McDermott Reports Fourth Quarter 2012 Financial Results

  McDermott Reports Fourth Quarter 2012 Financial Results

               EPS of $0.17; Strong Performance in Asia Pacific

   Fourth quarter 2012 bookings and recent awards provide improved revenue
                             visibility for 2013

Business Wire

HOUSTON -- February 28, 2013

McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today
reported net income of $40.5 million, or $0.17 per diluted share, for the 2012
fourth quarter. The results of the 2012 fourth quarter compare to income from
continuing operations of $9.3 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 237.8 million and 236.9 million in the
quarters ended December 31, 2012 and 2011, respectively.

McDermott’s revenues were $996.0 million for the 2012 fourth quarter, an
increase of 22 percent compared to $816.2 million in the corresponding period
of 2011. The year-over-year increase was primarily due to a 36 percent
increase in revenues in the Asia Pacific segment as a result of increased
marine activity on a subsea project, coupled with increased revenues in the
Middle East and Atlantic segments.

The Company’s operating income in the 2012 fourth quarter was $77.3 million,
an increase of 146 percent compared to $31.4 million in the 2011 fourth
quarter. Results in the fourth quarter 2011 included approximately $66 million
in pretax and after-tax charges primarily related to loss projects in Mexico
and Brazil. The fourth quarter 2012 results were negatively affected by an
aggregate of approximately $32 million of project losses and increased costs
on certain projects, including approximately $23 million in the Asia Pacific
segment as a result of incremental costs associated with anticipated
productivity and project delays on one subsea project, which is expected to
complete in late 2013. The Atlantic segment also was impacted by increased
cost estimates relating to two fabrication projects totaling approximately $9
million, due to lower than expected productivity, which are expected to
complete in mid-2013.

The Company’s other income for the fourth quarter of 2012 was $8.7 million, an
improvement of $4.8 million compared to other income of $3.9 million in the
fourth quarter of 2011, primarily due to higher foreign currency gains.

At December 31, 2012, the Company’s backlog was $5.1 billion, compared to $3.9
billion and $5.3 billion at December 31, 2011 and September 30, 2012,
respectively. Of the December 31, 2012 backlog, approximately $545 million is
from six projects currently in a loss position, primarily relating to the
recently commenced project in the Asia Pacific segment and a five-year charter
in Brazil, where future revenues are expected to equal costs when recognized.
In addition, the backlog includes approximately $162 million for one project
under deferred profit recognition.

“There were a number of positives during the quarter as fourth quarter
bookings, combined with awards received in the first quarter 2013, maintained
a strong backlog and improved revenue visibility for the coming year,” said
Stephen M. Johnson, Chairman of the Board, President and Chief Executive
Officer of McDermott. “We expect to recognize $2.6 billion in revenue in 2013
from our existing backlog and recent awards. With this revenue, combined with
additional short-term work that we typically accrue throughout the year, we
expect to see total revenues in the range of $3 billion in 2013. With
increased bidding activity and the company’s continued balance sheet strength,
we believe McDermott is well positioned to meet the growing customer demand in
each of our market segments.”

Balance Sheet Summary

As of December 31, 2012, McDermott reported total assets of approximately $3.3
billion. Included in this amount was $704.3 million of cash and cash
equivalents, restricted cash and investments. Net working capital, calculated
as current assets less current liabilities, was $676.8 million. Additionally,
total equity was $2.0 billion, or approximately 61% of total assets, with
total debt of $102.7 million.

Full-year 2012 Overview

For the year ended December 31, 2012, McDermott reported revenues of $3.6
billion, with operating income of $319.3 million and net income of $206.7
million, or $0.87 per fully diluted share. Operating income for 2012 in the
Asia Pacific segment benefited significantly from lower expected costs to
complete the marine campaign on an engineering, procurement, construction and
installation project, which is expected to complete in early 2013. These gains
were partially offset by project losses across each segment totaling
approximately $52.0 million.

OTHER INFORMATION

Conference Call

McDermott has scheduled a conference call and webcast related to its fourth
quarter and full year 2012 results on Friday, March 1, 2013, at 9:00 a.m. U.S.
Central Standard Time. Interested parties may listen over the Internet through
a link posted in the Investor Relations section of the Company's website. The
replay will also be available on the Company's website following the end of
the live call.

