                                                                     
Cash Flows From Financing Activities:
Increase in debt                                    19,033         40,212
Payment of debt                                     (4,482   )     (6,473    )
Debt issuance costs                                 64             (4,824    )
Distributions to noncontrolling interests           (15,728  )     -
Other financing activities, net                    (2,706   )     (2,059    )
                                                                   
Net Cash Provided By (Used In) Financing           (3,819   )     26,856    
Activities--Continuing Operations
                                                                   
Effects of exchange rate changes on cash and       1,663         (313      )
cash equivalents
                                                                   
Net increase in cash and cash equivalents          67,940        126       
                                                                   
Cash and cash equivalents at beginning of          570,854       403,463   
period
                                                                   
Cash and cash equivalents at end of               $ 638,794       $ 403,589 
period--Continuing Operations

Contact:

McDermott International, Inc.
Investors, Analysts and Financial Media:
Robby Bellamy, (281) 870-5165
Director, Investor Relations
rbellamy@mcdermott.com
or
Trade and General Media:
Louise Denly, (281) 870-5025
Director, Corporate Communications
ldenly@mcdermott.com