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, major integrated and other energy companies.
Operating in approximately 20 countries across the Atlantic, Middle East and
Asia Pacific, the Company’s integrated resources include approximately 14,000
employees and a diversified fleet of marine vessels, fabrication facilities
and engineering offices. McDermott has served the energy industry since 1923.
To learn more, please visit McDermott’s website on the Internet at
www.mcdermott.com.

Forward-Looking Statements

In accordance with the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995, McDermott cautions that statements in this
press release, which are forward-looking and provide other than historical
information, involve risks and uncertainties that may impact McDermott's
actual results of operations. These forward-looking statements include
statements about backlog, to the extent backlog may be viewed as an indicator
of future revenues, McDermott’s improved revenue visibility for 2013,
including our expectation for total revenue in the range of $3 billion in
2013, our expectation that McDermott will recognize $2.6 billion in revenue in
2013 from existing backlog and recent awards, the expected timing for
completion of certain projects, McDermott’s increased bidding activity and
continued balance sheet strength, and our belief that McDermott is well
positioned to meet growing customer demand in each of our market segments.
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, 2012.
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              Year Ended
                   December 31,                    December 31,
                   2012            2011            2012              2011
                   (In thousands)
                                                                     
Revenues           $ 995,953      $ 816,175      $ 3,641,624      $ 3,445,110 
                                                                     
Costs and
Expenses:
Cost of              853,048         726,409         3,100,009         2,980,390
operations
Selling,
general and          60,047          48,175          205,974           212,002
administrative
expenses
Loss on asset        -               5,488           -                 5,488
impairments
(Gain) loss on
asset               (123    )      (371    )      (405      )      (8,478    )
disposals
                                                                     
Total Costs         912,972       779,701       3,305,578       3,189,402 
and Expenses
                                                                     
Equity in Loss
of                  (5,693  )      (5,044  )      (16,719   )      (4,985    )
Unconsolidated
Affiliates
                                                                     
                                                                     
Operating           77,288        31,430        319,327         250,723   
Income
                                                                     
Other Income
(Expense):
Interest             441             788             4,656             1,848
income
Interest             -               (114    )       -                 (529      )
expense
Gain (loss) on
foreign              8,957           3,591           20,142            1,234
currency–net
Other               (707    )      (400    )      (995      )      (1,985    )
expense–net
                                                                     
Total other
income              8,691         3,865         23,803          568       
(expense)
                                                                     
                                                                     
Income from
continuing
operations
before
provision for        85,979          35,295          343,130           251,291
income taxes,
discontinued
operations and
noncontrolling
interest
Provision for       42,200        26,773        129,204         87,124    
Income Taxes
                                                                     
Income from
continuing
operations
before               43,779          8,522           213,926           164,167
discontinued
operations and
noncontrolling
interest
Total income
(loss) from
discontinued        -             (19,271 )      3,497           (12,812   )
operations,
net of tax
                                                                     
Net Income          43,779        (10,749 )      217,423         151,355   
                                                                     
Less: net
income
attributable        3,235         780           10,770          12,625    
to
noncontrolling
interests
                                                                     
                                                                     
Net Income
Attributable
to McDermott       $ 40,544       $ (9,969  )     $ 206,653        $ 138,730   
International,
Inc.

                                                                  
McDERMOTT INTERNATIONAL, INC.

EARNINGS PER SHARE COMPUTATION
                                                                           
                   Three Months Ended                    Year Ended
                   December 31,
                                                         December 31,
                   2012              2011                2012              2011
                                                                           
                   (In thousands, except share and per share amounts)
                                                                           
Income from
continuing
operations         $ 40,544          $ 9,302             $ 203,156         $ 151,542
less
noncontrolling
interests
Income (loss)
from
discontinued        -                (19,271     )      3,497            (12,812     )
operations,
net of tax
                                                                           
Net income
(loss)
attributable       $ 40,544          $ (9,969      )     $ 206,653         $ 138,730     
to McDermott
International,
Inc.
                                                                           
                                                                           
Weighted
average common       235,847,019       235,041,313         235,638,422       234,598,901
shares
Effect of
dilutive
securities:
Stock options,
restricted
stock and           1,971,339        1,882,795         1,981,266        2,441,606   
restricted
stock units
                                                                           
Adjusted
weighted
average common
shares and
assumed             237,818,358      236,924,108       237,619,688      237,040,507 
exercises of
stock options
and vesting of
stock awards
                                                                           
                                                                           
Basic earnings
per share:
Income from
continuing
operations           0.17              0.04                0.86              0.65
less
noncontrolling
interests
Income (loss)
from
discontinued         -                 (0.08       )       0.01              (0.05       )
operations,
net of tax
Net income
(loss)
attributable         0.17              (0.04       )       0.88              0.59
to McDermott
International,
Inc.
                                                                           
Diluted
earnings per
share:
Income from
continuing
operations           0.17              0.04                0.86              0.64
less
noncontrolling
interests
Income (loss)
from
discontinued         -                 (0.08       )       0.01              (0.05       )
operations,
net of tax
Net income
(loss)
attributable         0.17              (0.04       )       0.87              0.59
to McDermott
International,
Inc.

                                                           
SUPPLEMENTARY DATA
                                                                       
                 Three Months Ended                  Year Ended
                 December 31,
                                                     December 31,
                 2012             2011             2012             2011
                                                                       
                 (In thousands)
Pension          $ 378             $ 4,125           $ 1,530           $ 19,492
expense
Depreciation
&                $ 20,484          $ 22,491          $ 86,440          $ 82,391
amortization
expense
Drydock
amortization     $ 3,939           $ 6,231           $ 25,545          $ 24,567
expense
Capital          $ 107,026         $ 50,749          $ 286,310         $ 282,621
expenditures
Backlog          $ 5,067,164       $ 3,881,063       $ 5,067,164       $ 3,881,063

                                                          
McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS
                                                                 
                                           December 31,
                                           2012                  2011
                                           (In thousands, except
                                           share and per share
                                           amounts)
Assets
Current Assets:
Cash and cash equivalents                  $ 640,147             $ 570,854
Restricted cash and cash equivalents         18,116                21,962
Investments                                  19,242                109,522
Accounts receivable--trade, net              428,800               445,808
Accounts receivable--other                   75,461                53,386
Contracts in progress                        560,154               287,390
Deferred income taxes                        9,765                 11,931
Assets held for sale                         2,679                 3,197
Other current assets                        35,425              33,135    
Total Current Assets                        1,789,789           1,537,185 
Property, Plant and Equipment                2,115,176             1,958,877
Less accumulated depreciation               (833,385  )          (857,012  )
Net Property, Plant and Equipment            1,281,791             1,101,865
Assets Held for Sale                         26,758                55,571
Investments                                  26,750                29,484
Goodwill                                     41,202                41,202
Investments in Unconsolidated                37,435                42,659
Affiliates
Other Assets                                129,902             184,848   
Total Assets                               $ 3,333,627          $ 2,992,814 
                                                                 
Liabilities and Equity
Current Liabilities:
Notes payable and current maturities       $ 14,146              $ 8,941
of long-term debt
Accounts payable                             400,007               315,514
Accrued liabilities                          108,963               116,051
Accrued employee-related benefits            57,391                29,072
Accrued contract costs                       203,064               164,392
Advance billings on contracts                241,696               320,438
Deferred income taxes                        10,758                13,187
Income taxes payable                        76,986              54,181    
Total Current Liabilities                   1,113,011           1,021,776 
Long-Term Debt                               88,562                84,794
Self-Insurance                               22,641                23,585
Pension Liability                            25,069                21,295
Other Liabilities                            132,239               107,652
Commitments and Contingencies
Stockholders’ Equity:
Common stock, par value $1.00 per
share, authorized 400,000,000 shares;
issued and outstanding 243,442,156 and       243,442               242,416
242,416,424 shares at December 31,
2012 and December 31, 2011,
respectively
Capital in excess of par value               1,391,271             1,375,976
Retained earnings                            445,756               239,103
Treasury stock, at cost, 7,574,903 and
7,359,983 shares at December 31, 2012        (98,725   )           (95,827   )
and December 31, 2011, respectively
Accumulated other comprehensive loss        (94,413   )          (102,030  )
Stockholders’ Equity--McDermott              1,887,331             1,659,638
International, Inc.
Noncontrolling Interests                    64,774              74,074    
Total Equity                                1,952,105           1,733,712 
Total Liabilities and Equity               $ 3,333,627          $ 2,992,814 

                                                        
McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                              
                             Year Ended December 31,
                             2012             2011             2010
                             (In thousands)
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income                   $ 217,423        $ 151,355        $ 227,712
(Income) loss from
discontinued operations,      (3,497   )      12,812         34,900     
net of tax
Income from continuing         213,926          164,167          262,612
operations
Non-cash items included
in net income:
Depreciation and               86,440           82,391           76,452
amortization
Drydock amortization           25,545           24,567           26,205
Equity in loss of
unconsolidated                 16,719           4,985            7,594
affiliates
Gains on asset disposals       (405     )       (8,478   )       (2,440     )
Loss on asset                  -                5,488            24,660
impairments
Provision for deferred         3,847            1,650            1,830
taxes
Stock-based compensation       15,369           17,825           16,458
charges
Other non-cash items           8,367            18,096           13,307
Changes in assets and
liabilities, net of
effects from
acquisitions:
Accounts receivable            (5,920   )       (152,840 )       (6,457     )
Net contracts in
progress and advance           (351,604 )       (151,157 )       182,472
billings on contracts
Accounts payable               84,430           71,291           (38,536    )
Accrued and other              36,922           56,049           40,110
current liabilities
Income taxes                   22,832           17,138           84,269
Pension liability and
accrued postretirement         36,897           (83,263  )       (106,338   )
and employee benefits
Other                         16,419         29,537         (197,871   )
NET CASH PROVIDED BY
OPERATING                      209,784          97,446           384,327
ACTIVITIES--CONTINUING
OPERATIONS
NET CASH USED IN
OPERATING                     -              (1,426   )      (44,153    )
ACTIVITIES--DISCONTINUED
OPERATIONS
TOTAL CASH PROVIDED BY        209,784        96,020         340,174    
OPERATING ACTIVITIES
                                                                              
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases of property,         (286,310 )       (282,621 )       (186,862   )
plant and equipment
(Increase) decrease in
restricted cash and cash       3,846            175,899          (142,853   )
equivalents
Purchases of
available-for-sale             (95,964  )       (546,822 )       (1,491,329 )
securities
Sales and maturities of
available-for-sale             191,298          693,424          1,363,803
securities
Investments in
unconsolidated                 (5,084   )       (1,058   )       (32,550    )
affiliates
Proceeds from asset
dispositions and other        3,291          9,943          2,870      
investing activities
NET CASH PROVIDED BY
(USED IN) INVESTING            (188,923 )       48,765           (486,921   )
ACTIVITIES--CONTINUING
OPERATIONS
NET CASH PROVIDED BY
(USED IN) INVESTING           60,671         -              (65,084    )
ACTIVITIES--DISCONTINUED
OPERATIONS
TOTAL CASH PROVIDED BY
(USED IN) INVESTING           (128,252 )      48,765         (552,005   )
ACTIVITIES
                                                                              
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from debt             19,034           46,987           3,423
Payment of debt                (10,061  )       (8,606   )       (8,540     )
Purchase of treasury           (2,898   )       (10,092  )       (15,715    )
shares
Cash contribution from
The Babcock & Wilcox           -                -                100,000
Company
Distributions to NCI           (20,135  )       (2,524   )       -
Debt issuance costs and
other financing               267            (4,476   )      (3,076     )
activities
NET CASH PROVIDED BY
(USED IN) FINANCING            (13,793  )       21,289           76,092
ACTIVITIES--CONTINUING
OPERATIONS
NET CASH PROVIDED BY
(USED IN) FINANCING           -              1,426          (109,600   )
ACTIVITIES--DISCONTINUED
OPERATIONS
TOTAL CASH PROVIDED BY
(USED IN) FINANCING           (13,793  )      22,715         (33,508    )
ACTIVITIES
                                                                              
                                                                              
EFFECTS OF EXCHANGE RATE       1,554            (109     )       (80        )
CHANGES ON CASH
TRANSFER OF CASH TO THE       -              -              (250,388   )
BABCOCK & WILCOX COMPANY
                                                                              
                                                                              
NET INCREASE (DECREASE)
IN CASH AND CASH              69,293         167,391        (495,807   )
EQUIVALENTS
CASH AND CASH
EQUIVALENTS AT BEGINNING      570,854        403,463        899,270    
OF PERIOD
CASH AND CASH
EQUIVALENTS AT END OF        $ 640,147       $ 570,854       $ 403,463    
PERIOD

Contact:

McDermott International, Inc.
Investors, Analysts and Financial Media:
Steven D. Oldham, 281-870-5147
Vice President, Treasury and Investor Relations
soldham@mcdermott.com
or
Trade and General Media:
Louise Denly, 281-870-5025
Director, Corporate Communications
ldenly@mcdermott.com